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West Japan Railway
20 декабря 2016, 07:52

Ситуация на фондовых площадках Азиатско-Тихоокеанского региона:

Основные фондовые индексы Азиатско-Тихоокеанского региона торгуются разнонаправленно. На динамику торгов повлияло решение Банка Японии оставить денежно кредитную политику без изменений. Также фондовые рынки приняли удар после того, как два отдельных смертельных нападений в Турции и Германии выразили обеспокоенность по поводу безопасности в Европе. Посол России в Турции был убит, когда выступал с речью в картинной галерее в Анкаре. И в Берлине, грузовик врезался в переполненном Рождественский рынок, что привело к гибели девяти человек. Котировки на крупнейшей в Азии токийской фондовой бирже снизились с начала сессии, однако за тем выросли после решения Банка Японии оставить процентную ставку без изменений на уровне -0,1%. Банк также заявил, что продолжит покупать японские гособлигации предыдущими темпами на сумму около 80 трлн иен в год и оставит уровень доходности по 10-летним гособлигациям Японии около нуля. Акции Toyota Motor Corp подешевели на 0,5%, Honda Motor Co - на 0,6% и Panasonic Corp - на 1,3%. Бумаги East Japan Railway Co подорожали на 1,4%, West Japan Railway Co - на 1,0% и Mitsui Fudosan Co - 1,0%. Nikkei 225 19,415.93 +24.33 +0.13% Shanghai Composite 3,102.02 -16.06 -0.52% S&P/ASX 200 5,587.90 +25.82 +0.46% Информационно-аналитический отдел TeleTradeИсточник: FxTeam

30 августа 2016, 10:20

BRIEF-West Japan Railway forms business and capital alliance with Nippon Signal

* Says the co signed a capital and business alliance agreement with Nippon Signal Co Ltd on Aug. 30

Выбор редакции
25 января 2016, 00:52

National › 5 dead, over 100 injured due to snow, severe weather in Japan

Five people died and more than 100 were injured Sunday as a cold air mass gripped Japan, with record-breaking heavy snowfall in western and central areas of the country. The weather forced airlines to cancel many flights and West Japan Railway Co to reduce the speed of bullet trains on…

Выбор редакции
24 января 2016, 09:50

National › Heavy snow hits western, central Japan; Okinawa feels chill, too

A cold air mass gripped the Japanese archipelago, bringing heavy snow and gusty winds to a wide area of western and central Japan on Sunday, forcing airlines to cancel many flights and West Japan Railway Co to reduce the speed of bullet trains on sections of the Sanyo Shinkansen lines.…

Выбор редакции
14 октября 2014, 04:13

Из-за тайфуна "Вонгфонг" пострадало 100 человек, один погиб

Тайфун парализовал работу транспорта в центральной части страны: впервые за свою историю крупнейшая железнодорожная компания юго-западного региона Японии West Japan Railway Company заранее объявила об отмене движения 1200 поездов на всех 24 направлениях.

Выбор редакции
30 сентября 2013, 09:50

National › JR West employee falls to death from bridge

An employee of West Japan Railway Co (JR West) fell to his death from a bridge in Suita, Osaka, early Monday. According to police, a team of workers was inspecting a bridge on the JR Kyoto Line in Suita at around 1 a.m., when one of the group apparently fell…

Выбор редакции
27 сентября 2013, 13:41

Суд в Японии оправдал экс-руководителей ж/д-компании по делу о гибели 107 человек

Три бывших руководителя железнодорожной компании West Japan Railway Company (JR West) признаны невиновными по делу об аварии 2005 года, в результате которой погибли 107 человек, 550 получили ранения.

Выбор редакции
27 сентября 2013, 13:05

Japan ex-rail heads cleared of crash

Three former chiefs of West Japan Railway are found not guilty over a 2005 train crash that killed 107 people in the city of Amagasaki.

Выбор редакции
14 июня 2013, 01:40

National › Free Wi-Fi for tourists to become available at 11 JR West stations

West Japan Railway Company (JR West) said Thursday that it will launch free Wi-Fi service for tourists on July 1 at 11 stations on its shinkansen (bullet train) lines, including for the first time Shin-Kobe, Okayama, Hiroshima, Ogura, Hakata, as well as stations where it is already available -- Kyoto,…

10 февраля 2013, 17:09

Liveblogging World War II: February 10, 1943

British Prime Minister Winston S. Churchill: The dominating aim which we set before ourselves at the Conference at Casablanca was to engage the enemy's forces on land, sea, and in the air on the largest possible scale and at the earliest possible moment. The importance of coming to ever closer grips with the enemy and intensifying the struggle outweighs a number of other considerations which ordinarily would be decisive in themselves. We have to make the enemy burn and bleed in every way that is physically and reasonably possible, in the same way as he is being made to burn and bleed along the vast Russian front from the White Sea to the Black Sea. But this is not so simple as it sounds. Great Britain and the United States were formerly peaceful countries, ill-armed and unprepared. They are now warrior nations, walking in the fear of the Lord, very heavily armed, and with an increasingly clear view of their salvation. We are actually possessed of very powerful and growing forces, with great masses of munitions coming along. The problem is to bring these forces into action. The United States has vast oceans to cross in order to close with her enemies. We also have seas or oceans to cross in the first instance, and then for both of us there is the daring and complicated enterprise of landing on defended coasts and also the building-up of all the supplies and communications necessary for vigorous campaigning when once a landing has been made. It is because of this that the U-boat warfare takes the first place in our thoughts. There is no need to exaggerate the danger of the U-boats or to worry our merchant seamen by harping upon it unduly, because the British and American Governments have known for some time past that there were these U-boats about and have given the task of overcoming them the first priority in all their plans. This was reaffirmed most explicitly by the Combined Staffs at Casablanca. The losses we suffer at sea are very heavy, and they hamper us and delay our operations. They prevent us from coming info action with our full strength, and thus they prolong the war, with its certain 1469 waste and loss and all its unknowable hazards. Progress is being made in the war against the U-boats. We are holding our own, and more than holding our own. Before the United States came into the war, we made our calculations on the basis of British building and guaranteed Lend-Lease, which assured us of a steady and moderate improvement in our position by the end of 1943 on a very high scale of losses. There never was a moment in which we did not see our way through, provided that what the United States promised us was made good. Since then various things have happened. The United States have entered the war, and their shipbuilding has been stepped up to the present prodigious levels, amounting for the year 1943 to over 13,000,000 gross tons, or, as they would express it in American nomenclature, 18,000,000 or 19,000,000 dead weight tons. When the United States entered the war she brought with her a Mercantile Marine, American and American-controlled, of perhaps 10,000,000 gross tons, as compared with our then existing tonnage, British and British-controlled, of about—I am purposely not being precise—twice as much. On the other hand, the two Powers had more routes to guard, more jobs to do, and they therefore of course presented more numerous targets to the U-boats. Very serious depredations were committed by the U-boats off the East coast of America until the convoy system was put into proper order by the exertions of Admiral King. Heavy losses in the Far East were also incurred at the outset of the war against Japan when the Japanese pounced upon large quantities of British and United States shipping there. The great operation of landing in North Africa and maintaining the armies ashore naturally exposed the Anglo-American fleets to further losses, though there is a compensation for that which I will refer to later; and the Arctic convoys to Russia have also imposed a heavy toll, the main part of both these operational losses having fallen upon the British. In all these circumstances it was inevitable that the joint American and British, losses in the past 15 months should exceed the limits for which we British ourselves, in the days when we were alone, had budgeted. However, when the vast expansion in the United States shipbuilding is added to the credit side, the position is very definitely improved. It is in my opinion desirable to leave the enemy guessing at our real figures, to let him be the victim of his own lies, and to deprive him of every means of checking the exaggerations of his U-boat captains or of associating particular losses with particular forms and occasions of attack. I therefore do not propose to give any exact figures. This, however, I may say, that in the last six months, which included some of those heavy operations which I have mentioned, the Anglo-American and the important Canadian new building, all taken together, exceeded all the losses of the United Nations by over 1,250,000 gross tons. That is to say, our joint fleet is 1,250,000 tons bigger to-day than it was six months ago. That is not much, but it is something, and something very important. But that statement by no means does justice to the achievement of the two countries, because the great American flow of shipbuilding is leaping up month by month, and the losses in the last two months are the lowest sustained for over a year. The number of U-boats is increasing, but so are their losses, and so also are the means of attacking them and protecting the convoys. It is, however, a horrible thing to plan ahead in cold blood on the basis of losing hundreds of thousands of tons a month, even if you can show a favourable balance at the end of a year. The waste of precious cargoes, the destruction of so many noble ships, the loss of heroic crews, all combine to constitute a repulsive and sombre panorama. We cannot possibly rest content with losses on this scale, even though they are outweighed by new building, even if they are not for that reason mortal in their character. Nothing is more clearly proved than that well-escorted convoys, especially when protected by long-distance aircraft, beat the U-boats. I do not say that they are a complete protection, but they are an enormous mitigation of losses. We have had hardly any losses at sea in our heavily escorted troop convoys. Out of about 3,000,000 soldiers who have been moved under the protection of the British Navy about the world, to and fro across the seas and 1471 oceans, about 1,348 have been killed or drowned, including missing. It is about 2,200 to one against your being drowned if you travel in British troop convoys in this present war. Even if the U-boats increase in number, there is no doubt that a superior proportionate increase in the naval and air escort will be a remedy. A ship not sunk is better than a new ship built. Therefore, in order to reduce the waste in the merchant shipping convoys, we have decided, by successive steps during the last six months, to throw the emphasis rather more on the production of escort vessels, even though it means some impingement on new building. Very great numbers of escort vessels are being constructed in Great Britain and the United States, equipped with every new device of anti-U-boat warfare in all its latest refinements. We pool our resources with the United States, and we have been promised, and the promise is being executed in due course, our fair allocation of American-built escort vessels. There is another point. Everyone sees how much better it is to have fast ships than slow. This is also true of racehorses, as the Noble Lady was well aware in her unregenerate days. However, speed is a costly luxury. The most careful calculations are made and are repeatedly revised as between having fewer fast ships or more slow ones. The choice, however, is not entirely a free one. The moment you come into the sphere of fast ships, engine competition enters a new phase. It starts with the escort vessels but in other directions and also in the materials for the higher speed engines there come other complicated factors. I should strongly advise the House to have confidence in the extremely capable people who, with full knowledge of all the facts, are working day in day out on all these aspects and who would be delighted to fit an additional line of fast ships, even at some loss in aggregate tonnage, provided they could be sure that the engines would not clash with other even more urgent needs. In all these matters I should like the House to realise that we do have to aim at an optimum rather than at a maximum, which is not quite the same thing. On the offensive side the rate of killing U-boats has steadily improved. From 1472 January to October, 1942, inclusive, a period of 10 months, the rate of sinkings, certain and probable, was the best we have seen so far in this war, but from November to the present day, a period of three months, that rate has improved more than half as much again. At the same time, the destructive power of the U-boat has undergone a steady diminution since the beginning of the war. In the first year, each operational U-boat that was at work accounted for an average of 19 ships; in the second year, for an average of 12, and in the third year for an average of 7½. These figures, I think, are, in themselves, a tribute to the Admiralty and to all others concerned. It is quite true that at the present time, as I said in answer to an inquiry by my hon. Friend the Member for Seaham (Mr. Shinwell) the other day, we are making inroads upon the reserves of food and raw materials which we prudently built up in the earlier years of the war. We are doing this for the sake of the military operations in Africa and Asia and in the Far Pacific. We are doing it for the sake of the Russian convoys, and for the sake of giving aid and supplies to India and to Persia and other Middle Eastern countries. We are doing this on the faith of President Roosevelt's promise to me of large allocations of shipping coming to us, as the floods of American new building come upon the seas. Risks have to be run, but I can assure the House that these needs are not left to chance and to sudden and belated panic spurts. Provided that the present intense efforts are kept up here and in the United States, and that anti-U-boat warfare continues to hold first place in our thoughts and energies, I take the responsibility of assuring the House—and I have not misled them so far—that we shall be definitely better off, so far as shipping is concerned, at the end of 1943 than we are now, and while it is imprudent to try to peer so far ahead, all the tendencies show that unless something entirely new and unexpected happens in this well-explored field, we shall be still better off at the end of 1944, assuming that the war continues until then. It may be disappointing to Hitler to learn that we are upon a rising tide of tonnage and not upon an ebb or shrinkage, but it is the governing fact of the situation. Therefore, let everyone engaged in this sphere of operations bend to 1473 his or her task and try to get the losses down and try to get the launchings up; and let them do this, not under the spur of fear or gloom, or patriotic jitters, but in the sure and exhilarating consciousness of a gigantic task which is forging steadily forward to successful accomplishment. The more the sinkings are reduced, the more vehement our Anglo-American war effort can be. The margin, improving and widening, means the power to strike heavier blows against the enemy. The greater the weight we can take off Russia, the quicker the war will come to an end. All depends upon the margin of new building forging ahead over the losses, which, although improving, are still, as I have said, a lamentable and grievous fact to meditate upon. Meanwhile, let the enemy if he will, nurse his Vain hopes of averting his doom by U-boat warfare. He cannot avert it, but he may delay it, and it is for us to shorten that delay by every conceivable effort we can make. It was only after full, cold, sober and mature consideration of all these facts, on which our lives and liberties certainly depend, that the President, with my full concurrence as agent of the War Cabinet, decided that the note of the Casablanca Conference should be the unconditional surrender of all our foes. But our inflexible insistence upon unconditional surrender does not mean that we shall stain our victorious arms by wrong and cruel treatment of whole populations. But justice must be done upon the wicked and the guilty, and, within her proper bounds, justice must be stern and implacable. No vestige of the Nazi or Fascist power, no vestige of the Japanese war-plotting machine, will be left by us when the work is done, as done it certainly will be. That disposes, I think, of two important features of the Casablanca Conference, the recognition that the defeat of the U-boat and the improvement of the margin of shipbuilding resources is the prelude to all effective aggressive operations, and, secondly, after considering all those facts, the statement which the President wished to be made on the subject of unconditional surrender. But the Casablanca Conference was, in my not inconsiderable experience of these functions, in various ways unparalleled. There never has been, in all the inter-Allied Conferences I have known, anything like the prolonged professional 1474 examination of the whole scene of the world war in its military, its armament production and its economic aspects. This examination was conducted through the whole day, and far into the night, by the military, naval and air experts, sitting by themselves, without political influence thrust upon them, although general guidance was given by the President and by myself. But they were sitting by themselves talking all these matters out as experts and professionals. Some of these conferences in the last war, I remember, lasted a day or two days, but this was 11 days. If I speak of decisions taken, I can assure the House that they are based upon professional opinion and advice in their integrity. There never has been anything like that. When you have half a dozen theatres of war open in various parts of the globe there are bound to be divergences of view when the problem is studied from different angles. There were many divergences of view before we came together, and it was for that reason, that I had been pressing for so many months for the meeting of as many of the great Allies as possible. These divergences are of emphasis and priority rather than of principle. They can only be removed by the prolonged association of consenting and instructed minds. Human judgment is fallible. We may have taken decisions which will prove to be less good than we hoped, but at any rate anything is better than not having a plan. You must be able to answer every question in these matters of war and have a good, clear, plain answer to the question: what is your plan, what is your policy? But it does not follow that we always give the answer. It would be foolish. We have now a complete plan of action, which comprises the apportionment of forces as well as their direction, and the weight of the particular movements which have been decided upon; and this plan we are going to carry out according to our ability during the next nine months, before the end of which we shall certainly make efforts to meet again. I feel justified in asking the House to believe that their business is being conducted according to a definite design and, although there will surely be disappointments and failures—many disappointments and serious failures and frustrations—there is no question of drifting or indecision, 1475 or being unable to form a scheme or waiting for something to turn up. For good or for ill, we know exactly what it is that we wish to do. We have the united and agreed advice of our experts behind it, and there is nothing now to be done but to work these plans out in their detail and put them into execution one after the other. I believe it was Bismarck—I have not been able to verify it, but I expect I shall be able to find out now—who said in the closing years of his life that the dominating fact in the modern world was that the people of Britain and of the United States both spoke the same language. If so, it was certainly a much more sensible remark than some of those that we have heard from those who now fill high positions in Germany. Certainly the British and American experts and their political chiefs gain an enormous advantage by the fact that they can interchange their thoughts so easily and freely and so frankly by a common medium of speech. This, however, did not in any way diminish our great regret that Premier Stalin and some of his distinguished generals could not be with us. The President, in spite of the physical disability which he has so heroically surmounted, was willing to go as far East as Khartoum in the hope that we could have a tripartite meeting. Premier Stalin is, however, the supreme director of the whole vast Russian offensive, which was already then in full swing and which is still rolling remorselessly and triumphantly forward. He could not leave his post, as he told us, even for a single day. But I can assure the House that, although he was absent, our duty to aid to the utmost in our power the magnificent, tremendous effort of Russia and to try to draw the enemy and the enemy's air force from the Russian front was accepted as the first of our objectives once the needs of the anti-U-boat warfare were met in such a way as to enable us to act aggressively. We have made no secret of the fact that British and American strategists and leaders are unanimous in adhering to their decision of a year ago, namely, that the defeat of Hitler and the breaking of the German power must have priority over the decisive phase of the war against Japan. I have already some two months ago indicated that the defeat of the enemy 1476 in Europe may be achieved before victory is won over Japan, and I made it clear that in that event all the forces of the British Empire, land, sea and air, will be moved to the Far Eastern theatre with the greatest possible speed, and that Great Britain will continue the war by the side of the United States with the utmost vigour until unconditional surrender has been enforced upon Japan. With the authority of the War Cabinet, I renewed this declaration in our Conference at Casablanca. I offered to make it in any form which might be desired, even embodying it in a special Treaty if that were thought advantageous. The President, however, stated that the word of Great Britain was quite enough for him. We have already, of course, bound ourselves, along with all the rest of the United Nations, to go on together to the end, however long it may take or however grievous the cost may be. I therefore think it only necessary to mention the matter to the House in order to give them the opportunity of registering their assent to that obvious and very necessary declaration. [HON. MEMBERS: "Hear, hear."] We may now congratulate our American Allies upon their decisive victory at Guadalcanal, upon the taking of which the Japanese had expanded a serious part of their limited strength and largely irreplaceable equipment. We must also express our admiration for the hard-won successes of the Australian and American Forces, who, under their brilliant commander General MacArthur, have taken Buna in New Guinea and slaughtered the last of its defenders. The ingenious use of aircraft to solve the intricate tactical problems, by the transport of reinforcements, supplies and munitions, including field guns, is a prominent feature of MacArthur's generalship and should be carefully studied in detail by all concerned in the technical conduct of the war. In the meantime, while Hitler is being destroyed in Europe, every endeavour will be made to keep Japan thoroughly occupied and force her to exhaust and expend her material strength against the far superior Allied and, above all, American resources. This war in the Pacific Ocean, although fought by both sides with comparatively small forces at the end of enormous distances, has already engaged a great part of the American resources employed overseas as well as those of Australia and New Zealand. 1477 The effort to hold the dumbbell at arms length is so exhausting and costly to both sides that it would be a great mistake to try to judge the effort by the actual numbers that come into contact at particular points. It is a tremendous effort to fight at four, five and six thousand miles across the ocean under these conditions. It is the kind of effort which is most injurious to Japan, whose resources are incomparably weaker in material than those of which we dispose. For the time being, in the war against Japan the British effort is confined to the Indian theatre. Our Asiatic war effort is confined to operations to clear Burma, to open the Burma road and to give what aid can be given to the Chinese. That is the task which we have before us. We have been in close correspondence with Generalissimo Chiang Kai-shek, whom of course we should have been delighted to see at our Conference had it been possible for him to come. General Arnold, head of the United States Air Force, and Field-Marshal Dill are at present in Chungking concerting what we have in mind with the Chinese Generalissimo. We have already received from him an expression of his satisfaction about the strong additional help that will be provided for China at this stage in her long-drawn, undaunted struggle. The Generalissimo also concurs in the plans for future action in the Far East which we have submitted to him as the result of our deliberations. A communiqué about this Conference, received only a few minutes ago, declares the complete accord between the three Powers in their plans for the co-ordination of their Forces and in their determination in all their operations against Japan to ensure continued efforts and mutual assistance. Discussions between General MacArthur and Field-Marshal Wavell will follow in due course. So much for the Casablanca decisions and their repercussions as far as they can be made public. I must, however, add this. When I look at all that Russia is doing and the vast achievements of the Soviet Armies, I should feel myself below the level of events if I were not sure in my heart and conscience that everything in human power is being done and will be done to bring British and American Forces into action against the enemy with the utmost speed and energy and on the largest scale. This the President and I have urgently and specifically enjoined upon our military advisers and experts. In approving their schemes and allocations of forces, we have asked for more weight to be put into the attacks and more speed into their dates. Intense efforts are now being made on both sides of the Atlantic for this purpose. From the Conference at Casablanca, with the full assent of the President, I flew to Cairo and thence to Turkey. I descended upon a Turkish airfield at Adana, already well stocked with British Hurricane fighters manned by Turkish airmen, and out of the snow-capped Taurus Mountains there crawled like an enamel caterpillar the Presidential train, bearing on board the head of the Turkish Republic, the Prime Minister, the Foreign Secretary, Marshal Chakmak, and the Party Leader—in fact, the High Executive of Turkey. I have already uttered a caution against reading anything into the communiqué which has already been published on this Conference, more than the communiqué conveys. It is no part of of our policy to get Turkey into trouble. On the contrary, a disaster to Turkey would be a disaster to Britain and to all the United Nations. Hitherto, Turkey has maintained a solid barrier against aggression from any quarter and by so doing, even in the darkest days, has rendered us invaluable service in preventing the spreading of the war through Turkey into Persia and Iraq, and in preventing the menace to the oilfields of Abadan which are of vital consequence to the whole Eastern war. It is an important interest of the United Nations and especially of Great Britain that Turkey should become well armed in all the apparatus of modem war and that her brave infantry shall not lack the essential, weapons which play a decisive part on the battlefields of to-day. These weapons we and the United States are now for the first time in a position to supply to the full capacity of the Turkish railways and other communications. We can give them as much as they are able to take, and we can give these weapons as fast as and faster than the Turkish troops can be trained to use them. At our Conference I made no request of Turkey except to get this rearmament business thoroughly well organised, and a British and Turkish Joint Military Mission is now sitting in Ankara 1479 in order to press forward to the utmost the development of the general defensive strength of Turkey, the improvement of the communications and, by the reception of the new weapons, to bring its army up to the highest pitch of efficiency. I am sure it would not be possible to pry more closely into this part of our affairs. Turkey is our Ally. Turkey is our friend. We wish her well, and we wish to see her territory, rights and interests effectively preserved. We wish to see, in particular, warm and friendly relations established between Turkey and her great Russian Ally to the North-West, to whom we are bound by the 20-years Anglo-Russian Treaty. Whereas a little while ago it looked to superficial observers as if Turkey might be isolated by a German advance through the Caucasus on one side and by a German-Italian attack on Egypt on the other, a transformation scene has occurred. Turkey now finds on each side of her victorious Powers who are her friends. It will be interesting to see how the story unfolds chapter by chapter, and it would be very foolish to try to skip on too fast. After discharging our business in Turkey I had to come home, and I naturally stopped at the interesting places on the way where I had people to see and things to do. I think that the story I have to tell follows very naturally stage by stage along my homeward journey. I have already mentioned to the House, at Question time the other day, my very pleasant stay during my return journey at Cyprus, which has played its part so well and is enjoying a period of war-time prosperity. But how different was the situation in Cairo from what I found it in the early days of last year. Then the Desert Army was bewildered and dispirited, feeling themselves better men than the enemy and wondering why they had had to retreat with heavy losses for so many hundreds of miles while Rommel pursued them on their own captured transport and with their own food, petrol and ammunition. Then the enemy was 60 miles from Alexandria, and I had to give orders for every preparation to be made to defend the line of the Nile, exactly as if we were fighting in Kent. I had also to make a number of drastic changes in the High Command. Those changes have been vindicated 1480 by the results. In a week an electrifying effect was produced upon the Desert Army by General Montgomery and by orders which he issued, and upon the whole situation by the appointment of General Alexander as Commander-in-Chief, Middle East. At the same time great reinforcements, despatched many weeks and even months before round the Cape of Good Hope, were steaming up the Red Sea and pouring into the Nile Valley. The American Sherman tank, which the President gave me in Washington on that dark morning when we learned of the fall of Tobruk and the surrender of its 25,000 defenders, came into the hands of troops thirsting to have good weapons to use against the enemy. As a consequence of those events and many others which could be cited, the enemy has been decisively defeated, first in the second Battle of El Alamein, where Rommells final thrust was repulsed, and, secondly, in the great battle for El Alamein, which will do down in history as the Battle of Egypt, for by it Egypt was delivered. On arriving in Cairo I found that now the enemy, who had boasted that he would enter Cairo and Alexandria and cross and cut the Suez Canal, and had even struck a medal to commemorate the event, of which I was handed a specimen, had been rolled back 1,500 miles, and it is probably 1,600 miles by now. What an amazing feat this has been. The battle is one story, the pursuit is another. So rapid an advance by such powerful, competent, heavily equipped forces over distances so enormous is, as far as I am aware, without parallel in modern war; and the Ancients had not the advantages of locomotion which we possess, so they are out of it anyway. Everywhere in Egypt there is a feeling that Britain has kept her word, that we have been a faithful and unfailing Ally, that we have preserved the Nile Valley and all its cities, villages and fertile lands from the horrors of invasion. It was always said that Egypt could never be invaded across the Western Desert, and certainly that historical fact has now been established upon modern and far stronger foundations. From Cairo I proceeded on my magic carpet to Tripoli, which 10 days before was in the possession of the enemy. Here I found General Montgomery. I must confess quite frankly that I had not 1481 realised how magnificent a city and harbour Tripoli has been made. It is the first Italian city to be delivered by British arms from the grip of the Huns. Naturally there was lively enthusiasm among the Italian population, and I can hardly do justice to the effusiveness of the demonstrations of which I was the fortunate object. I had the honour as your servant to review two of our forward divisions. The 51st Highland Division is the successor of that brave division that was overwhelmed on the coast of France in the tragedies of 1940. It has already more than equalised the account which Scotland had open in this matter. In the afternoon I saw a mass of 10,000 New Zealanders, who, with a comparatively small portion of their vast equipment of cannon, tanks and technical vehicles, took one-and-a-half hours to march past. On that day I saw at least 40,000 troops, and as representing His Majesty's Government I had the honour to receive their salutes and greetings. Meanwhile, of course, the front had rolled nearly another 100 miles farther to the West, and the beaten enemy were being pursued back to the new positions in Tunisia on which it is said they intend to make a stand. I do not wish to encourage the House or the country to look for any very speedy new results. They may come, or they may not come. The enemy have carried out very heavy demolitions and blockings in Tripoli harbour. Therefore, supply from the sea is greatly hampered, and I cannot tell what time will be required to clear the port and begin the building-up of a new base for supplies. It is not the slightest use being impatient with these processes. Meanwhile General Montgomery's Army is feeding itself from its base at Cairo, 1,500 miles away, through Tobruk, 1,000 miles away, and Benghazi, 750 miles away, by a prodigious mass of mechanical transport, all organised in a manner truly wonderful. Presently we may be able to move forward again, but meanwhile the enemy may have time to consolidate his position and to bring in further reinforcements and further equipment. Let us just see how things go. But I should like to say this; I have never in my life, which from my youth up has been connected with military matters, seen troops who march with the style and air of those of the Desert Army. Talk about spit and polish. The 1482 Highland and New Zealand Divisions paraded after their immense ordeal in the desert as if they had come out of Wellington Barracks. There was an air on the face of every private of that just and sober pride which comes from dear-bought victory and triumph after toil. I saw the same sort of marching smartness, and the same punctilio of saluting and discipline, in the Russian guard of honour which received me in Moscow six months ago. The fighting men of democracy feel that they are coming into their own. Let me also pay my tribute to this vehement and formidable General Montgomery, a Cromwellian figure, austere, severe, accomplished, tireless, his life given to the study of war, who has attracted to himself in an extraordinary measure the confidence and the devotion of his Army. Let me also pay, in the name of the House, my tribute to General Alexander, on whom the over-riding responsibility lay. I read to the House on 11th November the directive which in those critical days I gave to General Alexander. I may perhaps refresh the memory of hon. Members by reading it again: 1. Your prime and main duty will be to take or destroy at the earliest opportunity the German-Italian army commanded by Field-Marshal Rommel, together with all its supplies and establishments in Egypt and Libya. 2. You will discharge, or cause to be discharged, such other duties as pertain to your Command without prejudice to the task described in paragraph 1, which must be considered paramount in His Majesty's interests. I have now received, when, as it chanced, I visited the Army again, the following official communication from General Alexander, in which General Montgomery took great pleasure, and to which it will be necessary for us to send a reply: Sir, The Orders you gave me on August 15, 1942, have been fulfilled. His Majesty's enemies, together with their impedimenta, have been completely eliminated from Egypt, Cyrenaica, Libya and Tripolitania. I now await your further instructions. Well, obviously, we shall have to think of something else, and, indeed, this was one of the more detailed matters which we discussed in the Conference at Casablanca. I did not publish the original instructions to General Alexander until some months afterwards, when the Battle of Egypt had been won, and the House will naturally grant me a similar delay before I make public the reply to him which is now required. I should, however, inform the House and the country of the various changes in the High Command which the marked improvement in our affairs and the movements of the Armies have rendered suitable and necessary. This brings me to the general situation in French North-West Africa, on which I have a very few general remarks to make. The descent upon North Africa by the British and American Forces will, I believe, be judged in the words which Premier Stalin used to me when I told him about it in August last. He said that it was "militarily correct." It certainly has altered the strategic axis of the war. By this very large-scale manœuvre, thought by many experts to be most hazardous before it was undertaken, we recovered the initiative in the West, and we recovered it at comparatively small cost of life and with less loss in shipping than we gained by what fell into our hands. Nearly half a million men have been landed successfully and safely in North-West Africa, and those fair and beautiful regions are now under the control of the United States. We agreed with the President many months ago that this should be an American enterprise, and I have gladly accepted, with the approval of the War Cabinet, the position of lieutenant in this sphere. The Americans attach the greatest importance to unity of command between Allies and to control over all these Services being in the hands of one supreme commander. We willingly and freely accepted this position, and we shall act loyally and faithfully up to it on all occasions and in every respect. Some people are busily concerned about the past records of various French functionaries whom the Americans have deemed it expedient to employ. For my part, I must confess that I am more interested in the safety of the Armies and in the success of the operations which will soon be again advancing to an important climax. I shall therefore not take up the time of the House with the tales which can be told of how these various Frenchmen acted in the forlorn and hideous situation in which they found themselves when their country collapsed. What matters to General Eisenhower and to our troops, who, in great numbers, are serving under him, and what matters throughout this vast 1484 area of population of well over 16,000,000, 90 per cent. of whom are Moslems, is, first and foremost, a tranquil countryside, and, secondly, secure and unimpeded communications to the battle-front, which is now steadily developing on what I have called the Tunisian tip. I have not seen this battle front, I am sorry to say, because it is 400 miles distant by road from Algiers, where I spent last Friday and Saturday with General Eisenhower and Admiral Cunningham, and also with our Minister-Resident, the right hon. Member for Stockton-on-Tees (Mr. Harold Macmillan), who is doing admirable work and becoming a real solver of problems—friends with everyone—and taking, with Mr. Murphy's co-operation, an increasingly heavy load off the shoulders of the Commander-in-Chief in regard to matters with which a military commander should not to be burdened. Although I did not have a chance to see this front—because one does get a number of communications from home from time to time—I can tell the House that conditions are absolutely different from those which the Desert Army has triumphantly surmounted. The Desert Army is the product of three years of trial and error and of continued perfecting of transport, communications, supplies and signals, and the rapid moving forward of airfields and the like. The Armies now fighting in Tunisia are still in a very early stage of building up their communications. The enemy opposite to them, although largely an improvised army, have something like the advantage which we had over Rommel in front of Cairo, I mean the advantage of lying 30 or 40 miles in front of your bases; while we have to go over very long, slender, tightly stretched and heavily strained approaches, in order to get at them. Very nearly did General Anderson, under General Eisenhower's orders, clear the whole province at a run. Very little more, and we might have achieved everything. It was absolutely right to try, but it failed. The Germans effected their entry, and made good their bridge-heads. We had to fall back to gather strength and to gather our resources for heavy battle. I cannot pretend not to be disappointed that the full result was not achieved at the first bound, Still, our main object is to fight the Germans, and one cannot be blind to the fact that we have made them fight us 1485 in a situation extremely costly to them and by no means disadvantageous to us. Although the enemy's lines of supply on land are short, they are under constant attack by sea. Before they reach the battlefield they lose one-quarter, or one-third even, of everything they bring across the sea. Our power of reinforcement is far greater and more secure than theirs. The portentous apparition of the Desert Army, driving Rommel before them, is a new, most potent and possibly even decisive factor. Air fighting is developing on an ever-increasing scale, and this is, of course, greatly to our advantage, because it would pay us to lose two machines to one in order to wear down the German air force and draw it away from the Russian front. However, instead of losing two planes to one, the actual results are very nearly the other way round. Therefore, it seems to me that the House need not be unduly depressed because the fighting in North Africa is going to assume a very much larger scale and last a longer time than was originally anticipated and hoped. It is, indeed, quite remarkable that the Germans should have shown themselves ready to run the risk and pay the price required of them by their struggle to hold the Tunisian tip. While I always hesitate to say anything which might afterwards look like over-confidence, I cannot resist the remark that one seems to discern in this policy the touch of the master hand, the same master hand that planned the attack on Stalingrad and that has brought upon the German armies the greatest disaster they have ever suffered in all their military history. However, I am making no predictions and no promises. Very serious battles will have to be fought. Including Rommel's army, there must be nearly a quarter of a million of the enemy in the Tunisian tip, and we must not in any way under-rate the hazards we have to dare or the burdens we have to carry. It is always folly to forecast the results of great trials of strength in war before they take place. I will say no more than this: All the disadvantages are not on one side, and certainly they are not all on our side. I think that conforms to the standards of the anti-complacency opinion in this country. French North-West Africa is, as I have said, a United States operation, under American command. We have agreed 1486 that the boundary between our respective spheres shall be the existing frontier between Tripolitania and Tunisia, but the Desert Army is now crossing that frontier and driving forward on its quest, which is Rommel. Its movements must, therefore, be combined with those of the First Army and with the various powerful forces coming from the West. For some weeks past, the commanders have been in close touch with one another; these contacts must now be formalised. As the Desert Army passes into the American sphere it will naturally come under the orders of General Eisenhower. I have great confidence in General Eisenhower. I regard him as one of the finest men I have ever met. It was arranged at Casablanca that when this transfer of the Desert Army took place, General Alexander should become Deputy Commander-in-Chief under General Eisenhower. At the same time, Air Chief Marshal Tedder becomes Air Commander-in-Chief Mediterranean, responsible to General Eisenhower for all the air operations in his theatre. He will control also all the Air Forces throughout the whole of the Middle East. This is absolutely necessary, because our Air Forces of Egypt, Cyrenaica and Libya, and also our powerful Air Forces operating from Malta, are actually attacking the same targets, both by bomber and fighter aircraft, as the United States and British Air Forces now working from Algeria and Tunisia are attacking. You must have one control over all this, and that control must be exercised under the supreme command of one man—and who better, I ask, than the trusty and experienced Air Chief Marshal Tedder, for whom General Eisenhower so earnestly asked? Under him, Air Vice-Marshal Coningham, hitherto working with the Eighth Army, whose services have been so much admired, will concert the air operations in support of the British First and Eighth Armies and other troops on the Tunisian battlefield. At the same time, Admiral of the Fleet Sir Andrew Cunningham, who already commands all the British and American naval forces in this theatre, will extend his command Eastward so as to comprise effectively all the cognate operations inside the Mediterranean and the present Commander-in-Chief in the Mediterranean will become, with his headquarters in Egypt, Commander-in-Chief of the Levant, dealing also with the Red 1487 Sea and all approaches from that quarter. There is no need for me to announce exactly where the line of demarcation between those commands is drawn, but everything is arranged with precision. The vacancy in the Command of the Middle East created by General Alexander's appointment as Deputy Commander-in-Chief to General Eisenhower, will be filled by General Sir Henry Maitland Wilson, now commanding in Persia and Iraq, where the Tenth Army, now become a very powerful force, is stationed. It is proposed to keep Persia and Iraq as a separate command for the present, and the new commander will shortly be appointed. Meanwhile, General Eisenhower has already obtained the consent of General Giraud, who commands the French Army fighting on the Tunisian front, an army which is being raised by American equipment to a very powerful force and which will play its part later on in liberating the French Motherland, to this Army being placed all under the command of General Anderson, together with the strong United States Forces, which have been moved forward into Tunisia. Thus we have a hierarchy established by international arrangement completely in accord with modern ideas of unity of command between various Allies and of the closest concert of the three Services. I make an appeal to the House, the Press and the country, that they will, I trust, be very careful not to criticise this arrangement. If they do so, I trust they will not do it on personal lines, or run one general against another, to the detriment of the smooth and harmonious relations which now prevail among this band of brothers who have got their teeth into the job. In General Eisenhower, as in General Alexander, you have two men remarkable for selflessness of character and disdain of purely personal advancement. Let them alone; give them a chance; and it is quite possible that one of these fine days the bells will have to be rung again. If not, we will address ourselves to the problem, in all loyalty and comradeship, and in the light of circumstances. [Interruption.] I have really tried to tell the House everything that I am sure the enemy knows and to tell them nothing that the enemy ought to know: [HON. MEMBERS: "Ought not to know."] 1488 There was a joke in that Still, I have been able to say something. At any rate, I appeal to all patriotic men on both sides of the Atlantic Ocean to stamp their feet on mischief-makers and sowers of tares wherever they may be found, and let the great machines roll into battle under the best possible conditions for our success. That is all I have to say at the present time. I am most grateful for the extreme kindness with which I am treated by the House. I accept, in the fullest degree, the responsibility of Minister of Defence and as the agent of the War Cabinet, for the plans we have devised. His Majesty's Government ask no favours for themselves. We desire only to be judged by results. We await the unfolding of events with sober confidence, and we are sure that Parliament and the British nation will display in these hopeful days, which may nevertheless be clouded o'er, the same qualities of steadfastness as they did in that awful period when the life of Britain and of our Empire hung by a thread.

27 января 2013, 20:46

This Time Is Different

Authored by Dr. Tim Morgan, Tullet Prebon, The 2008 crash resulted from the bursting of the biggest bubble in financial history, a ‘credit super-cycle’ that spanned more than three decades. How did this happen? As Carmen Reinhart and Kenneth Rogoff have demonstrated in their magisterial book This Time Is Different, asset bubbles are almost as old as money itself. The Reinhart and Rogoff book tracks financial excess over eight centuries, but it would be no surprise at all if the Hittites, the Medes, the Persians and the Romans, too, had bubbles of their own. All you need for a bubble is ready credit and collective gullibility. Some might draw comfort from the observation that bubbles are a long established aberration, arguing that the boom-and-bust cycle of recent years is nothing abnormal. Any such comfort would be misplaced, for two main reasons: first, the excesses of recent years have reached a scale which exceeds anything that has been experienced before; and second, and more disturbing still, the developments which led to the financial crisis of 2008 amounted to a process of sequential bubbles, a process in which the bursting of each bubble was followed by the immediate creation of another. Though the sequential nature of the pre-2008 process marks this as something that really is different, we can, nevertheless, learn important lessons from the bubbles of the past. First, bubbles follow an approximately symmetrical track, in which the spike in asset values is followed by a collapse of roughly similar scale and duration. If this holds true now, we are in for a very long and nasty period of retreat. Second, easy access to leverage is critical, as bubbles cannot happen if investors are limited to equity. Third, most bubbles look idiotic when seen with hindsight. Fourth – and although institutional arrangements are critical – the real driving dynamic of bubbles is a psychological process which combines greed, the willing suspension of disbelief and the development of a herd mentality. “tulips from Amsterdam” One of the most famous historical bubbles is the tulip mania which gripped the United Provinces (the Netherlands) during the winter of 1636-37. Tulip bulbs had been introduced to Europe from the Ottoman Empire by Obier de Busbeq in 1554, and found particular favour in the United Provinces after 1593, when Carolus Closius proved that these exotic plants could thrive in the harsher Dutch climate. The tulip was a plant whose beauty and novelty had a particular appeal, but tulip mania would not have occurred without favourable social and economic conditions. The Dutch had been engaged in a long war for independence from Spain since 1568 and, though final victory was still some years away, the original Republic of the Seven Provinces of the Netherlands declared independence from Spain in 1581. This was the beginning of the great Dutch Golden Age. In this remarkable period, the Netherlands underwent some fundamental and pioneering changes which included the establishment of trading dominance, great progress in science and invention, and the creation of corporate finance, as well as the accumulation of vast wealth, the accession of the Netherlands to global power status, and great expansion of industry. This was a period in which huge economic, business, scientific, trading and naval progress was partnered by remarkable achievements in art (Rembrandt and Vermeer), architecture and literature. The prosperity of this period created a wealthy bourgeoisie which displayed its affluence in grand houses with exquisite gardens. Enter the tulip. For the newly-emergent Dutch bourgeoisie, the tulip was the “must have” consumer symbol of the 1630s, particularly since selective breeding had produced some remarkably exotic new plants. Tulips cannot be grown overnight, but take between seven and twelve years to reach maturity. Moreover, tulips bloom for barely a week during the spring, meaning that bulbs can be uprooted and sold during the autumn and winter months. A thriving market in bulbs developed in the Netherlands even though short-selling was outlawed in 1610. Speculators seem to have entered the tulip market in 1634, setting the scene for tulip mania. The tulip bubble did not revolve around a physical trade in bulbs but, rather, involved a paper market in which people could participate with no margin at all. Indeed, the tulip bubble followed immediately upon the heels of the creation by the Dutch of the first futures market. Bulbs could change hands as often as ten times each day but, because of the abrupt collapse of the paper market, no physical deliveries were ever made. Price escalation was remarkable, with single bulbs reaching values that exceeded the price of a large house. A Viceroy bulb was sold for 2,500 florins at a time when a skilled worker might earn 150 florins a year. Putting these absurd values into modern terms is almost impossible because of scant data, but the comparison with skilled earnings suggests values of around £500,0003, which also makes some sense in relation to property prices. In any event, a bubble which began in mid-November 1636 was over by the end of February 1637. Though tulip mania was extremely brief, and available data is very limited, we can learn some pertinent lessons from this strange event. For a start, this bubble looks idiotic from any rational perspective – how on earth could a humble bulb become as valuable as a mansion, or equivalent to 17 years of skilled wages? Second, trading in these ludicrously overvalued items took place in then novel forms (such as futures), and were conducted on unregulated fringe markets rather than in the recognised exchanges. Third, participants in the mania lost the use of their critical faculties. Many people – not just speculators and the wealthy, but individuals as diverse as farmers, mechanics, shopkeepers, maidservants and chimney-sweeps – saw bulb investment as a one-way street to overnight prosperity. Huge paper fortunes were made by people whose euphoria turned to despair as they were wiped out financially. The story that a sailor ate a hugely valuable bulb, which he mistook for an onion, is probably apocryphal (because it would have poisoned him), but there can be little doubt that this was a period of a bizarre mass psychology verging on collective insanity. all at sea The South Sea Bubble of 1720 commands a special place in the litany of lunacy that is the history of bubbles. The South Sea Company was established in 1711 as a joint government and private entity created to manage the national debt. Britain’s involvement in the War of the Spanish Succession was imposing heavy costs on the exchequer, and the Bank of England’s attempt to finance this through two successive lotteries had not been a success. The government therefore asked an unlicensed bank, the Hollow Sword Blade Company, to organise what became the first successful national lottery to be floated in Britain. The twist to this lottery was that prizes were paid out as annuities, thus leaving the bulk of the capital in government hands. After this, government set up the South Sea Company, which took over £9m of national debt and issued shares to the same amount, receiving an annual payment from government equivalent to 6% of the outstanding debt (£540,000) plus operating costs of £28,000. As an added incentive, government granted the company a monopoly of trade with South America, a monopoly which would be without value unless Britain could break the Spanish hegemony in the Americas, an event which, at that time, was wildly implausible. The potentially-huge profits from this monopoly grabbed speculator attention even though the real likelihood of any returns ever actually accruing was extremely remote. Despite very limited concessions secured in 1713 at the end of the war, the trading monopoly remained all but worthless, and company shares remained below their issue price, a situation not helped by the resumption of war with Spain in 1718. Even so, shares in the company, effectively backed by the national debt, began to rise in price, a process characterised by insider dealing and boosted by the spreading of rumours. Between January and May 1720, the share price rose from £128 to £550 as rumours of lucrative returns from the monopoly spread amongst speculators. What, many argued, could be better than a government-backed company with enormous leverage to monopolistic profits in the fabled Americas? Legislation, passed under the auspices of Company insiders and banning the creation of unlicensed joint stock enterprises, spurred the share price to a peak of £890 in early June. This was bolstered by Company directors, who bought stock at inflated prices to protect the value of investments acquired at much lower levels. The share price peaked at £1,000 in August 1720, but the shares then lost 85% of their inflated market value in a matter of weeks. Like the Dutch tulip mania, the South Sea Bubble was an example which fused greed and crowd psychology with novel market practices, albeit compounded by rampant corruption in high places. Even Sir Isaac Newton, presumably a man of common sense, lost £20,000 (equivalent to perhaps £2.5m today) in the pursuit of the chimera of vast, but nebulous, unearned riches. Any rational observer, even if unaware of the insider dealing and other forms of corruption in which the shares were mired, should surely have realised that an eight-fold escalation in the stock price based entirely on implausible speculation was, quite literally, ‘too good to be true’. In his Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay ranked the South Sea Company and other bubbles with alchemy, witch-hunts and fortune-telling as instances of collective insanity. Whilst other such foibles have tended to retreat in the face of science, financial credulity remains alive and well, which means that we need to know how and why these instances of collective insanity seem to be hard-wired into human financial behaviour. made in Japan In some respects, the Japanese asset bubble of the 1980s provided a ‘dry run’ for the compounded bubbles of the super-cycle. Japan’s post-war economic miracle was founded on comparatively straightforward policies. Saving was encouraged, and was channelled into domestic rather than foreign capital markets, which meant that investment capital was available very cheaply indeed. Exports were encouraged, imports were deterred by tariff barriers, and consumption at home was discouraged. The economic transformation of Japan in the four decades after 1945 was thus export-driven, and led by firms which had access to abundant, low-cost capital.   By the early 1980s, Japan’s economic success was beginning to lead to unrealistic expectations about future prosperity. Many commentators, abroad as well as at home, used the ‘fool’s guideline’ of extrapolation to contend that Japan would, in the foreseeable future, oust America as the world’s biggest economy. The international expansion of Japanese banks and securities houses was reflected in the proliferation of sushi bars in New York and London. Boosted by the diversion of still-cheap capital from industry into real estate, property values in Japan soared, peaking at $215,000 per square metre in the prized Ginza district of Tokyo. Comforted by inflated property values, banks made loans which the borrowers were in no position to repay. The theoretical value of the grounds of the Imperial Palace came to exceed the paper value of the entire state of California. Meanwhile, a soaring yen was pricing Japanese exports out of world markets. Though comparatively gradual – mirroring, in true bubble fashion, the relatively slow build-up of asset values – the bursting of the bubble was devastating. Properties lost more than 90% of their peak values, and the government’s policy of propping up insolvent banks and corporations created “zombie companies” of the type that exist today in many countries. Having peaked at almost 39,000 at the end of 1989, the Nikkei 225 index of leading industrial stocks deteriorated relentlessly, bottoming at 7,055 in March 2009. The Japanese economy was plunged into the “lost decade” which, in reality, could now be called the ‘lost two decades’. In 2011, Japanese government debt stood at 208% of GDP, a number regarded as sustainable only because of the country’s historic high savings ratio (though this ratio is, in fact, subject to ongoing deterioration as the population ages). 2008 – the biggest bust With hindsight, we now know that the Japanese asset bust was an early manifestation of the ‘credit supercycle’, which can be regarded as ‘the biggest bubble in history’. The general outlines of the super-cycle bubble are reasonably well understood, even if the underlying dynamic is not. To understand this enormous boom-bust event, we need to distinguish between the tangible components of the bubble and its underlying psychological and cultural dimensions. Conventional analysis argues that tangible problems began with the proliferation of subprime lending in the United States. Perhaps the single biggest contributory factor to the subprime fiasco was the breaking of the link between borrower and lender. Whereas, traditionally, banks assessed the viability of the borrower in terms of long-term repayment, the creation of bundled MBSs (mortgage-backed securities) severed this link. Astute operators could now strip risk from return, pocketing high returns whilst unloading the associated high risk. The securitisation of mortgages was a major innovative failing in the system, as was the reliance mistakenly placed on credit-rating agencies which, of course, were paid by the issuers of the bundled securities. Another contributory innovation was the use of ARM (adjustable rate mortgage) products, designed to keep the borrower solvent just long enough for the originators of the mortgages to divest the packaged loans. The authorities (and, in particular, the Federal Reserve) must bear a big share of culpability for failing to spot the mispricing of risk which resulted from the on-sale of mortgage debt. The way in which banks were keeping the true scale of potential liabilities off their balance sheets completely eluded regulators, and Alan Greenspan’s belief that banks would always act in the best interests of shareholders was breathtakingly naive. In America, as for that matter in Britain and elsewhere, central banks’ monetary policies were concentrated on retail inflation (which had for some years been depressed both by benign commodity markets and by the influx of ever-cheaper goods from Asia), and ignored asset price escalation. Meanwhile, banks’ capital ratios had expanded, in part because of ever-looser definitions of capital and assets and in part because of sheer regulatory negligence. Just as Greenspan’s Fed believed that bankers were the best people to determine their shareholders’ interests, British chancellor Gordon Brown took pride in a “light touch” regulatory system which saw British banks’ total risk assets surge to more than £3,900bn on the back of just £120bn of pure loss-absorbing capital or TCE (tangible common equity). It does not seem to have occurred to anyone – least of all to the American, British and other regulatory authorities – that a genuine capital reserve of less than 2% of assets could be overwhelmed by even a relatively modest correction in asset prices. Both sides of the reserves ratio equation were distorted by regulatory negligence. On the assets side, banks were allowed to risk-weight their assets, which turned out to be a disastrous mistake. Triple-A rated government bonds were, not unnaturally, regarded as AFS (‘available for sale’) and accorded a zero-risk rating, but so, too, in practice, were the AAA portions that banks, with the assistance of the rating agencies, managed to slice out of MBSs (mortgage-backed securities) and CDOs (collateralised debt obligations). Mortgages of all types were allowed to be risk-weighted downwards to 50% of their book value which, at best, reflected a nostalgic, pre-subprime understanding of mortgage risk on the part of the regulators. In the US, banks were allowed to net-off their derivatives exposures, such that J.P. Morgan Chase, for example, carried derivatives of $80bn on its balance sheet even though the gross value of securities and derivatives was close to $1.5 trillion. The widespread assumption that potential losses on debt instruments were covered by insurance overlooked the fact that all such insurances were placed with a small group of insurers (most notably AIG) which were not remotely capable of bearing system-wide risk. Meanwhile, innovative definitions allowed banks’ reported capital to expand from genuine TCE to include book gains on equities, and provisions for deferred tax and impairment. Even some forms of loan capital were allowed to be included in banks’ reported equity. Together, the risk-weighting of assets, and the use of ever-looser definitions of capital, combined to produce seemingly-reassuring reserves ratios which turned out to be wildly misleading. Lehman Brothers, for example, reported a capital adequacy ratio of 16.1% shortly before it collapsed, whilst the reported pre-crash ratios for Northern Rock and Kaupthing were 17.5% and 11.2% respectively. Well before 2007, the escalation in the scale of indebtedness had rendered a crash inevitable. Moreover, the two triggers that would bring the edifice crashing down could hardly have been more obvious. First, the resetting of ARM mortgage interest rates made huge subprime default losses inevitable unless property prices rose indefinitely, which was a logical impossibility. Subprime defaults would in turn undermine the asset bases of banks holding the toxic assets that the sliced-and-diced mortgage-based instruments were bound to become as soon as property price escalation ceased. The second obvious trigger was a seizure in liquidity. The escalation in the scale of debt had far exceeded domestic depositor funds, not least because savings ratios had plunged as borrowing and consumption had displaced saving and prudence in the Western public psyche. Unlike depositors – a stable source of funding, in the absence of bank runs – the wholesale funding markets which had provided the bulk of escalating leverage were perfectly capable of seizing up virtually overnight. For this reason, a liquidity seizure crystallised what was essentially a leverage problem.   At this point, three compounding problems kicked in. The first was the termination of a long-standing ‘monetary ratchet’ process – low rates created bubbles, and the authorities countered each ensuing downturn by cutting rates still further, but, this time around, prior rate reductions left little scope for further relaxation. Second, economies had become dependent upon debt-fuelled consumption, and any reversal in debt availability was bound to unwind the earlier (and largely illusory) ‘growth’ created by debt-fuelled consumer spending. As figs. 2.2 and 2.3 show, the relationship between borrowing and associated growth had been worsening for some years, such that the $4.1 trillion expansion in nominal US economic output between 2001 and 2007 had been far exceeded by an increase of $6.7 trillion in consumer debt, and the growth/borrowing equation had slumped. Third, some countries – most notably the United Kingdom – had compounded consumer debt dependency by mistaking illusory (debt-fuelled) economic expansion for ‘real’ growth, and had expanded public spending accordingly, a process which created huge fiscal deficits as soon as leverage expansion ceased. Ultimately, the leverage-driven ‘great bubble’ in pan-Western property values had created the conditions for a deleveraging downturn, something for which governments’ previous experience of destocking recessions had provided no realistic appreciation.   familiar features Though, as we shall see, the bursting of the super-cycle in 2008 had some novel aspects, the process nevertheless embraced many features of past bubbles. A number of points are common to these past bubbles, factors which include easy credit, low borrowing costs, financial innovation (in the form of activities which take place outside established markets, and/or are unregulated, and/or are outright illegal), weak institutional structures, opportunism by some market participants, and the emergence of some form of mass psychology in which fear is wholly ousted by greed. Often, the objects of speculation are items which can seem wholly irrational with the benefit of hindsight (how on earth could tulip bulbs, for instance, have become so absurdly over-valued?) A further important point about bubbles is that they can inflate apparent prosperity, but the post-burst effects include the destruction of value and the impairment of economic output for an extended period. In reality, though, the bursting of a bubble does not destroy capital, but simply exposes the extent to which value has already been destroyed by rash investment. Of course, the characteristics of earlier excesses have not been absent in contemporary events. As with tulip bulbs, South Sea stock and Victorian railways, recent years have witnessed the operation of mass psychologies in which rational judgement has been suspended as greed has triumphed over fear. Innovative practices, often lying outside established markets, have abounded. Examples of such innovations have included subprime and adjustable-rate mortgages, and the proliferation of an ‘alphabet soup’ of the derivatives that Warren Buffett famously described as “financial weapons of mass destruction”. Credit became available in excessive amounts, and the price of credit was far too low (a factor which, we believe, may have been exacerbated by a widespread under-reporting of inflation). why this time is different Whilst it shared many of the characteristics of previous such events, the credit super-cycle bubble which burst in 2008 differed from them in at least two respects, and arguably differed in a third dimension as well. The first big difference was that the scale and scope of the 2008 crash far exceeded anything that had gone before. Though it began in America (with parallel events taking place in a number of other Western countries), globalisation ensured that the crash was transmitted around the world. The total losses resulting from the crash are almost impossible to estimate, not least because of notional losses created by falling asset prices, but even a minimal estimate of $4 trillion equates to about 5.7% of global GDP, with every possibility that eventual losses will turn out to have been far greater than this. The second big difference between the super-cycle and previous bubbles lay in timing. A gap of more than 80 years elapsed between the tulip mania of 1636-37 and the South Sea bubble of 1720, though the latter had an overseas corollary in the Mississippi bubble of the same year. The next major bubble, the British railway mania of the 1840s, followed an even longer time-gap, and a further interval of about seven decades separated the dethroning of the crooked “railway king” (George Hudson) in 1846 from the onset of the ‘roaring twenties’ bubble which culminated in the Wall Street Crash. Though smaller bubbles (such as Poseidon) occurred in between, the next really big bubble did not occur until the 1980s, when Japanese asset values lost contact with reality. In recent years, however, intervals between bubbles have virtually disappeared, such that the decade prior to the 2008 crash was characterised by a series of events which overlapped in time. Property price bubbles were the greatest single cause of the financial crisis, but there were complementary bubbles in a variety of other asset categories. The dot-com bubble (1995-2000) reflected a willing suspension of critical faculties where the potential for supposedly ‘high tech’ equities were concerned, and historians of the future are likely to marvel at the idiocy which attached huge values to companies which lacked earnings, cash flow or a proven track record, and were often measured by the bizarre metric of “cash-burn”. Other bubbles occurred in property markets in the United States, Britain, Ireland, Spain, China, Romania and other countries, as well as in commodities such as uranium and rhodium. Economy-wide bubbles developed in countries such as Iceland, Ireland and Dubai. Perhaps the most significant bubble of the lot – for reasons which will become apparent later – was that which carried the price of oil from an average of $25/b in 2002 to a peak of almost $150/b in 2008. This rash of bubbles suggests that recent years have witnessed the emergence of a distinctive new trend, which is described here as a credit super-cycle, a mechanism which compounds individual bubbles into a broader pattern. This report argues that a third big difference may be that the super-cycle bubble coincided with a weakening in the fundamental growth dynamic. What we need to establish is the ‘underlying narrative’ that has compressed the well-spaced bubble-forming processes of the past into the single, compounded-bubble dynamic of the credit super-cycle. It is suggested here that this narrative must include: A mass psychological change which has elevated the importance of immediate consumption whilst weakening perceptions both of risks and of longer-term consequences. Institutional weaknesses which have undermined regulatory oversight whilst simultaneously facilitating the provision of excessive credit through the creation of high-risk instruments. Mispricing of risk, compounded by false appreciation of economic prospects and by the distortion of essential data. A political, business and consumer mind-set which elevates the importance of the immediate whilst under-emphasising the longer term. A distortion of the capitalist model which has created a widening chasm between ‘capitalism in principle’ and ‘capitalism in practice’. Before we can put the credit super-cycle into its proper context, however, we need to appreciate three critical issues, each of which is grossly misunderstood. The first of these is the vast folly of globalisation. This has impoverished and weakened the West whilst ensuring that few countries are immune from the consequences of the unwinding of a world economy which has become a hostage to future growth assumptions at precisely the same time that the scope for generating real growth is deteriorating. The second critical issue is the undermining of official economic and fiscal data, a process which has disguised many of the most alarming features of the super-cycle. Third, there has been a fundamental misunderstanding of the dynamic which really drives the economy. Often regarded as a monetary construct, the economy is, in the final analysis, an energy system, and the critical supply of surplus energy has been in seemingly-inexorable decline for at least three decades.

20 августа 2012, 22:32

Guest Post: The Demise Of The Car

From PeakProsperity contributor author Gregor Macdonald The Demise of the Car India’s recent series of power blackouts, in which 600 million people lost electricity for several days, reminds us of the torrid pace at which populations in the developing world have moved onto the powergrid. Unfortunately, this great transition has been so rapid that infrastructure has mostly been unable to meet demand. India itself has failed to meets its own power capacity addition targets every year since 1951. This has left roughly one quarter of the country’s population without any (legal) access to electricity. That’s 300 million people out of a population of 1.2 billion. Indeed, it is the daily attempt of the underserved to access power that may have led to India’s recent grid crash. But the story of India’s inadequate infrastructure is only one part of the difficult, global transition away from liquid fossil fuels. Over the past decade, the majority of new energy demand has been met not through global oil, but through growth in electrical power. Frankly, this should be no surprise. After all, global production of oil started to flatten more than seven years ago, in 2005. And the developing world, which garners headlines for its increased demand for oil, is running mainly on coal-fired electrical power. There is no question that the non-OECD countries are leading the way as liquid-based transport – automobiles and airlines – have entered longterm decline. Why, therefore, do policy makers in both the developing and developed world continue to invest in automobile infrastructure? Interestingly, instead of investing in the powergrid, India embarked earlier last decade on a massive highway project, known as the Great Quadrilateral. This created a kind of grand, national circular whose “four and six-lane, 3,625 miles run through 13 states and India's four largest cities: New Delhi, Calcutta, Chennai (formerly Madras), and Mumbai (formerly Bombay),” according to a 2005 New York Times article. The piece continues, describing the ongoing, 15-year effort (to be completed this year) as “the most ambitious infrastructure project since independence in 1947 and the British building of the subcontinent's railway network the century before.” Alas, the irony is rich. India conceived of this highway project as oil prices hit deep lows at the end of the past millennium. Now that the highway network is constructed and oil prices have more than quadrupled, it is massive investment in the powergrid that hundreds of millions of Indians so desperately need instead—not road building. Sunk-Cost Decision Making and the Overfocus on Autos But it’s not just India that has incorrectly invested in automobile transport. The other giant of Asia, China, has also placed large resources into auto-highway infrastructure. It appears that at least a decade ago, the developing world made the same assumption about future oil prices as was made in Western countries. The now infamous 1999 Economist cover, Drowning in Oil, reflected the pervasive, status-quo view that the global adoption of the car could continue indefinitely. A decade later, however, we find that after oil’s extraordinary price revolution, the global automobile industry is now starved for growth. In the same way that Western economies have shed enormous tranches of oil demand so that emerging markets could increase their oil consumption, automobile transport is now either stagnating or in outright decline outside of China. You cannot have a growing automobile industry in the United States when American oil demand is down over 12% since 2005. And you cannot have a growing auto industry in Europe when EU oil demand has shed over a million and half barrels a day – another 10% decline. Europe’s declining oil demand is particularly significant, given that coming into the last decade, the EU was already a highly efficient user of oil. To have taken off even more demand in the past 5 years shows just how tough high oil prices have become in Europe. The result is nothing less than a devastation of Europe’s auto industry, which has already lost 800,000 jobs and looks ready to lose another 500,000 more according to recent forecasts, as reported by Bloomberg. Meanwhile, here is Time Magazine’s big thematic piece from just last month: Europe’s Debt Crisis Seems Bad? Look at Its Car Industry Just how bad are things in motoring Europe? On Wednesday Peugeot reported it lost over $993 million in the first half of 2012 alone. The same day, American maker Ford announced second quarter net income of just over $1 billion world-wide — but a $404 million loss in Europe, where the company now expects total losses to exceed $1 billion by year’s end. Meanwhile, General Motors Europe affiliate Opel-Vauxhall has lost a whopping $14 billion since the start of the century, and is almost certainly facing the same sort of layoffs and plant closures Peugeot has announced.....What’s more, the sector is almost certain to see more bad news on the revenue front. According to the Brussels-based European Automobile Manufacturers’ Association (EAMA), new car registration declined by nearly 7% in the first half of the year. All told, projected total sales of 12.4 million cars in 2012 would represent a nearly 20% slide in volume over 2007, when the current string of annual shrinkage began. Forecasts that once saw activity improving by 2013 now push returning health in the sector beyond the recessionary horizon now stretching far off into the European distance....That dismal outlook on the demand side is compounded by concerns over excess supply. Industry analysts say auto manufacturers in Europe maintain around 30% more production capacity than the market will bear. Captured Governments Like other dying industries of the past century, the global auto industry has entered decline after having fully embedded itself in the political complex. Regardless of political leaning, federal governments from Europe, to Japan, to the United States have and will continue to do everything possible to save the industry. US automakers received their first bailout in late 2008 from the Bush Administration. The bailouts continued in the Obama Administration. (Both presidencies that could hardly be more dissimilar, but were united in their assumption of an enduring future for cars). For Republicans -- a party that claims to adhere to free-market principles -- releasing a first payment of over $13 billion to the industry was a classic foxhole-conversion in the midst of the financial crisis. For Democrats -- a party that claims to be concerned with climate change, the environment, and public transport -- the enormous financial support to the industry was only one part of the current administration’s continued embrace of the auto-highway complex. More broadly, however, global governments are captured by sunk-cost decision making as the past 60-70 years of highway infrastructure investment is now a legacy just too painful to leave behind. Interestingly, whether citizens and governments want to face this reality or not, features of the oil economy are already going away as infrastructure is increasingly stranded. Moreover, there are cultural shifts now coming into play as young people are no longer buying cars – in the first instance because they can’t afford them, and in the second instance because it’s increasingly no longer necessary to own a car to be part of one’s group. See this piece from Atlantic Cities: Young People Aren't Buying Cars Because They're Buying Smart Phones Instead Youth culture was once car culture. Teens cruised their Thunderbirds to the local drive-in, Springsteen fantasized about racing down Thunder Road, and Ferris Bueller staged a jailbreak from the 'burbs in a red Ferrari. Cars were Friday night. Cars were Hollywood. Yet these days, they can't even compete with an iPhone - or so car makers, and the people who analyze them for a living, seem to fear. As Bloomberg reported this morning, many in the auto industry "are concerned that financially pressed young people who connect online instead of in person could hold down peak demand by 2 million units each year." In other words, Generation Y may be happy to give up their wheels as long as they have the web. And in the long term, that could mean Americans will buy just 15 million cars and trucks each year, instead of around 17 million. If future car sales in the US will be limited by the loss of 2 million purchases just from young people alone, then the US can hardly expect to return to even 15 million car and truck sales per year. US sales have only recovered to 14 million. (And that looks very much like the peak for the reflationary 2009-2012 period)  Indeed, the migration from suburbs back to the cities, the resurrection of rail, and the fact that oil will never be cheap again puts economies – and culture – on a newly defined path to other forms of transport and other ways of working. Cars and the Environment Recently, the main focus of the global climate change and environment communities has centered on coal-fired power generation. But it's the transport sector that is ripe for changing, given that declining gasoline consumption is already trending favorably in the same direction. Recent data from EIA Washington shows, unsurprisingly, that US emissions from all energy consumption has fallen back to levels seen twenty years ago. As CO2 emissions from total US energy demand fell back to levels in the early 1990s, US oil demand has also fallen to levels last seen in that same time period. And thus the official Washington posture towards US oil consumption remains quite conflicted. Washington wants less dependency on foreign oil, lower CO2 emissions, and cheaper gasoline. On the other hand, Washington refuses to meaningfully shift its Transport budget from highways to public transportation. Ultimately, global governments will be left standing in the way of a process that’s now gaining momentum and is unlikely to be reversed. Obsolete Infrastructure For half a century, the auto-highway complex has been a conduit for political power, and myriad players have self-interested reasons to maintain the system. However, the contraction of motorized transport in the West – a natural outcome of high oil prices and debt saturation – will gain further strength as various states (or countries) simply run out of money to build new roads. As discussed in California: Bellwether for the Rest of America, the highway-rich landscape of the Golden State (for example) sucks up 90% of its transport budget. But California roads are now among the worst in the nation, costing drivers some of the highest on-road expenses merely as a result of poor surface conditions. To the extent that states can no longer maintain roads to an adequate standard, infrastructure will become stranded. We see the same related effects in US airport infrastructure as many regional airports have either seen a huge reduction in traffic or have shut down completely. (The US Postal Service and its current financial difficulties also reflect the emerging trend, as the USPS is obligated to deliver mail to remote locations even as postal revenues drop on the higher cost of – you guessed it – energy and gasoline.) Eventually, drivers will be asked to pay higher tolls and other fees to maintain roads, as public funds, in a time of flat economic growth, are diverted to other services. This will then compound the transition as the costs of maintaining and running a car go even higher. Every car driver is now subsidized. As the subsidy goes away, more drivers will be forced off the road. Yes, it is painful for both politicians and the public to acknowledge that much of our infrastructure is no longer needed and cannot be redeployed. The public is only now becoming aware that the energy costs of road-building and road-maintenance have gone through the same price revolution as the price of oil. Governments at all levels find that simply keeping the existing roads operable – and not even in particularly good repair – requires enormous annul sums of capital. And, the per-mile construction cost of new roads is prohibitive. When the national highway system was originally constructed, of course, oil prices were at an inflation-adjusted level of around $12-$14 per barrel. That oil prices now trade at 8 times those levels has completely changed the economic return on road building. Unsurprisingly, the demand for asphalt has crashed back to levels last seen in the early 1980s.  US Product Supplied of Asphalt and Road Oil End of the Grand Public Subsidy of Roads The United States has only just begun a long reduction of public spending on roads and highways. The current administration has shifted only a few percentage points of the transport budget from the auto-highway sector to public transport -- but that shift will grow larger as the years progress. And while it took many decades for such a shift to develop in the US, the same process will be more rapid in the developing world. In other words, the advance, peak, and decline of motorized transport in China and India will be much more rapid as these nations and their giant populations arrive more quickly to the limits of oil based transport. Indeed, there is already evidence in the data that oil adoption rates have slowed considerably as the majority of new energy demand comes online to the powergrid. In Part II: Rise of the Global Powergrid, we further examine the poor investment prospects of roadbuilding as economies enter the next leg of energy transition. Interestingly, one of the implications of this shift is that oil will be set free to advance to much higher price levels. A paradigmatic shift in global energy usage is underway that has finally become more well-defined, and more visible. Oil is no longer the new great game; grid power, with its inherent flexibility, is now emerging. Click here to access Part II of this report (free executive summary; paid enrollment required for full access).