by Gerard Donnelly Smith
(Swans - December 17, 2007) For me, 2007 will be remembered as the year of the meltdown: this word has several denotations that apply to events that occurred during the last year ranging from the economic to the climatic, from the global to the personal.
Although no "overheating of a nuclear core" resulting in a "nuclear meltdown" occurred last year, the overheating of the energy market has threatened to melt the resolve of Congress and state legislatures to resist putting more nuclear reactors online. Last year, Australia had proposed to build 25 nuclear reactors by 2050. The Nuclear Regulatory Commission has reported that 16 separate utilities have shown an interest, which could result in the building of 25 nuclear plants in the United States. Of the New Reactor Licensing application list utilities that have sent letters of intent to start the application process in 2008, fourteen proposed reactors will reach the hearing phase by 2010, the other six by 2011. So the nuclear energy business is heating up, and with each new plant built the probability of a nuclear reactor core overheating increases.
Would this interest in nuclear energy have been so great had not the price per barrel of oil reached record highs in 2007? Coupled with the subprime mortgage catastrophe, energy costs threaten to cause an economic meltdown. Though I don't wish to posit a slippery-slope, or should I say "core meltdown" fallacy, market volatility should concern everyone. The increase for gasoline according to the Energy Information Administration ranged from $2.87 to $3.43 per gallon. In January of 2004, the average price per gallon was $1.55. That's an increase of over 500% in three years.
I haven't heard any economist call that hyperinflation, but that's what it feels like to those who earn minimum wage. That increase in price-per-gallon causes a corresponding increase in goods (foods and products) that are delivered by trucks, trains, ships, and planes -- in other words, everything. For example, the USDA reported that the average price for a gallon of milk rose to $3.13 in June of 2007. The price paid to farmers for milk increased 50% in 2007, driven by higher transportation costs. Similar increases for other products are manifest. Needless to say, consumer confidence is down, because consumer purchasing power is down. As folk singer Jim Page sings, "we're getting squeezed." Unless, wages increase to match this inflation which seems to be "overheating," the economic slowdown fueled by increased energy costs to consumers could result in a serious recession in 2008.
Now for the real economic meltdown: the subprime mortgage debacle. Sure some of the speculators deserve what they get, and some of the banks deserve to lose those "billions" of dollars because they underwrote risky loans. However, this housing meltdown will hurt us all in the long run.
As long as the economy was growing, as long as inflation and the "core" consumer confidence was "cool" then these risky loans may have been winners for both home buyers and lenders. But interest rates increased as the federal government borrowed more and more money to wage its "War on Terror" in Iraq and other places. As energy prices increased, as prices for goods and services increased, as the price for a three-bedroom house in Pleasant Valley reached record highs, the inevitable happened: a full-blown housing recession. One might argue that the housing market has suffered a meltdown -- a rapidly developing disastrous situation.
Foreclosures caused by increased interest rates when the subprime rate expired have lead to more than $40 billion in write downs for lenders such as Citigroup, Merrill Lynch, and Morgan Stanley. Multiple sources including Lehman Brothers Holdings Incorporated report that losses could range from $250 billion to $300 billion, with Deutsche Bank AG estimating that credit losses may reach $400 billion worldwide. Numerous reporters and economists have called this a "meltdown" in print! As the "fallout" continues to radiate into other sectors of the economy, the threat of a full-blown recession for 2008 looms. Indeed, construction of new homes is down, which means construction and contracting jobs are down -- plumbers, electricians, masons, landscapers, drywall installers and finishers are all experiencing an economic down turn. Their loss of income, of course, means these consumers will be spending less at retail stores: it's a trickle down meltdown.
So what's the good news? "The President Who Never Was" received the Nobel Peace Prize for 2007. Finally some justice done! Unfortunately, in his acceptance speech Al Gore warned that "We, the human species, are confronting a planetary emergency -- a threat to the survival of our civilization that is gathering ominous and destructive potential even as we gather here. But there is hopeful news as well: we have the ability to solve this crisis and avoid the worst -- though not all -- of its consequences, if we act boldly, decisively and quickly." In other words, the meltdown is here.
In 2007, US Navy researchers predicted that the North Polar ice cap may be completely gone in as little as seven years, as reported Gore. The International Panel on Climate Control in its November, 2007 AR4 Synthesis Report stated:
Eleven of the last twelve years (1995-2006) rank among the twelve warmest years in the instrumental record of global surface temperature (since 1850). The 100-year linear trend (1906-2005) of 0.74 [0.56 to 0.92] C° 1 is larger than the corresponding trend of 0.6 [0.4 to 0.8] C° (1901-2000) given in the Third Assessment Report (TAR). The temperature increase is widespread over the globe, and is greater at higher northern latitudes. Land regions have warmed faster than the oceans.
Such warming is a direct result of increased greenhouse gases in the atmosphere with carbon dioxide being the most prevalent. This increase in greenhouse gases has prompted a welcome interest in alternative energies sources such as wind and hydroelectric plants, and renewed the argument that nuclear power is "green and clean." The nuclear waste will be dealt with later. Indeed, the IPCC report paints a grim picture, one that screams for alternatives to fossil fuels:
Atmospheric concentrations of CO2 (379 ppm) and CH4 (1774 ppb) in 2005 exceed by far the natural range over the last 650,000 years. Global increases in CO2 concentrations are due primarily to fossil fuel use, with land-use change providing another significant but smaller contribution. It is very likely that the observed increase in CH4 concentration is predominantly due to agriculture and fossil fuel use. [...] There is very high confidence that the net effect of human activities since 1750 has been one of warming.
So what, besides global temperature rise, does increased CO2 mean? Meltdown of the polar ice caps and glaciers has already caused rising sea levels that will ultimately flood coastal regions and that has already covered some low lying atolls.
The most widely reported inundation occurred off the coast of India. In a report by the School of Oceanography at Calcutta's Jadavpur University, Lohachara Island has totally vanished and two-thirds of Ghoramara Island has been permanently flooded; the refugees have fled to neighboring islands; one in particular, Sagar Island, has already lost 7,500 acres to the rising sea levels. According to estimates, the predicted one-meter rise in sea levels will permanently flood 15% of Bangladesh, displacing 13 million people.
According to the Environmental Protection Agency, that one meter increase in sea levels could eliminate between 17-34% of coastal wetlands, and "would eliminate 10,000 square miles of dry land, [...] an area equal to the combined size of Massachusetts and Delaware." Dire predictions put the estimate at 22,000 square miles. Coastal water supplies would be threatened by salt water (the aquifer would become saline); coastal agriculture would be ruined and millions of refugees would have to relocate as their towns and communities go the route of Lohachara Island. The sea level rise will flood Jamestown, VA, Kennebunkport, ME, and the Outer Banks, NC, and is already threatening the Cape Hatteras lighthouse. New York, Washington D.C., Boston, Tokyo, Shanghai, and Jakarta are all on the flood watch. Combined, an estimated 634 million people live in these low-lying regions.
So, instead of standing behind Al Gore, the current administration (those lovers of fossil-fuel profits) still refuses to sign the Kyoto Accord, still postpones increased fuel efficiency for auto manufacturers, still provides billions of dollars in tax breaks to oil companies that could be used for promoting alternative energy and the consumers who wish to go "green." Still, they chop brush in Texas instead of planting more trees on the ranch.
Unfortunately, the meltdown has already begun. In our lifetimes we will see the effects of global warming; indeed within the next fifty years, significant environmental changes will occur that will test us all.
For me, 2007 has already been a year of tests, trials, and tragedy -- all of which I have come through. In many ways 2007 has been a lucky year; my stepson survived a nearly fatal car crash, my soul mate and I have renewed our commitment after 10 years of learning what it means to love, my son moved from public school to private school and is now thriving, and I've been given a second chance to be a better stepfather. My family avoided an emotional meltdown because our love for each other was strong.
I hope we can all look back at 2007 and say that it was a lucky year; say that it was the year when we all woke up and made a conscious decision to stop the meltdowns by consuming responsibly, by using energy wisely, by reducing the behaviors that cause environmental damage. Most importantly, I pray that 2007 is the year that we all realize that we are on this small, blue planet together, that our actions affect everyone else, and that we develop compassion for each other and for our children's children before the meltdowns reach critical mass.
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