Japan, South Korea Plan Green Economic Stimulus Packages

Japan and South Korea have announced that their governments will be investing billions of dollars to develop new green projects which would help creating new jobs and hopefully bring their battered economies back on track.

Continuing the global trend, the Asian industrial powers announced ambitious plans to tackle the rising carbon emissions, depleting energy resources and sliding economic growth. South Korea plans to invest $38 billion in the next four years to create almost a million new jobs. The new investments will be made in projects aimed at recycling waste, increasing energy efficiency, forest conservation and developing renewable energy resources.

Japan, too, has unveiled plans to expand its $745 billion green business sector to $1 trillion by 2020 thus creating about 800,000 new jobs. Japan, although, a huge producer of green technologies has been facing economic downturn primarily because of falling exports, now the government wants to create a market for these green technologies at home.

Nicaragua Plans to Reduce Dependence on Oil-based Energy

Few decades ago the share of renewable energy in Nicaragua’s power generation was 70 percent but with growing ties with Venezuela and availability of cheap oil that number declined and now the country gets just 34 percent of its energy from renewable sources. But with the rising oil prices and increasing blackouts the government now seems to be falling back on the locally available and reliable renewable energy sources.

Having close diplomatic relations with Venezuela assured Nicaragua of sufficient oil supply for years but with oil peaking to $147 it became more and more difficult to shoulder the burden of rising energy costs. Although oil-based energy was cheaper than the energy produced from non-conventional sources, the fluctuation in oil prices started hurting the economy of the nation. The government of Nicaragua soon realised that oil-based energy sector is not sustainable in the given circumstances.

Recession-hit UK Struggles to Manage its Recyclable Waste

In the time of recession we must try to use our resources efficiently, save as much as possible and reuse and recycle whatever we can. British households are trying to do exactly that, segregating wastes into as many as five different groups so as to help the city councils recycle the waste easily. Instead the councils are dumping anywhere between 10 to 30 percent of recyclable waste to landfills and incinerators. That’s wasting some very useful waste.

After inspiring and appealing to homeowners to do their bit for the environment by separating the waste generated at their homes, the city councils are struggling to recycle the wastes and selling them to the manufacturing and reprocessing sectors because of lower demand during this economic downturn. As a result, the recyclable waste is literally going waste as it is either dumped into the ground or burnt – adding to the rising carbon emissions instead of cutting them.

While claiming that they are trying to recycle as much waste as possible, various city councils in Britain are dumping or burning 10 percent or more of the recyclable wastes. The revelations have invited criticism from green groups and have also allowed the opposition parties to question Labor government’s green credentials.

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Is China Looking To Manipulate Global Economy?

Higher interest rates haven’t stopped the world markets from soaring to new all-time highs. Markets in Asia and USA have touched their life highs and still analysts say that there is plenty of money waiting to be pumped in. The source of such huge liquidity flow (believed by many) is the trillion dollar forex reserves of China.

China has the world’s largest foreign exchange reserves accounting to more than a trillion dollars. That’s an instrument which, many fear, the Chinese government could use to fulfill its ‘national interests’. The US government has already expressed its fears about China’s huge forex reserves & the lack of transparency in its entire economic activities. US administration has also expressed the rightful reservations about China not allowing Yuan to be traded freely.

Recently China established a $200 billion dollars as part of its drive to earn higher returns by making riskier investments. The fund has already picked up a 10% stake in Blackstone Group for $ 3 billion dollars and now it is looking to fund Barclays’ bid for ABN Amro bank. China has already invested a great amount of money in buying out Africa’s oil rich fields which supply its oil hungry economy.

The thing to watch here are the places where this money is directed. China bought a 10 % stake in Blackstone which controls or has stakes in companies which have a central role in the development of the respective economies. Some of the companies that Blackstone has in its kitty are:

• Texas Genco: One of the largest wholesale electric power generating companies USA.

• Foundation Coal Holdings: Foundation Coal is the 4th largest coal producer in the U.S.

• Freescale Semiconductors: One of the world’s largest semiconductor companies.

• Deutsche Telekom: Parent company of the T-Mobile brand.

The most interesting one, however, is Kosmos Energy whose operations are focused on oil and gas projects off the coast of West Africa.

Although China has assured the world leaders that it won’t use its massive reserves to manipulate the economic trends of the global economies but still Clay Lowery, the U.S. Treasury’s acting undersecretary for international affairs, has asked the International Monetary Fund and the World Bank to draft a best-practices guide to monitor the investment policies of sovereign wealth funds.

China is rapidly picking strategic stakes in companies in world’s major economies, with Blackstone it has got ‘access’ to many vital sectors like manufacturing & energy. It seems China has found a way to buy into the American companies without irking the American sentiments much. And while US is apparently busy in fighting wars for oil in the troubled Middle East, China is swiftly & effectively using its forex reserves advantage to buy out Africa’s yet-to-be tapped oil reserves.

The concern over China’s vast reserves is evident and the world leaders as well as the economists need to watch where & how China spends this money. It’s fairly clear that the leaders of the Communist government have big goals for their country and it won’t be a surprise if in the near future China follows Kremlin’s tactics of influencing the economic activities of other counties to achieve its own strategic goals.

We Must Stop Burning Our Future

Oil & gas aren’t our future but the way we use them will certainly play a major role in determining our future. Our over dependence on oil & gas as fuels could ultimately play a catastrophic part in decline of the peace around the world.

Recent studies show that there would be a major shortage of oil and the prices could rise to agonizingly high levels. Even the oil producing companies acknowledge that the world will need to develop all the supplement sources of energy it can to meet the soaring demand. And we should do that not only for energy security but for our own security as well.

The major source of energy driving hundreds of economies & billions of lives should not be concentrate in the hands of a few. That applies especially when many nations with huge oil reserves may have suspicious objectives to fulfill national interests. The world should act now to reduce the monopoly of oil producing nations so that no nation could get an unfair leverage over the rate at which world’s economies grow in the future.

A classic case of what our future could be holding for us came up as Russia and Georgia & Ukraine argued over the gas pricing. Georgia, through which pass the pipelines providing gas supplies to Europe, was punished by Russia for its westward leaning. Georgia ultimately had to give in & had to agree to the high gas prices. There isn’t any guarantee that this won’t happen again. With Russia opposing the US missile shield being installed over Europe, it would certainly use the energy levers to apply pressure on EU not allow USA to deploy the shield.

We should try to move towards energy sources which are equally available to all. Adopting solar energy, wind energy or hydro energy would prevent nations from monopolizing the energy flow.

Concentration of vital energy sources in hands of only a few nations would lead to widespread favourism, corruption & hatred among developing economies. Our over dependence on oil & gas must end to preserve peace and humanity in the world. We would be sowing seeds of a catastrophic war if we don’t reduce our over dependence on oil & favouring nations with huge oil reserves.

Who’s Driving The Stock Markets

Stock markets around the world are making news highs almost everyday. Everything, from Dow Jones to the Nikkei, is up. But this recent upsurge in the world markets has came as surprise for many citing the poor sub prime data from the US. Nonetheless investors, including me, are happy to see their profits swell.

But why are the world markets making new highs. The interest rates haven’t gone down anywhere rather they have moved up; central banks of many countries increased their interest rates many times during the last six to twelve months. Typically this should have crunched the liquidity but as we are seeing that’s clearly not the case.

A source of liquidity is the Japanese yen which the investors can acquire in huge amounts with very little interest rates. The problem will arise if the Japanese central bank decides to increase the interest rates or the Yen appreciates like it did earlier in the year. But the Yen Carry Trade isn’t new & has been going on for years. So what or who are these new sources of liquidity?

There’s a strong possibility that the oil exporters, Russia and China could be the sources of the liquidity. The accumulation of foreign exchange by oil exporters has increased from 3.7% of the global GDP in 1997 to 9.5% last year. The recent surge in the stock markets was also accompanied by oil again moving upwards. The Gulf countries have showed increased interest in investing in new projects & acquiring companies around the world.

The developing countries – Russia, Brazil & India – added $200 billion of reserves in the first six months of this year while China alone added $ 266 billion. China has the largest reserve of forex in the world and has been investing massively in Africa to buy oil fields. Russia has the largest gas reserves in the world and recently was involved in a tussle EU over pricing in which it forced the EU to comply with its demands.

Certainly, if not all, a major portion of the money driving the world markets is coming from nontraditional sources. And some of them aren’t the players investors would like to see pumping money into the stock markets.

Well nobody would like to see large amounts of Arab or Chinese money driving the world markets. Certainly the Americans will have reservations & so will the Europeans in case Russia decides to pump money into European markets & manipulate the geo-political scenario of the region.