Which Crisis ????

Remember July when the oil price reached 150 $ pr. Barrel – approximately as the same time as Senator McCain stated publicly that the US economy was as strong as ever? Since then the sub-prime buble exploded and stocks plummeted. Banks went broke, and the confidence between banks simply disappeared. It didn’t help much as US Senate couldn’t get their act together and as you remember, US legislators voted No for the first round of the salvation package.

This undoubtedly worsened the global aspect of the crisis to the extent that each and every country had to find ways to secure their own financial institutions. Ireland leading by a not-so-elegant rescue package where only local Irish banks where in a position to guarantee their clients deposits.

Denmark probably was among the most constructive to put together a package involving the financial sectors themselves, but beyond that point a carte blanc for deposits not only by private investors but also by companies. The Danish interest rate was raised to a level 1% above the EURO interest rate, and slowly the funds started to flow again.

This is a bit opposed to the melt down in Iceland, which to some extent had been expected sooner or later. As the total debt of the Iceland Banks extended to 8 times the Icelandic GDP, they sort of asked for it. The neighboring Nordic countries have extended some of their funds to help Iceland, but it will never again be the same. In spite of this risky business it did come as a surprise though, that Gordon Brown (which has scored a lot of ‘Browny’ points during this crisis) acted to protect British interests as he used the UK anti-terrorist law to nationalize the deposits of the Icelandic Kaupthing Bank in UK and with the 2 Bio £ captured, actually kicked the Icelandic state over the edge.

Following acceptance of final 700 Bn $ plan, by the US Senate at their second try, stock markets rose – temporarily. World market reacted positively for a while also after the G8 summit in Washington, but when EU leaders meet to combine efforts on bank crisis, it became rather obvious that it was more a less a question of implementing different national plans at the same time, so it helped for a while. But the markets in Asia still reacted negatively. Worldwide crisis plans face acid test in Asia (Oct. 13.)

Now after a number of terrible weeks, the stock market is down on average by 25-30%, still extremely nervous, Dollar has – amazingly – risen to an all-time high this year, and believe it or not, the oil price is down to 79-80 $ pr. Barrel. And raw material index fell at an alarming rate not seen for more than 50 years. All of this are sure signs of a recession, and not only a short term financial hiccups because of some greedy bankers in US.

Now the real question is how well the World’s leaders are avle to manage and steer their way with the long term energy crisis that is not going away, even if the oil price temporarily has fallen back, between the riscs of rising unemployment and the long term wish and plans for a better Planet by reducing dependencies on oil.

Next year we will have the United Nations Climate Conference in Copenhagen 2009. This week the EU leaders met to discuss a common position and their formerly accepted plan to reduce carbon dioxide by 20% in just 2 years from now. Initially both Poland, other former Eastern European Countries, Germany and Italy raised the opinion that EU should back off from this rather heroic plan – pressed by the upcoming elections in some countries and the fear of recession in most of them. But if one reads the results: EU Leaders meet to discuss position on climate before the UN conference in Copenhagen in 2009, everything looked fine on the surface. The problem is that the statement agreed upon requires that the EU leaders meet again and agree ‘unanimously’ on a position before the Climate Summit. So somebody kicked the ball over the side line to gain time. But no guarantees what so ever! (In spite of this statement: ‘Climate conference in Poland undeterred by current crisis’ )

It is interesting to note that both US presidential candidates seem to be in support of doing something, in spite of the US energy boards expectations this summer:

“However, unless the global economy is weaker than anticipated, EIA expects that the call on Organization of the Petroleum Exporting Countries’ (OPEC) crude oil will exceed OPEC crude oil production over the next 6 months. This market balance and the relatively low level of Organization for Economic Cooperation and Development (OECD) commercial oil inventories suggest some upward pressure on prices. However, if non-OPEC oil production increases as expected during 2009, oil price pressures would then moderate”

And it was likewise very positive to note that in the middle of the financial crisis in US,

US Senate approved package to extend loan to 18 Billion $ for promoting green energy. This is a follow up to a lot of warnings like this one: “ US faces long term energy crisis “

The next few months will see if we can get more countries on the move towards an agreement in Copenhagen while at the same time handling the financial crisis.

(If you want to read more abou the energy forecasts, this is the The International Energy Agency Outlook report (Sept. 10, 2008)