Monday, November 30, 2015

Global Economic Stagnation

Buried deeply within the International Monetary Fund's latest World Economic Output (WEO) issued in October 2015, we find a bar graph that provides us with an interesting look at how the global unemployment picture has changed since the depths of the Great Recession and post-recessionary recovery period and what factors will influence the global economy over the next year.

Here is a graphic showing the unemployment rate for the world's advanced economies at the end of  2014 (blue bars) compared to the maximum level during the period from 2008 to 2014 (red squares):

Keeping in mind that the Bank of Japan, the European Central Bank and the Federal Reserve have employed "heroic measures" to prod the economy back to life since 2008 as we can see on this chart which shows the growth in the balance sheets as a percentage of 2008 GDP for the three aforementioned central banks since 2007:

...for the vast majority of the world's advanced economies, the unemployment rate has declined by a relatively insignificant amount during the "recovery".  While the global markets tend to focus on the unemployment picture in the United States as the key measure of global economic health, many nations including Italy, France, Finland, Austria, the Netherlands, Begium, Luxembourg, Australia, Norway and Korea have roughly the same current unemployment rate as they had at the worst point in the period between 2008 and 2014.  As well, several of the nations that have shown significant improvements in their employment picture (i.e. Greece, Spain, Portugal and Ireland) were part of the PIIGS debt transgressors of the first half of the latest decade whose economies can hardly be regarded as "healthy"

Why should this be of concern?  Here is a graphic showing the IMF recession risks for the period between Q3 2015 and Q2 2016:

Compared to the April 2015 WEO, the risk of recession has risen for most of the world's advanced economies including the United States, Europe, Japan and Latin America.  This is largely because productivity growth as measured using the difference between output growth and employment growth has turned out to be weaker over the period from 2008 to 2014 when compared to 1995 to 2007 as we can see on this graphic:

All economies fall below the 45 degree line with the exception of Spain whose economy reflects changes in temporary and lower productivity jobs over the period from 2008 to 2014.

As well, potential output growth is projected to remain well below pre-Great Recession rates.  

One factor that will not help the global economy and the unemployment picture when the next recession hits is the high level of gross public debt as a percentage of GDP as shown on this graphic:

With major advanced economies having public debt levels well in excess of 100 percent of GDP, governments will find it increasingly difficult to spend their way out of another recession, particularly if it is a deep one that causes a significant contraction in tax revenues.

Despite the intervention of the world's central banks, from this information, we can easily draw the conclusion that the global economy is, at the very least, entering a stagnant phase a conclusion that is also evident from the significant decline in the value of the world's commodities as demand for copper, oil, nickel and other key metals has stagnated as we can see on this chart:

Thursday, November 26, 2015

America's "Atlantis"

While a significant portion of the population doesn't believe in the concept of global warming and its consequences, what if it really happened?  What would the impact be on the coastal United States?  A study by researchers at the Rosenstiel School of Marine and Atmospheric Science looks at the possible impact on one of America's largest cities, Miami.

Let's open with a map showing the coastal elevations in Florida:

As we can easily see, a very significant area of southern Florida is barely above sea level.

Let's now look at the changes in sea level in the Miami area.  Since 1996, measurements of sea level taken on the small island of Virginia Key located south of Miami Beach show the following trend:

By 2014, mean sea level has risen by 3.7 inches from their 1996 levels.

Not only is sea level rising in the Miami area, the rate of the rise is accelerating as shown on this graphic which plots the daily highest tide mark.  Please note that each five year period is given a different colour:

Note that the slope of the line that is calculated using a 31 day running mean of all 19 years of data.  Over the past 15 years, the average high tide has increased by 0.3 inches per year, however, over the past 5 years, the high tide level has increased at an average rate of 1.27 inches per year.

What does all of this mean to the Miami metropolitan area, home to just over 5.5 million people?  More than 10 percent of land in Miami-Dade lies at least than 1 foot above sea level, 20 percent at less than 2 feet and 25 percent at less than 3 feet.     Here is a map showing how much of central Miami will be inundated at high tide with a three foot rise in sea level:

As well, the same area would be flooded during significant rain events (i.e. hurricanes) during even the lowest of tides.

Miami is suffering from a two-edged sword.  Municipal wells that provide water for both residential and agricultural use are pumping water from a porous and permeable limestone aquifer.  As shown in this diagram, as the fresh water is pumped out of the aquifer, saltwater from the ocean advances into the aquifer in a process known as saltwater intrusion:

As a result of saltwater intrusion, some cities in Florida have had to shut down some of their fresh water wells because the water has become contaminated (brackish).  As sea level rises over the coming decades, the saltwater will exert more pressure on the freshwater in the aquifer, pushing the freshwater further from the coast and toward the surface.  This means that the depth to the water table will decrease as time passes.  Another problem connected to the porosity of the bedrock underlying south Florida is that seawalls cannot block seawater; during storm surges, seawater will move inland under any seawalls that are constructed.

A study by Forbes Thompson and Christina DeConcini at the World Resources Institute observes that sea level in southeast Florida has risen by 12 inches with the annual se level rise between 1993 and 2010 being twice the rate that was observed from 1901 to 2010.  

Over the next 20 years, Florida's problems with sea level changes will become more apparent.  By 2034, sea level is expected to rise by about 6 inches meaning that flooding from heavy rains will become more of a problem, particularly for residents that live very close to sea level.   By 2060, sea levels along Florida's coastline will rise by between 9 inches and two feet.  This will have a massive impact on Florida's economy as the cost of post-storm cleanups increase in lock-step with the damage being done.  To give us a sense of the size of the problem, the 2005 Hurricane Wilma caused $2.21 billion in damage to the Miami-Dade area.  The seven foot storm surge that caused this amount of damage had the likelihood of occurring only once in 76 years.  If the sea level along Miami-Dade's coastline rises by one foot, the same seven foot storm surge will have a likelihood of occurring once in 21 years and if the sea level rises by two feet, the same seven foot storm surge would have a likelihood of occurring once every five years!  

Florida is the most vulnerable state to changes in sea level and Miami-Dade has more people living less than four feet above sea level than any other state excluding Louisiana.  Miami has the nation's largest amount of exposed assets and has the world's fourth largest population vulnerable to a rising sea level.  Whether the cause of global climate change is related to man-made/anthropogenic causes or is just part of a natural warming cycle it matters little to the future residents of Miami and Dade County.  It's not a political issue.  It's an issue that will impact us all, particularly given that billions of dollars worth of homes and infrastructure lie within the target zone.

Wednesday, November 25, 2015

The Conundrum in Syria

It is increasingly becoming apparent that the current situation in Syria and Iraq is complex beyond belief as we can see on this diagram from Think Progress:

There are so many players in the game that it is almost impossible to tell which group is on which side of the conflict.  To help better understand why this posting is important, here is a map showing who controls Syria:

Hopefully, this will help you put the following information into context.

Let's now take a look at a brief video montage:

The first part of the video (at the ten second mark) shows former U.S. Ambassador to Syria Robert Ford posing with Free Syrian Army Colonel Abdel Jabbar al-Okaidi, the key man in America's low-key, three year-long effort to unseat Syria's current President.  Colonel al-Okaidi was a former colonel in the Syrian Arab Army who defected to the opposition/rebel forces in 2012.  He was considered to be the main recipient of the limited Western (read United States and the United Kingdom) aid that was destined to reach the rebel forces.  He resigned in November 2013 after the Free Syrian Army rebels were defeated at Safira.

At the 18 second mark, you will see Colonel al-Okaidi being interviewed in November 2013 about his relationship with ISIS.  Here are his responses:

Interviewer - How is your relationship with the Islamic State in Iraq and the Levant?

al-Okaidi - It is good.  My relationship with the brothers in ISIL is good.

Interviewer - Do you communicate with them?

al-Okaidi - Yes, of course.  I communicate almost daily with brothers in ISIL to settle these disputes and issues.  The issues are being overinflated by the media.  There's a lot of spotlight being put on the issue of ISIL, that they are Takfiris (apostate Muslims) etcetera.

Interviewer - And they are not?

al-Okaidi - The majority are not as such.  There are some elements who might have the wrong ideology, however, when we sit down with them...

Interviewer - So it's a matter of individual mistakes then?

al-Okaidi - Perhaps it's individual mistakes, however, when we sit down together with their leaders, they don't have this ideology.  And the relationship is good, even brotherly.  However, in some of their behaviours on the ground, there are mistakes.

Now, let's move to the 1 minute and 33 second mark.  Here, America's key man in the Free Syrian Army is posing with members of the forces that captured the Menagh Airbase near Aleppo in August 2013.  Standing immediately to the right of Colonel al-Okaidi (wearing a head covering) is ISIS Emir Abu Jandal.  Remember, at that time, ISIS was not well known to the public.

Here's what al-Okaidi had to say:

"We thank Allah and we bring good news to our people in Syria and to our Muslim people in all the world that Allah has been generous with us during this blessed month with this great victory after we achieved victory in Khan al-Assal and now in Menagh military airbase which got liberated at the hands of these heroes."  

He goes on to introduce "our brother" Abu Jandal who a senior commander.  Here is is photo from a publication by the Brookings Institute:

Skipping ahead, at the 3 minute and 48 second mark, we notice that Colonel al-Akaidi is again being interviewed in January 2013, this time, about Jabhat al-Nusra, better known as al-Qaeda in Syria.  Here's the exchange:

Interviewer - Why is Jabhat al-Nusra being listed on the terrorist organizations list?

al-Okaidi - I don't know.  There are not longer any questions or discussions except about Jabhat al-Nusra which perhaps constitutes ten percent of the Free Syrian Army in Aleppo or in Syria.  I don't know what are the illegal or unusual acts that Jabhat al-Nusra members have practiced so it can be listed on the terror list.  We truly did not see from them except good morals and brave and heroic fighting against this regime.

Here is a map showing the key battles that Jabhat al-Nusra have been involved in up to the end of December 2014:

So, what all of this means is that coalition support for the Free Syrian Army has put arms into the hands of both ISIS and al-Qaeda's proxy in Syria.  It is interesting to note that 29 Syrian opposition groups have signed a petition which condemns the United States designation of Jabhat al-Nusra as a terrorist group, urging rebel supporters to raise the Jabhat al-Nusra flag.  

Let's close this posting with a photo montage showing Colonel al-Okaidi with Ambassador Robert Ford and with ISIS commander Abu Jandal, a montage that shows us how opaque and complex the situation in Syria really has been all along:

The significant number of competing agendas in the current fight in Syria and Iraq make it nearly impossible for outside nations to avoid supporting groups that we regard as terrorists.  Apparently, our leaders are unable to learn from the mistakes of the past.