Tag Archives: Macro Economics

Extreme Climate Turn Norway Into A Blowtorch (Extreme Photos)

This may very well be a strange side effect of the global climate change. Extreme dry weather this winter have turned the cost of Norway into a hazardous area that may ignites and burst into flames in a matter of seconds. Right now firefighters are trying to save another village from total destruction as nearly 100 buildings are lost,  but still hey are not able to control the wild-fire. Only one week ago 40 buildings were lost when another small Norwegian village suddenly burst into flames.

“Our theory is that sparks from power lines has started the fire, but that’s what we’re going to find out.”

Trude Skogen

nrk3

Criminal investigators are now arriving the burned-out village, Flatanger, Norwegian Broadcasting (NRK) reports Tuesday night. Increasing wind in the area have made fire even more difficult to manage and it is now threatening almost 140 buildings.

“We have begun questioning already. Tomorrow, crime technicians and tactical investigators will arrive to continue the research. Our theory is that sparks from power lines has started the fire, but that’s what we’re going to find out,” police prosecutor, Trude Skogen, says.

And hold it, right there.

Sparks from power lines? You mean those wires hanging over my head right now?

This seem to be the case, based on eye witness reports.

Løsly hanging power lines may have come in contact with each other and produced sparks that may have ignited the extreme dry grass, moss and heather below. Strong winds may have created the scary blowtorch effect.

State meteorologist confirms that the winter have been extremely dry along the Norwegian cost this year. Areas, usually covered in snow this time of year, is currently being blow dried in a way I have never seen before.

Another on of those “small prints” on the “Big Wall”?

If there’s anyone out there, who lives in another part of the world, but have seen or experienced something similar, please let me know.

Photos from:

 nrk.no

andrssa.no

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ONE WEEK AGO:

Something similar happened in the village, Lærdal, on the western coast of Norway. 40 buildings were lost.

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LATEST: 

News reports at 22:30 (Local time) says the firefighters has the fire under control. About 100 buildings are destroyed.

UPDATE:

On Wednesday morning local police says firefighters have lost control over the fire once again, as the fire hoses froze during the night.

Related by econoTwist’s:

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Filed under ecology, National Economic Politics, sustainable development

The Absurdity of the French-German Euro Summit

EconoTwist’s is obviously not the only blog who thinks there’s something absurd about the two top leaders of France and Germany getting together and hammer out the future of the whole European Union, and sending their orders in a five-page letter to the president of the EU Council together with an offer for the leading chair in the new economic government they’re proposing. I’m not sure what they mean by “strengthening” the economic governance, or how this is gonna solve anything. Professor George Irvin, however, have a few clarifying comments.

“In a sane world, the German Chancellor and the French President would sack their economic advisors who clearly lack an understanding of basic economics or national accounting principles. Sadly, the world is growing less sane by the day.”

George Irvin

Except for the so-called “Tobin-tax” on financial transactions, EconoTwist’s, agree on most arguments made by honorary professor George Irvin at the University of London. In his recently published post at the EUobserver.com, professor Irvin points to  one crucial fact: There is nothing in the French-German plans for a new European economic government that actually may stop the debt crisis from escalating.

Angela Merkel and Nicholas Sarkozy spent most part of yesterdays meeting mapping the future of the Euro Area (EA) and apparently came away pleased with their work, professor Irvin observes.

And continues:

The good news is that they want to move towards serious EA economic governance and seemed to have agreed on a Tobin tax as part of the deal.

The bad news is that they want all members of the EA-17 to write a ‘balanced budget’ rule into their constitution; ie, to replicate the German ‘debt brake’ (Schuldenbremse) law across the EA.

It won’t work.

The reason a generalised balanced budget rule won’t work is simple; it follows from the basic national accounting savings balances. Because (over the business cycle as a whole) the private sector normally runs a savings surplus, a government balance of zero logically entails a current account surplus.

While this may hold true for Germany, it cannot be true for all EA countries taken together.

For the EA as a whole, one country’s exports are another’s imports—for some countries (like Germany) to run a surplus, others must run a deficit.

This is not an empirical matter but follows logically from national accounting definitions; Merkel and Sarkozy are guilty of a basic fallacy of composition.

There is only one way a “balanced budget rule” might work for the EA as a whole – each EA deficit country would have to run a countervailing surplus with the non-EA world. But there are two problems here.

The first, shown in a paper by Whyte, is that there is not enough excess demand in the rest of the world to absorb the extra EA exports.

Even if there were, the resulting global trade imbalance would result over time in the EA accumulating excess reserves, much as China today.

Crucially, Mrs Merkel and Mr Sarkozy made no mention of strengthening the “bailout fund” or issuing E-bonds. The latter is vital if short-term crisis is to be avoided.

George Irvin

In a sane world, the German Chancellor and the French President would sack their economic advisors who clearly lack an understanding of basic economics or national accounting principles. Sadly, the world is growing less sane by the day.

The financial markets will know this and soon enough return to speculating against member states’ sovereign debt.

By George Irvin

George Irvin is a retired professor of economics and for many years was at ISS in The Hague. He is now honorary Professorial Research Fellow in Development Studies at the University of London, SOAS.

His blog covers contemporary economic and political issues relevant to the EU.

 

See also: Van Rompuy tipped to chair new “economic government”

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Filed under International Econnomic Politics, National Economic Politics, Philosophy

Financial Markets Temporary Shut Down In Both US, EU And Russia

The trading in financial markets has now been closed in both the US, Europe and in Russia due to sharp declines.  The shutdown is temporary, but the panic and uncertainty might pospone the closedown. Ride on, baby!

“We cut our global GDP growth forecasts to 3.9% in 2011 and 3.8% in 2012, from 4.2% and 4.5%, respectively. DM growth looks set to average only 1.5% this year and next – down from 1.9% and 2.4% previously – making the BBB recovery even more bumpy, below-par and brittle.”

Morgan Stanley Research

Rule 48 have just been invoked by the NYSE Euronext.

A few hours ago, Russian media reported that the Russian stock market had been closed for the same reasons – a sharp decline. All trading on Russia’s MICEX stock exchange has been halted until 17:15 GMT.

(h/t: Zero Hedge)

Here’s the text of Rule 48:

(a) In the event that extremely high market volatility is likely to have a Floor-wide impact on the ability of [Designated Market Makers] to arrange for the fair and orderly opening, reopening following a market-wide halt of trading at the Exchange, or closing of trading at the Exchange and that absent relief, the operation of the Exchange is likely to be impaired, a qualified Exchange officer may declare an extreme market volatility condition with respect to trading on or through the facilities of the Exchange.

(b) In the event that an extreme market volatility condition is declared with respect to trading on or through the facilities of the Exchange, a qualified Exchange officer shall be empowered to temporarily suspend at the opening of trading or reopening of trading following a market-wide trading halt: (i) the need for prior Floor Official or prior NYSE Floor operations approval to open or reopen a security at the Exchange (Rules 123D(1) and 79A.30); and/or (ii) applicable requirements to make pre-opening indications in a security (Rules 15 and 123D(1)).

The rule was approved by the Securities and Exchange Commission on Dec. 6, 2007.

(Source: The Wall Street Journal)

Check the developments at the major stock exchanges here:

NYSE Euronext

New York Stock Exchange

Nasdaq OMX

London Stock Exchange

RTS Exchange Russia

TODAY’s SHOCKER:

Morgan Stanley – Dangerously Close to Recession

See Also:

Fitch Ratings. European Senior Fixed-Income Investor Survey Q311. 08182011.

“Corporate entities are expected to scale back capital spending and revert to cash preservation mode. Investment grade corporates snatch top spot for most favoured asset class, ahead of high yield, whilst cash moves to joint third from sixth place in Q211. Access to funding remains the key perceived risk to bank credit quality, with a higher proportion of respondents citing this factor as critical. Over the coming 12 months, the majority foresee tight or tightening bank lending conditions, receding from the overall expectation of loosening in the previous survey.”

Oh, and a little  bit more…from BNP Paribas:

“The recovery’s weaknesses are now coming to light. The crisis caused growth to collapse without a proportionate fall in asset prices; barely had the recovery begun than the world economy found itself in a position of excess liquidity, creating the preconditions for a commodity bubble that has now materialised. The overheating of certain developing economies has worsened, whilst, in the G3, under utilisation of production factors has persisted, or has even been more marked. International financial imbalances remain. The sustainability of Greek government debt is becoming highly problematic, whilst the systemic risk for banks and governments in other in other peripheral euro zone countries are far from being resolved. The recovery in the US shows signs of running out of steam and the outcomes of unrest in the Arab world remain uncertain.”

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Filed under International Econnomic Politics, National Economic Politics, Technology