October 15, 2012
Along with vast improvements in material conditions capitalism’s dark side has created insatiable appetites, limitless monetization of contemporary life through privatization for-profit (hospitals, schools, prisons…) commodification and commercialization. Harvard political philosopher, Michael Sandel claims we have gone too far and calls for an informed public debate, a robust conversation on the moral limits of markets? Sandel argues that the left and right, the Democrats and Republicans have abandoned civic virtue, and have impoverished views of citizenship and community. Sandel does not suggest precise limits but invites discussions. Things that were once considered repugnant as marketable commodities, have become or are gradually becoming normalized: paying people to give an organ or blood or to submit to risky drug tests; the sale of naming rights in classrooms, for sports stadiums, etc; paying school children to read more or get good grades; the right of corporations to pollute the atmosphere; hiring mercenaries to fight wars or using private corporations in the U.S. military presence in Iraq; selling citizenship to immigrants; selling admission to elite universities.
Selected Timeline of Related Events in the Social History of Moral Limits of Markets
Barely begun, work in process. Please note that efforts are made to acknowledge sources but this is a blog post not an academic paper and there might be unintentional omissions. See webliography and bibliography.
2012-10-15 Roth received a Nobel Prize for his innovative exchange concept applied to kidney transplants. In a 2007 article he noted that his exchange concept may have been repugnant to some as it created a grey area in benefits from organ donations. Economists Alvin E. Roth of Harvard University and Lloyd S. Shapley of the University of California at Los Angeles whose work has led to nearly 2,000 kidney transplants across the United States have received 2012 Nobel Prize for economics Monday at a news conference in Stockholm, Sweden. Roth and Shapley were honored for “the theory of stable allocations and the practice of market design.” (Smith 2012-10-15 ” Nobel economists’ big impact: Kidney transplants ). See also Roth, Alvin E. 2007. “Repugnance as a Constraint on Markets.” Journal of Economic Perspectives. Summer: 21:3. pp. 37–58.
2012-07-12 In a book review entitled “Money and the markets: Insatiable longing,” The Economist examined limits of capitalism.
2012-04-24 Michael J. Sandel’s book entitled What Money Can’t Buy: The Moral Limits of Markets was published. Sandel asks, “Should we pay children to read books or to get good grades? Should we allow corporations to pay for the right to pollute the atmosphere? What about hiring mercenaries to fight our wars? Auctioning admission to elite universities? Selling citizenship to immigrants willing to pay? (Amazon)”
2007 “The laws against buying or selling kidneys reflect a reasonably widespread repugnance, and this repugnance may make it difficult for arguments that focus only on the gains from trade to make headway in changing these laws. That does not mean that no gains from exchange can be realized; in fact some gains are beginning to be realized in the kidney exchange programs that Tayfun So¨nmez, UtkuU¨ nver, and I helped to design in New England and elsewhere. In the simplest form of kidney exchange, a patient with a willing donor who has an incompatible blood type (or who is incompatible for another reason) can exchange a kidney with another such incompatible patient–donor pair. (That is, the pairs are matched so that the donor from one pair is compatible with the patient from the other, and each patient receives a kidney from the other patient’s donor.) This sort of “in kind” exchange has gained acceptance in the transplant community (Roth, Alvin E. 2007. “Repugnance as a Constraint on Markets.” Journal of Economic Perspectives. Summer: 21:3. pp. 37–58.).1″
2005-02-09 Michael J. Sandel presented his paper entitled the “The Moral Limits of Markets” in which he raised these questions: “Are there some things that should not be bought and sold, and, if so, why? The proliferation of markets in recent years makes this issue difficult to avoid. Consider, for example, recent proposals to establish markets in organs for transplantation, the race among medical entrepreneurs to patent human genes and other life forms, the aggressive marketing of drugs as consumer goods, and the proliferation of for-profit schools, hospitals, and prisons. The rampant commodification, commercialization, and privatization of contemporary life give us reason to reconsider the moral limits of markets: Are there some things that money should not buy?” (Hoffmann and Sandel 2005-02-09).
2003-07 [T]he U.S. Department of Defense included terrorist attacks or terrorism futures market in a speculative list of predictive markets. Public repugnance forced the Pentagon to hastily cancel the program (wiki).
1990 “[T]he Clean Air Act was amended to allow trading of rights to pollute through tradable emissions entitlements (Roth 2007).”
1980s Alvin E. Roth of Harvard University’s market design experiments based on Shapley’s 1960s work were used for such matches as students with schools and organ donors with patients who need a transplant (Smith 2012-10-15 ” Nobel economists’ big impact: Kidney transplants ). See also Roth, Alvin E. 2007. “Repugnance as a Constraint on Markets.” Journal of Economic Perspectives. Summer: 21:3. pp. 37–58.
1960s Economist Lloyd S. Shapley co-developed a mathematical theory on resource allocation as applied to the job market (Smith 2012-10-15 ” Nobel economists’ big impact: Kidney transplants ). See also Roth, Alvin E. 2007. “Repugnance as a Constraint on Markets.” Journal of Economic Perspectives. Summer: 21:3. pp. 37–58.
1907 George Simmel’s book on economic sociology entitled The Philosophy of Money was published. Simmel investigated the consequences as money penetrated everyday life. “Hannes Böhringer has argued, “Money…objectifies the ‘style of life’, forces metropolitan people into ‘objectivity’, ‘indifference’, ‘intellectuality’, ‘lack of character’, ‘lack of quality’. Money socializes human beings as strangers…money also transforms human beings into res absolutae, into objects. Simmel’s student, Georg Lukács, correctly noticed that this objectification (in his words: reification and alienation) did not remain external, cannot, as Simmel maintained, be the ‘gatekeeper of the innermost elements’, but rather itself becomes internalized (H.Böhringer, ‘Die “Philosophie des Geldes” als ästhetische Theorie’, in H.J.Dahme and O.Rammstedt (eds), Georg Simmel und die Moderne, Frankfurt, Suhrkamp, 1984, pp. 178–82, esp. p. 182. cited in Simmel, Georg. 2004 . The Philosophy of Money. Third enlarged edition. Ed. David Frisby. Trans. Tom Bottomore and David Frisby from a first draft by Kaethe Mengelberg. London and New York.)” Roth ( 2007) cited Simmel (1907 as a starting point in sociology literature on “how the introduction of money changes many kinds of social relationships and their meanings.”
Michael J. Sandel “is professor of government at Harvard University, where he has taught political philosophy in the Faculty of Arts and Sciences since 1980. He was educated at Brandeis University and received his Ph.D. from Balliol College, Oxford University, where he was a Rhodes Scholar. He is a member of the National Constitution Center Advisory Panel, the Rhodes Scholarship Committee of Selection, the Shalom Hartman Institute of Jewish Philosophy, and the Council on Foreign Relations. He has received fellowships from the Ford Foundation, the American Council of Learned Societies, and the National Endowment for the Humanities. He is the author, most recently, of Democracy’s Discontent: America in Search of a Public Philosophy (1996), as well as Liberalism and Its Critics (1984) and Liberalism and the Limits of Justice (1982) (Tanner Lectures Introduction. 1998-05-11/12. “What Money Can’t Buy: The Moral Limits of Markets).” While at Balliol College, Oxford, as a Rhodes Scholar, Sandel studied under political philosopher Charles Taylor.
Selected Webliography and Bibliography
The Economist. 2012-07-12. “Money and the markets: Insatiable longing.” The Economist.
Hoffmann, Stanley; Sandel, Michael J. 2005-02-09. “Markets, Morals, and Civic Life” Introduction by Stanley Hoffmann. Presented at the 1887th Stated Meeting, held at the House of the Academy. http://www.amacad.org/publications/bulletin/Summer2005/MarketsMoralsCivitLife.pdf
Roth, Alvin E. 2007. “Repugnance as a Constraint on Markets.” Journal of Economic Perspectives. Summer: 21:3. pp. 37–58.
Sandel, Michael J. 1996. Democracy’s Discontent. Belknap Press of Harvard University Press. Amazon.
Sandel, Michael J. 1998-05-11/12. “What Money Can’t Buy: The Moral Limits of Markets.” The Tanner Lectures on Human Values. Delivered at Brasenose College, Oxford.
Sandel, Michael J. 2005. “The Moral Limits of Markets.” Bulletin of the American Academy of Arts and Sciences. Summer: 6–10.
Sandel, Michael J. 2012-04-24. What Money Can’t Buy: The Moral Limits of Markets. Farrar, Straus and Giroux.
Simmel, Georg. 1907. The Philosophy of Money.
Smith, Aaron. 2012-10-15. “Nobel economists’ big impact: Kidney transplants.” CNN Money.
Filed in Business & Finance, Economics, Economy & Finance, ethics, morality and economics, Social History Timeline
Tags: Beyond Left and Right, market values, non-market norms, Political Philosophy, public philosophy, role of markets in a democratic society
August 1, 2011
Journalists acted as cheerleaders for buying stocks […] The market values journalists advice more then of analysts, and journalists advice are believed to contain more new information compared to analysts advice […] The lesson for investors is this: If either journalists or analysts come with a “sell” recommendation the stock drops significantly right away and continues to yield abnormal negative return. If an analyst issues “buy’s” there is only a slight chance that the stock will show abnormal positive return and more likely that the return will be negative. But if journalists issue “buy’s” it offers investors a short time of positive and significant abnormal positive returns, before the returns disappear and become severely negative. This is what Lidén calls a classic overreaction. “…it is obvious that analysts and journalists were fooled by the over-optimism from the positive information, but they were not from negative information. In turn, this is due to positive information being more intricate to interpret.”
“The British financial journalism had been molded in the hands of people like J.R. McCulloch the editor of the Scotsman and the first real economist to write regularly in a newspaper. The influence of McCulloch is evident as he edited such works as The Wealth of Nations by Adam Smith in The Works of David Ricardo (source). Today magazines like The Economist and The Financial Times rely on McCulloch’s heritage while the American Barron‘s and the Wall Street Journal have for long been more finance oriented sources based on Alsanger’s foundation. In general this could be described as Speculators vs. Economic theory. This difference is important when retrieving, analyzing and valuing information from different sources on both sides of the Atlantic Ocean. Different cultural background and general rivalry has for example led many US financial journalist still today to consider The Economist the most overrated journal in the world!
2005 “Publishers such as Pearson (Financial Times, Economist) and Dow Jones (WSJ) are striving to become journalistic brand names that integrate news content and media around the basic product which paper is. The environment of the 90s has been called paradoxical concerning these two publishing giants. On one hand they are forced to adopt multimedia strategies, particularly developing a range of non-print products. On the other hand they have to do so while maintaining a historical focus on financial news, with clear growth limitations when considered nationally (source 2005).”
2005-1995 This “decade has been described by some scholars as the decade of popular capitalism, materialized in the growth of the “citizen investor” and of the globalization – primarily corporate and financial (Arrese and Medina (2002). The success of electronic financial media has forced economic dailies to stop identifying with just the traditional newspaper.”
2005 An example of the opposite opinion would be how Michael Bloomberg the Governor of New York City starts up his day. Bloomberg is a former stockbroker and owns one of the worlds most powerful finance quotation and informational media bearing his name. Remarkably enough Mr. Bloomberg says he gathers information the old-fashioned way starting with printed media. Among these are The Wall Street Journal, The Financial Times and The New York Times but he seldom goes to a story inside. He reads The Economist from cover-to-cover, never misses Fortune and usually reads Business Week. As for TV news, “I never watch TV, even my own [news channel].”
2004 Rupert Murdoch, “president of the News Corporation which publishes newspapers such as The Times in the UK and The New York Post, has urged newspaper editors “to embrace the internet saying print news executives sat by and watched as a generation of digital consumers turned away from newspapers…The challenge for each of us in this room is to create an internet presence that is compelling enough that users make it their home page. Just as people traditionally started their day with coffee and a newspaper, in the future I hope that the way they start their day online will be with coffee and our website,” Murdoch said at the annual meeting of the American Society of Newspaper Editors last April. If quotes of closing price would have been accessible to investors in a similar way back in 17th century surely there would have been no need for papers like the Lloyd’s List.” (source 2005).”
1996 Dan “Dorfman was fired from his 450.000 dollars-a-year job in 1996 after he refused to turn over his confidential sources. Federal investigation was made whether he had personally profited from his reports, either by trading on them or tipping others in exchange for favors. In an investigation made by the WSJ it was found that Dorfman maintained a brokerage account that was managed by one of his frequent sources, a broker who later left the business after being acquitted of fraud charges (source 2005).”
1990s “Dan Dorfman worked as a financial journalist at the Money magazine and as a commentator for the CNBC in the early 90s to become the highest-paid and the most influential business reporter in his time. Dorfman’s expertise was tied to his linguistic skill – not his analytic skills. He was a reporter, not an analyst. Dorfman went on television and mentioned a stock that someone had told him that was a possible
takeover target. The stock moved up and although only briefly, everybody was happy – for a while [. . .] But that evolution seems to be part of the everyday life of the modern journalist. Investment bankers, arbitrageurs, corporate raiders, analysts and people in corporate public relations all try to spin the story to their favor. To analyze how this evolved into a serious problem is the case of one of the most influential US business journalist who “moved market” for years with exclusive stories, but then was found guilty in the court of public opinion for unethical behavior regarding his work (source 2005).”
1980s As the golden age of economic controversy came to pass in the 80s the turmoil left a deep mark on the financial press. Privatization, deregulation of the financial markets, advances in information technology along with increased private share ownership helped to unleash a powerful new figure in the financial media which had mostly been overlook for many decades – the financial analyst. The bull market of
the 80s and again in the late 90s led “the tipster” to become in greater demand then teachers and scholarly journalists. “Now, as in the 1920s, speculation is a game all the family can play for the price of an evening paper.” (source)
1973 The oil crisis in 1973 and the collapse of the Bretton Woods exchange system seriously dented the limelight of the Keynesian economic gurus and gave rise to antiKeynesians intellectuals such as the Nobel-winning Austrian economist Friedrich A. Hayek (source).
1960s and 1970s The standing of the American economic profession rose highest and the leading men of this period became celebrities and gurus (Galbraith, Samuelson and Friedman) and in demand as commentators. Some people hoped that the ideas of a new breed of economists would rid the world from economic and financial crises [. . .] A prime example of this is the successful selling of Milton Friedman’s “supply-side economics” in the Wall Street Journal and the “monetarism” in the Financial Times. Both journals experienced tremendous success at this time where the WSJ climbed to a top position in circulation, toppling such newspapers as the New York Times and the Washington Post. The basis for creating a solid specialized news groups in the 60s was supported by the lack of interest for economic and financial news of the general news media (source).”
The seeds of this craze were planted in 1593. A man by the name of Conrad Guestner imported the first tulip bulb into Holland from Constantinople, in present day Turkey. After a few years, tulip bulbs became a status symbol and a novelty for the rich and famous. Eventually, tulip bulbs became a hot
ticket item in neighboring Germany, as well. Initially, only the true connoisseurs bought tulip bulbs, but the rapidly rising price quickly attracted speculators looking to profit. By 1634, tulip mania had feverishly spread to the Dutch middle class. Pretty soon everybody was dealing in tulip bulbs, looking to make a quick fortune. The majority of the tulip bulb buyers had no intentions of even planting these bulbs! The name of the game was to buy low and sell high, just like in any other market. The whole Dutch nation was caught in a sweeping mania, as people traded in their land, livestock, farms and life savings all to acquire 1 single tulip bulb! (Source: http://www.stock-market-crash.net; http://cepa.newschool.edu/het/profiles/mcculloch.htm)”
“dead tree media”
August 1, 2011
In process DRAFT
Polarized thinking, false choices, false dichotomies, either or thinking, primal thinking, false dilemma, black and white thinking)
Blumenthal, Paul. 2011-07-29. “Debt Limit Stalemate Has Roots In Campaign Money, Earmarks, Social Media.”
2011-07-31 On National Public Radio last week, Rep. Tom Cole, a Republican deputy whip, was giddy about the potential for calamity. Asked if it was a mistake to try to cut spending by threatening the U.S. economy, Cole replied: “No, I don’t think so. Frankly, I think it’s one of the good things that’s come out of this. We’ll never have a debt-ceiling increase again without serious efforts to deal with the long-term spending (source).”
2011-07-18 A CNN Survey found that 64% of Americans supported spending cuts and tax increases. The question in the survey was worded: “In those discussions, several budget plans have been proposed that would reduce the amount the government owes by trillions of dollars over the next ten years. If you had to choose, would you rather see Congress and President Obama agree to a budget plan that only includes cuts in government spending, or a budget plan that includes a combination of spending cuts and tax increases on higher-income Americans and some businesses (source)?” 52% of Americans felt that President Obama acted responsibly in reply to the question: “Based on what you have read or heard about the discussions between Congress and Barack Obama on the debt ceiling, do you think Obama has or has not acted responsibly?” To the question: “Based on what you have read or heard about the discussions between Congress and Barack Obama
on the debt ceiling, do you think the Republicans in Congress have or have not acted responsibly?” 63% of Americans answered “No, have not 63%.” In response to the question regarding potential cuts in government spending and increasing taxes that have been suggested as part of the discussions on the debt ceiling. 66% opposed cutting federal subsidies to farmers; 68% opposed cutting pensions and benefits for retired government workers; 52% opposed cutting defense spending; 77% opposed cutting the amount the government spends on Medicaid; 77% opposed cutting the federal health program for the poor; 87% opposed cutting the amount the government spends on Medicare; 87% opposed cutting the federal health program for the elderly; 84% opposed cutting the amount the government spends on Social Security; 73% were in favor ncreasing the taxes paid by oil and gas companies by ending
federal subsidies for those businesses 73% 26% 1%
Increasing the taxes paid by businesses that own private jets 76% 23% *
Increasing the taxes paid by people who make more than
250 thousand dollars a year 73% 26%
2011-05-01 Republican is Michael Grimm, elected in November 2010 argued that Medicare was not sustainable. “What this debate has turned into is class warfare — let’s be honest about it,” he said. Lower taxes across the board would increase government revenue, he maintained, in the face of loud catcalls from those who pointed out that that economic theory has long since been discredited [. . .] We need a strong national defense.” (source).”
2011-04-11 President Obama called for allowing the Bush tax cuts to expire for individuals making $200,000 or more a year and couples making $250,000 or more. Some conservatives, such as Sen. Tom Coburn (R-Okla.) have voiced support for tax increases.
Representative Paul Ryan’s (R-WI) proposed a controversial budget plan which included a proposal to turn Medicare into a voucher-like system.
Speaker John Boehner (R-Ohio proposed a new debt limit to the Republicans. They required 216 votes.
Below is a snapshot of This group of Republicans votes against Speaker John Boehner’s proposed bill to raise the debt ceiling.
Michele Bachmann, Minnesota – The Tea Party stalwart and presidential candidate said she would not vote for any bill that raised the debt ceiling.
Paul Broun, Georgia – Elected in 2007, Broun has on several occasions referred to President Barack Obama as a “socialist.”
Jason Chaffetz, Utah – Chaffetz has staked out turf as a Tea Party-friendly conservative since being elected in 2008. He is weighing a primary challenge to Senator Orrin Hatch.
Chip Cravaack, Minnesota – A former Navy pilot, Cravaack was elected last year with Tea Party support but declined to join official Tea Party group in Congress.
Scott DesJarlais, Tennessee – A doctor first elected last year with Tea Party support, he had not held any previous elected office.
Trey Gowdy, South Carolina – Gowdy won election last year with Tea Party support after winning the Republican primary by accusing the incumbent of working too often with Democrats.
Tim Huelskamp, Kansas – Elected in 2010 with Tea Party support, Huelskamp was raised on a farm.
Tom Graves, Georgia – Won his seat in a special election last year with Tea Party support.
Tim Johnson, Illinois – Johnson has compiled a moderate voting record since he was elected in 2000.
Jim Jordan, Ohio – A leader of the party’s conservative wing, Jordan was first elected in 2006.
Steve King, Iowa – A veteran leader of the party’s social conservatives, he gained notoriety for saying Obama’s election would lead to radical Islamists “dancing in the streets.”
Connie Mack, Florida – Elected in 2004, Mack started an anti-tax freedom caucus while serving in the Florida House.
Tom McClintock, California – Elected in 2008, McClintock gained some national prominence when he ran for governor going up against movie-star Arnold Schwarzenegger in 2003.
Mick Mulvaney, South Carolina – Elected in the Republican wave in 2010, he is the first Republican to represent his district since 1883.
Ron Paul, Texas – A long-time favorite of groups that want to drastically shrink government, the presidential candidate said he would not vote for any legislation that raised the debt ceiling.
Tim Scott, South Carolina – A leader of the party’s freshman class, he is the first black American to win national office from South Carolina since the Civil War era.
Steve Southerland, Florida – Elected in 2010, Southerland is owner and president of a family funeral home business.
Rep. Joe Walsh (R-Ill.) won his seat in 8th Congressional District in Chicago’s north and northwest suburbs in an out-of-nowhere victory 2010-Fall. He accused President Obama of being a liar on the debt-ceiling issue. He maintained uses cable television and social media like Twitter to maintain a high level of visibility.
Joe Wilson, South Carolina – A veteran lawmaker best known for shouting “You lie!” at President Obama during the 2009 State of the Union address.
(Reporting by Andy Sullivan and Kim Dixon; editing by Anthony Boadle)
July 19, 2011
Who owns the $14.3tn debt?
US Government owes itself $4.6tn
Remaining $9.7tn owed to investors
They include banks, pension funds, individual investors, and state/local/foreign governments
China: $1.15 tn, Japan: $0.91tn, UK: $0.33tn
Deficit is annual difference between spending and revenue, $1.29tn in 2010
America raised its debt ceiling 140 times since World War II without controversy.
2011-07-29The “Republican-controlled House of Representatives passed a stopgap bill by 218-210. Two hours later, the Democratic-controlled Senate voted to kill it by 59-41. The Senate, keen to have a deal in place before the markets open on Monday, with the potential for huge falls in share prices, is proposing a bill of its own scheduled to go to a vote on Sunday [. . .] The standoff between the Republicans and Democrats – the biggest ideological collision between the parties for decades – enters its final phase [. . .] The US stock market has just had its worst week for a year and Obama, in a Gallup poll published on Friday, saw his approval ratings drop to a new low, from 45% to 40%.” MacAskill, Ewen. 2011-07-31. “US debt crisis: Tea Party intransigence takes America to the brink.” Washington: The Observer.
2011-05 The US Treasury reported that the US Government has a debt of $14.3 trillion.
2011-04-18 “The influential credit-rating firm Standard & Poor’s which assigns ratings to guide investors on the risks involved in buying debt instruments changed its ratings of U.S. Treasury securities to “negative” from “stable” but left the overall rating as AAA. As a result the struggle intensified between President Obama’s Democratic administration and his Republican opponents in the House to get control over a nearly $1.4 trillion budget deficit and $14.27 trillion debt burden (Johnson, Steven C. 2011-04-18. “S&P threatens to cut U.S. credit rating on deficit.” New York: Reuters).” The U.S. debt cap was $14.294 trillion cap. The debt continues to rise. Probable causes include costs for health care, retirement and other so-called entitlement programs, and the interest on existing debt. The stock market response included:
The Dow Jones Industrial Average fell 140.24 points, or 1.14%, to 12201.59, its biggest decline in a month, after earlier tumbling almost 250 points. Stocks in Britain, Germany and France fell more than 2%, with most of the declines coming after the S&P news, and in early trading Tuesday, Japan shares fell 1%. Gold surged to just below $1,500 an ounce.
2011-01 A U.S. congressional report entitled “The Financial Crisis Inquiry Report 2011-01” blamed ratings companies such as S&P and Moody’s Corp for triggering the financial crisis when they cut the inflated ratings they had applied to complex mortgage-backed securities. “Moody’s, the
Commission’s case study in this area, relied on lawed and outdated models to issue erroneous ratings on mortgage-related securities, failed to perform meaningful due diligence on the assets underlying the securities, and continued to rely on those models even after it became obvious that the models were wrong (FCIR 2011:126).” The Commission investigated institutions included American International Group (AIG), Bear Stearns, Citigroup, Countrywide Financial, Fannie Mae, Goldman Sachs, Lehman Brothers, Merrill Lynch, Moody’s, and Wachovia. “26 million Americans who are out of work, cannot ind full-time work, or have given up looking for work. About four million families have lost their homes to foreclosure and another four and a half million have slipped into the foreclosure process or are seriously behind on their mortgage payments. Nearly 11 trillion in household wealth has vanished, with retirement accounts and life savings swept away.” “The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public (The Financial Crisis Inquiry Report 2011-01:xvii).”
2009-05 The National Commission on the Causes of the Financial and Economic Crisis in the United States was established as part of the Fraud Enforcement and Recovery Act (Public Law 111-21.) passed by Congress and signed by the President. This independent, 10-member panel was composed of private citizens with experience in areas such as housing, economics, inance, market regulation, banking, and consumer protection. Six members of the Commission were appointed by the Democratic leadership of Congress and four members by the Republican leadership.
2008-09/10 Fed Chairman Ben Bernanke told the FCIC, “As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression. If you look at the firms that came under pressure in that period . . . only one . . . was not at serious risk of failure. . . . So out of maybe the 13, 13 of the most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two (The Financial Crisis Inquiry Report 2011-01:354).”
2008-09 An extra digit was added to the US federal debt clock when the debt exceeded $10 trillion (Durst). The deficit problem intensified since the 2008 financial crisis.
2003-2007 Between “2003 and 2007, as house prices rose 27% nationally and $4 trillion in mortgage-backed securities were created, Wall Street issued nearly $799 billion in CDOs that included mortgage-backed securities as collateral. Collateralized debt obligations (CDOs), structured financial instruments that purchase and pool financial assets such as the riskier tranches of various mortgage-backed securities, came into existence in the first decade of this century […] The key players involved in the creation, management and sales of CDOs were Securities firms, CDO managers, rating agencies, investors, and financial guarantors who took risks but made huge profits […] CDO managers and investors are derivative folks not mortgage professionals or real estate professionals (The Financial Crisis Inquiry Report 2011-01:128).
2007 From 1978 to 2007, “the amount of debt held by the inancial sector soared from $3 trillion to $36 trillion, more than doubling as a share of gross domestic product. The very nature of many Wall Street irms changed—from relatively staid private partnerships to publicly traded corporations taking greater and more diverse kinds of risks (The Financial Crisis Inquiry Report 2011-01).” “Money washed through the economy like water rushing through a broken dam. Low interest rates and then foreign capital helped fuel the boom. Construction workers, landscape architects, real estate agents, loan brokers, and appraisers proited on Main Street, while investment bankers and traders on Wall Street moved even higher on the American earnings pyramid and the share prices of the most aggressive inancial service irms reached all-time highs. Homeowners pulled cash out of their homes to send their kids to college, pay medical bills, install designer kitchens with granite counters, take vacations, or launch new businesses. They also paid off credit
cards, even as personal debt rose nationally. Survey evidence shows that about 5% of homeowners pulled out cash to buy a vehicle and over 40% spent the cash on a catchall category including tax payments, clothing, gifts, and living expenses. Renters used new forms of loans to buy homes and to move to suburban subdivisions, erecting swing sets in their backyards and enrolling their children in local schools (The Financial Crisis Inquiry Report 2011-01:5).” . Overall mortgage indebtedness in the United States climbed from $5.3 trillion in 2001 to $10.5 trillion in 2007. The mortgage debt of American households rose almost as much in the six years from 2001 to 2007 as it had over the course of the country’s more than -year history. The amount of mortgage debt per household rose from $91,500 in 2001 to $149,500 in 2007 (The Financial Crisis Inquiry Report 2011-01:6).”
2006 Home sales volume started to increase, and average home prices nationwide climbed, rising 67% in eight years by one measure and hitting a national high of $227,100 in early 2006. (The Financial Crisis Inquiry Report 2011-01:5).”
2006 On the eve of the crisis in 2006, financial sector proits constituted 27% of all corporate proits in the United States, up from 15% in 1980 (The Financial Crisis Inquiry Report 2011-01: xvii).”
2005 Paul McCulley, a managing director at PIMCO, one of the nation’s largest money management firms, told the Commission that he and his colleagues began to get worried about “serious signs of bubbles”. They therefore sent out credit analysts to 20 cities to do what he called “old-fashioned shoe-leather research,” talking to real estate brokers, mortgage brokers, and local investors about the housing and mortgage markets. They witnessed what he called “the outright degradation of underwriting standards,” McCulley asserted, and they shared what they had learned when they got back home to the company’s Newport Beach, California, headquarters. “And when our group came back, they reported what they saw, and we adjusted our risk accordingly,” McCulley told the Commission. The company “severely limited” its participation in risky mortgage securities (The Financial Crisis Inquiry Report 2011-01: 4).”
2005 Convinced that we lived in a less risky world former Federal Reserve governor and National Economic Council director under President George W. Bush Lawrence Lindsey encouraged any rational investor to respond to a less risky world by laying on more risk. The US played with an asymmetric policy that allowed for unfettered, unregulated markets and mortgages and unrestrained growth. If there was a glitch the Treasurer cushioned the impact. (The Financial Crisis Inquiry Report 2011-01: 133).” suggested this could be a “moral hazard.”: “Did the policy encourage investors and financial institutions to gamble because their upside was unlimited while the full power and inluence of the Fed protected their downside (at least against catastrophic losses)? Greenspan himself warned about this in a 2005 speech, noting that higher asset prices were “in part the indirect result of investors accepting lower compensation for risk” and cautioning that “newly abundant liquidity can readily disappear.” Yet the only real action would be an upward march of the federal funds rate that had begun in the summer of 2004, although, as he pointed out in the same 2005 speech, this had little effect. And the markets were undeterred (The Financial Crisis Inquiry Report 2011-01: 133).”
2004 Synthetic CDOs, such as Goldman Sachs’s Abacus 2004-1 deal, were complex paper transactions involving credit default swaps (The Financial Crisis Inquiry Report 2011-01:144).”
2004 A new debt clock was installed at West 44th Street and Avenue of the Americas (Durst).
2000-2003 The Federal Reserve cut interest rates early in the new century and mortgage rates fell, home refinancing surged, climbing from $460 billion in 2000 to $2.8 trillion in 2003, allowing people to withdraw equity built up over previous decades and to consume more, despite stagnant wages (The Financial Crisis Inquiry Report 2011-01: 4).”
2002The debt clock was switched back on (Durst).
2000 During the 1990s the US prospered, the US national debt slowly decreased. The debt clock was temporarily switched off in 2000 (Durst).
1989-02-20 The US national debt was c. $3 trillion. Seymour Durst conceived and installed the first National Debt Clock to call attention to the soaring debt and each family’s share of it. The original Durst clock was installed on Sixth Avenue and 42nd Street(Durst).
1980s Federal Reserve chairman Alan Greenspan championed deregulation and reliance on self-regulation by financial institutions. Deregulation was argued by Greenspan to raise the level of competitiveness, increase productivity and efficiency and therefore lower prices. For 30 years until the crash in 2007, deregulation was supported by successive administrations and Congresses, and actively pushed by the powerful inancial industry at every turn, had stripped away key safeguards, which could have helped avoid catastrophe. This approach had opened up gaps in oversight of critical areas with trillions of dollars at risk, such as the shadow banking system and over-the-counter derivatives markets. In addition, the government permitted inancial irms to pick their preferred regulators in what became a race to the weakest supervisor (The Financial Crisis Inquiry Report 2011-01: xvii).” “Between 1978 and 1980, Congress and President Carter approved deregulation of airlines, trucking, and railroads. Carter aide Mary Schuman played a crucial role in bringing about airline deregulation. For all the market talk that surrounded transportation politics before and after 1980, however, officials of the American state had been and remained the principal agents creating those markets (Rose et al. 2006.)”
1971 The first comprehensive proposal to deregulate a major industry in the United States, transportation, originated in the Richard Nixon Administration and was forwarded to Congress.
1970s Deregulation gained momentum, influenced by research at the University of Chicago and the theories of Ludwig von Mises, Friedrich von Hayek, and Milton Friedman, among others. Presidents Nixon, Ford, and Carter sought to deregulate transportation with a view toward reversing “stagflation.” (Rose et al. 2006.)
1960s President Johnson sought broad deregulation of rail, truck, and airline firms. Johnson wanted another device to “fine tune” the economy. (Rose, Mark H. Bruce E. Seely, and Paul F. Barrett. 2006. Railroads, Trucks, Airlines, and American Public Policy in the Twentieth Century.)
1917 The US Congress enacted a debt ceiling.
Webliography and Bibligraphy
Angelides, Phil; et al. 2011-01. The Financial Crisis Inquiry Report” Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States. Official Government Edition. The Financial Crisis Inquiry Commission. Pursuant to Public Law 111-21.
Rose, Mark H. Bruce E. Seely, and Paul F. Barrett. 2006. Railroads, Trucks, Airlines, and American Public Policy in the Twentieth Century.
June 19, 2011
There is a high degree of uncertainty in predicting future commodity prices that baffles those engaged in monetary policies, academics, economists, and the everyday consumer.
High frequency trading (see Direct Edge 2005-) using proprietary algorithmic trading programs accounted for over 25% of all shares traded by the buy side by 2009. In 2009 73% of US equity trading volume was attributed to the activities of a small number of high-frequency trading firms, including divisions of Goldman Sachs and UBS but many more obscure, startup firms (with only 12-100 employees) such as Archelon, EWT Trading, Getco and Peak6 (Heires, Katherine. 2009-07-20Code Green: Goldman Sachs & UBS Cases Heighten Need to Keep Valuable Digital Assets From Walking Out The Door. Millions in Trading Profits May Depend On It Securities Industry News). The entire event/analysis/action cycle has been reduced for traders with the fastest machines to a few milliseconds. Fast computing not rational decision-making counts. Arnuk and Saluzzi (2009) call these activities toxic trade and claim that the high frequency trader seize the best deals at the expense of real investors whose machines are not as fast.
NYSE specialists no longer provide price stability. With the advent NYSE Hybrid, specialist market share has dropped from 80% to 25%.
There is a saturation of equity quotes with the entire event/analysis/action cycle has been reduced for some traders to a few milliseconds.
CQS Capacity (Quotes per Second) capacity was increased was increased by 33% to 1 million quotes/second on July 4, 2010 and on July 5th there was a micro-burst of activity. July 5th was 33% more active than any trading day in history.] CQS is already planning to increase capacity an additional 25% in October 2011. How long before that limit is hit ? We think it will be hit the very next trading day. If 3 years ago someone told us that equity quote traffic rates for NYSE, AMEX and ARCA issues would exceed 1 Million/second (not even counting Nasdaq stocks), we would have thought the market would have entered the greatest bull or bear market ever known. Instead, you can’t even recognize from a 1 minute chart where these bursts of out-of-control quote traffic rates occur. And when they do occur, a significant percentage of those quotes will have already expired before they even leave the exchange network. At these rates of growth, we will no longer have a diversity of trading participants with accurate market data, and regulators will have no hope of ever piecing together what happened after the next disaster. It took the SEC five months just to assemble equity data to analyse the flash crash [of May 6, 2010]. When the next disaster strikes, they will have to contend with 5 to 10 times more data (“Equity Quote Saturation” Nanex).”
“The market itself creates events in the form of imbalances of supply and demand that could be of value to traders who are fast enough to respond to them. There is no doubt that being faster than others entails private advantage, but is it socially beneficial? The first mover in the case of fundamental news imposes costs on other traders, and high adverse selection costs could cause market failure. The fast traders that take advantage of market events could provide valuable liquidity to those seeking immediacy and hence enhance market quality, but could also step ahead of large orders in the book, thereby imposing costs on other liquidity providers (as described in the specialist context by Seppi (1997)) (Hasbrouck, Joel; Saar, Gideon. “Low-Latency Trading“. p. 1. Retrieved 18 July 2011).”
Canadian-born, Harvard-educated economist Dean of the University of Toronto’s Rotman School of Management, Roger L. Martin argued in his publication entitled Fixing the Game: How Runaway Expectations Broke the Economy, and How to Get Back to Reality (2011-05) “The mayhem in our capital markets is ultimately the unfortunate effect of tightly tying together two different markets: the real market and the expectations market.” In her article printed in The Atlantic Lane Wallace (2009-07-07) admired Martin’s use of an easy-to-understand football analogy to explain how flawed economic theories about compensation and investment contributed to the 2008 melt-down on Wall Street. I have been unable to find the original Financial Times article to which Wallace referred but Martin has used the example of the New England Patriots’ stellar 16-0 record in their 2007 winning streak in Fixing the Game (2011) and this section is posted on Huffington Post. In it Martin explained how MVP Quarterback Tom Brady, the head coach and the team’s superlative 2007 performance was perfect even in measurable “real” terms. He uses Brady’s real performance value as an analogy for real stock market values and real embodied customers. He contrasts this with the speculators’ expectations market based on the point spread. The Patriots’ performance for example was only mediocre because the Patriots covered the point spread only ten times. Martin explained that “In betting vernacular, a favored team covers the spread when it wins the game by more than the point spread. In this case, the point spread is the moral equivalent of the stock price, in that it captures the consensus expectations of all bettors (Huffington Post).” Martin argued that it is impossible to meet bettors’ expectations forever and expectations grow to unattainable levels in both football and the stock market. In “American capitalism, CEOs are compensated directly and explicitly on how they perform against the point spread; that is, against expectations (Martin 2011 cited in Huffington Post).” And CEOs increasingly focus on managing share price over the short run something that is easier to manipulate. Shareholders are better off however when the focus of their investment managers is on the long term, on increasing share price more or less forever. In this horse-race spread-covering betting scenario, the interests of shareholders and executives are not aligned.
In 2009 (Stiglitz Commission 2009).” warned that financial speculation exacerbated the mortgage meltdown, the phenomenal increase in the price of energy including oil. As the price of energy increases countries’ purchasing power decreased. “The transfer of income from those who suffered from these price increases to those who benefited weakened global aggregate demand and contributed to the global imbalances which played an important role in the crisis (Stiglitz Commission 2009).”
There are those who claim that perceptions not realities create oil prices (Dicker 2011:309). He argued that the illogical outcome of BP disaster (the decrease in the price of oil when the supply was less than demand) is another example of the way in which oil markets and prices are influenced by quick analysis of traders and investors looking to benefit from a well-placed bet not by legitimate changes in fundamental supply.
While gurus such as Bernstein (2000) argue that gambling is for anyone but speculation is for professionals, the chaos and unpredictability of the current global economy have been linked to a growing culture of gambling in futures trading rather than level-headed professionalism. Gamblers create risk simply by placing a bet; professional speculators “transfer risk from the hedgers to the speculators” and it therefore called risk management instead of gambling.
“It rained last night so the price of soy beans will be down today.” Although the basis of fundamental analysis in economics is supply and demand, the actual fundamental analysis of specific markets that might generate accurate price predictions are complicated as numbers of factors overlap and massive quantities of data need to be considered. The simple equation involves how much of a commodity or service are buyers willing to pay at a given time and place. There used to be a correlation between price and consumption. Factors that impact on price of commodities include the state of the economy (local, regional, national and international – inflationary, recessionary with rising or falling employment), availability of alternate products or services, storage possibilities, weather, seasonality, price cycles, price trends, government subsidies, political influences, protectionist attitudes, international tensions, fear of war, hoarding, stockpiling, demand for raw materials (sugar, petroleum, copper, platinum, coffee, cocoa), currency fluctuations, health of the economy, level of unemployment, housing starts. Most technical systems are not effective in making traders money.
In examining implications regarding monetary policies the US Federal Reserve Board theoretical analyses often focus on: “commodity prices and inflation, the role of labor costs in the price-setting process, issues arising from the necessity of making policy in real time, and the determinants and effects of changes in inflation expectations (Bernanke 2008-06-09).”
While some argue that “policymakers care only about expected economic outcomes and not the uncertainty surrounding those outcomes” Pesenti and Groen claim that policymakers are concerned about the risks to their projections as well as the projections themselves (Pesenti and Groen 2011-03)?” Should and how does this affect the way in which policies are made?
Selected Timeline of Critical Events
2011-08-09. “In recent days, the high-frequency operation at Tradeworx Inc., a Red Bank, N.J. firm, juggled its largest daily volumes since its 2009 launch, resulting in some of its most profitable days on record, according to its founder, Manoj Narang. The reason: High-speed firms’ profits are highly correlated with increased volatility in the market. The more stock are rising and falling, the better they are able to make profits on the difference between buy and sell prices. A gauge of volatility, the Chicago Board Options Exchange Volatility Index, or VIX, rose more than 100% from Aug. 1 to Aug. 8. (Patterson, Scott. 2011-08-09. “High Frequency Traders Win in Market Bloodbath.” Wall Street Journal Blog Marketbeat.)”
2011-08-13 ANDREW ROSS SORKIN: “[T] he issue of what’s called high-frequency trading and electronic trading that she just mentioned is absolutely right. The reason why you’re seeing these huge gains and huge losses is because there are people who are making these decisions based on the headlines, but then there are computers, there’s machines that are effectively taking over and exacerbating the ups and the downs, because what they’re looking to do is — these are machines with algorithms that are looking to pick up pennies, lots of pennies in many instances. But they’re looking for one stock to go up and one stock to go down, and they see different correlations. And that’s really exacerbating the big moves in volatility we’re seeing in the stock market these days.” CATHERINE MANN: [The] ordinary investor, the person on Main Street is affected by these gyrations. [The ordinary investor] feels a disconnect between the big profits that some Wall Street, the big financials or non-financials companies get by trading on this high frequency and the ups and the downs, and the average person on Main Street. “The disconnect there has been there for a while. It’s been worsened because of the lack of credit being extended to Main Street, as — as — even though the banks have gotten better, in better shape, they have not extended any credit to Main Street. And so that disconnect is worse. And they really feel like Wall Street is out to get them. And they’re probably right about that (“Uncertainty, Computerized Trading Fuel Wall Street’s Wild Ride.”)
2011-07-07 Melloy, John. 2011-07-07. “New Way High-Speed Traders Get Edge on Investors.” Fast Money. CNBC.com
2011 High-frequency trading firms using high-frequency techniques (software-based mechanisms: high frequency algorithmic trading) earned $12.9 billion in profit in the last two years (2009-2011), according to TABB Group, a specialist on the markets.
2011-07-18 The price of gold climbed to c.”$1604 an ounce, putting the precious metal on track for a 10th-straight rise and another record settlement. The U.S. dollar strengthened against the euro but declined versus the yen. Crude-oil prices fell below $95 a barrel (Wall Street Journal).”
2011-07-10 Anderlini, Jamil. “Trade data show China economy slowing.” “In a sign that industrial activity in the country was moderating, imports of key commodities like crude oil, aluminium and iron ore all fell in June from a month earlier. Crude oil imports fell to the lowest level in eight months and were down 11.5 per cent from the same month a year earlier and, while copper imports rebounded in June, they were significantly down on 12 months ago.”
2011-07-08 U.S. stocks slumped. Crude-oil futures fell 2.9% and traded just below $96 a barrel (Wall Street Journal).
2011-07-04 “Speculators unburned.” The Economist. Oil traders are free to bid for it. And it seems they did. The Department for Energy says its auction was heavily oversubscribed with bids from more than 90 parties. For reference, there are 148 refineries in America, but most are owned by a few major players such as Exxon, who would do the actual bidding. Traders who anticipate the oil price will rise, and have the capacity to store oil, can buy physical stocks now, and sell oil forward. As long as the price rises enough to cover storage costs, they will turn a profit. If a trader was able to purchase West Texas Intermediate—the oil held in America’s Strategic Petroleum Reserve (SPR)—at the spot price on June 24th, they would already be sitting on a tidy profit.
2011-07-04 Capacity (Quotes per Second) CQS capacity was increased by 33% to 1 million quotes/second. On July 5th, 2011 there was a micro-burst of activity: 33% more active than any trading day in history (Nanex Research).
2011-06-27 “The London Stock Exchange (LSE.L) has launched a super-fast trading service in its latest bid to court more business from high-frequency trading (HFT) firms.” (Jeff, Luke. 2011-06-27. “LSE makes latest high-frequency move.” London:Reuters.
2011-06 “A recent report produced by a joint advisory committee of the SEC and the Commodity Futures Trading Commission urged the SEC to work with the Financial Industry Regulatory Authority and the exchanges “to develop effective testing of sponsoring broker-dealer risk management controls and supervisory procedures.The concern from Washington prompted a group of 12 brokerages to collaborate on a set of risk guidelines intended for adoption across the industry. Working under the aegis of FIX Protocol Limited, the group recently published a checklist of 13 risk controls it hopes will deter the acceptance of orders that might disrupt the marketplace. FIX Protocol is a pan-industry group that promotes and supports electronic trading through the ubiquitous FIX communications standard. The guidelines devised by the members of the FPL Risk Management Working Group focus strictly on algorithmic and direct-market-access orders for cash equities. The members include the nine largest trading firms, which account for the vast majority of industry orders (“New Checks Unlikely to Satisfy SEC.” Traders Magazine).”
2011-06-28 “Futures advanced a second day as Brent crude oil climbed. Gasoline and heating oil rose as crude and equities gained and the dollar weakened against the euro.”(Powell 2011-06-28).
2011-06-23 In its commitment to keep oil markets well-supplied the Paris-based International Energy Agency (IEA) announced that the 28 IEA member countries for the third time in the IEA history, they would release 60 million barrels of oil (2 million barrels of oil per day from their emergency stocks over an initial period c. June-July 15) to offset the ongoing disruption of oil supplies from Libya. By May 30 132 mb of Libyan light, sweet crude oil was not available to the market and analysts expect this to continue through 2011. This supply disruption has been underway for some time and its effect has become more pronounced as it has continued. The normal seasonal increase in refiner demand expected for this summer will exacerbate the shortfall further. Greater tightness in the oil market threatens to undermine the fragile global economic recovery (International Energy Agency 2011-06-23).
2011-06-16 Fletcher, Sam. “Energy prices tumble; Brent-WTI spread at 3-month low.” PennEnergy- Energy News. West Texas Intermediate to “the weakest level” since March, said Olivier Jakob at Petromatrix, Zug, Switzerland. In Houston, analysts at Raymond James & Associates Inc. said the European debt crisis and continued worries of a weakening US economy …
2011-06-15 Britain’s top banks will have to protect their retail business from investment banking activities (casino banking) after “the government backed a plan to overhaul the industry and shield taxpayers from future losses (more).” See Financial Times also.
2011 Debates in the UK on how to make our financial institutions safer include ring-fencing utility operations from casino banking, new capital requirements and living wills. Megabanks (Barclays, Lloyds, RBS and Santander) were rescued by taxpayers as well as through worsening savings and loan rates. Read more: http://www.thisismoney.co.uk/money/article-2004841/SUNDERLAND-ON-SATURDAY-Banks-need-customers-queue.html#ixzz1QbQ38DAGSee Sunderland “The scale of the taxpayer bailout of the banking system has led to lengthening dole queues and severe cuts to public spending (more).”
2011 Megabank Barclays was ordered by the Financial Services Authority to pay a fine of £7m and to repay up to £60m to mainly elderly customers who had been duped into gambling their savings on the stock market. Read more
2011-06-17 In the Alberta oil sands, oil prices tripled from their 2009 lows. Drilling activity was on the upswing. Unemployment was falling and oilsands investment was surging (Read more)
“When you see oil prices spiking by $2, $3 or $5 a day, that’s not a situation Alberta wants to be in because it’s not driven by (market) fundamentals, it’s being driven by speculators”.
2011-05-02 through 2011-05-07 The price of silver dropped 25% in just four trading days.
2011-04 Investors pushed the price of silver up 57% in 2011 before a massive correction started on May 2, 2011.
2011-03 In the wake of the U.S. real estate collapse, declining returns in the bond market, worries about a global slowdown and fears that after a nice run, equities have nowhere to go but down, big hedge funds and other sophisticated market pros have been loading up on cotton, corn, soybean oil and other soft commodities. Milner, Brian.
2011-03. “Soaring commodity prices at mercy of demand – from speculators.” Globe and Mail.
2011-03 A rally in commodity prices resurrected inflationary threats (Pesenti and Groen 2011-03).
2011-01-12 American International Group, which received a massive bailout in 2008, claimed it expected to complete a recapitalization that would allow it to fully pay back the government (more).
2011-02 Coffee prices: In New York, the benchmark May futures contract hit $2.784 a pound, their highest level since $3.40 in 1977, an all-time record. During the past 12 months alone, those prices rose by 145%. Last week the International Coffee Organisation said the price had hit a 14-year high. By July 2011 “Coffee futures are up 53% over the past year, although the front-month contract for July delivery fell 1.9%, or 4.8 cents, in Friday to close at $2.5255 a pound.”
2011-06-01 Investors should prepare for renewed swings in prices of commodities (oil, natural gas, orange juice) “swings expected after weather forecasters predicted a busy Atlantic hurricane season.” Blais 2011-06-01 .” Financial Times. London.
2010-12 From 1977-2010 the compound annual sharehold value continues to decrease compared to pre-shareholder-value era (1933-1977) (Martin 2011 cited in Huffington Post).” Companies tend to boost earnings per share without creating value but gross-margin return on inventory investment drives longer term value creation. CEOs need to be held accountable for long-term performance by linking compensation to such metrics as multiyear stock performance. see Lek.
2010-09 Investment banker multimillionaire 59-year-old American Bob Diamond was appointed as head of Barclays megabank raising concerns that the Treasury should separate traditional retail banking from casino banking. Casino banking can lead to potential massive profits or loss depending on the level of risk of investments. Vince Cable: “Diamond, with his £20m bonuses, is the unacceptable face of this bonus-driven banking,” Oakeshott said. “This highlights the need to break-up and de-risk the British banking system.” Barclays appointment highlights ‘casino’ banking fears Business secretary says Barclays’ appointment of Bob Diamond illustrates dangers of having retail banks with massively profitable investment arms attached to them.
2010—08-16 The CFTC sanctioned ConAgra Trade Group, Inc. (CTG) $12 Million for causing a non-bona fide price to be reported in the NYMEX Crude Oil futures contract. On January 2, 2008, CTG was the first to purchase NYMEX crude oil futures contracts at the then-historic price of $100. As a result of CTG’s effort to be the first to trade at the $100 level, CTG caused a non-bona fide price to be reported, according to the CFTC order. (CFTC Press Release 5873-10, August 16, 2010) (more).
2010-07-21 President Obama signed the Dodd-Frank financial regulatory bill. “Title VII of the Dodd-Frank Act amends the Commodity Exchange Act to establish a comprehensive new regulatory framework for swaps and security-based swaps. The legislation is enacted to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: 1) providing for the registration and comprehensive regulation of swap dealers and major swap participants; 2) imposing clearing and trade execution requirements on standardized derivative products; 3) creating robust recordkeeping and real-time reporting regimes; and 4) enhancing the Commission’s rulemaking and enforcement authorities with respect to, among others, all registered entities and intermediaries subject to the Commission’s oversight. On the same day, the CFTC releases a list of 30 areas of rulemaking to implement the Dodd-Frank Act. (CFTC Press Releases 5855-10 and 5856-10, July 21, 2010) (more). The Dodd-Frank Act included the Volcker Rule which requires that “regulators implement regulations for banks, their affiliates and holding companies, to prohibit proprietary trading, investment in and sponsorship of hedge funds and private equity funds, and to limit relationships with hedge funds and private equity funds. Non-bank financial institutions supervised by the Fed also have restrictions on proprietary trading and hedge fund and private equity investments. The Council will study and make recommendations on implementation to aid regulators (more).”
2010-05-24 A YouTube video of High Frequency Trading explained by William Arnuk, the 13-year-old son of Sal Arnuk, who works for the HFT research firm, Themis Trading.
2010-05 With the flow from BP’s Deepwater Horizon huge oil spill unstaunched both stock and oil markets crashed with the brunt of the losses in the energy sector. Oil prices fell. (Dicker 2011:305).
2010—05-06 Major stock indexes and stock index futures experience a “flash crash”, a brief but severe drop in prices, falling more than 5% in a matter of minutes, only to recover a short time later. Dow Jones industrials fell roughly 900 points, only to quickly recover. Some individual securities experience more volatility than the stock indexes. (Statement by SEC and CFTC, May 6, 2010). (more) The joint CFTC/SEC report on the “flash crash” of May 6, 2010, examined the role of high-frequency trading in this extreme episode (U. S. Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission, 2010). Whether or not a single large order caused the “flash crash” in May 2010, as the Securities and Exchange Commission has alleged that a single large order may have caused the crash and has placed pressure on brokers to make sure they don’t toss any oversize or out-of-control orders into the market (Traders Magazine). “The regulators’ official October report on the 15-minute plummet in the Dow Jones Industrial Average on May 6, 2010, blamed a liquidity crisis that followed a bad trade in S&P 500 futures. Officials have since taken action to prevent a similar catastrophe by instituting circuit breakers that halt individual stocks in the S&P 500 after a 10 percent move (Melloy 2011-07-07).”
2010—04-06 It took $20 trillion of public funds over a period of two-and-a-half years to lift the total world market capitalization of listed companies by $16.4 trillion. This means some $3.6 trillion, or 17.5%, had been burned up by transmission friction. Government intervention failed to produce a dollar-for-dollar break-even impact on battered markets, let alone generate any multiplier effect, which in normal times could be expected to be between nine and 11 times. In the meantime, with the exception of China’s, the real global economy continues to slide downward, with rising unemployment and underemployment. The massive government injection of new money managed to stabilize world equity markets by January 2010, but only at 73.5% of its peak value in October 2007. It still left the credit markets around the world dangerously anemic and the real economy operating on intensive care and life support measures from government. This is because the bailout and stimulus money failed to land on the demand side of the economy, which has been plagued by overcapacity fueled by inadequate workers’ income, masked by excessive debt, and by a drastic reversal of the wealtheffect on consumer demand from the bursting of the debt bubble. The bursting of the debt bubble destroyed the wealth it buoyed, but it left the debt that fueled the bubble standing as liability in the economy. Much of the new government money came from adding to the national debt, which taxpayers will have to pay back in future years. This money went to bail out distressed banks and financialinstitutions, which used it to profit from global “carry trade” speculation, as hot money that exploited interest rate arbitrage trades between economies. The toxic debts have remained in the global economy at face value, having only been transformed from private debts to public debts to prevent total collapse of the private sector. The debt bubble has been turned into a dense debt black hole of intense financial gravity the traps all light from appearing at the end of the recovery tunnel.(Lui, Henry C.K. 2010—04-06. “Bailouts, Stimulus Packages and Jobless Recovery: The Crisis of Wealth Destruction. Part I).”
2010-04-20 BP’s Deepwater Horizon rig caught fire resulted in oil spill.
2010-03 Michael Lewis published his book entitled The Big Short in which he returned “to his financial roots to excavate the crisis of 2007–2008, employing his trademark technique of casting a microcosmic lens on the personal histories of several Wall Street outsiders who were betting against the grain—to shed light on the macrocosmic tale of greed and fear.” “Lewis is a capable guide into the world of CDOs, subprime mortgages, head-in-the-sand investments, inflated egos–and the big short.” Lewis provides “a savvy assessment of the wisdom of the financial bailout and where-are-they-now updates on the book’s various heroes and villains.” (more)
2010—01-14 The “CFTC votes at an open meeting to publish in the Federal Register a proposal to set position limits for futures and option contracts in the major energy markets. (CFTC Press Release 5771-10, January 7, 2010) (more).”
2010-01 Organizations “representing the electric and natural gas industries and serving nearly all energy customers in the United States, support the goals of the Administration and Congress to improve transparency and reduce systemic risk in over-the-counter (OTC) derivatives markets. As the Senate considers financial reform legislation, [they argued] that it preserve the ability of companies to access critical OTC energy derivatives products and markets. engaged in off-market trading for oil which is unregulated. Estimates for the OTC derivative market for all assets range upward of $600 trillion. See (Edison Electric Institute (EEI). 2010-01. “OTC Derivatives Reform: Energy Sector Impacts.”).
2009-12-17 “Automated market makers (AMM) co-locate their servers in the NASDAQ or the NYSE building, right next to the exchanges’ servers. AMMs already have faster servers than most institutional and retail investors. But because they are co-located, their servers
can react even faster.” “According to Traders Magazine the number of firms that co-locate at NASDAQ has doubled over the last year (Arnuk, Sal L.; Saluzzi, Joseph. 2009-12-17. “Toxic Equity Trading Order Flow on Wall Street: The Real Force Behind the Explosion in Volume and Volatility.” A Themis Trading LLC White Paper.)
2009-10-08 “High Frequency Trading Technology: a TABB Anthology.” TABB reported that software capable of electronic routing and execution based on algorithms account for more than 25% of all shares traded by the buy side today. A relatively few high frequency proprietary trading firms experienced a meteoric rise and now wield far greater influence on the markets today than most people recognize.
2009-10-30 Market analysts argued that oil markets were no longer tied to supply and demand fundamentals. They were concerned with the extremely high correlation between crude oil prices and US currency (“Flood 2009-10-30).
2009-08-06 Computer-based algorithmic programs carry out transactions in 400 microseconds which is 1000 times faster than the human eye. Few ordinary investors are aware of or have access to this frenetic, technology-driven world of high-frequency trading which accounted for 50% of daily volume in US stocks, up from estimates of 30 per cent in 2005 (Mackenzie, Michael; Grant, Jeremy. 2009-08-06. “The dash to flash.” Financial Times.)
2009-07-20. Goldman Sachs and UBS filed charges against former employees they allege stole proprietary computer code key to their high-speed trading programs, now the most tactical and strategic weapons on Wall Street (Heires, Katherine. 2009-07-20Code Green: Goldman Sachs & UBS Cases Heighten Need to Keep Valuable Digital Assets From Walking Out The Door. Millions in Trading Profits May Depend On It Securities Industry News).”
2009-03 UBS filed papers “charging three ex-employees with “misappropriation of trade secrets,” specifically the misappropriation of 25,000 lines of source code for the firm’s high-speed, algorithmic trading programs (Heires, Katherine. 2009-07-20Code Green: Goldman Sachs & UBS Cases Heighten Need to Keep Valuable Digital Assets From Walking Out The Door. Millions in Trading Profits May Depend On It Securities Industry News).”
2009-07-03. Goldman Sachs brought charges “against a former vice president for equity strategy and computer programmer on July 3 for allegedly copying 32 megabytes of the bank’s trading codes and uploading them to an encrypted server before sending them to a home computer and other
devices (Heires, Katherine. 2009-07-20Code Green: Goldman Sachs & UBS Cases Heighten Need to Keep Valuable Digital Assets From Walking Out The Door. Millions in Trading Profits May Depend On It Securities Industry News).”
2009-06 Signs of an approaching global economic recovery re-emerged (Pesenti and Groen 2011-03).
2009-06-28 Evans-Pritchard, Ambrose. “China’s banks are an accident waiting to happen to every one of us.
Fitch Ratings warned that China’s banks have lent up to $1,000bn (£600bn) since December 2008. “Money is leaking instead into Shanghai’s stock casino, or being used to keep bankrupt builders on life support.” This does not help the world economy.
2009-06-26 “The Iraq War and other events which helped set off an increase in the price of oil had a further depressing effect on countries which import energy, including the U.S. The magnitude of the increase in energy prices was exacerbated by financial speculation. This change in the price of energy, accompanied by governments’ attempts to develop alternative bio energy sources contributed to higher food prices. The sharp increase in energy prices thus directly and indirectly brought further reductions in purchasing power within many countries. The transfer of income from those who suffered from these price increases to those who benefited weakened global aggregate demand and contributed to the global imbalances which played an important role in the crisis (Stiglitz Commission 2009).”
2009-05 During “an annual conference of the Securities Industry and Financial Markets Association, top executives from Direct Edge and the NYSE angrily debated the merits of flash orders. Flash orders are a type of high frequency trading. Institutional paying participants get a flash peek at prices before they are released to the broader, public market (more).”
2009-03-24 The Federal Reserve, working closely with the Treasury, made the decision to lend to AIG on September 16, 2008. It was an extraordinary time. Global financial markets were experiencing unprecedented strains and a worldwide loss of confidence. Fannie Mae and Freddie Mac had been placed into conservatorship only two weeks earlier, and Lehman Brothers had filed for bankruptcy the day before. We were very concerned about a number of other major firms that were under intense stress. AIG’s financial condition had been deteriorating for some time, caused by actual and expected losses on subprime mortgage-backed securities and on credit default swaps that AIG’s Financial Products unit, AIG-FP, had written on mortgage-related securities. As confidence in the firm declined, and with efforts to find a private-sector solution unsuccessful, AIG faced severe liquidity pressures that threatened to force it imminently into bankruptcy (more). Claims of bondholders and counterparties were paid at 100 cents on the dollar by taxpayers, without giving taxpayers the rights to the future profits of these institutions. Benefits went to the banks while the taxpayers suffered the costs (more).
2009-02-03 The “U.S. government announced a restructuring of a bailout plan for the troubled insurer American International Group Inc. Monday, extending $30 billion in additional aid to the company. News of the additional funds came as AIG, once the world’s largest insurer, said it lost $61.7 billion in the fourth quarter, the biggest quarterly loss in U.S. corporate history, amid continued financial market turmoil.”
2008-10-18 The President of the United Nations General Assembly, “Miguel D’Escoto Brockmann, announced his intention to establish a taskforce of experts to review the workings of the global financial system, including major bodies such as the World Bank and the IMF, and to suggest steps to be taken by Member States to secure a more sustainable and just global economic order (http://www.un.org).” Noted economist and Kerala State Planning Board Vice-Chairman Prabhat Patnaik was included in a four-member high-power task force of the United Nations (U.N.) to recommend reforms of the global financial system. The task force Commission of Experts on Reforms of the International Monetary and Financial System (2009), informally known as the Stiglitz Commission, was headed by Nobel Prize-winning economist Joseph Stiglitz.
2008 Morgan Stanley and Goldman Sachs, the last two investment banks left standing, announced they would become traditional bank holding companies, marking the end of an era for Wall Street (more).
2008-09-16 American International Group, Inc. (AIG) (NYSE: AIG), an American insurance corporation, suffered a liquidity crisis following the downgrade of its credit rating. “The Federal Reserve, working closely with the Treasury, made the decision to lend to AIG on September 16, 2008. It was an extraordinary time. Global financial markets were experiencing unprecedented strains and a worldwide loss of confidence. Fannie Mae and Freddie Mac had been placed into conservatorship only two weeks earlier, and Lehman Brothers had filed for bankruptcy the day before. We were very concerned about a number of other major firms that were under intense stress. AIG’s financial condition had been deteriorating for some time, caused by actual and expected losses on subprime mortgage-backed securities and on credit default swaps that AIG’s Financial Products unit, AIG-FP, had written on mortgage-related securities. As confidence in the firm declined, and with efforts to find a private-sector solution unsuccessful, AIG faced severe liquidity pressures that threatened to force it imminently into bankruptcy (more).”
2008-07 2008 Lehman Brothers failed. Bubble popped and money fled from oil investment. Trading value of oil dropped by 80% (Dicker 2011).
2008 Oil reached $147 a barrel (Dicker 2011).
2008-06 Federal Reserve Chairman Bernanke “singled out the role of commodity prices among the main drivers of price dynamics, underscoring the importance for policy of both forecasting commodity price changes and understanding the factors that drive those changes (Pesenti and Groen 2011-03 citing Bernanke).”
2008-04 The macroeconomic outlook changed rapidly and dramatically as the global economy experienced the near-collapse of trade volumes and the associated plunge in commodity prices was the harbinger of pervasive disinflation risks (Pesenti and Groen 2011-03).
2008 In the ten years after Born’ s 1998 proposal, the market in derivatives exploded from $27 trillion to one worth more than $ 600 trillion. By comparison, the entire U.S. economy was worth $ 14 trillion. Hirsch, Michael. 2010. Capital Offense: How Washington’s Wise Men Turned America’s Future Over to Wall Street. New Jersey: John Wiley.
2008-06 “NYSE Floor Brokers Get New Tools.” The New York Stock Exchange introduced two new technologies to give brokers on the NYSE trading floor the ability to trade algorithmically and to strengthen the brokers’ ability to locate large sources of liquidity. more
2008-06-17 Ross Levin, a Wall Street NYC hedge fund analyst with Arbiter Partners, who calls himself a “passive speculator in securities” met Lionel Lepine, a member of the Athabaskan Chipewyan First Nation whose family and friends living on the contaminated watershed upriver from the oil sands’ effluence are suffering from unprecedented numbers of cancerous tumours. Levin attended Calgary’s prominent energy investment forum and “found himself in the eye of a growing environmental storm battering Alberta’s oilsands — one of several clashes centred on the energy sector.”
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2008-04-02 – After two decades spent expanding in Britain, the United States and other developed economies, the world’s third biggest bank is shifting its ….. or if the government forces banks to separate their retail arms from investment banking, dubbed “casino banking” by some politicians. .
2008 PM Harper apologized for past treatment of Canada’s First Nations.
2008 Pollution of the Athabaskan River north of the oil sands
2008 Impatient development of nonrenewable resources in the oil sands.
2008-03-24 Reich, Robert B. 2008-03-24. Is the Game About to Stop? American consumers’ buying power was less than the goods and services the U.S. economy is capable of producing. Reich predicted fewer jobs, even less consumption which would lead to even fewer jobs and possible a recession which could become a full-fledged depression. Reich argued that fiscal and monetary policies could perhaps make up for consumers’ lack of buying power. American consumers were already deep in debt, their homes were losing value, their paychecks were shrinking.
2008 Meteoric rise of oil commodities market directly caused by irresponsible speculators playing with volatile, unpredictable hedge funds that play havoc with the market making a fortune for some while destroying economic, social and ecological environments all around them.
2008 Calgary has a high percentage of young millionaires with lots of disposable income. There are also c.4000 homeless people in Calgary, the oil capital of Canada. c. 40% of the homeless are working poor who are unable to afford housing.
2007-10-31 Meredith Whitney, an obscure analyst of financial firms for Oppenheimer Securities “predicted that Citigroup had so mismanaged its affairs that it would need to slash its dividend or go bust. It’s never entirely clear on any given day what causes what in the stock market, but it was pretty obvious that on October 31, Meredith Whitney caused the market in financial stocks to crash. By the end of the trading day, a woman whom basically no one had ever heard of had shaved $369 billion off the value of financial firms in the market. Four days later, Citigroup’s C.E.O., Chuck Prince, resigned. In January, Citigroup slashed its dividend (Lewis, Michael. 2008. The End).”
2007-08 Arnuk and Saluzzi argued in their white paper entitled Toxic Equity Trading Order Flow on Wall Street: The Real Force Behind the Explosion in Volume and Volatility” (2009-12-17) that electronic trading, the new for-profit exchanges and ECNs, the NYSE Hybrid and the SEC’s Regulation NMS all came together in unexpected ways in the late summer of 2007. This perfect storm caused the Volatility Index, [stock market volatility index (VIX) “fear gauge” measures the expectation of price movement over the next 30 days. The higher the reading, the more likely stocks are to move in one direction or another] to climb, trading volumes to increase explosively, stock prices and indexes to experience rapid change. “
This has resulted in the proliferation of a new generation of very profitable, high-speed, computerized trading firms and methods that are causing retail and institutional investors to chase artificial prices (Arnuk and Saluzzi 2009-12-17).”
2006-03-07 The merger of NYSE and Archipelago was completed forming the NYSE Group, Inc., a holding company that operates two securities exchanges: the NYSE and NYSE Arca, Inc. They are a leading provider of securities listing, trading and market data products and services (more).
2007-06-18 Wolf, Martin. 2007-06-18. “Unfettered finance is fast reshaping the global economy.” “In Rome everything is for sale.”
2007-01 “Both the switch to trading in penny increments in January 2007 and stepped-up activity by high-frequency traders have cut into dealer profits. That has made the dealers less willing to shoulder the entire burden of supporting the exchanges. Almost 90 percent of industry volume is now being traded in options subject to the “penny pilot.” With the minimum trading increment down from 5 cents to 1 cent in the most active options, competition has cut dealer spreads dramatically. “Options Market Makers Catch a Break on Fees as Customers Pick Up.” Traders Magazine
2006 “[F]lash orders – a key focus of the New York Times article, which prompted an almost instant response from politicians and regulators. Flash orders first appeared in US equity markets in 2006, with the launch of the Enhanced Liquidity Provider (ELP) programme by Direct Edge. The idea was that if an order had been sent into Direct Edge and not found a match, it would be shown to other market participants before being routed out to alternative markets, as would normally happen. In theory, more of the orders placed with Direct Edge would be filled, and more customers would have a shot at trading at the price they want (Wood, Duncan. 2009-09-04) “Murky business.” Risk magazine.” tags: Algorithmic Trading Topics: Equities, Trading
2006-2008 Mainly cautious elderly customers were ill-advised by Barclays between 2006 and 2008 to put money into high-risk investments Aviva Global Balanced Income or the Aviva Global Cautious Income funds. No one at Barclays lost jobs even though this scandal cost Barclays shareholders close to £80 million and inflicted untold damage on Barclays’ reputation. Read more
2005-12-15 NYSE Hybrid Market was launched, creating a unique blend of floor-based auction and electronic trading. NYSE Hybrid Market claimed to provide customers with more choices and greater flexibility in accessing the superior liquidity and best prices of the NYSE marketplace. In 2005, the combined dollar value of transaction volumes of the NYSE and NYSE Arca represented approximately $17.8 trillion dollars, which was greater than the value of trading of Nasdaq ($10.1 trillion), the London Stock Exchange ($5.7 trillion), the Tokyo Stock Exchange ($4.4 trillion), Euronext ($2.9 trillion) and the Deutsche Börse ($1.9 trillion) (more)
2005-06-29 70 FR 37496, 37627 Rule 603 — Distribution, Consolidation, and Display of Information with Respect to Quotations for and Transactions in NMS Stocks. “In Regulation Fair Disclosure, the SEC took the stand that firms cannot release fundamental information to a subset of investors before others. On the other hand, Rule 603(a) established a different approach to market data, whereby market centers could sell data directly to subscribers, in effect creating a tiered system of investors with respect to access to information about market events. Rule 603(a) prohibits an SRO or a broker-dealer from supplying the data via direct feeds faster than it supplies it to the Securities Industry Automation Corporation (SIAC) that processes the data and distributes the “tape.” However, the operation of processing and retransmitting data via SIAC appears to add 5 to 10 millisecond and hence subscribers to direct exchange data feeds “see” the information before others who observe the tape (more).”
2005-07-31 CEO, John Thain discussed NYSE plans to merge its floor-based trading system with a relatively new electronic market known as Archipelago creating a hybrid system that allows electronic, instantaneous and anonymous trades. Thain’s former employer, Goldman Sachs, was on both sides of the deal representing the NYSE and Archipelago. Goldman was the biggest NYSE seat holder, owned a specialist firm and 15% of Archipelago “NYSE chief: Hybrid trading system’s the way to go.”
2005Many banks operated proprietary trading units that were organized much like hedge funds. Risk exposures of the hedge-fund industry began to have a material impact on the banking sector, resulting in new sources of systemic risks (more).
2005 High-frequency trading accounted for 30% of daily volume in US stocks (Mackenzie, Michael; Grant, Jeremy. 2009-08-06. “The dash to flash.” Financial Times.)
2005 Direct Edge, a small, electronic trading company opened for business using high-frequency trading (lightning-fast computers equipped with sophisticated and powerful algorithms that are capable of executing trading strategies) and flash orders (literally flashing their orders to their own investors for about a tenth of a second before releasing it to the public market).
2005-07 S&P upgraded China’s sovereign rating by one notch to A-minus, citing China’s aggressive overhaul of its financial sector and improved profitability. China is rated ‘A2′ by Moody’s Investors Service and ‘A’ by Fitch Ratings. Liu, Henry C. K. World Trade Needs a Global Cartel for Labor (OLEC).
2005 According to one study, if the share of world trade and world gross domestic product for non-industrial countries had remained at its 2000 levels, then by 2005, real oil prices would have been 40 percent lower, and real metals prices 10 percent lower, than they actually were (Pain, Koske, and Sollie, 2006). Since 2005, continued strong growth in the demands for resources of emerging market economies have likely put further considerable upward pressure on commodity prices (Bernanke 2008-06-09). “
2004 The “demand for oil by members of the Organisation for Economic Co-Operation and Development (OECD) has been essentially flat since 2004 (Bernanke 2008-06-09). ”
2004-08-02 Revolutionary electronic trading practices transformed the stock market. The NYSE filed to expand using the NYSE Direct+® system. NYSE Direct+® eliminated limits on the size, timing, and types of orders that can be submitted via Direct+, significantly increasing the level of purely electronic trading at the NYSE.
2004 The “demand for oil by members of the Organisation for Economic Co-Operation and Development (OECD) has been essentially flat since 2004 (Bernanke 2008-06-09). “
2003 The price of oil had remained relatively stable from 1990 to 2003 when the price of oil became volatile. The price increased sixfold in five years then lost 80% of its value in 6 months (Dicker 2011:viii).
2001 There was “an overnight change in the trading patterns of the Nasdaq 100 Index which highlighted the competitive impacts of the SEC reforms and foreshadowed the dominance of the high frequency traders and all-electronic marketplaces. At the time, the ETF for the Nasdaq 100 Index (then known as the QQQ) was the most actively traded security and was primarily traded on the American Stock Exchange which utilized a manual floor-based specialist system. Using ATSs, the high frequency traders began using their efficient automated trading systems to narrow the quoted spreads in the QQQ from several pennies down to tenths of a penny, saving investors millions in the process (Traders) .”
Within months, investors voted with their feet and made the electronic markets that featured the liquidity and narrower spreads of the high frequency traders the dominant venues for the QQQ. Investors never looked back. Ultimately, the NYSE and the Nasdaq Stock Market were compelled to purchase these electronic markets that catered to high frequency traders (Archipelago was purchased by the NYSE and INET by the Nasdaq Stock Market). The traditional, uncompetitive Wall Street market maker model was replaced and the exchanges were transformed to open, fair and transparent electronic marketplaces.
2000 More than 90 foreign futures exchanges emerged with the ever-increasing demand for new financial instruments “to hedge against fluctuating interest rates, changing foreign exchange rates and institutional securities portfolios (Bernstein 2000:46).
2000 The Chicago Mercantile Exchange (CME) trades futures in livestock futures, currency futures, interest rate futures, stock index futures (Bernstein 2000:70).
1999 The most actively traded future contracts were interest rates, futures, stock index futures, energy futures, currency futures and agricultural futures (Bernstein 2000:72).
1998 Long Term Capital Management collapsed.
1998Security and Exchange Commission ruling allowed electronic communication networks (ECN’s for short) to trade equities in competition with the traditional exchanges. New technologies made the automation possible resulting in the development of high frequency trading: Lightening-quick computers, aided by powerful algorithms, buy and sell stocks based on price or other markers (more).
1998 Brooksley Born, chairman of the Commodity Futures Trading Commission declared that the unregulated regulation of private derivative contracts could “pose grave dangers to our economy.” He argued forcefully for regulation of private derivative contracts but lost to Alan Greenspan and Robert Rubin who were against policing the deals.
1990 The price of crude oil rose dramatically when Hussein invaded Kuwait.
1986 The total volume of futures contracts trading was 184 million and the T bonds were among the most actively traded future contracts (Bernstein 2000:71).
1989 Michael Lewis’ novel entitled Liar’s Poker was published. He intended to write a period piece about the 1980s in America. He had expected readers to be outraged that in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million. He expected readers to be horrified that one of the traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million. He expected readers to be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running.” Writing in 2008 he expressed dismay that Wall Street continued for another 20 years and the public were more in awe than angry. Read more: http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom#ixzz1Qd1u5MLZ
1987 The World Commission on Environment and Sustainable Development (Brundtland Commission) defined sustainable development as meeting the needs of the present without compromising the ability of future generations to meet their own needs.
1987-10-19 “The Dow Jones Industrial Average tumbled more than 20%, and the swoon extended into the following day, before a rebound. Floor traders, working by telephone, dominated the action and computer-generated trading was still in its infancy. Dark pools and high-frequency trading were the stuff of science fiction. Trading reached 600 million shares, according to the SEC (source).”
1982 Futures trading in the US was self-regulating and anyone in the business had to become a member of the National Futures Association (NFA).
1970s The Bretton Woods system broke down in the early 1970s. This was followed by a period of financial market liberalization and deregulation, by a surge of private capital flows and by the increasingly global reach of financial institutions.
1974 The US Congress passed the Commodity Futures Trading Commission Act and established Commodity Futures Trading Commission (CFTC) to protect participants in the futures market from fraud, deceit and abusive practices such as unfair trading practices (price manipulation, prearranged trading, trading ahead of a customer), credit and financial risks, and sales practice abuses (Bernstein 2000:32). Individual nation states have similar regulating bodies.
1973/4 The International Energy Agency (IEA) was founded as an autonomous organisation to ensure reliable, affordable and clean energy for its 28 member countries and beyond. The IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. The Executive Director in 2011 is Nobuo Tanaka “Total oil stocks in IEA member countries amount to over 4.1 billion barrels, and nearly 1.6 billion barrels of this are public stocks held exclusively for emergency purposes. IEA net oil-importing countries have a legal obligation to hold emergency oil reserves equivalent to at least 90 days of net oil imports. These countries are holding stock levels well above this minimum amount, currently at 146 days of net imports (http://www.iea.org)”
1972 The total volume of futures contracts trading was 18 million and the top ten most actively traded future contracts were agricultural futures (Bernstein 2000:71).
1970s There was increasing volatility in international currency exchange rates as the Bretton Woods agreement began to break down. Business people transferred risk of volatility in international markets by hedging with speculators willing to take the risk. Futures markets began to expand into foreign currencies as fluctuated wildly competing against each other and the US dollar.
1960s Futures trading, also known as commodities trading, the final frontier of capitalism, became a popular speculative and investment vehicle in the US in the 1960s (Bernstein 2000:1).
1960s Futures trading, also known as commodities trading, the final frontier of capitalism, became a popular speculative and investment vehicle in the US in the 1960s (Bernstein 2000:1). These financial instruments offer unlimited profit potential with relatively little capital. Speculators are drawn to the possibility of quick money or what I like to call impatient money. The great wealth accumulated from speculative financial instruments has spawned careers in brokerage, market analysis, computerized trading, computer software and hardware, accounting, law, advertising which themselves subdivide into more recent opportunities such as those related to risk-management.
1929-30 “As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth — not of existing wealth, but of wealth as it is currently produced — to provide men with buying power equal to the amount of goods and services offered by the nation’s economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.” Eccles, Marriner S. 1951. Beckoning frontiers: Public and personal recollections Ed. Hyman, Sidney. Alfred A. Knopf.
1919 – 1945 The Chicago Mercantile Exchange (CME) traded futures in eggs, butter, apples, poultry and frozen eggs (Bernstein 2000:70).
1865 The Chicago Board of Trade (CBOT) organized trading of futures contracts.
1848 The Chicago Board of Trade (CBOT) was formed as a price risk occurred in the grain markets of Chicago. It was a cash market for grain. Forward or “to-arrive” contracts began trading at the CBOT almost immediately.
1710 The first modern organized futures exchange began with the Dojima Rice Exchange in Osaka, Japan.The Japanese feudal landowners began to use certificates of receipt against future rice crops. As these futures certificates became financial instruments in the general economy the value of the certificates would rise and fall as the price of rice fluctuated. The Dojima Rice Exchange emerged as the world’s first futures market where speculators traded contracts for the future delivery of rice or “certificates of receipt.” The Japanese government outlawed the practice when futures contracts (where delivery never took place) began to have no relationship to the underlying cash value of the commodity leading to wild and unpredictable fluctuations (Bernstein 2000:30).
Actors and Actants
Electronic Communication Network (ECN) “An electronic system that attempts to eliminate the role of a third party in the execution of orders entered by an exchange market maker or an over-the-counter market maker, and permits such orders to be entirely or partly executed.”
High-frequency trading firms (they self-identify as Automated Trading Professionals) use high-frequency techniques (software-based mechanisms: high frequency algorithmic trading) with real-time, co-located, high-frequency (sub-millisecond) trading platform—one (data collected then orders: created-routed-executed). Wall Street banks and hedge funds also use high-frequency techniques but new (ie emerged formed in c. 1999-2001) small (most have as few as 12 to 100 employees), independent firms account for most high-frequency trading, handling 60 % of the 7 B shares that change hands daily on US stock markets on Wall Street and hedge funds. These high-frequency trading firms have formed a trade group called Principal Traders Group in an effort to hold off regulators who want to curb their activities. The members of the FIA Principal Traders Group is the industry’s response to the Joint CFTC-SEC Advisory Committee examination of the market structure and policy issues arising from the extraordinary market turmoil that occurred on May 6, 2010. See (Bowley, Graham. 2011-07-18. “ Split-second traders aim to polish image.” New York Times.) High-frequency trading firms using high-frequency techniques (software-based mechanisms: high frequency algorithmic trading) earned $12.9 billion in profit in the last two years (2009-2011), according to TABB Group, a specialist on the markets. TABB Group content focused on the business and technology issues facing US equity and options trading.
RGM Advisors, is a high-frequency trading firm in Austin, Texas. RGM CEO Richard Gorelick, is leading his company to seek a higher public profile.
Low latency Algorithmic Trading is used to process market updates and turn around orders within milliseconds. Low latency trading refers to the network connections used by financial institutions to connect to stock exchanges and Electronic communication networks (ECNs) to execute financial transactions. With the spread of computerized trading, electronic trading now makes up 60% to 70% of the daily volume on the NYSE and algorithmic trading close to 35%. Trading using computers has developed to the point where millisecond improvements in network speeds offer a competitive advantage for financial institutions. (Low latency is also being discussed in the advertising community, as a form of advertising that responds rapidly to consumer inputs, often from tweets.)
International Energy Agency (IEA) The International Energy Agency (IEA) is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. It is at the heart of global dialogue on energy, providing authoritative and unbiased research, statistics, analysis and recommendations. The IEA is committed to keeping the oil supplies well-stocked. The Executive Director in 2011 is Nobuo Tanaka “Total oil stocks in IEA member countries amount to over 4.1 billion barrels, and nearly 1.6 billion barrels of this are public stocks held exclusively for emergency purposes. IEA net oil-importing countries have a legal obligation to hold emergency oil reserves equivalent to at least 90 days of net oil imports. These countries are holding stock levels well above this minimum amount, currently at 146 days of net imports (http://www.iea.org)”
Henry C.K. Liu “is an independent commentator on culture, economics and politics. Born in Hong Kong and educated at Harvard University in architecture and urban design, Liu developed an interest in economics and international relations while pursuing interdisciplinary work on urban and regional development as a professor at UCLA, Harvard and Columbia universities. He was a planning/ development advisor to the late Winthrop Rockefeller, governor of Arkansas, and has received a national urban design award. Liu is currently the chairperson of a New York-based private investment group, a contributor to Asia Times Online and a visiting professor of global development at the University of Missouri at Kansas City. He is an occasional advisor on economic policy to several governments of emerging economies. Liu coined the term “dollar hegemony” to explain that the dollar, a fiat currency since 1971 and the major reserve currency internationally, distorts global trade and finance. Liu is a critic of central banking. He also calls for the use of sovereign credit in lieu of foreign capital for financing domestic development in developing countries. Liu has also been vocal in his critique of Chinese economic policy, which he argues includes imbalances that result in severe income disparity and environmental neglect. In a series of articles in Asia Times Online, Liu proposed the establishment of the Organization of Labor-Intensive Exporting Countries (OLEC), an international cartel, to restore the balance of market power between capital and labor in the globalized economy. He blogs at henryckliu.com. Huffington Post.”
OTC Over-the-counter derivatives markets engage in off-market trading for oil which is unregulated. Estimates for the OTC derivative market for all assets range upward of $600 trillion. See (Edison Electric Institute (EEI). 2010-01. “OTC Derivatives Reform: Energy Sector Impacts. p. 1.”). “Use of Financial Derivatives: A typical, large independent oil & natural gas exploration and production company regularly deals with volatility in oil & natural gas exploration. Such companies regularly make extensive use of financial derivatives with the discrete purpose of ensuring a stable cash flow from which they can consistently fund their capital program to find and bring much needed energy resources to market. Although they may make use of exchange-traded instruments, many of their financial transactions are concluded overthe-counter (OTC) under bilateral credit agreements. These frequently use the OTC markets for efficiency and economic reasons and allows the companies to: 1) customize the instrument specifically to operations;
2) reduce the need for cash by permitting more flexibility in the types of collateral leading to a more efficient use of capital and greater liquidity; 3) provide credit exposure diversification; and 4) have the ability to modify credit arrangements depending on a variety of factors during the term of a trade (more).”
Universal Banking Model – Investment and retail banking in one organisation. There is widespread concern that casino banking endangers security of traditional retail banking.
Webliography and Bibliography
Bernstein, Jake. 2000. How the Futures Markets Work. New York Institute of Finance.
Although it is quite old for the fast-paced risk management industry, there are certain basics that ring true. He briefly traced the history futures contracts leading to the volatile environment where agricultural futures were replaced by the less predictable currency markets. Of course, his book was written long before the meteoric rise of private equity funds. My concern remains with the absent ethical component on trading floors. Ethical responsibilities are as elastic as the regulations that govern the centuries old practice of hedging. In the period of late capitalism and the emergence of risk society, the cost of destructive unintended byproducts have created havoc in ways that far exceed the commodities/service value. The road to profits and impatient money, is paved with casualties. Berstein’s facts of market life are telling. He encourages simple methods and systems which require few decisions and little mental conflict. Too much thought is not conducive to successful trading. Too much analysis costs lost opportunities. Keep systems simple. Control your emotions. Practice caring less so that you remain more objective. Don’t ask why. Knowing why may hinder you more than it will help you. Patterns are the best indicators available (What feeds into a “pattern” however is not a science). Timing is what makes money in the futures market (Bernstein 2000:282-3). In other words, futures’ gurus encourage young hedge fund analysts to not think too much about factors such as displacement of peoples, the degradation of living conditions and the way in which they unwittingly contribute to making vulnerable ecologies and peoples even more vulnerable. Their gurus tell them to not think about the impact of their actions. They are told to not ask why the prices of essential commodities like fuel and food that they are playing with, are pushing certain groups into unimaginable levels of social exclusion. In the end groups at-risk to health degradation are always those least able to protect themselves. How convenient that the gurus do not factor in these social issues. They are entirely absent from finance reports. But then a lot of information is purposely not included in financial and business reports. Bernstein argues that the simpler systems that take fewer things into consideration will lead to more profits. Yet when he lists off all the potential factors in operation in even a simple fundamental analysis, it is not at all simple. It begins with the highly complex. The algorithms involved may appear to be simplified through the use of databases that seem to generate accurate, objective hard facts. In reality, the accuracy of any query depends on what was fed into it.
Bernanke, B. S. 2008. “Outstanding Issues in the Analysis of Inflation.” Speech at the Federal Reserve Bank of Boston. 53rd Annual Economic Conference. Chatham, MA.
Blais, Javier. 2011-06-01. Commodity swings expected after US storms forecast.” Financial Times. London.
Coyle, Diane. 2011. The Economics of Enough: How to Run the Economy as If the Future Matters. Princeton University Press.
nature of global capitalism, fiscal policy, inequality and the environment with reflection on civil society, economic growth ought not to be a policy goal, use of a greater range of economic indicators–she backs output growth as an objective, bond holders are safe; citizens are not; beyond traditional measures of debt in thinking about future obligations; top-rank economist’s view from the summit, challenge the neo-classical economic purist; economics and sustainability; serious and difficult changes made to economic systems’ structure and function; Herman Daly’s Steady-State Economics; long-run development; resource depletion, population growth, world poverty, rising debt, rates of innovation;
Cuthbertson, Richard. 2008-06-17. “Energy battles boiling over: A Wall Street analyst attending Calgary’s prominent energy investment forum found himself in the eye of a growing environmental storm battering Alberta’s oilsands — one of several clashes centred on the energy sector Monday.” Calgary Herald.
Eccles, Marriner S. 1951. Beckoning frontiers: Public and personal recollections Ed. Hyman, Sidney. Alfred A. Knopf.
Flood, Chris. 2009-10-30 “Markets: Oil dips after US GDP boost.” Financial Times.
Hirsch, Michael. 2010. Capital Offense: How Washington’s Wise Men Turned America’s Future Over to Wall Street. New Jersey: John Wiley.
Lewis, Michael. 1989. Liar’s Poker. W.W. Norton & Company.
Martin, Roger L. 2011-05. Fixing the Game: How Runaway Expectations Broke the Economy, and How to Get Back to Reality. Harvard Business School.
Orphanides, Athanasios, and John C. Williams (2007). “Robust Monetary Policy with Imperfect Knowledge,” Journal of Monetary Economics, vol. 54 (July), pp. 1406-35.
Pain, Nigel, Isabell Koske, and Marte Sollie (2006). “Globalisation and Inflation in the OECD Economies,” OECD Economics Department Working Paper Series 524. Paris: Organisation for Economic Co-operation and Development, November.
Pesenti, Paolo A. Groen, Jan J.J. 2011-03. Commodity prices, Commodity Currencies, and Global Economics. Directorate-General for Economic and Financial Affairs. European Commission. Economics Papers 440. Brussels. Commodity prices, forecasting, exchange rates, factor models, PLS regression
Powell, Barbara. 2011-06-28. “Gasoline Futures Gain as Crude, Equities Advance, Dollar Drops.” Bloomberg.
Rich, Robert W., and Charles Steindel (2007), “A Comparison of Measures of Core Inflation,” Federal Reserve Bank of New York, Economic Policy Review, vol. 13 (December).
Wallace, Lane. 2009-07-07. “The Uncommon Navigator: What Wall Street Should Learn from the NFL.” The Atlantic.
Filed in Business & Finance, economic efficiency, Economics, Economy & Finance, ethics, Power and everyday life, Public Policy, reflexivity, risk management, Risk Society, Social History Timeline, wealth disparities will intensify
Tags: Barclays, bonus-driven banking, boom and bust, casino banking, commodities, futures, hedge funds, hedging, High frequency trading, market fundamentals, soft commodities, speculation, supply and demand
July 23, 2009
Economic activity which mainly uses raw materials such as waterways, sea, forests and soils, increased to a (GWP) (Gross World Product): (purchasing power parity exchange rates) of $23 trillion by 2002; $51.48 trillion by 2004 and $59.38 trillion by 2005 and in 2008 (market exchange rates) it was $60.69 trillion. Yet global wealth does not translate into an increase in global well-being. Extremes of wealth and poverty have increased and according to TD Bank Financial Group Economists Drummond and Tulk (2006) wealth disparities will intensify. In Canada alone, the wealthiest or Ultra High New Worth (UHNW) families, who comprise only a fraction of Canada’s households, controlled almost half the investable assets: $1.3-trillion of $2.4-trillion in 2007. The “vast majority” of that $1.3-trillion held by UHNW with family offices Chevreau, Jonathan. 2007-05-14).“
Mavericks, tycoons and risk-takers, (many of whom became the Ultra High Net Worth (UHNW) individuals and families – people capable of seeing resources as opportunities and knowing how to manage them to their own advantage, are western heroes. As long as enough of the resources trickled down, translating into a reasonable quality of life for most people in the form of jobs, assets, properties, vehicles, services and common recreation and parklands, we remained in a love-hate relationship with the the elite who had status, wealth and/or power. In 1992 Ulrich Beck described a world where the unintended consequences of the production of the former were no longer benefiting the latter. Certitude in access to fundamentals like clean air, water, sufficient food, housing was eroding in places that had never doubted before. And how the UHNW are becoming even more enriched by using raw materials such as waterways, sea, forests and soil, is troubling.
The Bruntland Commission reported (1987) that since 1977 public concern had been seized by the realization that crises once considered to be separate and therefore more containable – such as environmental crisis, development crisis, energy crisis, (by 2009 include food crisis, water crisis, poverty crisis, financial crisis) – were in fact, global. The dissolving of boundaries between the neat compartmentalization of the globe and its resources into nation states and sectors (energy, agriculture, trade), and within broad areas of concern (environment, economics, social) which made them once seem as one-by-one problems with solutions, were already understood to be much more far-reaching and complex. The one-world one-earth future was no longer a utopian dream or dystopian nightmare, just a pragmatic reality Our Common Future.
Risk Management: Shrinking Watersheds and Aquifers
The most vulnerable to social exclusion, the most impoverished have been hit harder than ever before and their numbers are growing. We have the technical and scientific capacity to link data from different sources and scales and to make this information widely available through Web 2.0 or the social media – crucial information regarding public policies, legal aspects, ethics, (moral mathematics?) etc of the depletion of aquifers, watersheds, and the re-routing of limited water resources. Who is producing reliable assessments of extremes of water wealth and poverty? Without access to balanced, objective information how can we expect to have the individual, political and institutional will to establish objective criterion for indexing water resource use and management? With information, can we hope for knowledge and dream of wisdom?
Groundwater Processes are Virtually Unknown
“Many of Canada’s freshwater resources are under stress because of increasing municipal and industrial use and impacts from human activities. To ensure protection of public health and the aquatic environment, Canadians need state-of-the-art treatment plants capable of removing a growing array of pollutants from wastewaters. This includes emerging contaminants such as pharmaceuticals and endocrine-disrupting chemicals disposed of in the sewage system, pathogens such as the Corona virus, and nutrients that feed unwanted and potentially toxic algae growth. In Alberta, groundwater processes are virtually unknown. The full long-term impacts of water use by the oil and gas industry are poorly understood, and future expansion of this industry will rely on improved, cost-effective water conservation and management practices. Dr. Tom Harding of the University of Calgary’s Institute for Sustainable Energy, Environment and Economy does on research areas the recycling and reuse of water in oil and gas production (ISEEE).”
Is water a commodity or a human right?
According to T. Boone Pickens (b. 1919- ), the Texas oil tycoon, “he could be selling wind, water, natural gas, or uranium; it’s all a matter of supply and demand. “(Berfield 2008).” See also Mapping Blue Gold
According to the United Nations Committee on Economic, Social and Cultural Rights (UNESCO) water was formally recognized as a human right for the first time when [they] adopted the ‘General Comment’ on the right to water, and described the State’s legal responsibility in fulfilling that right. “The human right to drinking water is fundamental to life and health. Sufficient and safe drinking water is a precondition for the realization of human rights.” (UNESCO 2002-11-27).
According to BBC News Online environment correspondent, Alex Kirby, who explored fears of an impending global water crisis in his 2004 article when 1/3 of the world’s population were already living in water-stressed countries, “We have to rethink how much water we really need if we are to learn how to share the Earth’s supply (Kirby 2004-10-19).”
According to The World Commission on Environment and Development (WCED). 1987.”Our Common Future.” “Water is essential for life, and an adequate water supply is a prerequisite for human and economic development. It hasbeen recognized that human behavior can have an impact both on water, and on the global ecosystem, and that there is a need to regulate that behavior in order to stabilize and sustain our future (WCED, 1987 cited in Sullivan 2002). Global water resources are limited, and only through a more sustainable approach to water management, and more equitable and ecologically sensitive strategies of water allocation and use, can we hope to achieve the international development targets for poverty reduction that have been set for 2015 (DFID, 2000).”
According to University of Alberta’s Dr. Bill Donahue, Alberta treats water ”as an inexhaustible resource […] The disconnect between supply and demand is not sustainable (Simon 2002-08-09)..”
“Water, an increasingly valuable multiple-use resource, is the source of continuing conflict in Canada and abroad. Its use and control presents significant challenges to governments, stakeholders, and citizens. Canadian Water Politics explores the nature of water use conflicts and the need for institutional designs and reforms to meet the governance challenges now and in the future. The editors present an overview of the properties of water, the nature of water uses, and the institutions that underpin water politics. Contributors highlight specific water policy concerns and conflicts in various parts of Canada and cover issues ranging from the Walkerton drinking water tragedy, water export policy, Great Lakes pollution, St Lawrence River shipping, Alberta irrigation and oil production, and fisheries management on the Atlantic and Pacific coasts. Canada – with its Great Lakes, three oceans, and border with the US – provides an ideal reference point for studying water use rivalries, conflicts, and governance. By exploring the controversies surrounding water management in Canada, Canadian Water Politics is an essential source for citizens, officials, academics and students, and contributes to our understanding of natural resource management and environmental policy at home and globally (Review of Sproule-Jones, Johns and Heinmiller 2008-11-20).”
The Brundtland Commission, formally the World Commission on Environment and Development (WCED), created by the United Nations in 1983, to address growing concern “about the accelerating deterioration of the human environment and natural resources and the consequences of that deterioration for economic and social development.” In establishing the commission, the UN General Assembly recognized that environmental problems were global in nature and determined that it was in the common interest of all nations to establish policies for sustainable development. (WCED 1987). Their report entitled “One Common Future” recommended securing water availability for the needs of future generations. “On the development side, in terms of absolute numbers there are more hungry people in the world than ever before, and their numbers are increasing. So are the numbers who cannot read or write, the numbers without safe water or safe and sound homes, and the numbers short of woodfuel with which to cook and warm themselves. The gap between rich and poor nations is widening – not shrinking – and there is little prospect, given present trends and institutional arrangements, that this process will be reversed (WCED 1987:1).”
Copenhagen Climate Council is an Anti-Kyoto organisation which “works against most US government efforts to address climate change.” The self-defined ”global climate leaders” are in fact business leaders as CEOs of major global corporations, hoping to seize “seize the unique opportunity which the Copenhagen Summit 2009 offers to do something good for the global environment and at the same time do good business.” The U.N.’s post-Kyoto, post-2012 negotiations will be finalised in Copenhagen in 2009. Global business leaders issued “The Copenhagen Call” at the close of the World Business Summit on Climate Change on May 26 where CEOs discussed “how their firms can help solve the climate crisis through innovative business models, new partnerships, and the development of low-carbon technologies. They will send a strong message to the negotiating governments on how to remove barriers and create incentives for implementation of new solutions in a post-Kyoto framework.” The Climate Council is represented by Don Pearlman, an international anti-Kyoto lobbyist who was a paid adviser to the Saudi and Kuwaiti governments who followed the US line against Kyoto. Ms Dobriansky met Don Pearlman to “solicit [his] views as part of our dialogue with friends and allies (Vidal 2005-06-08).”
Maud Barlow is the National Chairperson of the Council of Canadians- A citizen’s watchdog organization with over 100,000 members. One of their ongoing campaigns is that water is a public trust which belongs to everyone. She is also the co-author of Blue Gold: The Fight to Stop the Corporate Theft of the World’s Water.
Bechtel Corporation (Bechtel Group) is the largest engineering company in the United States, ranking as the 7th-largest privately owned company in the U.S. With headquarters in San Francisco. wiki Bechtel was forced to back down on its efforts to taking control of the Cochabamba, Bolivia water supply and privatizing it in 2000 when Bolivian protesters were joined by overwhelming international support. Bechtel Corporation, one of the world’s largest engineering and construction services companies has been owned and operated by the Bechtel family since incorporating the company in 1945. It was founded by Warren A. Bechtel (1872 – 1933) in 1898. The current Bechtel CEO is Riley P. Bechtel, one of the richest men in the United States. wiki
Paula Dobriansky, US under-secretary of state for President George Bush’s administration between 2001 and 2004, sought the advice of anti-Kyoto Exxon executives on what climate change policies Exxon might find acceptable and thanking them for their active involvement in helping to determine climate change policy. These exchanges were revealed in the US State Department briefing papers, “documents, which emerged as Tony Blair visited the White House for discussions on climate change before next month’s G8 meeting , reinforc[ing] widely-held suspicions of how close the company [Exxon] is to the administration and its role in helping to formulate US policy(Vidal 2005-06-08).”
Dr. Bill Donahue of the University of Alberta was quoted in the New York Times: Alberta treats water ”as an inexhaustible resource […] The disconnect between supply and demand is not sustainable (Simon 2002-08-09)..” Dr. Bill Donahue of the University of Alberta’s Environmental Research and Studies Centre said his research at Muriel Lake suggested that the oil companies’ appetite for water was having a long-term effect. Although heavy rains in 1997 replenished many other lakes in the area, but the level of Muriel Lake is falling again. Mr. Donahue said the addition of chemicals to water used in oil recovery and the fact that much of the recycled water ends up in deep underground reservoirs meant that ”ultimately, it is lost from the normal water cycle (Simon 2002-08-09)..” “The Muriel Lake Basin Management Society was formed in 1999 in response to these severe losses of water. In 2002, Dr. Bill Donahue, with the support of Dr. Dave Schindler, the Gordon Foundation, the Natural Sciences and Engineering Council of Canada, and ERSC, began a study to determine the local and regional water budgets. Drs. Bill Donahue and Alex Wolfe also began a study of the history of water quality, biology, and climate change in Muriel Lake.” Limnologist Anne-Marie Anderson reported that the lake levels of Muriel Lake (northeast of Edmonton and close to the hub of oil sands activity, including Imperial’s Cold Lake operation) were monitored since 1967. The lake reached its maximum in 1974, a very wet year but since then water levels declined steadily, a drop in lake level of nearly 3 m in 2000 from 6.6 m in 1962. As a result of the drop in lake levels, shoreline width has increased considerably. This amounts to perhaps a 50 to 60% loss in the volume of water. There are also concerns that the decline in water levels is resulting in a deterioration of lake water quality and fishing. (Anderson 2000-04).
Exxon the US’s most valuable company valued at $379bn (£206bn) dominates The Global Climate Coalition GGC, and is the main anti-Kyoto US industry group. President Bush considered Exxon “among the companies most actively and prominently opposed to binding approaches [like Kyoto] to cut greenhouse gas emissions […] Paula Dobriansky, US under-secretary of state for President George Bush’s administration between 2001 and 2004, sought the advice of anti-Kyoto Exxon executives on what climate change policies Exxon might find acceptable and thanking them for their active involvement in helping to determine climate change policy. These exchanges were revealed in the US State Department briefing papers, “documents, which emerged as Tony Blair visited the White House for discussions on climate change before next month’s G8 meeting , reinforc[ing] widely-held suspicions of how close the company [Exxon] is to the administration and its role in helping to formulate US policy(Vidal 2005-06-08).”
The Global Climate Coalition GGC, dominated by Exxon, is the main anti-Kyoto US industry group. President Bush considered Exxon “among the companies most actively and prominently opposed to binding approaches [like Kyoto] to cut greenhouse gas emissions(Vidal 2005-06-08).”
Oscar Olivera, was secretary of the Bolivian Federation of Factory Workers. In 2006 he addressed the World Development Movement conference held in Britain on the theme of “Whose Rules Rule.” He was a protest leader against water privatisation by the US-based multinational company Bechtel when Bechtel came to Cochabamba, Bolivia with the intention of taking control of the water supply and privatizing it in 2000. Olivera won the 2001 Goldman environment prize.
T. Boone Pickens (b. 1919- ) Pickens, the Texas oil tycoon, who made his fortune in oilpatch investments, is now planning on building the world’s largest wind farm in Texas. In 2008 he introduced “The Pickens Plan, [which called] for the United States to cut its dependence on foreign oil by more than one-third by making natural gas and wind power much bigger parts of America’s energy supply.” (CBC 2009-06-17.) He proposes that the private sector build thousands of wind turbines that could potentially supply one-fifth of electricity in the U.S. He claims wind power would replace natural gas in power generation; natural gas could then replace diesel and gasoline as a transportation and the U.S. could become free from its foreign oil dependency. He insists that Canadian oil is not considered to be “foreign.” ( “CBC 2008-06-20).”
Pickens who sees water as blue gold and already owns more of it than any other American. He thirsts to increase his water assets. “T. Boone Pickens […] owns more water than any other individual in the U.S. and is looking to control even more. He hopes to sell the water he already [had in 2008], some 65 billion gallons a year, to Dallas, transporting it over 250 miles, 11 counties, and about 650 tracts of private property. The electricity generated by an enormous wind farm he is setting up in the Panhandle would also flow along that corridor. As far as Pickens is concerned, he could be selling wind, water, natural gas, or uranium; it’s all a matter of supply and demand. “(Berfield 2008).” In June of 2009 he claimed that he was very interested in Alberta as a potential site for his giant wind farms if he could make a better deal in Alberta than in Texas. He is already priming the Alberta business community. While he has carefully massaged his media image to be tauted as environmentally friendly and he has generously gifted the University of Calgary, his methods are shrewd, buying what others see as useless until they realize how much control he has over their oil, water and/or energy supply. He is persistent, single-minded and worked for decades to one by one change relevant laws in his favour in the Canada River watershed in Texas to gain the control he needed. Pickens donated $2.25 million in 2006 to establish the Boone Pickens Centre for Neurological Science and Advanced Technologies at the the Hotchkiss Brain Institute, University of Calgary, which was created by Pickens’ long-time friend Calgary Flames co-owner Harley Hotchkiss with a gift of $15 million in 2004. In June 2008 Pickens donated another $25 million to research at the Hotchkiss Brain Institute which is the largest donation ever given to the University of Calgary by a single person and the only philanthropic donation Pickens has made outside the U.S. Pickens, who has an estimated net worth of $3 billion, has given away $700 million from 2003 to 2008. Pickens lived in Calgary briefly in the 1960s working as a geologist ( “CBC 2008-06-20).”
T. Boone Pickens engineered a shrewd takeover of an 8 acres stretch of scrub-land near Amarillo, Roberts County, Texas. The acquisition of this land was “central to Pickens’ plan to create an agency to condemn property and sell tax-exempt bonds in the search for one of his other favorite commodities: water. Approval of the water district was all but certain as Texans voted [November 2007] in state and local elections. By law, only the two people who actually live on the eight acres will be allowed to vote: the manager of Pickens’ nearby Mesa Vista ranch and his wife. The other three owners, who will sit on the district’s board, all work for Pickens. Pickens “has pulled a shenanigan,” said Phillip Smith, a rancher who serves on a local water-conservation board. “He’s obtained the right of eminent domain like he was a big city. It’s supposed to be for the public good, not a private company.” Pickens and his allies say no shenanigans are involved. Once the district is created, the board will be able to issue tax-exempt bonds to finance construction of Pickens’ planned 328-mile, $2.2 billion pipeline to transport water from the Panhandle across the prairie to the suburbs of Dallas and San Antonio. If Pickens can’t find a buyer for the bonds or for his water – and he hasn’t yet – he might buy the bonds himself to jump-start the project, said his Dallas-based lawyer, Monty Humble of Vinson and Elkins. The board will spend about $110 million to buy the right-of-way for the pipeline, using the power of eminent domain to acquire property if necessary, Humble said. Still, Pickens faces obstacles. To help pay for construction, he plans to piggyback wind power on the water infrastructure. He plans wind farms on the ranchland and wants to run electricity cables along the right-of-way of Mesa’s water pipeline. All told, the wind and water project is expected to cost more than $10 billion. Pickens said he has about $100 million invested so far. “This is a $10 billion project,” he said in an interview. “It better be profitable.” Most of all, he needs a group of confirmed buyers for his water. That’s in part because of political resistance to his plan for acquiring water rights. Several Dallas-area water districts have refused to sign up. “We have real concerns about private control of water,” said Ken Kramer, director of the Texas Sierra Club. “Water is a resource, yet in some respects it is a commodity. It’s as essential to human life as air. That puts water in a different class.” John Spearman Jr., a Roberts County rancher and chairman of the Panhandle Groundwater Conservation District, is one of many local critics who contend that Pickens’ water play could upset conservation efforts and seeks to profit from shortages of a vital resource. “He has the legal authority to do it,” Spearman says. “We can’t stop him (Woellert 2007-11-07.”
Meera Karunananthan, water campaigner for The Council of Canadians opposes an expanded Alberta water market. “The water market system is absolutely not the solution. We consider water to be a human right. When you allocate according to the laws of the market, then you see water going to those who can pay the most. So it goes to the highest bidder.” She argues the government should instead create a hierarchy of water use, allocating to those who need it most — including the environment (Klaszus 2009-06-25).
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), an international environmental treaty The Kyoto Accord was first negotiated in Kyoto, Japan in December 1997, to “establish a legally binding international agreement, whereby all the participating nations commit themselves to tackling the issue of global warming and greenhouse gas emissions.” The objective was to stabilize and reconstruct “greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.” The Kyoto negotiations built upon the research of The Intergovernmental Panel on Climate Change (IPCC) which predicted an average global rise in temperature of 1.4°C (2.5°F) to 5.8°C (10.4°F) between 1990 and 2100. The agreement finally came into force on 16 February 2005 when following ratification by Russia ratified it on 18 November 2004. As of 14 January 2009, 183 countries and the European Community ratified the agreement. The Kyoto Protocol include “commitments to reduce greenhouse gases that are legally binding; implementation to meet the Protocol objectives, to prepare policies and measures which reduce greenhouse gases; increasing absorption of these gases and use all mechanisms available, such as joint implementation, clean development mechanism and emissions trading; being rewarded with credits which allow more greenhouse gas emissions at home; minimizing impacts on developing countries by establishing an adaptation fund for climate change; accounting, reporting and review to ensure the integrity of the Protocol; compliance by establishing a compliance committee to enforce compliance with the commitments under the Protocol.” wiki
Vivendi water is the backbone of Vivendi company according to Maud Barlow, with c. 295,000 people working just in their water department alone. So these companies came onto the scene first in France interestingly enough because France flirted with the privatization of water first then moved over to Great Britain under Margaret Thatcher and then with the World Bank backing them have moved all through the third world where they are failing every single solitary place that they are operating.
Manthan Adhyayan Kendra centre, based in the Narmada Valley, was founded by Shripad Dharmadhikary in October 2001 to research, analyse and monitor water and energy issues. Manthan’s two major themes of work are (a) large dams, irrigation and hydropower and (b) Privatisation and commercialisation of water and power in India. Dharmadhikary was a full time activist of the Narmada Bachao Andolan for 12 years, the mass organisation of people affected by large dams on the Narmada river in India. He was closely associated with the World Commission on Dams from its inception to its follow up UNEP-Dams and Development Project. He has recently completed a study on hydropower dam building in the Himalayas for International Rivers titled Mountains of Concrete. Other publications include Unravelling Bhakra, the report of a three year study (2001-12 through 2004-12) led by him of the Bhakra Nangal project. This study claims to completely overturn many of the popular notions and perceptions associated with the Bhakra Nangal Project. Currently, Manthan is working on the issues and impacts of privatisation of the water sector in India, including a study of the Public Private Partnership (PPP) model that is being pushed in the water sector, and the implications – financial, economic, social, environmental and access – of large scale privatisation of hydropower.
Professor Cathy Ryan, Department of Geoscience and the BScEnvironmental Science Program, University of Calgary “has inspired inspired an undergraduate research programin Environmental Science, as part of which students work in partnership with government, private sector and non-governmental collaborators to collect and analyze original data. The results of these studies are reported back to community stakeholders at enthusiastically-attended open houses.Meanwhile, Professor Ryan’s active contributions to local watershed groups (among them, Friends of Fish Creek, Elbow River WatershedPartnership, Nose Creek Watershed Partnershipand the Bow River Basin Council) are further evi-dence of a community engagement that extends beyond the normal call of academic duties. As a Board Member of the Bow River Basin Councilfrom 2004 to 2008, she provided technical advice and was an invited speaker and presenter on research activities that informed local landuse policymaking.The value of Professor Ryan’s input, and a furthermeasure of her community service, is manifest infrequent invitations to participate in regional,municipal, provincial and national workshops. Beyond simply sharing research findings, these presentations help to guide groundwater man-agement initiatives, including a successful 2006 municipal bylaw proposal for Environmental Setbacks for the Bow and Elbow Rivers. Currently, Professor Ryan is also the Assistant Program Director for the Central American WaterResources Management Network, a training net-work designed to better enable Central American universities and local communities to protect their water resources. Professor Ryan has published on Central American hydrogeology and water quality, in addition to her research in Alberta.Professor Ryan’s research interests include thefate of agricultural, human, and industrial wastes in groundwater and surface water. An examination of the impact of Calgary waste water on theBow River led in turn to a part-time sabbatical appointment as a Senior Water Policy Advisor to the City of Calgary. Professor Ryan subsequently received the City of Calgary Environmental Achievement Award in June 2008. Professor Ryan received her BASc in Geological Engineering from Queen’s University and her MSc and PhD (1994) in Earth Sciences from the University of Waterloo. She is also an adjunct professor in the Schulich School of Engineering, and has been a member of the Faculty Association since 1997 (University of Calgary 2009 awards).”
World Bank “The initial hopes for privatisation were so high that donor spending on infrastructure fell in the expectation that the private sector would take up the slack. For example, World Bank lending for infrastructure investment declined by 50 per cent during 1993-2002, with much of this directed towards preparing firms for privatisation. In 2002, Bank lending for water and sanitation projects, in particular, was only 25 per cent of its annual average during 1993-97. At the same time, the World Bank increased its support for private investment in utilities through its International Finance Corporation (IFC) and its Multilateral Investment Guarantee Agency (MIGA). While Bank lending to public electricity utilities dropped from about $2.9 billion in 1990 to only $824 million in 2001, its sector lending to private investors rose from $45 million to $687 million. Lending about $20 billion to water supply projects over the last 12 years, the World Bank has not only been a principal financier of privatisation, it has also increasingly made its loans conditional on local governments privatising their waterworks. The ICIJ’s study of 276 World Bank water supply loans from 1990 to 2002 showed that 30 per cent required privatisation – the majority in the last five years (Molina and Chowla 2008-09-26.“)
World Water Council 2009 Report
Water Poverty Index This paper provides discussion of ways in which an interdisciplinary approach can be
taken to produce an integrated assessment of water stress and scarcity, linking physical estimates of water availability with socioeconomic variables that reflect poverty, i.e., a Water Poverty Index to contribute to more equitable solutions for water allocation. A ‘‘Water Poverty Index’’ would enable progress toward development targets to be monitored, and water projects to be better targeted to meet the needs of the current generation, while securing water availability for the needsof future generations, as recommended in the Brundtland Report (WCED 1987). It is known that poor households often suffer from poor water provision, and this results in a significant loss of time and effort, especially for women. Sullivan provided a summary of different approaches to establish a Water Poverty Index by linking the physical and social sciences to address this issue (Sullivan, Caroline. 2002 “Calculating a Water Poverty Index.” World Development. 30:7: 1195–1210).”
Sir Richard Branson Founder and CEO, Virgin Group, (Ultra High Net Worth (UHNW) is on The Copenhagen Climate Council. He “has recently pledged all profits from his Virgin air and rail interests over the next 10 years to combating rising global temperatures. However, the estimated $3bn will be invested in Virgin Fuels. Much of the investment will focus on biofuels, an alternative to oil-based fuels made from plants. […] “…in our particular case we are putting all the profit we have got from our airline business into trying to develop clean fuels so that hopefully one day we can actually have fuels that we can fly our plains by, that will not do any damage to the environment (Branson).”
Bow River watershed
The San Joaquin River watershed originates in Martha Lake (California) and winds through California for 530 km flowing into the Sacramento-San Joaquin Delta and then San Francisco Bay. The basin area is 83,000 km2.
Selected Timeline of Events Related to Watersheds: Licensing Blue Gold or Managing a Human Right
1728 Mennonite brothers, the Bechtels, came to America in the early 1700s from Switzerland.
1846 German-born Heinrich Kreiser (aka Henry Miller) (Ultra High Net Worth (UHNW) immigrated to the United States arriving in California in 1850. The Miller and Lux company became the largest producer of cattle in California and one of the largest landowners in the United States, owning 1,400,000 acres (5,700 km2) directly and controlling nearly 22,000 square miles (57,000 km2) of cattle and farm land in California, Nevada, and Oregon. The Miller and Lux Corporation was headquartered in Los Banos, California, on the west side of the San Joaquin Valley. Miller played a major role in the development of much of the San Joaquin Valley during the late 19th century.
early 1900s The Alberta agricultural irrigation industry acquired massive water licences. Since then they have relied on the first-in-time, first-in-right licensing system which gave priority to whoever got water licences first (Klaszus 2009-06-25).. In Alberta, water has been traditionally allocated on the “first-in-time, first-in-right” principle for both surface and ground water. The older the licence, the higher that user is on the priority list. This allows the owners of the first licenses issued to access the full amount of water issued before newer licensees have access, regardless of use. Furthermore, water licenses granted under this principle have no expiry date. However, licenses issued under the Water Act are now issued for a fixed period. In a review of Canadian Water Politics (2008) Chris McLaughlin, CEO of the Niagara Escarpment Foundation agreed with the book’s insightful comments that “the historical path dependency of current water allocation privileges – first-in-time, first-in-right – continues to favour entrenched agricultural, industrial and commercial interests who had their water claims institutionalized in law well before the value of “sustainability” was recognized. The reality inhibits institutional change, especially the adaptation of institutions to evolving water conflicts and other shifts social-ecological realities (McLaughlin 2009:31).”
1913 Oil tycoon, John D. Rockefeller, who became the world’s first billionaire, was the wealthiest person in the modern history of the world. Ultra High Net Worth (UHNW)
1930s The Bechtel Six Companies, a joint venture of construction companies built The Hoover Dam, named after President Herbert Hoover). This hydroelectric dam on the Colorado River was at that time the largest civil engineering project ever undertaken.
1940s Friant Dam was constructed as part of the federal Bureau of Reclamation’s Central Valley Project in the 1940s. Its purpose was to divert the waters of the San Joaquin to maximize their use to help people, both to irrigate crops and to provide groundwater recharge. Most of the waters of the San Joaquin River are diverted into canals so that the river remains dry for a 17 miles (27 km) except when flood control requires additional releases from the dam.
1950s Using raw materials from watersheds, seas, forests and soils 80% of the global industrial growth since the 1880s occurred since 1950. Industrial production grew more than fifty-fold from 1887-1987. There was already a $13 trillion world economy in 1987 Our Common Future.
1963-10-22 Prime Minister Jawaharlal Nehru opened the 740-feet high Bhakra multipurpose hydroelectric project claiming to ushering an era of agriculture development, Nehru had aptly declared Bhakra ‘the temple of modern India’.
1966-08 Helsinki Rules on the uses of the Waters of International Rivers. 1966-08. Adopted by the International Law Association at the 52nd conference, held at Helsinki. Report of the Committee on the Uses of the Waters of International Rivers. London: International Law Association (1967).
1969 The world’s first ministry of environment was established in Japan in 1969.
1970 Canada introduced its Ministry of the Environment.
1971 Ontario introduced its Ministry of the Environment.
Late 1970s Most OECD countries had a comprehensive framework of laws and regulations concerning waste and pollution.
1987 “State of the environment: National reports.” Nairobi: UNEP.
1984-1987 The World Commission on Environment and Development reported that between October 1984. and April 1987: “The drought-triggered, environment-development crisis in Africa peaked, putting 36 million people at risk, killing perhaps a million; A leak from a pesticides factory in Bhopal, India, killed more than 2,000 people and blinded and injured over 200,000 more; Liquid gas tanks exploded in Mexico City, killing 1,000 and leaving thousands more homeless; The Chernobyl nuclear reactor explosion sent nuclear fallout across Europe, increasing the risks of future human cancers; Agricultural chemicals, solvents, and mercury flowed into the Rhine River during a warehouse fire in Switzerland, killing millions of fish and threatening drinking water in the Federal Republic of Germany and the Netherlands; An estimated 60 million people died of diarrhoeal diseases related to unsafe drinking water and malnutrition; most of the victims were children (WCED 1987).”
1987. The World Commission on Environment and Development (WCED) published their report entitled “Our Common Future,” known as the Brundtland Report.
1989 “[The] government of Argentina embarked on a major privatization program, and water and sewage were not excluded (Orwin 1999-08).” This contract [was] terminated in 1999. Problems with quality and cost prompted the new government, which had been in opposition when the contract was negotiated, to take the action. The major partner in the consortium, Vivendi, sued the region for compensation ( Orwin 1999-08).”
1992-04 Three Gorges Dam, so enormous it would become the world’s biggest dam, sparked the biggest political debate in Communist China’s history in the National People’s Congress, China’s annual parliament. Nearly one-third voted against the dam or abstained – an unprecedented figure (Coonan 2006-03-17.
1992 The degree of water privatization in Canada and the United States was minimal. While more than half of the American water utilities were privately owned, and while cities such as Indianapolis and Atlanta were increasingly contracting out their water and sewage services, public utilities remained the norm in large cities; in 1992, they served 85 per cent of the U. S. population ( From Orwin 1999-08).
Early 1990s “[C]ritics in both the public and the private sector had questioned the appropriateness of a regulatory approach based on what was called “the old system of command and approaches such as economic instruments or voluntary measures. At the same time, governments were facing strong fiscal pressures to reduce the cost of their operations in order to stop the downward spiral of growing deficits and debt. These fiscal pressures were given ideological impetus by political parties that favored deregulation, downsizing and privatization (Ministry of the Environment research 2000).”
1992 Sullivan (1992) called for the political will and institutional acceptance so that individual countries would be enable to produce their own integrated assessments of water poverty. She recommended the use of participatory action research at the community level to involve and educate local people in terms of their water needs enabling them to better understand, communicate and negotiate with policy makers. “By providing information about household welfare, and water stress at the household and community level, this locally generated data can form the core of the Water Poverty Index (WPI).
1993 “The initial hopes for privatisation were so high that donor spending on infrastructure fell in the expectation that the private sector would take up the slack. For example, World Bank lending for infrastructure investment declined by 50 per cent during 1993-2002, with much of this directed towards preparing firms for privatisation. In 2002, Bank lending for water and sanitation projects, in particular, was only 25 per cent of its annual average during 1993-97. At the same time, the World Bank increased its support for private investment in utilities through its International Finance Corporation (IFC) and its Multilateral Investment Guarantee Agency (MIGA). While Bank lending to public electricity utilities dropped from about $2.9 billion in 1990 to only $824 million in 2001, its sector lending to private investors rose from $45 million to $687 million. Lending about $20 billion to water supply projects over the last 12 years, the World Bank has not only been a principal financier of privatisation, it has also increasingly made its loans conditional on local governments privatising their waterworks. The ICIJ’s study of 276 World Bank water supply loans from 1990 to 2002 showed that 30 per cent required privatisation – the majority in the last five years (Molina and Chowla 2008-09-26.“)
1994 Ontario passed the Environmental Bill of Rights.
1994 In Ecuador the Inter-American Development Bank (IDB) giving a grant to the government to set up the necessary reforms of pricing and regulatory procedures to encourage further privatization in the water and sewage sector. By 1999 The government of Ecuador planned on privatizing all water utilities, for the sake of financing further investment ( Orwin 1999-08).
1995-06 Mike Harris as Premier of Ontario , declared a “Common Sense Revolution” in which he announced that Ontario was “open for business” promised to cut red tape and get government (particularly the Environment ministry) “out of the face” of business. Over the next two years, the budget of Moe was cut nearly 50% and the staff was reduced by more than 40% . The impact of these cuts on the capacity of Moe to serve the public interest in relation to the taro operations was cited in print media coverage of the controversy (Ministry of the Environment (MOE) research 2000).”
1995-11 The World Bank offered large loans to Bogota, Columbia to convert the dysfunctional municipal monopoly into a privatized utility.
Postel, S. L. (1996). Dividing the waters: food security, ecosystem health, and the new policies of scarcity. Worldwatch Paper No. 132, P29. Washington, DC:
1996-12 The government of Chili “introduced a bill to fully privatize state-run water works, the first such legislation in South America. It faced strong opposition even within the ruling coalition but the bill was passed with some compromises, including a stipulation that the government must maintain 35 per cent equity, with some of the remainder being owned by the company employees. In April 1997, the government announced its intention to privatize wastewater treatment as well. The privatization package was finally approved in January 1998, and 55 per cent of the utilities involved were expected to be privatized by March 1999. ( From Orwin 1999-08).
1997-03 The 1st World Water Forum was held in Marrakech, Morocco.
1997-07 La Paz and El Alto, Bolivia “turned their water and sewerage systems over to the French company Lyonnaise des Eaux in July 1997, despite large protests and agitations by the opposition, which periodically paralysed both municipalities. Interestingly, the coalition in favour of the agreement included not only the governments and the water companies but the labor unions as well, who helped ensure the completion of the process. Lyonnaise des Eaux own[ed] 34 per cent of the new company, while a combination of Bolivian and Argentine directors own[ed] the rest ( Orwin 1999-08).”
1998 Postel, S. L. 1998. “Water for food production: will there be enough in 2025?” Biosciences. 28:629–637.
1998-09-17 Orwin’s report on the privatization of water reveals his enthusiasm for the privatization of water and sewage systems. Vivendi and Suez-Lyonnaise des Eaux joined to vie for the concession for Rio de Janeiro’s water and sewage systems. At that time some of Brazil’s municipal governments that own[ed] the water and sewage systems sought private sector help. Aguas de Limeira, a joint venture between the French conglomerate Lyonnaise des Eaux and Companhia Brasileira de Projectos e Obras, provided water and sanitation to the 250,000 people of the Sao Paulo suburb of Limeira. Degremont, Lyon built two water purification plants in Sao Paulo: one for Sao Miguel (population 700,000) and one for Novo Mondo (population 1,000,000) […] Vivendi acquired 30% shares in Sanepar, which serves seven million people in the state of Parana. ( Orwin 1999-08).”
1998 Author Shripad Dharmadhikary writes: “the Bank’s process of generating knowledge is flawed and exclusionary. It excludes common people, and their traditional expertise and knowledge. The Bank’s knowledge is frequently created by highly paid, often international, consultants, who have little knowledge of local conditions. The knowledge creation is mostly directed towards arriving at a pre-determined set of policies – privatisation and globalisation. This knowledge creation is often selective, in that information, evidence or experiences that do not support these pre-determined outcomes are ignored. The book is based on case studies of the Indian water sector review in 1998, the Bank-support Public-Private Infrastructure Advisory Facility (see Update 56), water privatisation in Delhi, and a project for water restructuring in the Indian state of Madhya Pradesh. Dharmadhikary finds that “[the Bank’s] policies have cut people’s access to water, led to environmental destruction, resulted in displacement and destitution of people, stifled better options for water resource management, have had huge opportunity costs, and privileged corporate profits over social responsibility and equity.”
1999 “In Canada, virtually all water and sewage systems [were] publicly owned and operated. However, privatization [was] very slowly getting off the ground in Ontario, where private companies serve[d] 500,000 people,(2) approximately 4.5 per cent of the provincial population. There [was] also some scattered private participation in Alberta and British Columbia, and privatization [was] being considered by two of the larger Maritime cities ( Orwin 1999-08).”
1999 The Inter-American Development Bank approved a $70-million loan to reform regulatory systems so as to encourage private sector involvement in Bolivia. Bolivia had begun “major restructuring of the water sector in 1991, which involved the transfer of powers from the central level to the municipal level ( Orwin 1999-08).”
1999 As the water crisis deepens countries are depleting groundwater resources accumulated over thousands of years. In India alone the water table dropped by as much as 3m in 1999. As groundwater is exploited, water tables in parts of China, India, West Asia, the former Soviet Union and the western United States were already dropping by 2004 according to a special 2004 report (Kirby 2004-10-19).
2000-03 The Second World Water Forum in The Hague, The Netherlands “generated a lot of debate on the Water Vision for the Future and the associated Framework for Action, dealing with the state and ownership of water resources, their development potential, management and financing models, and their impact on poverty, social, cultural and economic development and the environment. The Ministerial Declaration identifed meeting basic water needs, securing food supply, protecting ecosystems, sharing water resources, managing risks, valuing water and governing water wisely as the key challenges for our direct future. 15,000 people were involved in the Vision related discussions; there were 5,700 participants in the Forum; there were 114 ministers and official of 130 countries at the Ministerial Conference; 500 journalists; 32,500 visitors at the World Water Fair.”
2000 “The UN-backed World Commission on Water estimated in 2000 that an additional $100bn a year would be needed to tackle water scarcity worldwide (Kirby 2004-10-19).”
2000-04 Water Sciences Branch, Water Management Division, Alberta Environmental Service Limnologist Anne-Marie Anderson reported that the lake levels of Muriel Lake (northeast of Edmonton and close to the hub of oil sands activity, including Imperial’s Cold Lake operation) were monitored since 1967. The lake reached its maximum in 1974, a very wet year but since then water levels declined steadily, a drop in lake level of nearly 3 m in 2000 from 6.6 m in 1962. As a result of the drop in lake levels, shoreline width has increased considerably. This amounts to perhaps a 50 to 60% loss in the volume of water. There are also concerns that the decline in water levels is resulting in a deterioration of lake water quality and fishing. (Anderson 2000-04). Dr. Bill Donahue of the University of Alberta’s Environmental Research and Studies Centre said his research at Muriel Lake suggested that the oil companies’ appetite for water was having a long-term effect. Although heavy rains in 1997 replenished many other lakes in the area, but the level of Muriel Lake is falling again. Mr. Donahue said the addition of chemicals to water used in oil recovery and the fact that much of the recycled water ends up in deep underground reservoirs meant that ”ultimately, it is lost from the normal water cycle (Simon 2002-08-09)..” “The Muriel Lake Basin Management Society was formed in 1999 in response to these severe losses of water. In 2002, Dr. Bill Donahue, with the support of Dr. Dave Schindler, the Gordon Foundation, the Natural Sciences and Engineering Council of Canada, and ERSC, began a study to determine the local and regional water budgets. Drs. Bill Donahue and Alex Wolfe also began a study of the history of water quality, biology, and climate change in Muriel Lake.”
2000-03 Goals set forth at the Millennium Summit of the United Nations in New York.
2001 The International Freshwater Conference was held in Bonn.
2002 The World Summit on Sustainable Development was held in Johannesburg.
2002-02-15 President Bush pledged to reduce “greenhouse gas intensity” by 18 % from 2002 to 2012. New York Times journalist Paul Krugman cautioned however that the algorithm to calculate “greenhouse gas intensity” divides “greenhouse gas intensity” by the gross national product GDP which by most forecasts will expand by 30% from 2002 to 2012. This proposal then will allow a substantial increase in (mainly carbon dioxide, released by burning fossil fuels) that cause global warming. Krugman argued that the Bush administration exaggerated the economic costs such as the destruction of millions of jobs if the Kyoto Protocol’s environmental regulations were implemented. In 2001 Dick Cheney claimed that environmental rules had caused a shortage of refining capacity.(Krugman 2002-02-15)
2002-08-09 Western Canada had its worst drought in decades and environmentalists, farming groups and others called for tighter control of the oil industry. New York Times Business journalist claimed that Alberta’s oil companies use nearly half as much water as the million people in Alberta’s commercial center, Calgary. […] The energy industry makes up about a quarter of Alberta’s economy. Processes of extracting oil from conventional wells and from oil sands are water-intensive: c. 10 barrels of water are needed to extract one barrel of oil. The Canadian Association of Petroleum Producers claimed that about 55% of Alberta’s oil output, totaling 1.55m barrels a day, is now brought to the surface with the help of enhanced water-assisted methods. The water used in the oil sands “ends up in deep underground reservoirs meant that ”ultimately, it is lost from the normal water cycle(Simon 2002-08-09).“
2002-11-27 Water was formally recognized as a human right for the first time when the United Nations Committee on Economic, Social and Cultural Rights adopted the ‘General Comment’ on the right to water, and described the State’s legal responsibility in fulfilling that right. “The human right to drinking water is fundamental to life and health. Sufficient and safe drinking water is a precondition for the realization of human rights.” (UNESCO 2002-11-27).
2003-03 The 3rd World Water Forum held in Kyoto, Shiga and Osaka, Japan “took the debate a step further also within the context of the new commitments of meeting the goals set forth at the Millennium Summit of the United Nations in New York (2000), the International Freshwater Conference in Bonn (2001) and the World Summit on Sustainable Development in Johannesburg (2002). The large number of participants ensured that a variety of stakeholders and opinions were represented aiming at accepting differences and finding a common way forward.” There were 24,000 participants, 1000 journalists and 130 ministers in attendance.
2004 A federal judge ruled the U.S. Bureau of Reclamation in violation of California law for not letting enough water flow which has resulted in the depletion of the historic Chinook salmon population on the San Joaquin River which it is claimed, once supported the southernmost salmon run in North America.
2004-10-19 BBC News Online environment correspondent, Alex Kirby, explored fears of an impending global water crisis. In 2004 1/3 of the world’s population were already living in water-stressed countries. By 2025, this is expected to rise to two-thirds. His report includes some potential solutions including new technologies that could clean up polluted waters and so making more water useable, more efficient agricultural water-use practices, drought-resistant plants, collecting rainfall, dams, desalinisation. Many of these solutions would require huge quantities of affordable, useable energy sources which also poses an enormous challenge. Kirby concluded, “We have to rethink how much water we really need if we are to learn how to share the Earth’s supply (Kirby 2004-10-19).”
2005-02-16 The Kyoto Protocol climate change conference leading up to the Kyoto Accord was first debated in Kyoto, Japan in December 1997, to “establish a legally binding international agreement, whereby all the participating nations commit themselves to tackling the issue of global warming and greenhouse gas emissions.” The objective was to stabilize and reconstruct “greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.” The Kyoto negotiations built upon the research of The Intergovernmental Panel on Climate Change (IPCC) which predicted an average global rise in temperature of 1.4°C (2.5°F) to 5.8°C (10.4°F) between 1990 and 2100. The agreement finally came into force on 16 February 2005 when following ratification by Russia ratified it on 18 November 2004. As of 14 January 2009, 183 countries and the European Community ratified the agreement. The Kyoto Protocol include “commitments to reduce greenhouse gases that are legally binding; implementation to meet the Protocol objectives, to prepare policies and measures which reduce greenhouse gases; increasing absorption of these gases and use all mechanisms available, such as joint implementation, clean development mechanism and emissions trading; being rewarded with credits which allow more greenhouse gas emissions at home; minimizing impacts on developing countries by establishing an adaptation fund for climate change; accounting, reporting and review to ensure the integrity of the Protocol; compliance by establishing a compliance committee to enforce compliance with the commitments under the Protocol.” wiki
2005-06-08 John Vidal, environment editor for the Guardian based on according to US State Department papers, claimed that pressure from ExxonMobil, the world’s most powerful oil company, and other industries, influenced President George Bush in his decision to not sign the Kyoto global warming treaty(Vidal 2005-06-08).
2005-06-09 BBC reported that Philip Cooney, Chief of Staff for the White House Council on Environmental Quality, “which helps devise and promote the administration’s policies on environmental issues […] removed or adjusted descriptions of climate research that had already been approved by government scientists.” According to the New York Times Cooney “made dozens of changes to reports issued in 2002 and 2003, and many appeared in final versions of major administration climate reports.” Rick Piltz formerly from the office of co-ordinates U. S. government climate research resigned and reported the watered down reports to the New York Times. Philip Cooney, a lawyer by training has no scientific education. He was a lobbyist at the American Petroleum Institute, the largest oil industry trade group. He is a lawyer by training, with no scientific background. (BBC 2005-06-09).
2006-03-22 The 4th World Water Forum was held in Mexico City with seven days of debates and exchanges. Close to 20,000 people from throughout the world participated in 206 working sessions where a total of 1600 local actions were presented. Participants included official representatives and delegates from 140 countries out of which 120 mayors and 150 legislators, 1395 journalists experts, NGOs, companies, civil society representatives were involved. The Ministerial Conference brought together 78 Ministers.
2006-03 Uruguay, Cuba, Venezuela, Ecuador and other countries drafted a counter declaration at the 2006 World Water Forum when the official ministerial declaration did not include water as a human right (Karunananthan 2009-03-18).
2006-03 According to an article by (Coonan 2006-03-17, environmentalists viewed the 2006 completion of the Three Gorges dam on the Yangtze River in China, the world’s biggest, as a monstrous natural catastrophe. Between one to two two million people were moved because their homes were flooded by the rising water of the reservoir. Environmental activist and journalist Dai Qing, the most famous opponent of Three Gorges dam, wrote a book entitled Yangtze! Yangtze!, for which she was imprisoned for 10 months in a maximum security prison and faced with the treat of the death sentence. She opposed the dam because of the lack of public debate, the lack of independent analysis. “Further along the river, construction of Xiloudu dam has begun, which will be the third biggest in the world when it is finished. Three other dams are in the exploration stage near Xiloudu – including one that will flood the beautiful Tiger Leaping Gorge in Sichuan province. All four of these dams together will produce more electricity than the Three Gorges dam (Coonan 2006-03-17.”
2000 Oscar Olivera’s article in The Guardian described how the water wars began in Cochabamba, Bolivia when Bechtel, a large multinational, came there with the intention of taking control of the water supply and privatizing it in 2000.Olivera 2006-07-19.”
2006-08-31 The Alberta provincial government under Premier Stelmach closed southern Alberta river basins to new water licences when they realized they had over-allocated water. Some growing municipalities with junior licences began the long and laborious process of negotiating transfers water licenses from willing irrigators and other senior licensees (Klaszus 2009-06-25).. “Alberta Environment announced the province will no longer accept new water licence applications for the Bow, Oldman, and South Saskatchewan sub-basins. Water allocations may still be obtained through water allocation transfers. The newly minted water management plan, the first of its kind in Alberta, will ban new demands from the three rivers, which are part of the South Saskatchewan River basin that feeds water to Calgary, Red Deer, Lethbridge, Brooks and Medicine Hat (Alberta Water).”
2006-2009 According to Alberta Environment about 30 water licence transfers have occurred between junior and senior licensees since 2006 when Premier Stelmach closed southern Alberta river basins to new water licences (Klaszus 2009-06-25).
2007 The Province of Alberta’s budget showed a surplus of $8.5 billion. Alberta is the economic engine of Canada but it is also the country’s worst industrial greenhouse gas emitter. Calgary-based EnCana alone earned profits of $6.4 billion, a record-breaking sum. An energy war is predicted between Eastern and Western Canada (Kohler 2007-10-08).
2007-10-08 Journalist Kohler reviewed William Marsden’s (2007) book entitled em>Stupid to the Last Drop in which outlined the environmental threats posed by Alberta’s energy industry, claiming that the [province of Alberta were] going to be the “architects of their own destruction.” “Left unfettered, Alberta’s energy sector will, by the end of this century, transform the southern part of the province into a desert and its north into a treeless, toxic swamp. Driven both by global warming and oil and gas developments, temperatures in Alberta will soar by as much as eight degrees. The Athabasca River will slow to a trickle, parching the remainder of the province’s forests and encouraging them to burst into flame, generating vast quantities of CO2. (Kohler 2007-10-08).”
2007 Despite comprising only a fraction of Canada’s households, the wealthiest families control almost half the investable assets: $1.3-trillion of $2.4-trillion. The “vast majority” of that $1.3-trillion held by wealthy families is controlled by the decamillionaires. They are the ones with “family offices.” Tim Cestnick, of WaterStreet Family Wealth Counsel, set the threshold for High New Worth HNW as $5-million to $20-million in net worth and for Ultra High New Worth UHNW at $20-million-plus. Bederman classified households with $1-million to $5-million as “mass millionaires.” There were 335,000 such households in Canada in 2007. There were 60,000 “penta millionaires” (with net worths of $5-million to $10-million) and 20,000 decamillionaire households with more than $10-million in 2007. Despite comprising only a fraction of Canada’s households, the wealthiest families control almost half the investable assets: $1.3-trillion of $2.4-trillion. The “vast majority” of that $1.3-trillion held by wealthy families is controlled by the decamillionaires. They are the ones with “family offices “Chevreau, Jonathan. 2007-05-14).“
2007-10-03 Funded by a $30 million grant from the Government of Alberta through Alberta Ingenuity, (whose President and CEO is Dr. Peter Hackett) the Alberta Water Research Institute (chaired by Dr. Lorne Taylor, the former Minister of Alberta Environment) claim they will fund innovative, practical water research that will “tackle some of Alberta’s most pressing water-related environmental issues, including habitat decline, biodiversity loss, water flow and water quality. [T]he research will involve a multi-disciplinary approach — including biologists, engineers, economists and other social scientists — to provide the knowledge water users, managers, industry, policy makers and consumers to help them make informed choices. [T]he Alberta Water Research Institute works in collaboration with The Alberta Energy Research Institute (AERI).” Their work focusses on Water Treatment and Recycling; Oilsands Tailings Treatment with water recycling; reducing water use in electrical power generation
2007-11-07 T. Boone Pickens engineered one of a shrewd takeover of an 8 acres stretch of scrub-land near Amarillo, Roberts County, Texas. The acquisition of this land was “central to Pickens’ plan to create an agency to condemn property and sell tax-exempt bonds in the search for one of his other favorite commodities: water. Approval of the water district was all but certain as Texans voted Tuesday in state and local elections. By law, only the two people who actually live on the eight acres will be allowed to vote: the manager of Pickens’ nearby Mesa Vista ranch and his wife. The other three owners, who will sit on the district’s board, all work for Pickens. Pickens “has pulled a shenanigan,” said Phillip Smith, a rancher who serves on a local water-conservation board. “He’s obtained the right of eminent domain like he was a big city. It’s supposed to be for the public good, not a private company.” Pickens and his allies say no shenanigans are involved. Once the district is created, the board will be able to issue tax-exempt bonds to finance construction of Pickens’ planned 328-mile, $2.2 billion pipeline to transport water from the Panhandle across the prairie to the suburbs of Dallas and San Antonio. If Pickens can’t find a buyer for the bonds or for his water – and he hasn’t yet – he might buy the bonds himself to jump-start the project, said his Dallas-based lawyer, Monty Humble of Vinson and Elkins. The board will spend about $110 million to buy the right-of-way for the pipeline, using the power of eminent domain to acquire property if necessary, Humble said. Still, Pickens faces obstacles. To help pay for construction, he plans to piggyback wind power on the water infrastructure. He plans wind farms on the ranchland and wants to run electricity cables along the right-of-way of Mesa’s water pipeline. All told, the wind and water project is expected to cost more than $10 billion. Pickens said he has about $100 million invested so far. “This is a $10 billion project,” he said in an interview. “It better be profitable.” Most of all, he needs a group of confirmed buyers for his water. That’s in part because of political resistance to his plan for acquiring water rights. Several Dallas-area water districts have refused to sign up. “We have real concerns about private control of water,” said Ken Kramer, director of the Texas Sierra Club. “Water is a resource, yet in some respects it is a commodity. It’s as essential to human life as air. That puts water in a different class.” John Spearman Jr., a Roberts County rancher and chairman of the Panhandle Groundwater Conservation District, is one of many local critics who contend that Pickens’ water play could upset conservation efforts and seeks to profit from shortages of a vital resource. “He has the legal authority to do it,” Spearman says. “We can’t stop him (Woellert 2007-11-07.”
2008-06-12 In 2008 he introduced “The Pickens Plan, [which called] for the United States to cut its dependence on foreign oil by more than one-third by making natural gas and wind power much bigger parts of America’s energy supply.” (CBC 2009-06-17.) “T. Boone Pickens […] owns more water than any other individual in the U.S. and is looking to control even more. He hopes to sell the water he already has, some 65 billion gallons a year, to Dallas, transporting it over 250 miles, 11 counties, and about 650 tracts of private property. The electricity generated by an enormous wind farm he is setting up in the Panhandle would also flow along that corridor. As far as Pickens is concerned, he could be selling wind, water, natural gas, or uranium; it’s all a matter of supply and demand. “(Berfield 2008).” Business Week
2008-05-08 The U.S. Senate committee gave its approval to restore a 240 km stretch of the dried-up San Joaquin River and the historic Chinook salmon run spawning area. The settlement agreement, supported by almost every member of the California congressional delegation, anticipated spending as much as $800 million U.S. with farmers paying c. $330 million, and the rest from California bonds and the federal government.
2008-06 T. Boone Pickens a Texas oil tycoon, who sees water as blue gold and already owns more of it than any other American. He thirsts to increase his water assets and he is now showing a great interest in Alberta. While he has carefully massaged his media image to be tauted as environmentally friendly and he has generously gifted the University of Calgary, his methods are shrewd, buying what others see as useless until they realize how much control he has over their water supply. He is persistent and worked for decades to change laws in his favour in the Canada River watershed in Texas. Pickens donated $2.25 million in 2006 to establish the Boone Pickens Centre for Neurological Science and Advanced Technologies at the the Hotchkiss Brain Institute, University of Calgary, which was created by Pickens’ long-time friend Calgary Flames co-owner Harley Hotchkiss with a gift of $15 million in 2004. In June 2008 Pickens donated another $25 million to research at the Hotchkiss Brain Institute which is the largest donation ever given to the University of Calgary by a single person and the only philanthropic donation Pickens has made outside the U.S. Pickens, who has an estimated net worth of $3 billion, has given away $700 million from 2003 to 2008. Pickens lived in Calgary briefly in the 1960s working as a geologist ( “CBC 2008-06-20).”
2008-09-26 Molina and Chowla argued that the World Bank has been a principal financier of privatisation and has increasingly made its loans conditional on local governments privatising their waterworks. The ICIJ’s study of 276 World Bank water supply loans from 1990 to 2002 showed that 30 per cent required privatisation – the majority in the last five years (Molina and Chowla 2008-09-26.“). The initial hopes for privatisation have faded as governments work towards de-privatization of water services (Molina and Chowla 2008-09-26.“)
2009-03-18The Council of Canadians, Our Water Commons, Food and Water Watch and other organizations held a panel at the official World Water Forum to launch a report highlighting success stories of communities working to protect the water commons through a communitarian approach to water management and calling for the recognition of water as a human right.Karunananthan 2009-03-18. .”
2009-03-16 to 2009-03-22 The world’s biggest water-related event, with over 25,000 participants, the Fifth World Water Forum was held in Istanbul, Turkey on the theme of “Bridging Divides for Water.”
2009-06 Jim Webber, general manager of the Western Irrigation District wants the province to respect the first-in-time, first-in-right licensing system to prevent an economic disaster for the 400+ farms east of Calgary and a handful of communities, including Strathmore (Klaszus 2009-06-25).
2009-03-29 The United States Congress appropriated $88 million to help fund the restoring of salmon spawning grounds as part of a bill providing wilderness protection to more than 2 millions acres in nine states.
2009-06-29 In California the debate has become increasingly polarized between agriculture and environmental interests over the distribution of water in the face of a three year drought that has left 450,000 acres unplanted in California as well as causing the third collapse of the salmon industry as the San Joaquin River spawning grounds dried up. (In 2004 a federal judge ruled the U.S. Bureau of Reclamation in violation of California law for not letting enough water flow which has resulted in the depletion of the historic Chinook salmon population on the San Joaquin River which it is claimed, once supported the southernmost salmon run in North America. ) In Fresno County alone, normally the US most important agriculture county, farmers cannot plant in 262,000 acres because of a lack of water.Cone 2009-06-29).
CBC. 2009-06-17. “Texas oil billionaire eyes Alberta wind power.”
1. March 22nd is World Water Day
2. Since moving to Calgary, Alberta we have been following our source of city water. The Bow Glacier was stunningly beautiful last August. But like glaciers worldwide it is receding. The Elbow River which also flows through Calgary was very high this year even though much of Alberta’s farmland was experiencing a devastating drought. We’ve installed rainbarrels, planted drought-resistance perennials, overseeded our water-thirsty Kentucky grass with Sheep’s Fescue and generally tried to be more water wise, I am following water stories. Alberta has four major rivers tha drain most of the province: 1. The Peace and 2. Athabaska rivers drain the northern half of Alberta with their waters joining water from Lake Athabaska to form Alberta’s largest river, the Slave River, which flows into the Northwest Territories and on to the Arctic Ocean; 3. The North Saskatchewan River winds through the foothills and parkland of central Alberta. 4. The South Saskatchewan River, which is fed by three rivers that arise in the mountains, makes it way through dry farmland and prairie. The North and South Saskatchewan rivers join in the province of Saskatchewan and become the Nelson-Churchill system, and their waters eventually reach Hudson Bay There is also the smaller Beaver River, which flows through the heart of the Lakeland Region and then into the Churchill system and the Milk River, which passes briefly into Alberta
from Montana before returning south to flow finally to the Mississippi River and the Gulf of Mexico (Mitchell, Prepas and Crosby 1990:3) For a detailed map and more information visit Alberta Water
2. Moore Lake, c. 280 km northeast of Edmonton is a very popular recreational lake in Alberta’s Lakeland Region. Moore Lake is part of the Beaver Lake watershed. It is a headwater lake with outlets from the east shore into Hilda and Ethel Lakes and eventually into the Beaver River (which flows through the heart of the Lakeland Region and then into the Churchill system and the Milk River, which passes briefly into Alberta from Montana before returning south to flow finally to the Mississippi River and the Gulf of Mexico (Mitchell, Prepas and Crosby 1990:275).” “Moore Lake is underlain by the Muriel Lake Aquifer. In  the principal water sources for regional water needs were the aquifers and not the lake. The largest water users in the area [were] the oil sands industries. Oil sands and petroleum and natural gas leases in the Moore drainage basin are held by several companies, including Esso Resources and Husky Oil. The oil sands permits allow the companies to test and set up drilling operations for subsurface oil deposits, including those under the lake surface. There are no signficant gas pools in the area. As a result of Alberta Environmental studies of the water resources in the Cold Lake-Beaver River basin in the early 1980s, a long-term plan for water resources management in the Cold Lake region was adopted by the government in 1985. Under the provisions of this plan, Moore Lake will not become a major water supply for the oil industry. Major industrial water users will be required to obtain their water from a pipeline from the North Saskatchewan River (Mitchell, Prepas and Crosby 1990:275).”
3. History of Moore Lake and the Beaver River. “Woodland Cree occupied the region when the fur traders first arrived. The Beaver River, to the south of Moore Lake, was part of a major fur trade route from Lac Isle-a-la-Crosse, Saskatchewan to the Athabaska River. The first fur-trading post in the area was Cold Lake House. It was established by the North West Company in 1781 on the Beaver River near the present-day hamlet of Beaver Crossing (Mitchell, Prepas and Crosby 1990:273).”.” “Moore Lake is underlain by the Muriel Lake Aquifer. In  the principal water sources for regional water needs were the aquifers and not the lake. The largest water users in the area [were] the oil sands industries. Oil sands and petroleum and natural gas leases in the Moore drainage basin are held by several companies, including Esso Resources and Husky Oil. The oil sands permits allow the companies to test and set up drilling operations for subsurface oil deposits, including those under the lake surface. There are no signficant gas pools in the area. As a result of Alberta Environmental studies of the water resources in the Cold Lake-Beaver River basin in the early 1980s, a long-term plan for water resources management in the Cold Lake region was adopted by the government in 1985. Under the provisions of this plan, Moore Lake will not become a major water supply for the oil industry. Major industrial water users will be required to obtain their water from a pipeline from the North Saskatchewan River (Mitchell, Prepas and Crosby 1990:275).”
4. For amusement I am also reading an entertaining science fiction called Watermind that begins with a foaming journey of nano technology from Alberta down the Milk River flowing down the Mississippi to the Gulf of Mexico collecting toxic waste and data all along the way.
5. Western-style lifestyles and diets which are heavy on beef require much more water than healthier cereal or pulse-based diets (1 kg of grain-fed beef needs at least 15 cubic metres of water, while a 1 kg of cereals needs only up to three cubic metres). Pulse crops (including Dry beans, Kidney bean, haricot bean, pinto bean, navy bean, Lima bean, butter bean, Azuki bean, adzuki bean, Mung bean, golden gram, green gram, Black gram, Urad, Scarlet runner bean, Dry peas, Garden pea, Chickpea, Garbanzo, Bengal gram Black-eyed pea, blackeye bean, Lentil) commonly consumed with grain, provide a complete protein diet. Pulses are 20 to 25% protein by weight, which is double the protein content of wheat and three times that of rice. Pulses are sometimes called “poor man’s meat”. Pulses are the most important dietary predictor of survival in older people. In the Seven Countries Study legume consumption was highly correlated with a reduced mortality from coronary heart disease.
6. This Google Map below (a work in progress) traces some of the areas of concern regarding our watersheds where substantial control concentration of access, rights and strategic assets are quietly being acquired by individuals or individual families. The most troubling of these includes T. Boone Pickens who sees water as blue gold and already owns more of it than any other American. He thirsts to increase his water assets and he is now showing a great interest in Alberta. While he has carefully massaged his media image to be tauted as environmentally friendly and he has generously gifted the University of Calgary, his methods are shrewd, buying what others see as useless until they realize how much control he has over their water supply. He is persistent and worked for decades to change laws in his favour in the Canada River watershed in Texas.
7. Tim Cestnick, founder of WaterStreet Family Wealth Counsel, in 2007 set the threshold for High Net Worth HNW as $5-million to $20-million in net worth and for Ultra High Net Worth UHNW at $20-million-plus.
My Google Map: Blue Gold
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Beck, Ulrich. 1992. Risk Society.
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Filed in Business & Finance, climate change, democracy, economic efficiency, Economics, Economy & Finance, ethics, everyday life, Human Geography, meta-ethics, MyGoogleMaps, Power and everyday life, Public Policy, risk management, Risk Society, Social Justice, visualizations
Tags: Alberta, aquifers, Athabasca River, blue gold, Bow River, Brundtland, Calgary watershed, corporate social responsibility, Council of Canadians, de-privatisation of water services, de-privatization of water, drought, economic efficiency, Food and Water Watch, groundwater, moral mathematics, OECD, Our Common Future, Our Water Commons, privatization of water, Public Private Partnership (PPP), riverlorians, T. Boone Pickens, Ultra High Net Worth (UHNW), vulnerability to social exclusion, water allocation, water conservation, water poverty index, water-stressed, wind farms on water pipelines, World Water Forum
June 29, 2009
“Keep alive in your hearts
the feeling of confidence
that the light of knowledge
will inevitably dispel
the clouds of ignorance,
that concern for justice
will ultimately conquer
hatred and enmity.
[… The] proper response to oppression
is neither to succumb in resignation
nor to take on the characteristics of the oppressor.
The victim of oppression
can transcend it
through an inner strength
that shields the soul
from bitterness and hatred
consistent principled action.” UHJ 2009
There is such a contrast between the use of the term “principled action” when used here for healing the human spirit and the way it is used in writings referring to doing ethics, applied ethics, ethics talk. Is it about words or deeds?
“Keep alive in your hearts” calls to all of us to sustain consistent principled action freed from bitterness and hatred even when oppressed, refuse to resign to victimization, be careful not to respond to oppression by taking on the characteristics of the oppressor, struggle to continue to believe that knowledge will overcome ignorance, that justice will conquer injustice, nurture and maintain inner strength that will sustain us through the most ethically distressing dilemmas of our lives, nurture confidence when you feel doubt, seek knowledge instead of vengeance. This far transcends concepts of ethical codes and minimal ethical standards.
“Some people confuse acting in good conscience with “doing ethics”. While personal good conscience is necessary for acting ethically, it is not sufficient. There is also confusion of so-called “codes of ethics’ which are really codes of professional etiquette – for instance, between physicians or between lawyers – or which define unprofessional conduct, with codes of ethics properly so-called. Just because certain conduct does not breach professional norms, does not necessarily mean that it is ethical […] “Doing ethics”, especially by an ethicist, requires one to undertake an informed structured analysis that will assist in the identification and prioritisation of the full range of values relevant to, or affected by, the various decision options that are open in any given situation. It is inevitable that one’s own values come into play, but they should be identified as such and the other people involved advised of this. I sometimes imagine that “doing ethics” can be compared with opening a beautiful, intricately painted fan. The struts are the different schools of ethics, or the fundamental bases of the alternative analyses that could be used. The fabric that joins the struts may display one or several scenes. When we all agree on the outcome, although we do so for different reasons, we are choosing a different location in the one scene. When we disagree on the outcome, we are identifying several scenes and arguing that one scene is fundamental and should take priority in setting the overall tone or interpretation of the painting that the artist has portrayed on the fan, and that the other scenes must be interpreted in light of this. We all need to learn how to do ethics, even if we do not always succeed in doing this. “Doing ethics” is not a simple task; it is a process, not an event; and, in many ways, no matter in which capacity or context we do ethics, it is a life-long learning experience. The most important requirement, however, is that we all engage in that process, that is, we all participate in “ethics talk” (Somerville 2006).“
Filed in Business & Finance, Economy & Finance, ethics, governance, justice, meta-ethics, My Reviews, Philosophy, philosophy and society, Political Philosophy, Power and everyday life, Public Policy, Religion, religion and politics, social cohesion, Social History Timeline, society, wealth disparities will intensify
Tags: allocating limited resources, applied ethics, corporate social responsibility, CSR, doing ethics, ethical distress, ethical imagination, ethical intelligence, ethics talk, Global Compact, human rights, minimum ethical standards, principled action