Archive for June 1st, 2010
Posted by Admin on June 1, 2010
Posted by Admin on June 1, 2010
By MATTHEW BROWN | Posted: Monday, May 31, 2010 4:11 pm
Independent scientists and government officials say there’s a disaster we can’t see in the Gulf of Mexico’s mysterious depths, the ruin of a world inhabited by enormous sperm whales and tiny, invisible plankton.
Researchers have said they have found at least two massive underwater plumes of what appears to be oil, each hundreds of feet deep and stretching for miles. Yet the chief executive of BP PLC _ which has for weeks downplayed everything from the amount of oil spewing into the Gulf to the environmental impact _ said there is “no evidence” that huge amounts of oil are suspended undersea.
BP CEO Tony Hayward said the oil naturally gravitates to the surface _ and any oil below was just making its way up. However, researchers say the disaster in waters where light doesn’t shine through could ripple across the food chain.
“Every fish and invertebrate contacting the oil is probably dying. I have no doubt about that,” said Prosanta Chakrabarty, a Louisiana State University fish biologist.
On the surface, a 24-hour camera fixed on the spewing, blown-out well and the images of dead, oil-soaked birds have been evidence of the calamity. At least 20 million gallons of oil and possibly 43 million gallons have spilled since the Deepwater Horizon drilling rig exploded and sank in April.
That has far eclipsed the 11 million gallons released during the Exxon Valdez spill off Alaska’s coast in 1989. But there is no camera to capture what happens in the rest of the vast Gulf, which sprawls across 600,000 square miles and reaches more than 14,000 feet at its deepest point.
Every night, the denizens of the deep make forays to shallower depths to eat _ and be eaten by _ other fish, according to marine scientists who describe it as the largest migration on earth.
In turn, several species closest to the surface _ including red snapper, shrimp and menhaden _ help drive the Gulf Coast fishing industry. Others such as marlin, cobia and yellowfin tuna sit atop the food chain and are chased by the Gulf’s charter fishing fleet.
Many of those species are now in their annual spawning seasons. Eggs exposed to oil would quickly perish. Those that survived to hatch could starve if the plankton at the base of the food chain suffer. Larger fish are more resilient, but not immune to the toxic effects of oil.
The Gulf’s largest spill was in 1979, when the Ixtoc I platform off Mexico’s Yucatan peninsula blew up and released 140 million gallons of oil. But that was in relatively shallow waters _ about 160 feet deep _ and much of the oil stayed on the surface where it broke down and became less toxic by the time it reached the Texas coast.
But last week, a team from the University of South Florida reported a plume was headed toward the continental shelf off the Alabama coastline, waters thick with fish and other marine life.
The researchers said oil in the plumes had dissolved into the water, possibly a result of chemical dispersants used to break up the spill. That makes it more dangerous to fish larvae and creatures that are filter feeders.
Responding to Hayward’s assertion, one researcher noted that scientists from several different universities have come to similar conclusions about the plumes after doing separate testing.
No major fish kills have been reported, but federal officials said the impacts could take years to unfold.
“This is just a giant experiment going on and we’re trying to understand scientifically what this means,” said Roger Helm, a senior official with the U.S. Fish and Wildlife Service.
In 2009, LSU’s Chakrabarty discovered two new species of bottom-dwelling pancake batfish about 30 miles off the Louisiana coastline _ right in line with the pathway of the spill caused when the Deepwater Horizon burned and sank April 24.
By the time an article in the Journal of Fish Biology detailing the discovery appears in the August edition, Chakrabarty said, the two species _ which pull themselves along the seafloor with feet-like fins _ could be gone or in serious decline.
“There are species out there that haven’t been described, and they’re going to disappear,” he said.
Recent discoveries of endangered sea turtles soaked in oil and 22 dolphins found dead in the spill zone only hint at the scope of a potential calamity that could last years and unravel the Gulf’s food web.
Concerns about damage to the fishery already is turning away potential customers for charter boat captains such as Troy Wetzel of Venice. To get to waters unaffected by the spill, Wetzel said he would have to take his boat 100 miles or more into the Gulf _ jacking up his fuel costs to where only the wealthiest clients could afford to go fishing.
Significant amounts of crude oil seep naturally from thousands of small rifts in the Gulf’s floor _ as much as two Exxon Valdez spills every year, according to a 2000 report from government and academic researchers. Microbes that live in the water break down the oil.
The number of microbes that grow in response to the more concentrated BP spill could tip that system out of balance, LSU oceanographer Mark Benfield said.
Too many microbes in the sea could suck oxygen from the water, creating an uninhabitable hypoxic area, or “dead zone.”
Preliminary evidence of increased hypoxia in the Gulf was seen during an early May cruise aboard the R/V Pelican, carrying researchers from the University of Georgia, the University of Mississippi and the University of Southern Mississippi.
An estimated 910,000 gallons of dispersants _ enough to fill more than 100 tanker trucks _ are contributing a new toxin to the mix. Containing petroleum distillates and propylene glycol, the dispersants’ effects on marine life are still unknown.
What is known is that by breaking down oil into smaller droplets, dispersants reduce the oil’s buoyancy, slowing or stalling the crude’s rise to the surface and making it harder to track the spill.
Dispersing the oil lower into the water column protects beaches, but also keeps it in cooler waters where oil does not break down as fast. That could prolong the oil’s potential to poison fish, said Larry McKinney, director of the Harte Research Institute at Texas A&M University-Corpus Christi.
“There’s a school of thought that says we’ve made it worse because of the dispersants,” he said.
Associated Press writer Jason Dearen contributed to this report from San Francisco.
Posted by Admin on June 1, 2010
Posted by Admin on June 1, 2010
Posted by Admin on June 1, 2010
Free-market capitalism has imploded, and Europe’s moment has not come: big-picture explanations of the world rarely hold good for long
Grievous, but perhaps not grievous enough. Sufficient to prompt swift action to prevent the global economy sliding into depression, but perhaps so successful that the option of a return to business as usual has been kept alive.
Almost three years into the financial crisis , all regions are growing, albeit at varying speeds. There is pressure on heavily indebted governments to abandon unorthodox economic policies and return to rigid fiscal austerity. Banks, hedge funds and private equity firms are lobbying hard to water down attempts to rein in their activities.
Adrian Blundell-Wignall, an official at the Organisation for Economic Co-operation and Development, spoke for many last week when he said: “How big is big enough?”
Speaking in a personal capacity at the OECD’s annual ministerial forum, Blundell-Wignall warned there was likely to be a second, even bigger, meltdown unless there was radical reform of the financial sector, including splitting up banks with both retail and speculative arms.
Although this is a sombre conclusion, it may prove accurate. The current crisis has yet to have the cathartic impact of the slump of the 1930s, when the economic cost was far higher and the links between the failure of the old laissez-faire model and the drift to political extremism were plain.
Nouriel Roubini, one of the few economists to spot the sub-prime crisis coming , says in his new book, Crisis Economics (with Stephen Mihm, published by Allen Lane), that it is precisely because the downturn has been handled more deftly this time that the impetus for deep, structural reform has faltered. “Had policymakers failed to arrest the crisis, as they failed during the Depression, the calls for reform today would be deafening: there’s nothing like ubiquitous breadlines and 25% unemployment to focus the minds of legislators.”
But, thankfully, policymakers did avoid most of the mistakes of the 1930s and we are where we are. In the circumstances, what the future holds is either full-blown recovery courtesy of the breathing space provided by central banks and finance ministries; another crash preceded by what the late socialist thinker Chris Harman described as “zombie capitalism”; or reform and renewal.
Full recovery would mean that the global economy could continue to prosper even when governments withdraw the support provided by low interest rates, tax cuts and higher public spending. That looks improbable, particularly since there is likely to be a simultaneous tightening of fiscal policy in many countries.
Zombie capitalism is where governments continue to buy up worthless paper from banks, where fundamentally insolvent institutions are kept alive for fear that their failure would cause systemic risk, where every country tries to export its way out of trouble, where the shrinkage of the financial sector depresses growth rates, and where the global imbalances between surplus and deficit countries remain worryingly large. That looks a more likely option.
What, then, are the prospects for reform and renewal? At the very least, this route is likely to be long, hard and strewn with setbacks. It may not be chosen, as Blundell-Wignall and Roubini fear, until there is system failure. The good news, though, is that the ideological vacuum left by the crisis creates the intellectual and political space for change. Since the demise of communism at the end of the 1980s, the west has had three competing belief systems. The first, free-market capitalism, imploded three years ago. The second, Europe, has taken a fearful battering over the past few months. A third, environmentalism, still has only a limited number of devotees.
Simon Tormey, professor of social and political sciences at Sydney University, put it well during a debate on the future of capitalism at the OECD. This, he said, is a pagan world where there is a scepticism about meta-narratives.
Rightly so. History shows that big-picture explanations of the world rarely hold good for long, and end with a fanatical core of true believers seeking to impose their will on the rest of us. If, as Jimmy Porter says in Look Back in Anger, there are no great causes left to fight for, that’s almost certainly a good thing. The demise of the meta-narrative doesn’t mean the end of politics or the abandonment of the search for making life better. On the contrary, it means a messier world in which there is less dogma but greater experimentation.
Let’s put this into some sort of context. Up until 2007, the credo was that markets worked, period. The world would be a better place if the role of government was diminished and financial markets allowed to get on with making money. If there was a role for the state, it was to champion structural reform of economic life: removing barriers to trade and, by investment in human capital, making their workforces more employable.
What actually happened was that endless financial innovation destabilised the global economy, while the benefits of growth accrued to a small cadre at the top and not to the rest of the newly flexible labour market. There was growth, but only because policymakers actively connived in the creation of bubbles. Indebtedness masqueraded as wealth.
The shorthand term for this model was Anglo-Saxon capitalism, and when it blew up it was thought that Europe’s moment had come. The European Union offered a kinder, more civilised way of running the economy in the 21st century, providing solidarity instead of cut-throat competition, protection for its citizens rather than low wages and welfare cuts.
Belief in Europe was just as messianic – and just as bonkers – as belief in the market. The idea was that you could take a dozen or more countries of wildly differing economic performance, with entirely disparate cultures, and bolt them harmoniously together. What’s more, you could do this without a common language to facilitate labour mobility or a common budget to transfer resources from rich countries to poor countries.
During the bubble years these fundamental design flaws were kept hidden, but they have been exposed by the crisis. Low interest rates allowed countries on the periphery to grow strongly for a while, covering up their steady loss of competitiveness against the country at Europe’s core, Germany. The financial crash resulted in a deep recession, soaring budget deficits and fears in the financial markets of debt default.
For all the talk of European solidarity, there is absolutely no evidence that German taxpayers will agree to a common fiscal policy to provide the budgetary support for the weaker parts of the euro area that Washington provides for the poorer US states. As such, the only options for countries like Greece , Ireland and Spain are devaluation (ruled out by monetary union), default (ditto) or years of deflation. They have opted for the third course, even though this will lead to slower growth and make it even harder to reduce budget deficits. Europe, touted as a progressive alternative to Anglo-Saxon economics, has become neo-liberalism on steroids.
Ultimately, the problem with the meta-narratives is that they don’t deliver. The postwar era of strong trade unions, full employment policies and capital controls produced stronger, more equitable growth than three decades of deregulation, liberalisation and flexible labour markets. The more integrated Europe has become, the worse it has performed.
China and India prove that it is possible to thrive without a meta-narrative. Both countries have systems of managed capitalism fully in the tradition of the mixed economies that prevailed in the west during the heyday of social democracy. What counts is what works. There is a lesson in that somewhere.
Economics Financial crisis European debt crisis Economic policy Banking Recession Greece Spain Ireland Europe European Union Germany Larry Elliott