Turning Wall Street ?

US President Barack Obama has unveiled a sweeping series of measures aimed at checking the behaviour of banks and creating pressures against high risk financial transactions and deals. The proposals which are touted as the biggest regulatory crackdown on banks since the 1930s, include limitations on the size of institutions and barring the most cavalier trading practices.

According to media reports, Obama stated “We should no longer allow banks to stray too far from their central mission of serving their customers,” “My resolve to reform the system is only strengthened when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low and cannot refund taxpayers for the bailout. If these folks want a fight, it’s a fight I’m ready to have. Never again will the American taxpayer be held hostage by a bank that is too big to fail.”

Obama stated that Wall Street banks must: halt “proprietary trading”, where banks risk huge sums predicting the outcome of future moves in the price of commodities such as oil; operate more cautiously and have more available funds; not become too large by limiting the amount of ordinary banking business they can undertake.

Wall Street has certainly demonstrated the degree of risk for the global community when an unfettered market is allowed to trade with unfettered greed, however Obama faces considerable barriers to effecting change needed in the World's largest capital markets. Risky deals and large executive remuneration has been the practice for many years and turning around such a culture, which also influences the rest of the international finance community, is a mammoth almost impossible task.

A War without End - the Taliban and Afghanistan

The war in Afghanistan shows little sign of resolution and the strike by the Taliban through a bombing against a CIA operation highlights the capacity of the group to strike back at will. The loss of seven CIA agents who were killed in the attack in Khost province has brought into the focus the clandestine and difficult war being fought by America’s intelligence agencies against the Taliban and al-Qaeda  in the wild border regions of Afghanistan and Pakistan.

Operating bases such as Forward Operating Base Chapman, are the main edge of American military and intelligence counter-terrorism operations in the tribal belt and have the objective of hunting down senior figures in al-Qaeda and their allies, the Taliban, and eliminating them. While the CIA’s main strike weapons are the remote drones which fly high over the border areas 24 hours a day, watching and listening to telephone networks, human intelligence is far harder to acquire yet absolutely essential for effective strikes. But gaining such vital and prized information among remote communities  is diffcult and dangerous given these commmunities are suspicious of any outsider and particualrly foreigners. The potential for inflitration and counter-strikes is very high which was demonstrated all too effectively this week.

New Year Challenges for 2010

With the new year about to commence, its worth quickly reflecting on the current state of play which will continue into the next year and maintain a powerful influence:

• The international economy is still recovering and quite patchy with some strong local economies including two giants in the developing world. Many others remain flat or with only marginal increases in growth.
• The conflict with terrorism continues as does the war in Afghanistan. The possible number of failed lawless states remains as it was in 2009. Security will remain a critical feature for the year.
• The UN Climate Change Conference (COP 15) at Copenhagen in December 2009 did not produce an effective plan for reducing carbon emissions as well as other related global warming factors.
• Technology convergence which is a mixed blessing will continue this year. This means both instantaneous communication but also social dislocation as the new technology causes both.   

In summary then, the direction of 2010 is already partially set by the events of 2009 some of which find their own basis from earlier years. Australia can ride out some but not all of these challenges. It will be a testing year.

COP 15 Agreement

The summary of resolutions from COP 15 shows in effect only a cursory series of agreements and not sufficient to combat carbon emissions in the degree necessary.  Further negotiations will occur in the next year so it is hoped that these may produce more tangible results.

GLOBAL WARMING ‘‘should be (kept) below two degrees Celsius’’, says the draft. But it does not identify a year by which carbon emissions should peak, a position resisted by emerging giants. Countries are asked to spell out by February 1 next year their pledges for curbing carbon emissions by 2020. The deal does not spell out penalties for any country that fails to meet its promise.

FUNDS: Rich countries are pledging $US10 billion in the three years from 2010-2012 to help poor countries tackle climate change. They also set the goal of ‘‘mobilising jointly’’ $US100 billion a year by 2020, drawn from ‘‘a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.’’

VERIFICATION: The pledges of rich countries will come ‘‘under rigorous, robust and transparent’’ scrutiny under the UN Framework Convention on Climate Change (UNFCCC). Developing countries will submit national reports on their emissions pledges under a method ‘‘that will ensure that national sovereignty is respected.’’ Pledges on mitigation measures that require international support will be recorded in a registry.

MID-CENTURY TARGETS: The text does not endorse the goal of halving the global output of carbon pollution by mid-century, an objective many rich countries endorse. Emerging giants mainly China and India have said they are unwilling to back such a target.

LEGALLY-BINDING TREATY: There is no deadline for transforming the objectives outlined in the accord into a legally-binding treaty. It had been widely expected that the text would call for a treaty to be finalised before the end of 2010.

Climate Change - an agreement too far?

As COP 15 concludes, the rest of the World will be left wondering exactly what has been achieved at a conference which has been marked by hostility and division notwithstanding the expected grandstanding and neogiating stances taken by delegates, environment ministers and Heads of State. The deal going forward for the consideration of the 190 countries attending the Climate Change Conference is to try to limit global warming to 2 degrees C but contains no targets to cut greenhouse gas emissions and is not a binding deal. The alternative to this very mild platform was to have the conference collapse into chaos yet with indications that the global environment is going to heat by 3 degrees C , this approach will be too little to effectively mitigate against changes already underway. On the basis that some agreement is better than no agreement at all COP15, has been successful in some key measures of reaching an understanding that action is needed. The devil, as always, is in the detail and key aspects such as the level of $ in the climate change fund, verification of reduction in emissions and a binding agreement remain glaring missing items.

COP 15 Negotiations - Initial Rounds

The 15th United Nations Climate Change Conference (COP15) is underway at the Bella Centre in Copenhagen running from the 7th to the 18th of December, 2009.

With fierce debate in progress at COP 15, its opportune to reflect that more than half of global carbon pollution comes from developing countries rather than the developed part of the world and hence both segments must contribute in real terms to efforts to mitigate the impact of climate change. Developing countries led by emerging giants China, India and Brazil are the most significant CO2 emitters, and the proportion of carbon pollution from these sources is set to rise as their high-population economies grow.

Not surprisingly, the 42-member Alliance of Small Island States (AOSIS), which includes the vocal island nation of Tuvalu, and the bloc of mainly African Least Developed Countries, have rejected the widely held goal of keeping global temperatures from rising more than 2.0 degrees Celsius stating that this target is manifestly inadequate.

In their estimation only a cap of 1.5 C compared to pre-industrial times would give their nations a chance of fighting off rising seas or crippling drought. The reality is their position is fairly sound and without ambitious targets both with agreement and adherence, the opportunity for averting a major shift in climate will be lost.