Daily Digest 11/27 - China's Unlivable Cities, U.S. Power Grid Vulnerable to Just About Everything

Economy

Welcome to the Currency War, Part 5: The Dollar Gets Serious Competition (pinecarr)

Not so long ago the dollar was the world’s only reserve currency. Everything else was one (or several) steps down in terms of safety and liquidity, and major financial institutions acted accordingly, accumulating dollars for the risk-free parts of their portfolios. Global demand for dollars was, as a result, effectively infinite, which meant the US could borrow whatever it wanted, secure in the knowledge that the Treasury bonds it created would find willing buyers.

But quietly, over the past couple of decades, the dollar has been joined at the top by the euro, yen, pound sterling and Swiss franc. And now the list of legitimate reserve currencies has expanded to include Canadian and Australian dollars…

Protesting farmers spray European Parliament with milk (westcoastjan)

The EU is the world's largest milk producer and in 2010 nearly 47% of its 123bn euro budget went on subsidies and other forms of financial aid for farmers, including dairy producers.

Unlivable Cities (jdargis)

Why are Chinese cities so monolithic? The answer lies in the country's fractured history. In the 1930s, China was a failed state: Warlords controlled large swaths of territory, and the Japanese had colonized the northeast. Shanghai was a foreign pleasure den, but life expectancy hovered around 30. Tibetans, Uighurs, and other minorities largely governed themselves. When Mao Zedong unified China in 1949, much of the country was in ruins, and his Communist Party rebuilt it under a unifying theme. Besides promulgating a single language and national laws, they subscribed to the Soviet idea of what a city should be like: wide boulevards, oppressively squat, functional buildings, dormitory-style housing. Cities weren't conceived of as places to live, but as building blocks needed to build a strong and prosperous nation; in other words, they were constructed for the benefit of the party and the country, not the people.

Energy

High demand means world needs all of Canada’s oil: IEA (westcoastjan)

“The U.S. will still need to import about 4 million barrels per day of oil, and this oil will have to come from somewhere, and I believe Canada will be a primary destination (for supplies) to the United States.”

In its forecast, the IEA said oil sands output was expected to nearly triple to 4.3 million barrels a day by 2035, assuming environmental concerns about development can be addressed.

Why Oil Is Going To Zero (James S.)

It is clear that high oil prices are curing high prices. Oil hit a bottom of $10 a barrel in 1998, when it was worth less than the barrel holding it. That is when the industry obtained its last raft of tax subsidies from Washington. After that, it rocketed to $149. The big guess is how close we get to the last bottom. If world peace breaks out -- a distinct possibility if Iran folds its nuclear program in response to unremitting US pressure -- then oil could lose a risk premium that many in the industry estimate at $30-$40/barrel.

U.S. Power Grid Vulnerable to Just About Everything (James S.)

So what is being done to mitigate risk? According to FERC, utility companies aren’t doing enough. Unfortunately, FERC does not have the power to order utilities to act in the name of protecting the country’s energy infrastructure. Security is expensive, and more than 90% of the country’s grid is privately owned and regulated by state governments. Private utilities are not likely to feel responsible for footing the bill for security, and states may not be able to afford it.

Environment

Real clothes for the Emperor: Facing the challenges of climate change (Ann P.)

Global carbon dioxide emissions for 2011 – a year of economic recession and upheaval in the West – rose by 3.2% on the 2010 figure, which itself was up 6% on 2009. We are entering uncharted waters; 7 to 9 billion people living in a world with a climate changing at rates unprecedented in human history and beyond that at which ecosystems are attuned to adapt.

Hurricane Sandy: Staten Island Survivors (jdargis)

As we head into the Thanksgiving weekend, thousands of families in the northeast face a difficult holiday season. For those still reeling from the effects of Superstorm Sandy, emotions are still raw and futures are uncertain. Reuters photographer Mike Segar visited Staten Island last week, spending time with residents hard-hit by Sandy. He collected not just their portraits but their stories, as they stood amid the wreckage of what had been their homes, businesses, and places of worship. While there was anger and sadness on display, there was also a sense of gratitude for the outpouring of help from afar, and the groundswell of support from friends and neighbors.

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