Fareed Zakaria GPS – CNN 03-20-16

Salient to Investors:

Fareed Zakaria said:

Trump’s nomination would transform the Republican party into a blue-collar populist, nationalist movement with a racial element, like many others in the West.

The Federation of American Scientists says Pakistan has the fastest growing nuclear arsenal – up as much as 44% in the last 4 years – and could have 251 warheads by 2025, the 5th largest stockpile in the world ahead of Great Britain.

The IEA says that 90% of new global electrical generation in 2015 came from renewable sources, of which more than 50% came from wind power. China has reduced its coal usage by 10% in just 4 years to under 70% of its total electricity.

Richard Haass at the Council on Foreign Relations said the era of consolidated nation states in the Middle East where governments hold sway over the entire territory is ending.

Thomas Frank said

Both US political parties have abandoned the working class and become the party of elites, and have stopped caring deeply about economic inequality. Inequality has worsened under Obama.

Broadly speaking, the Republican party is becoming a blue-collar populist nationalist party while the Democratic party is becoming the party of urban professionals.

Tom Wainwright at The Economist said:

Incarcerating drug dealers in the US and Europe only reduces supply and pushes up prices, while addictive consumption remains constant, thus inflating the size of the drug market and enriching the drug cartels.

Drugs should be legalized, one by one. Legalized marijuana has greatly reduced the criminal economy in places like Colorado and deals a huge blow to organized crime. Legalized heroin in Switzerland means addicts no longer have to steal or deal.

Piers Sellers said that overshooting the 2-degree global warming is a near certainty because of the momentum of the global economy, and solutions will be implemented later than scientists would like, as usual.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1603/20/fzgps.01.html

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Fareed Zakaria GPS – CNN 04-19-15

Salient to Investors:

Fareed Zakaria said:

  • Lee Kuan Yew said America will remain the world’s dominant power in the 21st century only if it is the dominant Pacific power.
  • Global stability will be shaped by how the US handles China.
  • Graham Allison at Harvard said that since 1500, war resulted in 11 of the 15 cases where a transition of power took place.
  • China is the second-largest economy, but first when measured by purchasing power parity: yet its IMF voting share is only equivalent to that of Holland and Belgium combined.
  • Washington should turn its energies, attentions, and effort to Asia.
  • Turkey will be an illiberal democracy for the foreseeable future. It is one of the strictest Internet sensors in the world and President Erdogan has called social media the worst menace to society. Erdogan has built a palace which is >30 times the size of the White House.

Henry Paulson said:

  • China will overtake the US as the world’s largest economy. China now builds more than half of the buildings on earth, consumes half the cement, half the coal, half the steel.
  • Xi Jinping wants and needs a good relationship with the US.
  • The US economy is growing but not quickly enough and with tremendous income disparity.
  • The greatest threat to US long-term pre-eminence is not China but our political inability to strengthen and revitalize our economy and competitiveness.

Larry Summers said:

  • The US economy is growing, but not creating jobs, while productivity is not rising anywhere near levels in the past. The cause is a global phenomenon of the industrial world, namely a surplus of savings due to increasing inequality, developing countries accumulating reserves, and people paying down debt versus much less demand and investment.
  • Despite record low interest rates and near-high non-employment we are investing less in infrastructure than in any time since WWII on a net basis.
  • Borrowing money at 1% or less on average to finance the federal government is not the real problem; which is not making investments that offer very high rates of return for our children – instead, we are deferring maintenance and leaving them with a large liability.
  • The US should raise the minimum wage and allow unions a way to organize, which has been unavailable due to the enforcement, or not, of labor laws for the last quarter century.
  • The fundamental objective should be to raise middle-class incomes.
  • The US federal deficit has gone from 11% of GDP to below 3% of GDP, lower relative to the economy than the average over the last 40 years.

Musta Akyol said power has corrupted the ruling party in Turkey – certainties to win the upcoming election – though President Erdogan is no Putin and Turkey will not impose Sharia law and become Saudi Arabia any time soon.

David Brooks at The New York Times said:

  • Marco Rubio is the best of the Republican presidential candidates – creative and intellectually smart. Scott Walker is very practical and very sharp and, unlike all of his competitors, was a governor.
  • We underestimate international trends and electoral tastes. Tough people are winning, including Netanyahu and Merkel.
  • 53 percent of the electorate will probably be women.
  • Politicians who have a deep inner voice, like Abraham Lincoln, are few. Most are busy all the time, lack an inner voice, and are all me, me, me.  The age we live in selects out those with an inner life.

Jeffrey Sachs said:

  • 2015 is our last chance to act on climate change. The earth is warming – 2014 was the hottest year in instrument record – and the climate is becoming more unstable.
  • The population of 800 million people in 1750 has increased to over 7 billion today, while each person now uses ten times the resources.
  • Technology can accelerate the disaster or solve it. While solar is clean and much less expensive, the fossil fuel industry is now much more productive.
  • If China and India continue to completely depend on coal then it does not matter what you and I do.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript

at http://transcripts.cnn.com/TRANSCRIPTS/1504/19/fzgps.01.html

World’s Biggest Market Crashes and You Didn’t Even Know It – Bloomberg 09-30-14

Salient to Investors:

Marco Lambertini at The World Wildlife Foundation said:

  • More than half of the world’s vertebrates have disappeared between 1970 and 2010, primarily due to exploitation (37%), habitat degradation (31%), habitat loss (13%), and global warming (7.1%). Meanwhile the human population has nearly doubled.
  • Latin America’s biodiversity dropped 83%, the most of any region.
  • It would take 1.5 planet Earths to meet the present demands that humanity makes on nature: if every human had the same lifestyle as the typical American, it would take 3.9 planet Earths.
  • The effects of climate change are only just starting to be felt and the toll on wildlife is rising.

Read the full article at http://www.bloomberg.com/news/2014-09-30/depressed-market-half-of-world-s-wildlife-disappears-in-40-years.html

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Health of oceans ‘declining fast’ – BBC News 10-03-13

Salient to Investors:

The International Programme on the State of the Ocean said the health of the oceans is deteriorating even faster than had previously thought, and says conditions are ripe for the sort of mass extinction event that has afflicted them in the past. IPSO said the oceans have been shielding us from the worst effects of accelerating climate change by absorbing excess CO2 from the atmosphere, and though terrestrial temperature increases may be experiencing a pause, the oceans continue to warm.

IPSO said the oceans face a cocktail of threats more powerful than the individual problems themselves, including:

    • Being heated by climate change
    • Slowly turning less alkaline by absorbing CO2
    • Overfishing and pollution.
    • Dead zones formed by fertilizer run-offs.
    • Public and policymakers are mostly failing to recognize, or choosing to ignore, the severity of the situation.
    • Coral reefs suffering from higher temperatures, acidification, and bad fishing practices, pollution, siltation and toxic algal blooms.

Dan Laffoley at the International Union for Conservation of Nature said deferring action will increase costs in the future and lead to even greater, perhaps irreversible, losses.

Alex Rogers at Oxford University said past extinctions involved warming seas, acidification and low oxygen levels, all of which are rising. Rogers said fisheries may be recovering by better management in the US and Europe, but globally they are not, and while melting sea ice would increase fisheries near the poles, warmer waters in the tropics reduce mixing of nutrients and lead to lower production. Rogers said dead zones appear to be increasing though may reflect increased reporting, but no-one predicted the inability of fish to detect their environments properly due to ocean acidification effects.

Read the full article at http://www.bbc.co.uk/news/science-environment-24369244

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Four Numbers Say Wind and Solar Can’t Save Climate – Bloomberg 09-20-13

Salient to Investors:

Robert Bryce at the Manhattan Institute writes:

Any transition away from our existing energy systems will be protracted and costly. Energy transitions occur over decades, even centuries. Coal use in the US is declining, but it is soaring in the developing world and booming in Europe.

Global carbon dioxide emissions have increased 32 percent since 2002, nearly all in the developing world – 86% in Asia, 61% in the Middle East, 35% in Africa, minus 8% in the US (largely due to shale gas reducing coal use), and flat in Europe. Coal use, more than any other factor, is the driver.

Developing countries, particularly fast-growing economies such as Vietnam, China and India, cannot continue to grow if they limit the use of hydrocarbons. Roger Pielke Jr. at the University of Colorado says economic growth wins out over policies focused on emissions reduction every time.

Carbon dioxide emissions have soared because 2.6 billion people still live in dire energy poverty, with more than 1.3 billion having no access to electricity.

The power density of wind is 1 watt per square meter, meaning enormous tracts of land must be set aside to make it viable, along with a backlash from rural and suburban landowners who don’t want 500-foot wind turbines near their homes. To replace the power the US got from coal in 2011 would require placing wind turbines over an area the size of Italy and in which no one could live because of the noise. Offshore wind turbines cost about 3 times as much as turbines on land.

Global production of electricity from wind in 2012 was a 5-fold increase over 2005 output, and more than 5 times the contribution made by solar.

Global energy use is about 250 million barrels of oil equivalent per day, or the output of 30 Saudi Arabias.  On a scale of 30, 10 comes from oil, 9 from coal, 7 from natural gas, 2 from hydro, 1 1/2 from nuclear, and 1/2 from all renewable sources, not counting hydropower. We get 50 times as much energy from coal, oil, natural gas, nuclear and hydropower as we do from wind, solar, geothermal and biomass.

The only sources of electricity production that can compete with coal on price and can be deployed all over the world fairly rapidly and not take up too much land is natural gas and nuclear.

Read the full article at  http://www.bloomberg.com/news/2013-09-20/four-numbers-say-wind-and-solar-can-t-save-climate.html

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Our Chat With Jeremy Grantham – The Wall Street Journal 09-20-13

Salient to Investors:

Jeremy Grantham at GMO said:

Commodity prices fell for a hundred years by an average of 70 percent, and then from 2002 basically everything tripled and regained the whole decline in 6 years – tobacco was the only commodity that fell. The game changed because of the ridiculous growth rates in China whose 1.3 billion people use 45 percent of the coal used in the world, 50 percent of all the cement and 40 percent of all the copper.

The most important, valuable and critical commodity is phosphate or phosphorous, which is necessary for all living things. Yet we are mining and depleting it. 85 percent of the low-cost, high-quality phosphorous is in Morocco and belongs to the King of Morocco, and the rest of the world has 50 years of reserve if we don’t grow too fast.

I would own stock in the ground, great resources, reserves of phosphorous, potash, oil, copper, tin, zinc, but aluminum and iron ore less so because there is so much. I would not own coal or tar sands because it is hugely expensive to build coal utilities, and plants for tar sands are massive. So before they get their money back, the price of solar and wind will have come down so much.

The pressures on food are worse than anything else, so invest wisely in very good farmland, though it has had a big run and you can never afford to ignore value. Look for farmland in distinctly stable countries like Australia, New Zealand, Uruguay, Brazil, Canada, and the US. Forestry is a little overpriced but we are in a world where everything is overpriced because of incredibly low interest rates that push people into investing.

A career politician has a very short horizon and is not interested in problems that go out five or 10 years, as are corporations because a dollar in 10 years has a much lower value than a dollar today. The oil industry is making a bundle so does not want to change to a system that recognizes climate change and the need to have a tax on carbon.

With politicians so dependent on campaign contributions from the vested interests, the financial world, but more particularly the energy world, it is a miracle anything gets done.

The central idea in the stock market is patience and value and mean reversion and in society, it is resources and climate damage.

The market can go a lot higher with the Fed pushing it – to yet another real bubble, like the one in 2000 with Greenspan, the housing bubble and financial bubble with Bernanke and Greenspan.

America and Australia are the two very, very optimistic-biased societies. Mention housing bubble to Australians, they hate you for years! Optimism is very useful in enterprise, in start-ups because when the smoke clears, you end up with the Amazons and the Googles – we just throw more darts at the dartboard. But the downside is only 10 percent survive, but they all think they’re going to win.

Read the full article at http://online.wsj.com/news/articles/SB10001424127887323665504579032934293143524

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Ice Melting Faster in Greenland and Antarctica in UN Leak – Bloomberg 09-06-13

Salient to Investors:

Leaked UN documents show ice in Antarctica and Greenland is disappearing faster and may drive sea levels higher than predicted this century.

Greenland’s ice added 6 times more to sea levels in the decade through 2011 than in the previous 10 years, while Antarctica had a 5-fold increase.

Walt Meier at NASA said changes in the earth’s coldest areas are a very good indicator of a warming planet and serve as an early warning system. Meier said two degrees of warming in the UK or US would not be too noticeable, but in an area of snow and ice, it can have a huge effect –  minus 1 to plus 1 is the difference between skating on the ice and swimming in the ocean.

Greenland and Antarctica contain enough ice to raise global sea levels by 217 feet, a process that would take thousands of years.

Greenland may add a total of 4 centimeters to 21 centimeters to ocean levels by the period 2081 through 2100, across a range of carbon-emissions scenarios versus the period 1986 through 2005.

David Vaughan at the British Antarctic Survey said the cryosphere is clearly one of the natural indicators of decadal climate change in the planet, and the changes are very visible.

Read the full article at  http://www.bloomberg.com/news/2013-09-05/ice-melting-faster-in-greenland-and-antarctica-in-un-leak.html

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Fareed Zakaria GPS – CNN 07-28-13

Salient to Investors:

Fareed Zakaria said:

  • For 340 consecutive months, the Earth has been warmer than historic averages. 28 years ago, the Arctic was covered by ice throughout the year as it had been for centuries, but every summer two-thirds of it melts to water. In 2012, 46 commercial ships were allowed to sail the northern sea route which connects Northwestern Europe to Northeastern Asia through the Arctic, versus 34 in 20111 and 4 in 2010. In 2013, more than 200 ships have already been given the green light to sail.
  • Nature Magazine found that the thawing of the permafrost beneath the East Siberian Sea is releasing large amounts of methane, intensifying the greenhouse gas effect and more extreme weather – at an estimated cost of $60 trillion, almost the size of the global economy.
  • Nearly 1/3 of the world’s undiscovered gas lies under the Arctic along with vast reserves of metals and minerals. In reality, no one owns the Arctic. Russia, China and Canada have advanced systems to deal with navigating and policing these waters, but American does not. The UN’s Law of the Sea Treaty is signed by 164 countries but not by the US.

Meredith Whitney at Meredith Whitney Advisory Group said:

  • Expect a wave of pensioners making concessions across the US. There was no transparency on pensions until 2009 and things are actually much worse than they seem as the US economy is not coming back in the areas that are under the most fiscal duress, a la Detroit.
  • The US is grossly behind the rest of the world in terms of public/private infrastructure.
  • We are in the process of rebalancing as a country, and things are going to get better in certain areas and worse in other areas.

Dean Baker at Center for Economic and Policy Research said we are through the worst of the municipality pension crisis.

Joseph Nye at Harvard said Obama was much more transformational in his rhetoric and in his first year but has turned out to be far more transactional and prudent. Transformational presidents like Woodrow Wilson and Ronald Reagan made great announcements, wanted to change the world. Transactional presidents like Eisenhower and George H.W. Bush were managerially prudent. George W. Bush was largely transactional in the campaign, but became transformational after 9/11.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1307/28/fzgps.01.html

Arctic methane ‘time bomb’ could have huge economic costs – BBC News 07-24-13

Salient to Investors:

Gail Whiteman at Erasmus University and other scientists say that the release of large amounts of methane from thawing permafrost in the Arctic could cost $60 trillion, or roughly the size of the global economy in 2012, with impacts most likely to be felt in developing countries, which are more vulnerable to rising waters, flooding and the agricultural and health impacts of rising temperatures. Whiteman said the economic time bomb is not yet recognised on the world stage.

Peter Wadhams at Cambridge sees the possibility of catastrophic effect on global climate from the extremely fast sea ice retreat that’s been happening in recent years. Wadhams said we are seeing increasing methane in the atmosphere, mostly over the Arctic.

The release of methane on this scale could bring forward the date when global temperatures increase by 2°C by between 15 and 35 years.

Diminishing ice cover in the East Siberian sea is allowing the waters to warm and the methane to leach out.  Methane is a powerful greenhouse gas, even though it lasts less than a decade in the atmosphere.

It is thought that up to 30% of the world’s undiscovered gas and 13% of undiscovered oil lie in the Arctic waters. Lloyds of London estimates investment in the Arctic could reach $100 billion within 10 years.

Read the full article at  http://www.bbc.co.uk/news/science-environment-23432769

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