people in motion

people in motion

lundi 4 juin 2012

Can You Hear Me Now? Apocalypse Soon


Is it Too Late for Sustainable Development?
Dennis Meadows thinks so. Forty years after his book The Limits to Growth, he explains why

On March 2, 1972, a team of experts from MIT presented a groundbreaking report called The Limits to Growth to scientists, journalists and others assembled at the Smithsonian Castle. Released days later in book form, the study was one of the first to use computer modeling to address a centuries-old question: When will the population outgrow the planet and the natural resources it has to offer?
The researchers, led by scientist Dennis Meadows, warned that if current trends in population, industrialization, pollution, food production and resource depletion continued, that dark time—marked by a plummeting population, a contracting economy and environmental collapse—would come within 100 years.
In four decades, The Limits to Growth has sold over ten million copies in more than 30 languages. The book is part of the canon of great environmental literature of the 20th century. Yet, the public has done little to avert the disaster it foretells.
To mark the report’s 40th anniversary, experts gathered in Washington, D.C. on March 1. Meadows and Jorgen Randers, two authors of The Limits to Growth, and other speakers discussed the challenges of forging ahead into a sustainable future at “Perspectives on Limits to Growth: Challenges to Building a Sustainable Planet,” a symposium hosted by the Smithsonian Institution and the Club of Rome, the global think tank that sponsored the original report.
(Start at 5.45 min)

Dennis Meadows, who retired in 2004 after 35 years as a professor at MIT, Dartmouth College and the University of New Hampshire discussed the report and why he feels it is too late for sustainable development and it is now time for resilience.
From 1970 to 1972, you and 15 others worked feverishly on The Limits to Growth. What were your goals at the outset of the project?
Jay Forrester, a senior professor at MIT, had created a theoretical model that showed the interrelationship of some key global growth factors: population, resources, persistent pollution, food production and industrial activity. Our goal was to gather empirical data to test his model and elaborate on it. We wanted to understand the causes and consequences of physical growth on the planet over a 200-year time period, from 1900 up to 2100.
According to the “standard run” or “business-as-usual” scenario, you predicted that we would overshoot the planet’s carrying capacity and collapse by mid-21st century. What do you mean by collapse?
In the world model, if you don’t make big changes soon—back in the ’70s or ’80s—then in the period from 2020 to 2050, population, industry, food and the other variables reach their peaks and then start to fall. That’s what we call collapse.
Now, in real life, what would that mean? It is not clear. In a way, it is like being in San Francisco and knowing that there is going to be an earthquake and that it is going to cause buildings to fall down. Which buildings are going to fall down, and where are they going to fall? We just don’t have any way of understanding that. What we know is that energy, food and material consumption will certainly fall, and that is likely to be occasioned by all sorts of social problems that we really didn’t model in our analysis. If the physical parameters of the planet are declining, there is virtually no chance that freedom, democracy and a lot of the immaterial things we value will be going up.
How do you wrap your head around what the planet’s carrying capacity is?
The issue of global carrying capacity is one that is fraught with all sorts of technical, scientific and philosophical problems. But the best effort to deal with these various problems and come up with concrete numbers is the one that has been carried out by [Swiss-born sustainability advocate] Mathis Wackernagel and his colleagues. Mathis has come up with a concept called the global ecological footprint. In its essence, it converts all of the energy and materials that humanity uses every year from nonrenewable sources [such as oil] and makes the assumption that somehow they would come from renewable sources [such as wood or the sun]. Then, it compares our current consumption with what the earth could generate.
The reason we are able to go over the carrying capacity briefly is the same reason that you can for a brief period spend more out of your bank account than you save, if you have come through a long period of thrift. But eventually, of course, you bring your bank account back down to zero and you’re stuck. That is exactly what is happening to us on the globe. We are living off the savings of biodiversity, fossil fuel accumulation, agricultural soil buildup and groundwater accumulation, and when we have spent them, we will be back down to the annual income.
As the Washington Post reported in 1972, you and your colleagues were “dismissed by a lot of people as crackpots.” What were the main criticisms?
We left price mechanisms and therefore the market out of the model. Or, we underestimated the rate at which technological advance can progress. I would say those are the two principal criticisms. We treated the world as a whole and people made the very valid point that the world isn’t homogeneous. It has an enormous number of different regions and cultures. Those factors are missing from our model. We left them out because we didn’t think they made any difference to our central conclusion, but our critics thought that they did.
The media fixated on the doom and gloom. But the report also included optimistic scenarios that showed a stable, sustainable future. What changes did these models assume? 
We used the model as a test bed in the same way that you make models of airplanes and fly them in wind tunnels in order to experiment with different designs. We began to experiment with a variety of different changes to see what could avert decline. We started with technological changes that increased agricultural productivity, reduced pollution, increased the available supply of natural resources and so forth. What we found was that technological changes alone don’t avert the collapse. It requires cultural and social changes as well. You need to stabilize the population, and you need to shift consumption preferences away from material goods to the nonmaterial part—love, freedom, friendship, self-understanding and things like that.
How optimistic were you about society charting a sustainable course? 
In 1972, and for some time after that, I was very optimistic. I was naively optimistic. I honestly believed in what I called the “doorstep model of implementation.” That is to say, you do a piece of work. You learn the “truth.” You lay it on the decision maker’s doorstep, and when he comes out in the morning, he finds it and changes his behavior. My whole team worked very hard. We wrote other books. We developed teaching materials. Many of us went into teaching in an effort to help produce the changes that we thought were going to come.
At this point, you no longer think that sustainable development is feasible. How do you define that term?
When I use the term sustainable development—which I consider to be an oxymoron actually—I am trying to capture the meaning that most people seem to have. In so far as I can tell, people who use the term mean, essentially, that this would be a phase of development where they get to keep what they have but all the poor people can catch up. Or, they get to keep doing what they’ve been doing, but through the magic of technology they are going to cause less damage to the environment and use fewer resources. Either way you use the term, it is just a fantasy. Neither of those is possible—anymore. It probably was possible back in the ’70s, but not now. We’re at 150 percent of the global carrying capacity.
When did your feelings change about sustainable development?
In the ’90s, it was something that was in my mind. But it has probably been only the last four or five years that it has become really clear to me that we just haven’t got a chance of dealing with these issues in any kind of orderly way. I think the example of the dot-com bust and later, in 2008, the housing bust illustrated what incredibly primitive understanding and capacities we have for dealing with bubbles. Limits to Growth is absolutely focusing on a bubble, a bubble in population and in material and energy consumption.
Instead of growth, going forward what do you think we ought to equate with progress? 
Around the world, people are working to come up with alternative indicators of national well-being, which are more sophisticated than Gross National Product. Ironically, the inventors of the tool of GNP accounting strongly cautioned against ever using it as an indicator of success. But, of course, once we had it that is what it became. We need to start looking at other factors. The United States, for example, has the highest number of prisoners per capita in the world.We have the largest debt. Social mobility in this country is lower than many of the other industrialized nations. The gap between the rich and the poor is bigger. We have lots of problems, and a better indicator of national success would start to pull them in, quantify them and combine them in some way.
You stress the need for resilience. What do you mean by this?
Theoretically, resilience is the capacity of a system to absorb shocks and to continue functioning. Now, in practice, what does it mean? There is a fairly well-developed literature around the issue of psychological resilience. The medical community has tried to understand what can let somebody experience, for example, the loss of a loved one, a serious illness or the loss of a job and continue functioning. There is starting to be, particularly since Katrina, a field that looks at community resilience, or the capacity of a town or social community to absorb shocks and continue functioning to fulfill the needs of its members. I am talking about longer-term resilience. I am talking about coping with the permanent loss of cheap energy or the permanent change in our climate and what we can do at the individual, the household, the community and the national level to ensure that—although we don’t know exactly what is going to happen—we will be able to pass through that period still taking care of our basic needs.
Of the experts talking about growth today and making forecasts for the future, who do you think really deserves attention? 
I have always found Lester Brown [environmental analyst and author of World on the Edge] to be a source of very useful insights into what is happening mainly with food systems. He points out that in most areas of the world now we are over-pumping groundwater. Some of those groundwater aquifers aren’t recharged at all; they are what we call fossil water, and others have a rather low recharge rate. So, we are coming soon to the time where our use of those aquifers will not be able to exceed their annual recharge. That will mean that food that is currently being produced by overuse of water will need either to disappear or to come from very different methods. He makes that point forcefully.

Planète malade : tout reste à faire

Avant RIO+20 un état de situation 

Après quarante ans de débats, l'insoutenabilité de notre modèle de croissance est désormais à peu près reconnue. Mais le consensus n'existe pas sur la réponse à apporter. Le 20 juin prochain s'ouvrira à Rio de Janeiro, au Brésil, un Sommet de la Terre baptisé " Rio + 20 ". Il intervient en effet vingt ans après un autre sommet mondial tenu dans cette même ville en 1992. A cette occasion, la communauté internationale avait pris acte de la gravité des problèmes écologiques qui menacent la planète. Le cru 2012 ne devrait toutefois pas laisser un souvenir aussi marquant,

En 1992, le premier Sommet de la Terre à Rio avait pris acte de l'ampleur de la dégradation de notre environnement et la communauté internationale s'était engagée à y mettre bon ordre avec diligence. Vingt ans plus tard, force est de constater que sur pratiquement tous les dossiers, la situation s'est au contraire dégradée, qu'il s'agisse de l'assainissement, de l'alimentation, des émissions de gaz à effet de serre, de la déforestation, de la perte de biodiversité ou encore de l'urbanisation sauvage. Et malheureusement, le Sommet de Rio + 20 ne devrait pas être le moment du sursaut décisif pourtant indispensable.
Alimentation : un milliard d'affamés
En 2010, 925 millions de personnes ont souffert de la faim, selon les chiffres des Nations unies, un nombre en progression depuis 1990. La proportion de personnes sous-alimentées dans la population mondiale a cessé de baisser depuis une dizaine d'années, mettant hors de portée l'objectif de réduire de moitié cette part sur la période 1990-2015. La mondialisation agricole n'a guère profité aux pays en développement. Les émeutes de la faim de 2008, survenues dans des pays jusqu'ici à l'abri des pénuries alimentaires, ont fait éclater au grand jour leur dépendance accrue aux importations. Elle rend les pauvres plus vulnérables aux fluctuations de prix sur les marchés mondiaux des produits de base.
La sous-alimentation dans le monde



Ces tensions s'expliquent par des facteurs conjoncturels - climatiques et spéculatifs -, mais aussi et surtout structurels. Alors que la population mondiale, qui dépasse les 7 milliards d'habitants, devrait encore augmenter de 2 milliards d'ici à 2050, les rendements agricoles plafonnent et l'alimentation est de plus en plus concurrencée par le développement d'autres usages des terres agricoles : nourriture du bétail, agrocarburants et usages industriels (chimie verte), tandis que l'eau douce devient de plus en plus rare .
Prise de contrôle de terres entre 2000 et 2010, en millions d'hectares



Au niveau international, la spéculation sur les marchés agricoles occupe les discussions sans pour autant déboucher sur des mesures concrètes. Il est certes indispensable de mieux réguler ces marchés et de stabiliser les prix, mais la question de la maîtrise de la demande alimentaire ne peut pas être esquivée. Le modèle occidental, adopté par les nouvelles classes moyennes des pays émergents, implique en effet une surconsommation de calories comme de protéines animales. L'Organisation des Nations unies pour l'alimentation et l'agriculture (FAO) chiffre à 4 000 kilocalories (kcal) la ration alimentaire quotidienne d'un Occidental, alors qu'elle considère que 3 000 kcal suffisent en moyenne pour un adulte. Les cultures aujourd'hui destinées à l'alimentation du bétail permettraient de nourrir 3,5 milliards d'êtres humains. Il faut aussi réduire le gaspillage considérable qui existe tout au long de la chaîne de distribution.
Eau : tensions sur un bien vital
Le droit à l'eau potable et à l'assainissement est un droit de l'homme", a reconnu, en août 2010, l'Assemblée générale des Nations unies. Comme prévu par les Objectifs du millénaire pour le développement (*) , près de neuf personnes sur dix ont désormais accès à une source d'eau potable améliorée. Pour autant, la situation reste particulièrement difficile en Afrique et en Asie du Sud, où l'accès à une eau de qualité est très inégal. Dans les zones rurales africaines, moins de la moitié de la population boit une eau considérée comme potable. De plus, ce sont le plus souvent les femmes et les enfants qui sont astreints à la corvée d'eau. En Afrique notamment, ces tâches éloignent encore massivement les enfants de l'école. Pour l'assainissement, la situation est encore plus critique et les Objectifs du millénaire paraissent hors de portée : 40 % des êtres humains ne sont toujours reliés à aucun système de traitement des eaux usées, alors qu'ils ne devraient plus être que 25 % en 2015 si l'objectif était respecté. Or, les maladies liées à l'insalubrité des eaux tuent chaque année environ 5 millions de personnes, et des centaines de millions en souffrent.

Répartition de la population en fonction de son accès à l'eau, en %


Les besoins domestiques ne représentent toutefois qu'une faible part des usages de l'eau par les sociétés humaines. L'agriculture absorbe 92 % de l'eau douce prélevée dans le monde. Or, du fait de la croissance démographique et de l'évolution des régimes alimentaires, ces prélèvements sont fortement croissants. L'élevage est indirectement gourmand en eau, puisqu'il consomme d'énormes quantités de céréales. Au rythme actuel, en 2025, les deux tiers des habitants de la planète vivront en situation de stress hydrique (moins de 1 700 m3 disponibles par habitant et par an), contre 40 % actuellement. Accroître les quantités d'eau douce disponibles, notamment en désalinisant l'eau de mer, serait très coûteux et très consommateur d'énergie. Dans ces conditions, les conflits pour l'eau risquent fort de se multiplier : d'ores et déjà, les eaux du Nil, du Tigre, de l'Euphrate ou encore du Jourdain font l'objet de fortes tensions internationales.
Prélèvements et consommation d'eau par secteur, en km3/an


Climat : le temps des conséquences
Au rythme des rapports alarmants du Groupe d'experts intergouvernemental sur l'évolution du climat (Giec), le climat a été la question écologique qui a le plus mobilisé la communauté internationale depuis vingt ans. Il n'empêche : depuis l'échec du Sommet de Copenhague en 2009, celle-ci peine à simplement poursuivre l'effort pourtant limité inscrit dans le protocole de Kyoto signé en 1997, dont la première période se termine en 2012.
Pour l'instant, les négociateurs se contentent d'additionner les engagements pris par chaque Etat, sans que ceux-ci aient un caractère juridiquement contraignant. Dans l'état actuel des choses, même si ces promesses étaient respectées, on s'acheminerait vers une hausse des températures de l'ordre de 3,5 °C à l'horizon 2100, soit très au-dessus des 2°C maximum que vise officiellement la communauté internationale.
Depuis l'adoption de la convention-cadre des Nations unies sur les changements climatiques à Rio en 1992, les émissions de gaz à effet de serre ont crû de 45 %. Après une courte stabilisation due à la crise économique, elles sont reparties de plus belle depuis 2010, avec une hausse d'ampleur historique (+ 5,8 %) cette année-là. Les pays riches parviennent à peine à stabiliser leurs émissions, tandis que celles des pays émergents explosent. La Chine est devenue le premier émetteur mondial. Pour ne rien arranger, l'exploitation des hydrocarbures non conventionnels (gaz et pétrole de schiste aux Etats-Unis, sables bitumineux au Canada…) ou moins accessibles, comme le pétrole offshore, repousse la perspective d'une déplétion des énergies fossiles qui aurait accéléré la transition vers des énergies propres.
Emissions de gaz à effet de serre liées à la combustion des énergies fossiles, en milliards de tonnes de CO2


Une hausse importante des températures paraissant désormais inéluctable, le débat se reporte de plus en plus sur l'adaptation à ces changements climatiques. Une des seules avancées actées lors de la conférence de Durban en décembre 2011 fut d'ailleurs la création d'un fonds vert à destination des pays en développement. Censé être doté de 100 milliards de dollars par an à partir de 2020, il reste encore à l'état de promesse.
Nombre de personnes exposées au risque de submersion due à l'élévation du niveau de la mer et aux tempêtes vers 2070, en millions


Énergie : Un quart des humains toujours dans le noir
L'ONU a déclaré 2012 " année internationale de l'énergie durable pour tous ". Avec trois objectifs majeurs pour 2030. Tout d'abord, assurer un accès universel aux services énergétiques modernes : un quart de la population mondiale n'a pas accès à l'électricité, cette proportion pouvant atteindre 90 % dans certains pays d'Afrique subsaharienne. Deuxièmement, doubler l'efficacité énergétique, grâce à une réduction des gaspillages et de la consommation, afin de limiter le changement climatique. Enfin, doubler la part des énergies renouvelables dans le mix énergétique mondial, alors que cette part a en réalité à peine progressé sur les trente dernières années.
Demande mondiale d'énergie primaire, en millions de tonnes d'équivalent pétrole



Biodiversité : la nature en danger
Une des deux conventions signées lors du premier Sommet de la Terre en 1992 concernait la protection de la biodiversité. C'est un enjeu moins médiatisé que le changement climatique et pourtant tout aussi vital : l'érosion rapide de la biodiversité menace tous les écosystèmes, dont elle conditionne la résilience et l'adaptabilité. De plus, le phénomène, une fois enclenché, est très difficilement réversible.
Situation des espèces recensées par l'UICN en 2009


La biodiversité est mise en danger par la surexploitation chronique d'espèces au-delà de leur capacité de renouvellement (surpêche, chasse…) et par la destruction des habitats naturels les plus riches (forêts et zones humides). Si son rythme a ralenti, la déforestation se poursuit dangereusement, notamment en Amazonie, dans le bassin du Congo et en Indonésie.
En octobre 2010, la conférence de Nagoya avait adopté des objectifs ambitieux à l'horizon 2020 : extension des zones protégées de 12 % à 17 % de la surface terrestre, suppression des subventions dommageables à la biodiversité, création d'un organisme scientifique international qui jouerait le rôle d'un " Giec de la biodiversité ", etc. Elle a également prévu des mesures contre la biopiraterie, afin que les richesses génétiques du Sud cessent d'être appropriées par les firmes des pays riches. Mais les suites concrètes se font toujours attendre.
Evolution du couvert forestier mondial



Certains s'inquiètent d'une tendance à la marchandisation de la nature à travers des mécanismes comme la brevetabilité du vivant, reconnue par l'Organisation mondiale du commerce, ou l'initiative Réduction des émissions de gaz à effet de serre liées à la déforestation et la dégradation forestière (Redd), dont le mécanisme a été entériné à Cancún en 2010 : il consiste à rémunérer en crédits carbone des projets limitant la déforestation.
Océans : bientôt des déserts bleus ?
Bien qu'ils occupent près des trois quarts de la planète, les océans sont des écosystèmes fragiles et menacés. Réserves de biodiversité, régulateurs de climat et sources d'énergie, ils offrent également des ressources alimentaires mises en danger par la surpêche. 70 % des espèces de poissons marins commerciaux sont menacées et certaines, telles que le thon rouge de Méditerranée, sont déjà près de l'extinction. Malgré l'urgence, la protection internationale des océans progresse très lentement depuis l'entrée en vigueur, en 1994, de la convention des Nations unies sur le droit de la mer. Les sommets internationaux se multiplient, mais des quotas de pêche peinent à être fixés, respectés et équitablement répartis. En pratique, seules certaines organisations régionales, comme l'Union européenne, ont fixé des règles contraignantes. Autre difficulté : la haute mer fait l'objet d'un vide juridique, ce qui complique la délimitation des aires marines protégées dans les zones situées hors juridiction nationale.

Variation du pH des océans de 1700 à 1990


Les océans sont aussi menacés par la pollution. Formés par d'innombrables fragments de plastique, des " continents de déchets " se sont formés. Moins spectaculaire, mais sans doute plus dangereuse, l'acidité des océans a augmenté de 30 % depuis les débuts de l'ère industrielle en raison de l'absorption du CO2, fragilisant l'ensemble des chaînes alimentaires marines. Et à proximité des côtes, les zones mortes se multiplient à l'embouchure des fleuves. La pollution des eaux douces essentiellement causée par l'azote et le phosphore relâchés par l'agriculture et les égouts domestiques empêche les poissons, les plantes et les crustacés de survivre à cause d'une insuffisante oxygénation. Enfin, l'aquaculture, dont la production tend à rattraper la pêche de capture, peine à répondre de façon durable à la baisse des stocks : elle consomme elle-même de grandes quantités de poissons sauvages pour alimenter les élevages et engendre de graves pollutions locales.

Urbanisation : un monde de villes
Un humain sur deux vit aujourd'hui en ville. C'est dans les pays en développement que cette croissance se concentre : leur population urbaine a été multipliée par deux depuis vingt-cinq ans, et devrait doubler à nouveau d'ici à 2050. Cette urbanisation va de pair avec de profondes mutations : extension du salariat et généralisation de l'économie monétaire, mutation des structures familiales et du rôle des femmes. Mais elle engendre aussi de redoutables défis.
Lieux de concentration des activités et des richesses, les villes attirent aussi des armées de nouveaux citadins démunis. Les métropoles contemporaines sont marquées par d'extrêmes disparités sociales et par des fragmentations spatiales toujours plus fortes. Le premier défi au Sud consiste à loger décemment ces nouvelles populations et à leur fournir un accès aux grands réseaux urbains (distribution d'eau, assainissement, électricité, transports, réseaux d'information). Si la part de la population urbaine vivant dans des bidonvilles a baissé de 46 % à 37 % entre 1990 et 2010, leur nombre continue de croître en valeur absolue.
Le deuxième défi est environnemental. La ville dévore aujourd'hui les ressources à très vaste échelle. Elle devra demain réduire son empreinte écologique dans ses multiples dimensions : emprise sur les terres arables et les milieux naturels, impact des régimes alimentaires, consommation de ressources minérales et énergétiques. Source de dérèglements écologiques, les villes en sont aussi les premières victimes. Concentrées sur les zones côtières - un quart de la population mondiale vit à moins de 100 mètres d'altitude -, elles sont particulièrement vulnérables aux conséquences des changements climatiques et autres risques extrêmes, naturels ou sanitaires.
Evolution de la population urbaine entre 1990 à 2010



Depuis la déclaration de Rio, les collectivités urbaines sont reconnues comme des acteurs clés du développement durable. Mais l'élaboration d'agendas 21 locaux ou la constitution de réseaux transnationaux de villes ne suffisent pas à répondre aux défis politiques de la croissance urbaine. Au niveau local, les espaces urbains en permanente expansion débordent les cadres politiques et administratifs institués, rendant de fait bien des villes ingouvernables. Au niveau international, les villes restent quasi absentes de la construction de l'ordre international, toujours du ressort des Etats. Plus volontaires que ces derniers, elles n'ont pourtant officiellement aucune place à la table des négociations climatiques.



http://www.alternatives-economiques.fr/index.php?ogn=MODNL_225&prov=&cat=&lg=fr&id_article=59089&id_publication=1149







mercredi 9 mai 2012

Russia’s Competitive Advantages


Russia’s Competitive Advantages

Russia’s Investment Climate Shines Among Other High Growth Economies



Despite the prevailing bleak economic outlook, there is a silver lining for investors willing to brave the odds to do business in Russia, a new report found. Russia continues to shine among the world’s high growth economies, despite a steady stream of bad economic news about the country's investment climate, according to KPMG’s Competitive Alternatives 2012 report released on Saturday. The report, which helps businesses make informed decisions on where their operation will have the best opportunity, found that Russian leaders may have indeed been hard at work to retain current investors while trying to attract new ones.
As with previous reports, the KPMG's latest report compares the costs of doing business and other competitiveness factors in more than 110 cities in 14 countries. But for the first time, the report included the five leading high growth countries – Brazil, Russia, India, and China (also known as BRIC) and Mexico. “Over the last decade, these five countries have nearly doubled their share of world output and they now account for one fifth of the global GDP,” said the authors. Their rapid economic growth has been integrally linked with their lower labor costs and increasing importance in global supply chains, said the report. However, rapid economic growth has also led to the emergence of a large and growing middle class in those countries, creating a more self-sustaining economic base.

The survey expresses business costs as an index, with the United States being assigned the baseline index of 100. Compared to the U.S. baseline, business costs in the five emerging countries are below those in the nine mature countries examined. China and India are the cost leaders among the high growth countries, with overall business costs at 25.8 and 25.3 percent, respectively. Mexico ranks third among the countries, with business costs 21 percent below the United States, while Russia ranked fourth with business costs 19.7 percent below the U.S. baseline. Among mature markets, the United Kingdom, the Netherlands and Canada are the low-cost leaders, with business costs over five percent lower than in the United States. 

Russia received high marks in a range of cost and non-cost issues related to the high growth markets. Russia is the only high growth country in the study to have achieved universal literacy. Russia and Canada are world’s leaders in higher education attainment, with at least 50 percent of their labor forces being educated at the tertiary level. While India has emerged as a global IT and call-center hub, nearly 40 percent of its population is still illiterate. Russia, together with Mexico and Brazil, is also highly urbanized, with at least two thirds of the population living in urban areas, another indicator of the potential labor supply. By contrast, less than half of China’s population lives in urban areas, even though the proportion of urban dwellers in China has almost doubled since 1990.

Among high growth economies, Russia’s indicators on innovation employment are generally similar to those of mature economies, even though its R&D spending is lower than in the mature economies and the business executive survey rates Russia’s capacity to innovate as quite low. Though Russia still trails China in the sheer scale of infrastructure investments, Russia now ranks first among the high growth countries for the quality of its information and communications technology (ICT) infrastructure. However, it still ranks behind all of the mature countries on this measure and also has the second lowest score among the 14 countries for its physical distribution infrastructure, which has suffered from decay since the collapse of the Soviet Union.

The primary focus of the latest report is, however, international business costs, including the cost of living, labor availability and skills, regulatory environment and personal quality of life factors. The report found that total costs per employee are higher in Russia and higher still in Brazil. Both nations have high statutory plan and benefit burdens related to social security, private medical and pension plans, employee transportation and meals, and a high number of holiday and vacation days, all of which substantially increase the total cost per employee. 

For businesses focusing on manufacturing operations, countries with the lowest effective income tax rates are Canada, followed by China, Russia, and the United Kingdom, all with effective tax rates below 20 percent. And for general corporate services operations, the lowest effective income tax rates are offered by Russia, Canada, the United Kingdom, and China. Taxes typically represent up to 18 percent of location-sensitive costs across the locations and industries examined, said the report.

When labor costs for administrative and customer service staff are taken into account, Russia, India and China are the most cost-competitive countries for digital operations among the high growth markets. In terms of human development, which is broadly based on life expectancy, education levels, and income components, Russia, Mexico and Brazil are thought to have achieved “high levels” among the high growth economies according to the United Nations.

On the flip side, Russia consistently ranks below other countries in the areas of government effectiveness, rule of law and corruption. Among the high growth countries, Brazil receives the highest ranking in the rule of law and corruption categories, while Mexico is the highest ranking in the government effectiveness category. Russia’s performance is viewed as being the weakest among all 14 countries across each of these three indicators. And while the high growth countries generally have a young age demographic, providing advantages for both the labor supply and consumption, Russia remains an exception with an aging population.

mardi 8 mai 2012


The Adjusted Gold/XAU Ratio as an Indicator of 
Forward Returns for Gold Stocks

The latest data have a clear message for investors: gold stocks are attractively priced.
That’s the current finding of my model for evaluating stock prices of gold mining concerns, updating historic data to incorporate information as of April 30, 2012.
In an October 2011 an article explained how the ratio of gold prices to the price of XAU, a capitalization-weighted index consisting of 16 precious-metal mining companies, provides useful information that investors can use to anticipate the price of gold stocks.
The gold/XAU ratio has had an upward trend since 1968, which reduces the value of gold stocks relative to the price of gold bullion. Because of this trend, in order to make the current ratio directly comparable to the historic ratios, one has to increase the ratio’s historic values to compensate. This adjustment enables us to predict the returns for XAU based on the historic returns that followed trend-adjusted gold/XAU ratios of equal magnitude.
My analysis shows that XAU is considerably undervalued, as the relationship between the price of gold and the shares of companies who mine it is now significantly above the long-term trend line.
Trend of the gold/XAU ratio and returns for XAU
Figure 1 shows data from 1977 to 2011, including the price of gold, XAU, the gold/XAU ratio, and the trendline of the ratio, all updated through April 30, 2012. The most recent gold/XAU ratio is approximately 10.5. For context, a ratio that high was seen only once before since 1977, in November 2008.
The slope of the trend line indicates the rate at which gold stocks loose value relative to the price of gold bullion, which is now about 0.3% per month. Thus, if gold were to gain 4% over a year, $60 per ounce based on the current price, the value of gold stocks would not increase. The reason for this could be increasing mining costs, which are rising at about 8% year-over-year. With the average cash costs for gold miners at about $650 per ounce – a $60 increase would only compensate for the increased costs.


Figure 2 shows the price of gold, XAU, the trend-adjusted gold/XAU ratio, and the linear regression line of that adjusted ratio. The linear regression line is horizontal, indicating that the adjusted ratio is not trending in any direction, which confirms that one can compare the adjusted ratios directly with each other over time.  It also shows that past adjusted ratios were higher than the current level early in 1980, which was not the case for the un-adjusted ratio depicted in Figure 1.
Also shown is a blue trend line that connects the five peaks of the trend-adjusted ratio between 1980 and 2001, as well as the trend line’s extension from 2001 to the end of 2012. One can see that the 2008 peak of the trend-adjusted ratio fits the extended trend line reasonably well. Also, after each of the identified peaks of the ratio, there has been a significant gain in the level of XAU that occurred jointly with an increase of the price of gold.
Currently the gold/XAU ratio is below the extension of the trend line. If the blue trend line is indeed an indicator for peaks in the ratio, then we can expect such a peak to occur soon. Extending the current trend of the adjusted ratio, as represented by the short green line, we can anticipate intersection with the blue line at a level of about 11.4, which would indicate the expected peak level of the gold/XAU ratio. An increase in the price of gold with XAU gaining relatively less – or, alternatively, a further decline of XAU with gold remaining at the current price – could lead to the anticipated peak level. Once the trend-adjusted ratio has formed a peak and starts to decline, one can reasonably expect good gains for gold stocks afterwards, as has always been the case in the past. Those prior examples are listed in Table 1.

XAU & adjusted Gold/XAU ratio
Table 1
date when peak of adjusted gold/XAU occurred
level of XAU at peak of adjusted gold/XAU
date when XAU gained most after peak of adjusted gold/XAU
max XAU after peak of adjusted gold/XAU
%-gain
annualized rate of return
1/21/1980
105.24
10/1/1980
183.59
74%
122%
7/15/1982
52.8
1/5/1983
150.11
184%
795%
7/30/1986
60.04
9/9/1987
155.74
159%
136%
11/30/1992
65.81
1/6/1994
145.57
121%
106%
11/20/2000
42.17
3/5/2008
206.37
389%
24%
10/28/2008
72.72
3/30/2011
228.95
215%
61%

The recent gold/XAU ratio and historic returns for XAU
As mentioned in my October 2011 article, one could have, based on the then-prevailing gold/XAU ratio of about 8.30, expected significant gains for XAU over the subsequent eight months. That time has almost passed, and XAU has instead lost value since then.
In order for XAU to gain, the gold/XAU ratio would have had to get lower and stay below the criterion value of 8.30 during the remainder of the stipulated investment period, or the extended investment period, as explained in the original article. Since the ratio never fell below 8.30 and is now about 10.5, the investment period is not complete, and thus a final determination cannot be made on whether the investment strategy was successful or not.
But what performance can we expect from gold stocks in the near future? Looking back we see that there were only two other occasions when the adjusted ratio was as high as the current level, namely in 1980 and 2008. The returns that followed on those occasions when the adjusted ratio was 10.0 are shown in the table below.
Table 2
Historic XAU Returns for Criteria Value of Adjusted Gold/XAU = 10.0
and minimum investment period of 180 days
Investment Period  from     -       to
XAU value at start
$
XAU value at end
$
no. of months in each period
absolute return for each period
gain
(loss) over period
$
1/3/80
10/6/80
79.5
178.0
9.1
123.8%
98.5
10/22/08
5/16/09
71.7
136.7
6.8
90.7%
65.0
4/11/12
-
164.3
-
-
-
- 

If history repeats itself, then substantial returns await investors in gold equities – and they may be realized fairly soon.

mercredi 2 mai 2012

Money, Power and Wall Street : Frontline On Financial Fraud


-For the History records-

In one of the most complete documentaries undertaken on the financial crisis, PBS Frontline's "Money, Power, & Wall Street" series stretches from the origins of the credit derivative business with a pool-side Blythe Masters and her JPMorgan colleagues to the scary (but absolutely true) fact that the financial crisis never ended. 





Money, Power and Wall Street : Frontline On Financial Fraud

The four-part series can be found on the link below. A must-watch series from beginning to end to get a grasp of how we got here, where exactly we are now and what we can expect in the next few years.

The chapter-headings alone generate enough insight into the documentary's depth
Chapter 1 - A Brave New World of Banking
A group of young bankers make history with the creation of the credit default swap market
Chapter 2: Funding The American Dream
The Wall Street and mortgage lobbies successfully defeat attempts to regulate derivatives
Chapter 3: Marching Towards The Cliff
JPMorgan reassesses, pulls back from the mortgage market but other banks can't get enough
Chapter 4: The Unraveling Begins
When the housing bubble burst, CDS bring the global economy to its knees
Episode 2
Chapter 1 - Systemic Risk
Bear Stearns collapses; regulators fear its effects on the financial system
Chapter 2 - The Summer Of Assurances
The financial crisis becomes increasingly obvious, but there's no decisive action
Chapter 3 - The Decision To Let Lehman Fail
Paulson bet the markets would take care of themselves but would soon learn he was wrong
Chapter 4 - AIG Gets A Bailout
A decision by Geithner means billions of US Government dollars flows to Wall Street
Chapter 5 - A Turning Point?
Paulson decides on a dramatic use of the TARP money: capital injections to the banks.
In addition the entire set of 20 in-depth interviews with the various players (from Sheila Bair to Rodgin Cohen with a smattering of Jared Bernstein and Dick Fisher in between) can be found
http://www.pbs.org/wgbh/pages/frontline/oral-history/financial-crisis/