Dodd Frank Legislation: Protector of Civil Rights

There are many controversial provisions in the Dodd Frank legislation; however, one that seems to be going under the radar without much notice from the protagonists against this legislation is a provision that requires companies to disclose whether raw materials essential to their products include minerals from Congo and neighboring nations.

The Congo? What does the Congo have to do with legislation that was designed to overhaul the rules and regulations of the financial industry to prevent another financial market meltdown?

This is what happens in Congress. Many times random pieces of provisions are included in legislation that have no association with each other. For example, the unemployment benefits and employer payroll tax extension bills include provisions for the construction of an oil pipeline from Canada to Houston, Texas.

Here, there was pressure by human rights groups to some how fight back against the atrocities in the Democratic Republic of Congo. As a result, Congress ordered the US Securities and Exchange Commission in the Dodd Frank legislation to require companies to disclose this information about whether certain materials it uses for its products come from Congo and its neighbors. Clearly, this will not effect every company. The minerals from the Congo are casserite, columbite-tantalite, gold and wolframite. The only mineral here that I recognize is gold. Then again, I am not a geologist. However, if you take a look at your phone and many other electronic products around your house, including this computer that I am using to type this posting on my blog, many of these products include this minerals. Unfortunately, the mining industry in that region consists of corruption, kidnapping, child labor, racism, torture and murder.

The intent here is that if companies have to disclose that some of their suppliers are rapists, murders, kidnappers and just all around bad dudes, perhaps that will force the company to find a more friendlier, gentler and kinder supplier. Let's face it. In today's society, image is almost as important as the quality of the product. Does that mean there will be a shortage of iPhones and other electronic devices because companies stop doing business with the Congo. Most likely, the answer is no. The Congo only supplies 20% of the global demand for these raw materials. However, companies will face additional cost because of the added cost for auditing its suppliers in order to properly disclose on its 10K whether or not it has such a nefarious supplier. This also has not had an impact on companies' stock prices. For those companies that already disclosed this information, their stock was not impacted by this information. I guess investors are not concerned about companies being human rights stalwarts. As long as the company is meeting it numbers, investors are happy. However, that may become a different story with consumers. There is this hidden intangible capital about people feeling good. Perhaps, people will not feel comfortable to do his or her Facebook update on a computer that includes minerals that came from children mining the mines in the Congo. Maybe I should check Apple's disclosure. It would be contradictory for me to write this story and not confirm that this computer does not have any components with such Congolese minerals.

Then again, I have stock in Apple and there is no way I am going to sel that stock right when its 2012 growth projections are through the roof. What can I say, I am a pragmatist not an idealist.

Update on Climate Change Conference

It was the last day of the talks and the last hours of the Conference. It seemed as if this would be another conference of failed opportunities. However, at the end of this conference, an agreement was made between all 194 participating groups.

They agreed to start negotiations on a new accord that would place all countries under the same international requirements with respect to controlling the emission of greenhouse gases, which would take effect, at the latest, by 2020. This is a historical deal like the Kyoto treaty; however, the participants in this deal would be more expansive, especially if the US, China and India follow their commitments here.

In addition, to the agreement on greenhouse gas emissions, the parties agreed to set up bodies that will collect, govern and distribute tens of billions of dollars a year for poor countries. This is very important because many of the countries that will be hit hardest economically by climate change are the poor countries and, more importantly, the poor countries need additional funding to advance their technology to more green/carbon neutral type of products.

Also, the agreement sets out rules for monitoring and verifying emission reductions, protecting forests and transferring clean technologies to developing countries.

This is a good start, with the emphasis "start". They key will be all the parties to this agreement following through. More importantly, following through sooner than later. Unfortunately, the Earth's climate is already changing. Depending how quickly we act, we may be able to slow down this process of change where the concept of a white Christmas in the Northeast of the United States does become something of folklore and myths, like that red nosed reindeer.

Update from Durban- Drama at Sunnyvale High

Surprise, surprise, surprise. Another stalemate on an agreement for carbon emissions cuts at the Climate Summit in Durban, South Africa. It seems to be a repeat of a teenage coming of age made for TV movie.

There is the rich spoiled powerful character that is being played by the U.S. She is the most popular girl in the school. This character has caused serious damage and harm to many people's social lives; however, everyone is afraid to stand up to this diva type of character because of the repercussions, especially her click of friends known as the industrialized countries, like Japan and Europe. Then there is a new character that has recently arrived into town, who lives on the other side of the tracks and is getting the attention of the US friends. Of course, these this character, being played by either India and China, is relatively poor compared to the US, but is getting to be popular with everyone in the high school. Now, in this story, there is a major crisis that the US caused, but the US will not agree to a solution unless China/India agrees to it. Unfortunately, China/India will not agree because the US wants China/India to make certain sacrifices for things that US did. That is the problem in a nutshell.

Now back to reality. The US has been the largest emitter of carbon emissions in the world over the past decades and will agree to a emission reducing pact as long as China and India agree to the same restrictions. China, in particular, will agree to it only if the US agrees to a larger amount in emission cuts to catch up for the enormous levels of Co2 emissions it released in the atmosphere over the past decades. Of course, the US will not do it.

So there you are. It is the same story in Copenhagen and that is now playing out in Durban. It is also the same story you could find in any high school teenage drama on ABC Family, CW or Nickteen on cable/satellite TV. In these stories there is some happy ending where the popular girl realizes she is wrong and becomes friends with the outsider girl and they work together to resolve the major crisis at the high school. Of course, there really is no happy ending here. We hear it all the time. If there is not immediate commitment and action to reduce our carbon emissions, the end result will be catastrophic. These two high school girls will not be fighting over who gets elected president or gets to take the star athlete to prom. Instead they will be fighting for their own survival.

It is time for the US, China and India and the rest of the world to grow up and act like adults instead of teenagers in high school. At least, that is what the main characters did in Sunnyvale High School Day, the made for TV movie on Nickteen. They acted like adults and resolved their differences.

Kepler 22b- The Goldilocks Planet

Great news. If things do not work out here, we can hop on the space ark and go to Kepler 22b. Yes, NASA has discovered a new planet where life can exist. Apparently, it meet the Goldilocks principle. It's location to its sun in its own solar system is not too hot and not to cold, but just right.

We have to thank the kepler planet-hunting telescope that spotted it launched by NASA in May 2009. The planet is 2.4 times the size of Earth and orbits a star similar to Earth's sun. Also the surface temperature is 22 degrees Celsius. So pack your bags. Well, unfortunately, it is 3,600 trillion miles away, 600 light years. Therefore, we most likely not visit it in my generation or my children's generation. However, the kepler telescope is looking for other plants the matches Earth's climate. So far the telescope has detected 2,326 planets. They are still going through the data to see if any of these planets have a similar climate to Earth, but a little closer in distance. Keep your fingers crossed. At the very least, check for updates on ticket prices for that space ark on Travelocity.

China- The Climate Change Leader

Unbeknownst to many of us, South Africa is hosting the United Nations-led climate change talks. There was a surprise yesterday when China called for binding emission cuts. In addition, they have requested that $100 billion a year be set aside to to held poor countries impacted by climate change and a system be created for rich countries help poor ones with technology. Of course, there is still great skepticism here by the West. Many believe it is nothing more than a political stunt. However, if China is sincere here, this is a major step. At last major climate change summit, China pulled out of any commitments to cut green house gases. As a result, there was no green house gas emission deal in Copenhagen because the US was unwilling to commit to anything without China.

The big question here is what does China really want or why are they concerned now. Keep in mind that China has a population that exceeds a billion people with an increasing demand for resources. More importantly, China has seen the impact that a global crisis can have on China when the financial markets melted down and then there was the real nuclear melt down in Japan. In addition, it witnessed excessive flooding in Thailand and its own natural disasters. China has invested a lot of money in green technology; however, it is realizing that without a united efforts from all industrialized countries, its and the rest of the world's economic growth and future will be in jeopardy. The big question is what will the US do here. I am hoping that there is no role reversal here and the US walks away from any deal with China, just like China did to the US in Copenhagen. Of course, if things do not work out here, we can all jump on that Space Ark and go to Kepler 22b that was just discovered by NASA.

La Nina Returns, maybe

There was El Nino and now returns La Nina. Quite frankly, I am never really know if it an El Nino or La Nina year because of the schizophrenic climate patterns. Fortunately, at least, I can speak Spanish.

So what does this mean to you beside the issue of your winter being 50+ inches vs. 2 inches of snow. Well, this weather pattern can have an impact on crop growth through out the world. And with crop surplus or shortage, food prices go up and down, respectively.

So here in the US we can expect excess rains in the Northwest, which will benefit winter wheat, but, in contrast, the southeast can face dry and warm weather, which will impact corn, soybeans and wheat crops.

In South America, Columbia is expected to receive heavy rains, which can impact coffee bean crops. I guess my Starbucks cup of coffee will be more expensive this year. Argentina will be dry. This will impact corn and soybean crops.

Southeast Asia faces heavy rains and will continue to be inundated with rain. This has already destroyed rice fields and is impacting rubber, palm oil, coal and tin production.

Down under in Australia on the west coast, there will be heavy rain. This will impact the corn, wheat and sugar cane crops.

In addition, there is a threat of an Artic oscillation. This is the wild card. According to Mike Halpert of the US Climate Prediction Center, the erratic Artic Oscillation can change a shift in climate pattern or amplify La Nina's impact. With a negative oscillation, like the last two years, cold air is pushed down and that creates a colder winter and larger snow accumulation totals year in North America. This could push up the demand for natural gas heating and kill some of the warm weather winter crops in areas like Florida and other parts of the South.

Generally speaking, the weather is becoming more unpredictable, which can create fluctuations in commodity prices. For us, that can mean gyrating food, heating and electricity prices.

Buenos suertes.

The Economy is about Jobs, Jobs and more Jobs

Well, the 2012 campaign is beginning just when the 2011 summer is about to start. Amazing, the presidential campaign seems to be coming earlier and earlier each cycle, similar to the summer weather. We just experienced a mid-August type of heat wave at the end of May. Of course, the big issue for this presidential campaign will be jobs and the economy. Unfortunately, the economic numbers released for this past month do not look good. Only 54,000 jobs were added in May. This is not the pace we need to get the unemployment rate down to pre-recession levels. In fact, it is not a good pace to get below 8%. The unemployment rate is now at 9.1%.

Who is the blame? The president, Congress, the state governments, or private businesses? Perhaps, it could be the weather, human incompetence and other global events. Many economist believe the weak growth in jobs and the sluggish economic numbers are due to weather related and global events, such as Japan's tsunami, tornadoes and flooding in the US south and mid-west and high oil and food prices.

In Japan, we are learning how much supply chain management has become a globally connected system. US companies get parts from all around the world and many car parts and electronic parts are from Japan. In fact, the Prius car sold by Toyota has seen an increase in the value of a used Prius because of the delays in new Prius car production due of the damage to Japanese factories that supply Prius cars and parts to the US. This disruption in supply chain management has also impacted electronic devices. In China, a major factory that builds products for Apple and HP caught on fire. Once again, this impacts parts and products getting to the US to be sold to the American consumer. If companies cannot produce product to sell to the American consumer, they do not need to employ additional workers, which impacts job growth.

Then there is the destruction in the South and mid-west with all of the tornadoes and flooding. This has impacted agriculture production and the movement and production of goods. The south has become a major area for manufacturing of goods for the US and many parts of the mid-west represent the US breadbasket. Clearly, this destruction in this region has impacted many families on a personal level, but it also has impacted the economy. This has also raised questions on whether the federal government should take responsibility to cover damages due to weather related events. Some Congressman have stated that funding to help the victims should be money that is actually available in the budget, which would mean taking money from other programs to pay for the reconstruction of these communities. This haggling over who should foot the bill could delay getting these communities up and back on their feet, which could also impact growth in our economy. If there is no funding to help rebuild these communities, many potential job opportunities in the construction sector sit idle until there is funding to pay for this work.

Then there is the issue of rising oil prices. One could argue that this is not weather related and due more to the events in the Middle East. That is probably true. Regardless, the rising cost of oil has impacted the prices at the pump and has cut into Americans' budgets. This means that money that they could use to purchase electronics, clothes and other goods is going to pay for filling their cars. Also, the cost of oil has impacted companies in manufacturing products due to rising energy costs. That cuts into their profit margins. That means there is less money and demand to higher more people, which again impacts job growth.

Another issue that has impacted the American wallet is the price of food. Because of the rising cost of oil and weather related event in the middle of the country and the South along with other weather related events impacting food production around the world, the price for groceries is going up. Once again, the discretionary spending of Americans are impacted. Therefore, a person has to chose between feeding his or her family or purchasing the latest Ipad. I would assume they would chose feeding the family over an electronic device. Although that might be a tough decision considering all the cool apps you can get on the Ipad.

The last thing is the government. The U.S. and state governments are concerned about deficit reduction are are cash strapped. As a result, they are forced to cut back on spending and to reduce staff. In the month of May the government shed 29,000 workers.

Based on the foregoing, it is not surprising that the US economy has slowed down and job growth has decreased. The question here is whether this is temporary or signs of another double dip recession. I am hoping the former rather than the later. One person that could help us is mother nature by cutting back on these devastating natural disasters. I am just hoping that she is a capitalist.

A Snow Job over the Economy

This has been a horrible winter where I live. In fact, this year's record snowfall total surpassed last year's total, which was also a record. I have packed up that U-haul to move to a warmer climate. But where do I move?

It seems that most of the US had a bad winter. There was one satellite picture of North America taken after the onslaught of several storms across the US and it looked like all of North America was covered in snow. This snow not only has taken a toll on our bodies and psyche, it has taken a toll on our economy and the economy in other countries too.

For example, the UK got hit with extremely bad weather in December and its GDP dropped .5% due to the in climate weather. Germany's industrial production in December shrank 1.5% due to the snow. Part of the weak job growth in the US earlier this year was due to the bad weather. According to the Economist magazine, the Federation of Small Businesses (FSB), a British trade group, estimated that the UK economy lost £1.2 billion ($1.9 billion) for each day of the December freeze.

Of course, some people benefit from these snow days, and I am not including kids who are off from school. There are many people earning extra income in offering snow plowing services. Also, the ski resorts' profit margins increase due to the increase of skiers and the decrease in the need to make snow. In addition, tree removal services benefit from the downed trees caused by the bad weather. Moreover, car repair shops benefit from the fender benders caused by the treacherous driving.

Still, the majority of businesses are hurt by this weather. It reduces the production level of its employees because either they cannot make it into work or if they can make it to work, other persons or resources needed to do their work are unavailable, Of course, technology has mitigated that slightly because many people who work in the office can work from home. That is assuming, however, that they did not lose power from the fallen tree that knocked down the power line or they have to spend their time entertaining their kids who are off from school. In general, it causes disruption from closing of schools and offices along to flight delays or cancellations and delays in public transportation.

Interestingly, many economist have stated that the potential profits are not lost completely, but rather delayed. In 2010, when there was bad weather, the month proceeding the bad weather saw a larger increase in output and production. In the end, you see less of an even growth, but you see growth.

Nonetheless, I am hoping for the rest of 2011 that I do not have to write about or see snow. I, among many of us, have seen enough snow for the next several winters. Perhaps, a sure guarantee for that is to move to Caribbean. Then again, they get hurricanes.

Not Apologizing is Costly

Chevron got hit with a $9.47 billion fine from a court in Ecuador for polluting the water in the arc of the rainforest territory for polluting the region's water supply while pumping large amounts of oil in that region since the 1970s. If this judgement is upheld, the damage amount may be the highest-ever awarded in an environmental case. To add insult to injury, if Chevron does not make a public apology within 15 days of the issuing date of the judgement, the fine could go up to $17.2 billion.

At this point, the Company is not willing to apologize. Chevron is stating that the company it acquired Texaco cleaned up the polluted water before it ceased operations in the region and the current problems are due to another oil company, Petroecaudor, which is owned by the Ecuadorian government. Regardless of who is at fault, the inhabitants of that region complain of above-average cancer rates and the dumping of 15.8 billion gallons of toxic water into the streams of the rivers that supplies most of the areas drinking water.

At first blush, it would appear that Chevron has a pretty tough hill to climb because the entity it is blaming to have caused this problem is owned by the government. Chevron, however, has filed a suit in a New York court against the plaintiffs' lawyers alleging fraud and attempted extortion. Specifically, they claim that plaintiffs' lawyers have colluded with court officials to get this outrageously high amount of damages. In addition, Chevron has no assets in Ecuador. Therefore, collecting damages will be difficult. Ecuador will have to other authorities in countries where Chevron has assets to enforce this judgement. Most importantly, the Permanent Court of Arbitration at the Hague along with a court in New York issued an injunction temporally blocking this move by Ecuador.

In the end, Ecuador and the inhabitants of the plotted region may not receive an apology any type of damage payout. What seemed like a major victory now seems more like a Pyhric victory.

The Apocalypse or Just Another Day on the Planet Where Large Amounts of Wildlif Die

eMany of you have heard about the "rare" occurrence of 5000 blackbirds dropping dead in Arkansas and dozens of jackdaws falling from the sky in Sweden along with a few hundred turtle doves in Italy. At least the last one sounds like a scrooge-like Christmas prank. Nevertheless, should I take out my bible and read about the signs of the apocalypse? According to many scientists, mass animal deaths are not a rare occurrence. According to the National Wild Life Center in Madison, WI, which has been tracking mass animal deaths since the 1970s, there have been 188 cases just involving birds with mortality exceeding one thousand per event over the last ten years.

There are a variety reasons besides the "Act of God" that causes these deaths, such as animal starvation, animals eating toxic foods or getting poisoned by people. Some people hypothesized that the massive bird death in Arkansas could have been due to New Year fireworks scaring birds and causing them to fly into buildings, trees and other large hard objects.

According to the US Geological Survey, on average, there are between 160 to 200 such "mass death" events in the wildlife reported each year. In fact, there have been much larger bird deaths than the ones that just happened. In 1996 more than 100,000 ducks died of botulism in Canada.

So should we be afraid? Perhaps not, but then again there are some events that concern the science community, such as over one millions bats dying over the last three years due to the fungal affliction called "nose syndrome." Bats help in pollination of plants and reduce the mosquito population.

In the end, these rare occurrences are not so rare. At the same time, we should still be concerned that the wildlife is dying off in large amounts. It might not be the apocalypse; however, it could be a sign that the ecosystem is deteriorating. Also, certain populations like bats dying off can have significant impacts on our lives. So next time you see a bird slam into your window, you can sit back and relax knowing that its just a "natural" occurrence. Just make sure you stock up on mosquito repellent.