Category Archives: Global Issues

Research Paper “On the Threshold to a New Energy Age” and Survey Results

http://www.whatmattersweblog.com/2010/02/06/survey-results/

As part of the research for my research paper “On the Threshold to a New Energy Age“, I conducted a survey in order to find out how “prepared” people are for the transition to a new age of energy generation and use as well as to gather opinions on current trends in energy issues.

In the coming days I will publish the results of the question-by-question analysis. The questionnaire contained 14 questions. 73 people took part in my survey. More than three quarters of participants came from the United States. I interviewed the remaining quarter in Japan, Singapore, Germany and Portugal.

All questionnaires had been distributed and returned between April 2009 and September 2009.

You can find the survey results on the Main Menu page “Energy Survey”:

http://www.whatmattersweblog.com/energy-survey/

Check out the  ‘RP: New Energy Age’ Category for the downloadable version of my 50-page research paper and further commentary on the survey results:

http://www.whatmattersweblog.com/category/rp-new-energy-age/

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Filed under Auto Industry & Electric Cars, Economy, energy, Environment, Global Issues

The Pace of Globalization

Series: “The Pace of Globalization” by Maximilian Staedtler

-> www.whatmattersweblog.com

The Pace of Globalization I

The pace of globalization is increasing. And that is good for all of us. Today, we are more inter-connected than at any other date in history. More people communicate, collaborate and compete with each other than ever before.

Globalization is the driving force behind the progress of the human race. Globalization brings peace and prosperity. Globalization is spreading smart ideas at the speed of light and pushing innovations forward. Due to globalization, authoritarian regimes around the world feel pressure to abide by the rules of the international community. The most pressing issues of our time, i.e. overpopulation, resource scarcity (water, food, oil) and climate change, demand a global solution. No country in the world is powerful enough to solve any of these problems on its own. A lack of cooperation between nations in different parts of the world makes measures implemented by one country useless. A great example that demonstrates how prone to failure one-sided attempts are is the climate policy of the European Union. By forcing up prices for emitting carbon dioxide in Europe, the EU might achieve a reduction in European CO2 emissions by lowering demand for fossil fuels, but this has zero effect on global CO2 emissions. Lower demand for oil in Europe for instance achieved through artificially high prices in the EU, is decreasing the pace at which international oil prices would increase otherwise, therefore allowing the rest of the world to consume more (and emit more CO2 emissions) at a lower price. The bottom line is that European efforts to reduce carbon emissions only reduce the pressure on emerging economies to become more efficient and consume less oil. This is what German economist Hans-Werner Sinn calls the “Green Paradox”. (For more on the Green Paradox: http://en.wikipedia.org/wiki/Green_paradox )

 

The Pace of Globalization II

In his bestselling book “The World is Flat”, New York Times columnist Thomas L. Friedman – one of my favorite authors – analyzes globalization and divides it into three eras:

continued on www.whatmattersweblog.com

 

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Crude Oil Prices

this is my new Crude Oil Price Chart with data from the EIA.  You can download it as a PDF file on my new blog: http://www.whatmattersweblog.com/energy-charts/

crude-oil-prices-1998-2009-what-matters-weblog

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Filed under energy, Global Issues

how do you feel about globalization?

check out my post on this on my new blog:

http://www.whatmattersweblog.com/?p=64

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Filed under Global Issues, Uncategorized

Singapore determined to master the storm

 

Read the updated version on my new blog:

http://www.whatmattersweblog.com/2009/02/20/singapore-determined-to-master-the-storm/

Given these turbulent economic times, it’s not surprising that the Southeast Asian city-state of Singapore is also suffering from a deep recession.  Global demand for Singapore’s exports and services has collapsed since the financial crisis has spread to nearly every country on this planet and has emerged as a global economic crisis of unprecedented scale.

Since Singapore’s independence, it has become one of the richest nations worldwide with a modern high-tech and service industry relying on the country’s highly-skilled workforce. The combination of a capitalist society, a strong work ethic and smart government policies have proved extremely successful and have created numerous sources of income for the “Lion-city”. Despite its lack of raw materials, Singapore has become a major exporter and international financial and trade hub. Next to the pro-business and pro-export policy of the government, the excellent infrastructure has supported the country’s economic rise. The financial services and high-tech industry in addition to oil refining and re-exportation of imported and up-graded goods have been the foundation for Singapore’s economic success. However, Singapore’s strength in finance and international trade turned out to expose Singapore to the effects of the global economic crisis. (check out: https://economatters.wordpress.com/2009/01/10/grim-outlook-for-the-container-shipping-industry/) Container lines are struggling with costly over-capacities and are slashing some routes resulting in a major setback for the world’s busiest port. When international trade suffers, so does Singapore’s economy.

As the Singaporean government has already admitted, the city-state is in it’s deepest recession ever. The GDP is expected to contract by 5% this year. Nevertheless, the country has an abundance of financial resources. The Finance Minister announced a $13.6 billion (20.5 billion Singapore dollars) economic stimulus package to ease the effect of the recession on the people and revive the economy. Considering the size of the stimulus, this is a bold and determined step. The money should be spent to preserve jobs by subsidizing wages, guaranteeing bank loans to help businesses and families in trouble. Employers receive help to pay part of the salaries and benefit from tax reductions in order to ensure that as many people as possible keep their jobs and incomes. To stimulate banks to lend money, the government shares the risk of bank lending and jumps in when a business fails to pay back. Huge investments in education healthcare and infrastructure are part of the package, too.  The advanced subway system is to be expanded, public housing projects receive more money, more roads and parks will be built.

Apart from these countermeasures, Singapore might also weaken its currency to tackle the recession. This should strengthen the city-state’s export sector. Besides, this measure could halt the fall in consumer prices and reduce deflation risks. A large share of the consumer goods sold in Singapore are previously imported. Therefore, a possible devaluation of the Singapore dollar would stop the price fall by making imports more expensive.

Despite the grim outlook for the this year, Singapore’s future is bright. The government has invested billions of dollars into biotech and chemicals as well as telecommunications which should ensure the continuation of the economic success story. Singapore will overcome this crisis as it managed the Asian crisis in the 1990s and the outbreak of SARS. Pfizer and Lanxess are just two examples of foreign companies that have invested hundreds of millions into new research & development facilities. Pharmaceuticals already contribute decisively to Singapore’s GDP. However, the fast-growing biotech sector is still in its infancy and requires massive investments. In the medium term, especially biotech could become a big money-spinner. Singapore attracts many bright-minds from abroad. Scientists from foreign countries are fascinated by the vast research opportunities. The country’s innovative high-tech industry is making strides towards surpassing other Asian high-tech centers in Japan, Taiwan and South Korea.

The bottom line is that Singapore was hit by the crisis at the wrong point in time since it proved to be still too dependent on the financial sector while prospective sunrise industries are not yet ready to fill the gap.

If you’re interested in how Singapore manages this crisis and prepares for the future, you will be able to get first-hand information right here. In April, I’ll travel to Singapore and report daily about this intriguing global city at the tip of the Malay Peninsula.

http://edition.cnn.com/2009/WORLD/asiapcf/01/22/singapore.stimulus/index.html?eref=rss_latest

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grim outlook for the container shipping industry

The long-lasting boom in the container shipping industry ended abruptly last year when first high freight rates caused by record-high oil prices lowered demand and prompted companies to relocate production capacities closer to big consumer markets and towards the end of 2008, demand for consumer goods from recession-torn countries plummeted resulting in costly overcapacities. On the one hand, container lines could breath a sigh of relief since they don’t have to pay a fortune to fill up the tanks of their cargo vessels – at least not at this moment – but they’re strugglingto fill the decks of their ships with containers generatingenough revenue to cover operatingcosts. The surplus of cargo capacities is especially significant on the Europe-Asia routes as well as on the routes linkingNorth America to Asia. As shipyards continue workingoff the numerous orders from previous years, cargo capacities will continue climbing until 2012 unless orders are postponed and older ships put out of service in large numbers.

A wave of acquisitions and mergers appears inevitable. The consolidation process will let smaller freight lines disappear. The focus of the more dominant shippers is expected to shift to the routes to South America and the still growing economies of China and India which are permanently consuming more raw materials.

In the medium and long term, the outlook is not so bleak as global trade volumes will continue to grow as soon as consumer confidence recovers and postponed investments are due to be made. Therefore, the shipping industry just needs to find a solution to bridge the current trough. The bigger companies are likely to expand their control of the market and take over slots and terminals from smaller competitors which is to increase future profits. Port operators might also benefit in the l0ng term from acquiring smaller rivals.

Despite the current uncertainties and helplessness of the container shipping industry, the French container line CMA CGMappears to be willing to launch yet another new Europe-Asia route. The new service could be launched in summer while competitors are suspending services. According to the company, this step is aimed at securing”a leadership position in the Asian shipping market.”

The global economic downturn in addition to the crisis in the shipping industry hits the South-East Asian city-state of Singapore especially hard. The port of Singapore is the world’s busiest container port serving as a hub for South-East Asia. Next to the port, a large share of Singapore’s earnings comes from the financial industry which is obviously in the worst shape in decades. The country’s exports have also fallen and cash-strapped tourists from Western countries also tend to stay at home. Consequently, it’s not surprising that Singapore’s economy was contracting 12.5% in the fourth quarter. Nevertheless, Singapore’s government has control of an abundance of cash and currency reserves. Measures have already been taken to stimulate the economy, create new jobs and soften the effect on the people. In April, I’ll travel to Singapore to take a closer look at the economic situation there and give you insights on how this country, that has been extremely successful for decades works. I’m especially interested in how Singapore prepares for the future. In April, you can get first-hand information right here.

You can also take a look at my article from August when Asia-Europe shipping started to decline: Shrinking Asia -> Europe cargo volumes indicating an economic downturn in Europe

http://www.lloydslist.com/ll/news/cma-cgm-poised-to-launch-new-asia-europe-service/20017606102.htm

http://www.redlinechina.com/main/?q=node/1180

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2009: year of change, challenges and chances

2008 just ended and will be remembered as the year when the financial crisis rooted in risky mortgage lending turned into a global economic crisis. In today’s globalized world, the crisis spread from the U.S. housing market to almost all parts of the world. The global financial system went crazy, banks were collapsing, governments around the world injected hundreds of billions of dollars into financial markets and shabby banks. Things went from bad to worse on September 15th, when the U.S. investment bank Lehman Brothers filed for bankruptcy protection – it was the largest bankruptcy in U.S. history. The fall of Lehman sparked anxiety in the financial industry as the U.S. government didn’t intervene to prevent a collapse. Following the liquidation of Lehman Brothers, a global panic sellingof bank shares set in which also contributed to the failure of other financial institutions. Hypo Real Estate, a German property lender, suffered from the consequences of the Lehman failure as inter-bank lending dried up and the Munich-based company needed to be bailed out.  Just days after Lehman had declared bankruptcy, the insurance giant AIG was nationalized. Less than two weeks earlier, the U.S. government had bailed out the mortgage giants Fannie Mae and Freddie Mac. They were taken into public ownership.

Apart from the financial sector, the car industry is among those hit hardest by the international crisis. After record-high gasoline prices had hammered car sales in the first two thirds of 2008, sales plunged further due to the lack of confidence among consumers and tight credit in the last third. The Big Three car makers from Detroit – GM, Ford and Chrysler – are in the worst situation in  their history. Whether these companies survive depends pretty much on the decisions the next administration is going to take. The American auto industry is largely responsible for its demise as they missed the market trend and continued producing poor-quality gas-guzzlers at high labor costs. In the last decade, the management failed completely. Detroit’s car makers were outflanked and outsold by more innovative competitors from Japan, Korea and Germany that had better engineering and more long-term concepts for success. (more on this: How to save the American auto industry? No time for baby steps) However, even the new #1 car maker Toyota, which successfully build up a green image over the last few years, was hit hardly by the crisis in the auto market. Actually, this is not surprisingng. Though Toyota has sold more than one million units of its Prius hybrid car since it went on sale more than a decade ago, the majority of the slightly below ten million cars sold in 2008 has a less impressive fuel economy. (Check out Dec. 24th’s post)

All industrialized countries as well as many emerging nations will be in recession in 2009. Consumer spending is falling rapidly as economic uncertainty spreads, unemployment rises as companies slash their workforce to respond to lower demand, unavailability of credit and a bleak outlook for the next quarters.

The drop in oil prices since July 2008 represents best the worsening of the world economy. Since the United States is by far the world’s largest oil consumer (a quarter of total global consumption), demand has been falling which caused oil prices to lose ground. Global oil demand is contracting for the first time in more than 25 years! The day when Lehman Brothers collapsed, oil fell below the $100 a barrel mark, when the U.S. reported the loss of half a million jobs on December 5th, oil slid below $40.  On the one hand, lower energy prices benefit large parts of the population at the moment. Gasoline prices are at a four-year low in many parts of the world. (take a look at my overview of gasoline prices worldwide) On the other hand, currently low oil prices delay urgently needed investments into oil fields and the oil infrastructure which will cause an unprecedented price-hike once the economy does better. Even the $ 330 billion investment that OPEC countries want to make until 2011 which was announced earlier this year were not even enough to maintain the current production capacity in the medium term. In fact, more than one trillion dollars were needed to be spent every single year to maintain the current global oil output until 2030. (see my article on the World Energy Outlook 2008)

The turbulent times might still continue for several months. Though there is hope that towards the end of this year, the economy might begin to recover. 2009 should be seen as chance for a fresh start. On January 20th, Obama will take office as the 44th president of the United States. He’ll also be the first African-American president. This is undoubtedly a historic year. People in every corner of the globe and especially in the  U.S. are full of expectations. Obama stands for change and hope. Great leadership will be necessary to rebuild the nation and steer it out of the economic crisis. Pessimists predict a “lost decade” for the U.S. as Japan has experienced, others forecast the beginning of the recovery in fall. Barack Obama is likely to put all of his energy into solving the financial and economic problems the U.S. is facing right now. As soon as the economy allows him to focus on foreign policy, he is expected to work towards a new multilateralism.

Despite the calamity of the moment, the day will come when the economy thrives again. This is the time to push forward some necessary, fundamental and painful changes which will be the foundation for future growth. Given that Obama will be in power soon and that the U.S. has always been known for the flexibility of its economy, there’s plenty of reason to believe in a prosperous future. If the right action is taken, every crisis can be seen as a big chance. Especially at this point in history, where we are about to experience major changes in our daily lives due to the inevitable transition that is to take place in the energy sector over the next decade, there have seldom been more opportunities.

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Filed under Economy, Global Issues, Politics, Uncategorized