National Geographic on the World Food Crisis

There's an amazing and chilling overview from National Geographic encapsulating a brief history of modern agriculture and detailing it's impact on the continuing world food crisis.

It highlights the myriad ways in which our current systems to feed the world are completely unsustainable, and highlights some of the challenging decisions that arise when we are asked to do damage to our planet, promote a monoculture agriculture system entirely dependent on dwindling fossil fuels and big agribusiness, or let people starve.

But is a reprise of the green revolution—with the traditional package of synthetic fertilizers, pesticides, and irrigation, supercharged by genetically engineered seeds—really the answer to the world's food crisis? Last year a massive study called the "International Assessment of Agricultural Knowledge, Science and Technology for Development" concluded that the immense production increases brought about by science and technology in the past 30 years have failed to improve food access for many of the world's poor. The six-year study, initiated by the World Bank and the UN's Food and Agriculture Organization and involving some 400 agricultural experts from around the globe, called for a paradigm shift in agriculture toward more sustainable and ecologically friendly practices that would benefit the world's 900 million small farmers, not just agribusiness.

The green revolution's legacy of tainted soil and depleted aquifers is one reason to look for new strategies. So is what author and University of California, Berkeley, professor Michael Pollan calls the Achilles heel of current green revolution methods: a dependence on fossil fuels. Natural gas, for example, is a raw material for nitrogen fertilizers. "The only way you can have one farmer feed 140 Americans is with monocultures. And monocultures need lots of fossil-fuel-based fertilizers and lots of fossil-fuel-based pesticides," Pollan says. "That only works in an era of cheap fossil fuels, and that era is coming to an end. Moving anyone to a dependence on fossil fuels seems the height of irresponsibility."

Personal Credit Defaults Threaten "Glimmers"

from Mish's site, some excellent analysis of rising personal credit defaults and how they could hit the banks' bottom line.

Swine Flu Made in a Lab?

An Australian researcher certainly seems to think so.

The World Health Organization is investigating a claim by an Australian researcher that the swine flu virus circling the globe may have been created as a result of human error.

Adrian Gibbs, 75, who collaborated on research that led to the development of Roche Holding AG’s Tamiflu drug, said in an interview that he intends to publish a report suggesting the new strain may have accidentally evolved in eggs scientists use to grow viruses and drugmakers use to make vaccines. Gibbs said he came to his conclusion as part of an effort to trace the virus’s origins by analyzing its genetic blueprint.

Back at the helm soon...

All apologies for the lapse in posts. I went in for some routine outpatient surgery and ended up spending five days in the hospital with some unfortunate complications. I'm still recovering but am at least back at the computer and should resume normal posting soon.

Gulf Oil Peak

from the Houston Chronicle:

Oil production in the Gulf of Mexico could peak at more than 1.8 million barrels per day by 2013 under the industry’s best-case scenario, but natural gas production will likely continue its decadelong decline, according to a government study released Monday at the Offshore Technology Conference.

About 1.1 million barrels of oil per day were produced in the Gulf in 2008, according to the Minerals Management Service, with about 829,000 coming from deep-water fields — those drilled in more than 1,000 feet of water. Natural gas production was about 6.43 billion cubic feet per day, with about 2.6 bcf coming from the deep water.

Oil production from projects the industry has currently or is committed to starting up could peak at 1.6 million barrels by 2011, according to the agency’s forecast, but if announced discoveries and undiscovered resource estimates are included, the peak could reach 1.8 million barrels by 2013.

....

The Gulf of Mexico accounts for about 25 percent of domestic oil production and 15 percent of natural gas output, according to the agency.

Emphasis added.

New UN Climate Resolution Seems Anemic

from Reuters:

Among developed nations, the European Union says cuts must ensure that world temperatures do not rise more than 2 Celsius (3.6 Fahrenheit) above levels that existed before the Industrial Revolution.

"Submissions so far from all countries are nowhere near 2 Celsius," said Bill Hare, a visiting scientist at the Potsdam Institute for Climate Impact Research and a director of Climate Analytics.

"Many countries are slumbering through the climate crisis like Sleeping Beauty," Norwegian Environment Minister Erik Solheim said, asked about the gap between the rich nations' offers and the expectations of developing nations.

America's Largest Reservoir is Drying Up

from GOOD Magazine:

Lake Mead stores water from the Colorado River. When full, it holds 9.3 trillion gallons, an amount equal to the water that flows through the Colorado River in two years. The water from Lake Mead is used for many things. It irrigates a million acres of crops in the United States and Mexico, and supplies water to tens of millions of people. Its mighty Hoover Dam generates enough electricity to power a half-million homes. Additionally, the power from Hoover Dam is used to carry water up and across the Sierra Nevada Mountains on its way to Southern California.

In 2000, the water level at Lake Mead was 1,214 feet, close to its all-time high. It’s been dropping ever since. When Lake Mead was built during the 1920s and 1930s, the western United States was enjoying one of the wettest periods of the past 1,200 years. Even today, our so-called drought is still wetter than the average precipitation for the area averaged over centuries. In other words, for the last 75 years, we’ve been partying like it’s 1929. Farmers grow rice by flooding arid farmland with water from Lake Mead; residents of desert communities maintain front lawns of green grass; golfers demand courses in areas where the temperature exceeds 100 degrees Fahrenheit during the summer.

The combination of a changing climate and a strong demand for the lake’s remaining water has resulted in 100 foot drop since 2000. While that’s just 10 percent under the lake’s high water mark in 1983, Lake Mead is like a martini glass—wide at the top and narrow at the bottom. That 10 percent dip represents a loss of half Lake Mead’s water supply in nine years, from 96 percent capacity to 43 percent.

Raymond James believes in Peak Oil...

Analysts Raymond James are on board with the concept of Peak Oil.

Global production of petroleum peaked in the first quarter of last year, says analysts Raymond James, which “represents a paradigm shift of historic proportions. Unfortunately, mankind better get ready to live in a peak oil world because we believe the ‘peak’ is now behind us.”

Raymond James’s notes that non-OPEC oil production apparently peaked in the first quarter of 2007, and given precipitous falls in oil output from Russia to Mexico, there’s not much hope for a recovery. OPEC production—and thus global output—peaked a little later, in the first quarter of 2008, Raymond James says.

The contention rests on a simple argument: OPEC oil production actually fell even as oil prices were above $100 a barrel, a sign of the “tyranny of geology” that limits the easy production of ever-more crude.

“Those declines had to have come for involuntary reasons such as the inherent geological limits of oil fields … We believe that the oil market has already crossed over to the downward sloping side of Hubbert’s Peak,” the analysts write.

My hope is that enough trusted names will get behind the Peak Oil concept that the public-at-large will start to get their heads around it. Once it moves in from the fringe, we can get more people putting their shoulders to the wheel as we try to figure out what the hell to do about it.

To that end, it's also worth mentioning that Peak Oil is getting traction in some other circles as well.

But it seems that companies outside those industries most directly exposed to volatility in the supply of fossil fuels—oil and gas, construction and energy utilities—still do not see this as being a direct threat to their own businesses. Ernst & Young says that the risk of energy shock is a peril that is still “below the radar” for most enterprises.

However, the Industry Taskforce on Peak Oil & Energy Security—a group of UK-based companies including Arup, Foster and Partners and Virgin Group—has warned of the consequences of not being prepared for oil production reaching its peak.

“Neither the government, nor the public, nor many companies, seem to be aware of the dangers the UK economy faces from imminent peak oil …The risks to UK society from peak oil are far greater than those that tend to occupy the government’s risk-thinking, including terrorism,” the Taskforce’s report said.

These dangers are not confined to the UK, but the Taskforce calls on the British government and companies to consider the risks and to plan strategies in response to this problem.

The funny thing is, not only is ignoring the problem socially irresponsible, it's also tantamount to competitive suicide. This will be (as quoted from above) a "paradigm shift of historic proportions" and anybody not ready to get with the program, business/industry included, is going to find themselves trying to play a very hard game of catch up if they can't get ahead of the ball.

Pork Industry Boo-Hoo: Whine of the Swine

The pork industry have their tails in a curl because all this talk of "swine flu" is taking a chunk out of pork prices.

They might find a bit more sympathy floating around if it didn't look quite so much like the virus was caused by, bred in, and released from their own farms.

If the USDA is stepping in anywhere, it should be to reign in unsafe megafarming practices on account of the possible health risks to the world population.

Europe's "Borrow and Forget" Mentality Might Be Forced to End

via the Telegraph:

It looked easy for Western governments during the credit bubble, when China, Russia, emerging Asia, and petro-powers were accumulating $1.3 trillion a year in reserves, recycling this wealth back into US Treasuries and agency debt, or European bonds.

The tap has been turned off. These countries have become net sellers. Central bank holdings have fallen by $248bn to $6.7 trillion over the last six months. The oil crash has forced both Russia and Venezuela to slash reserves by a third. China let slip last week that it would use more of its $40bn monthly surplus to shore up growth at home and invest in harder assets – perhaps mining companies.

...

"The crux of the problem is not sub-prime, or Alt-A mortgage loans, or this or that bank. Governments around the world allowed their banking systems to grow unchecked, in some cases growing into an untenable liability for the host country," said Mr Bass.

A disturbing number of states look like Iceland once you dig into the entrails, and most are in Europe where liabilities average 4.2 times GDP, compared with 2pc for the US. "There could be a cluster of defaults over the next three years, possibly sooner," he said.

Let us not forget that the US is certainly guilty of this as well.

401(k) Funds Frozen?

from the Wall Street Journal:

Though 401(k) plans revolutionized the retirement-savings landscape by putting investment decisions in the hands of individuals, the restrictions show that plan participants aren't always in the driver's seat.

Individual investors mightn't even be aware of some behind-the-scenes maneuvers causing liquidity problems in their retirement plans. Many funds offered in 401(k) plans lend their portfolio holdings to other investors, receiving in exchange collateral that they invest in normally safe, liquid holdings.

The aim is often to generate a small but relatively reliable return that can help offset fund expenses. But in recent months, many of the collateral investments have gone haywire, prompting money managers to restrict retirement plans' withdrawals from the lending funds.

Some stable-value funds also are blocking the exits. These funds, available only in tax-deferred savings plans such as 401(k)s, typically invest in bonds and use bank or insurance-company contracts to help smooth returns. But in cases of employer bankruptcy and other events that can cause withdrawals, these funds can lock up investor money for months at a time.

Guess all those fees aren't a convenience charge after all?

Keeping the Unemployed Busy

Very thought-provoking piece in the LA Times about the relative passivity of the American unemployed, and why this might be the case.

In most parts of the world, from Paris to Beijing, mass unemployment brings the specter of mass social unrest. Not here, though, where 13 million people have accepted joblessness with nary a peep of protest.

Many reasons -- from Prozac to Pentecostalism -- have been cited to explain American passivity in the face of economic violence. But the truth may be far simpler: In America, being unemployed doesn't mean you have nothing to do but run around burning police cars. Unemployment has been reconfigured as a new form of work.

Please Keep All Arms Inside the Market at All Times

Those of you who are looking forward to another ride on the stock market's supposedly impending bullish upswing might want to take a look around and see what the folks in the board room are doing.

Almost 25% of Homeowners Underwater

via Bloomberg:

A growing number of U.S. homeowners owe more than their properties are worth after prices extended their two-year decline in the first quarter, Zillow.com said.

About 21.8 percent of all owners were underwater as of March 31, the Seattle-based real estate data service said in a report today. At the end of the fourth quarter, 17.6 percent of homeowners owed more than their original mortgage, while 14.3 percent had negative equity three months earlier.

Property values dropped 14 percent from a year earlier in the first quarter, reducing the median value of U.S. single- family homes, condominiums and cooperatives to $182,378, Zillow said. The decline has left about 20.4 million of the U.S.’s 93 million houses, condos and co-ops with loans higher than the properties are worth. The gain in underwater homeowners will lead to more bank repossessions, Zillow said.

I wonder how the much-touted "glimmers of hope" look to the quarter of American homeowners who are in this situation?

Stocks Rally, China Buying Less US Debt

Not being one to gloss over what good news we get, it bears mentioning even here that the markets are up and some sectors of the economy have at least the surface appearance of improvement.

However, not everyone seems to be sharing our brand of enthusiasm, as China doesn't see to think we look like such a great investment anymore...

The question I keep asking (along with many other, smarter people) is whether we're actually fixing the foundations of the problem, or just sloppily plastering over the holes.

Shots Across the Bow

So even the doomsayers are admitting that the swine flu might not end up being that big of a deal at the end of the day. And while some are criticizing the government's response as overreaction and fearmongering, I for one applaud their quick and well coordinated response. As the saying goes, "had this been an actual emergency..."

Speaking of which, I find it somewhat strange that America seems to be drawing the conclusion that we ought to be less worried about pandemic disease outbreaks, not more. It's as though, following too close to the car in front of us, we managed to avoid a serious collision by mere inches when that car stopped... but while driving away somehow came to the conclusion that following that close was a perfectly safe and acceptable practice, and immediately resumed doing so.

There's a good piece in the economist drawing attention to this idea, and here's an interesting interview that touches on the connection between industrial pig farms and new virus creation.