Monday, December 10, 2012 - The Fed After the Twist, Italy After Monti, China After 2030, Warming After Doha

The Fed After the Twist, Italy After Monti, China After 2030, Warming After Doha

by Sinclair Noe

DOW + 14 = 13169
SPX +0.48 = 1418
NAS + 8 = 2986
10YR YLD -.01 = 1.62%
OIL -.25 = 85.68
GOLD + 8.10 = 1713.60
SILV + .16 = 33.37

Economic reports due this week are not likely to be market movers. Tomorrow we'll see data on wholesale trade, plus the trade deficit; a report on how many new job opening exist. Later in the week, we'll find out about retail sales. The big event this week is the Federal Reserve FOMC meeting Tuesday and Wednesday. The Fed will be looking at the unemployment numbers from Friday. The unemployment rate fell to 7.7% from 7.9%, but that was because more people dropped out of the labor force. Usually that’s not a good sign because it means jobs are harder to find. Ultimately the Fed wants to see the jobless rate fall to 6% or less, the same levels that prevailed before the 2008 meltdown.

Nobody seems to think there will be a big uptick in new jobs. Lackluster hiring means consumer spending is unlikely to rocket higher. Too many people remain out of work and the growth in the average worker’s paycheck isn’t even keeping up with the low increase in annual inflation. Business are waiting for the consumer to spend, consumers are waiting for businesses to hire. Something needs to happen to kick start the economy, a jolt of stimulus, but don't hold out for any major announcements from this week's FOMC meeting. Bernanke should be able to point to the fact that a much-needed recovery in the housing sector has taken hold. And that's partly due to the Fed's effort to reduce mortgage rates and keep them low. Hiring has continued at a modest pace; in other words, nothing that would cause the Fed to do anything dramatic.

The Fed will need to make a decision on Operation Twist. The policy, set to end this month, let the Fed sell short-term Treasuries it already owns in order to buy longer-term bonds. The basic goal of Twist has been to lower long-term interest rates without having to increase the dollar amount of the assets on its books. Here's the problem though. The central bank is quickly running out of short-term bonds available for it to swap in a one-for-one exchange. So, the Fed might just look at some kind of an outright bond purchase program.

The Fed could double down on its purchase of mortgage-backed securities, which currently totals $40 billion a month. That program puts downward pressure on mortgage rates. The Fed announced this third round of quantitative easing, or QE3, in September.

Or, the Fed might say it will buy more Treasury bonds as a way to keep longer-term interest rates low, maybe $45 billion a month in bond purchases. Treasury purchases without offsetting sales would expand the Fed's bond portfolio, pumping more cash into the economy but also making it more difficult to eventually sell the bonds to head off inflation.

Or, the other option is the Fed waits until the new year and to see how Congress handles the fiscal cliff, and then they'll know whether they need to do something dramatic or not.

President Obama and House Speaker Boehner held closed door meetings at the White House yesterday. No announcements were made; your guess is as good as mine. President Obama traveled to Michigan today to push for his proposed extension of tax cuts for middle class earners. The president's message in Michigan will be that the economy is rebounding and Congress should not risk that progress to save tax cuts for the rich. Meanwhile, there is a political battle in the state about union recognition.

President Obama threw his support behind labor unions opposed to a Republican-led drive for "right-to-work" laws in Michigan, saying efforts to pass such measures were not about economics but about politics. Obama used a visit to an auto plant to weigh in on the controversial push in the state legislature to impose new restrictions on unions.

Obama told a crowd of workers at the Daimler Detroit Diesel plant in Redford, Michigan: "What we shouldn't be doing is trying to take away your rights to bargain for better wages and working conditions. These so-called right-to-work laws, they don't have to do with economics, they have everything to do with politics. What they're really talking about is giving you the right to work for less money."

Union members and others opposed to Michigan becoming a right-to-work state plan major protests in the state capital, Lansing, this week. Organizers expect thousands at a rally tomorrow when the state legislature reconvenes. With Republicans in control of the legislature and the Republican governor committed to sign the laws, Michigan could become the 24th right-to-work state by the middle of the week.

The rest of the world watches to see if the fiscal cliff can be resolved, and with the International Monetary Fund's managing director Christine Lagarde warning of "zero growth" in the US as a worst case scenario: The International Monetary Fund has already lowered its growth estimate for next year for the United States to 2.1%, and Lagarde reiterated that the implications of going over the cliff would be precipitous. She said, "If the US economy was to suffer the downside risk of not reaching a comprehensive deal, then growth would be zero."

Italian equities and bonds sank after Prime Minister Mario Monti's decision to resign stoked concern about who will lead the euro zone's third biggest economy out of its debt crisis. The euro initially weakened on the news out of Italy, but it managed to rebound against the dollar and pared most losses versus the yen; the reaction to Monti's resignation may have been overdone. Monti announced over the weekend he would resign once the government's 2013 budget is approved, potentially bringing forward an election due early next year. Monti became an investor favorite over the past year as he spearheaded a reform agenda to rescue Italy from the threat of a Greek-style collapse.

Commodities markets rose on data that showed factory output in China, the world's No. 2 economy accelerated to an eight-month high in November. Copper prices hit their highest level in almost two months.

A new intelligence report says that by 2030 Asia will overtake North America and Europe combined in global power based on gross domestic product, population, military spending and technological investment.

China alone will probably have the largest economy, surpassing that of the United States a few years before 2030. Meanwhile, the economies of Europe, Japan, and Russia are likely to continue their slow relative declines.

The report, "Global Trends 2030: Alternative Worlds,"  www.dni.gov/nic/globaltrends. was issued by the National Intelligence Council, an analytical arm of the U.S. government's Office of the Director of National Intelligence. The report says that despite the economic power of China, the United States is expected to retain its superpower status because it still is the only country able to pull together coalitions and mobilize efforts to deal with global challenges.

The report claims China isn't going to replace the US on a global level,and while being the largest economic power is important, it isn't necessarily the largest economic power that always is going to be the superpower.

China recognizes that it cannot play that role of organizing across regions and across state-nonstate boundaries. The health of the global economy increasingly will be linked to progress in the developing world rather than the traditional West.

HSBC is apparently ready to settle money laundering charges for $1.9 billion. The settlement with HSBC stems from accusations that the British banking giant transferred billions of dollars on behalf of sanctioned nations like Iran and enabled Mexican drug cartels to launder money through the American financial system. The deal will force the bank to forfeit more than $1.2 billion in ill-gotten gains and pay additional penalties.

Since January 2009, the Justice Department, Treasury and the Manhattan prosecutors have charged six foreign banks, including Credit Suisse and Barclays. In June, ING Bank reached a $619 million settlement to resolve claims that it had transferred billions of dollars in the United States for Cuba and Iran.

Earlier today, federal and state authorities announced a $327 million settlement with Standard Chartered. The British bank, which in August agreed to a larger settlement with New York's top banking regulator, admitted to processing thousands of transactions for Iranian and Sudanese clients through its American subsidiaries. To avoid having Iranian transactions detected by Treasury Department computer filters, Standard Chartered deliberately removed names and other identifying information

The Doha Climate Change Conference wrapped up this week. As Doha kicked off, we had just seen the effects of Hurricane Sandy, meanwhile environmental groups were prepared with a lineup of grim studies on just how far the world has fallen short on its environmental efforts. Carbon dioxide emissions hit a record high last year. Yet nations around the world, despite a formal treaty pledging to limit warming, and 20 years of negotiations aimed at putting it into effect, have shown little appetite for the kinds of controls required to accomplish those stated aims. There were no new emissions targets up for discussion at Doha. Commitments of monetary aid have been drying up.

Monday, November 26, 2012 - Shopping, Cliffs, Greece, Two-Tiered Justice, Doha, Infrastructure

Shopping, Cliffs, Greece, Two-Tiered Justice, Doha, Infrastructure
by Sinclair Noe

DOW – 42 = 12,967
SPX – 2 = 1406
NAS + 9 = 2976
10 YR YLD -.03 = 1.66%
OIL + 1.22 = 86.67
GOLD – 2.50 = 1750.40
SILV + .05 = 34.28

Well, I survived Black Friday, which actually creeped into Black Thursday; I made it through Shop Small Saturday, and I've arrived at Cyber Monday. Tomorrow will be Buyers' Remorse Tuesday. Don't forget Credit Card Shock January. I have not and will not go into debt for the holidays. Consumer debt is the worst.

A rebound in housing and the job market, along with a drop in household debt, has led additional consumers to say they’ll buy more this holiday. A new survey from the Credit Union National Association and the Consumer Federation of America shows 12 percent said they would boost spending, the highest level since 15 percent in 2007, while 38 percent said they would spend less.

According to the National Retail Federation, retail sales for the weekend are up about 13% from a year ago. Online shopping on Black Friday rose 26 percent to exceed $1 billion for the first time. Spending in stores and online rose to $59 billion in the four days starting Nov. 22. Customers spent $423 on average this weekend, up 6.3 percent from last year. The 13 percent jump in total spending suggests that some sales were pulled ahead from December and that retailers will have to keep up the promotions to avoid a lull. Retailers are going to have to get creative, such as price discounts or special events, to keep the customer engaged

Major indexes last week gained 3 to 4 percent, with the Dow above 13,000 and the S&P above 1,400 for the first time since November 6. Those gains represented a turnaround from recent losses founded on worries about Washington's ability to solve budgetary problems.

Once again today, the fiscal cliff and the Euro-crisis seemed to weigh on Wall Street, or maybe it was just a good excuse. The White House threw cold water on a proposal that tried to avoid the "fiscal cliff" of spending cuts and tax hikes by limiting tax deductions and loopholes, instead of allowing tax rates to rise for the richest Americans. Investors are hoping for advances in talks over the $600 billion in spending cuts and tax hikes scheduled to begin next year, which threaten to drag the U.S. economy back into recession.

The White House released a report today that warns of the catastrophic consequences if Republicans allow the tax bill for the middle class to rise $2,200 by not freezing middle class tax cuts. The report says that going over the cliff could take a combined $800 billion or so, out of the economy.

In its report, entitled “The Middle-Class Tax Cuts’ Impact on Consumer Spending & Retailers,” prepared by the National Economic Council and the Council of Economic Advisers, the White House argues that if Congress allows the middle-class tax cuts to expire, the economy would be devastated—the growth of the GDP could be slowed by 1.4 percentage points and consumers could spend an estimated $200 billion less than they would have in 2013 just because of the higher taxes. While Republicans are trying to get Democrats to agree to larger cuts in entitlements, Democrats are trying to hold the line on entitlement cuts while getting Republicans to agree on tax hikes for the wealthy.

In an op-ed article in the New York Times today, Warren Buffet Buffett asks readers to imagine they've been offered a great investment opportunity. The Oracle of Omaha concludes from his decades of experience in the investment world that most wouldn't shy away from an opportunity just because they might have to pay more in taxes. "Only in Grover Norquist’s imagination does such a response exist," Buffett writes.

Buffet writes that solving the country's deficit problem and getting the economy on track requires raising taxes on the rich and higher taxes won't keep the super-rich from trying to make money. He calls for a minimum 30% tax on incomes between $1 million and $10 million. At first blush, his position seems noble: A rich guy says that people like him should pay more to support the commonwealth. But on closer examination, one realizes that Mr Buffett never mentions doing anything to eliminate the tax-avoidance strategies that he uses most aggressively. And don't forget, we have been talking for a couple of years about the fact that Buffet pays less tax than his secretary, which means there is a huge gap between tax rates in theory and tax rates after the accountants have shredded the code.

The brunt of the cliff could be delayed, however. For instance, the Treasury Department and the Internal Revenue Service could wait to adjust withholding tax tables, which determine how much money is taken out of paychecks. Tax rates could also be fixed retroactively. The Federal Reserve is clothed in immense monetary power and has a few tricks up its sleeve that could keep money flowing to the government despite Congress. And the spending cuts to defense and domestic programs may be phased in over time rather than crashing down all at once at the beginning of January.

Part of the strategy might be to go over the cliff and let the blame fall; knowing that wherever the blame falls, that party will be forced to cave in. Of course, the whole process is being painted as a potential catastrophe, when it is in fact just politics as usual.

Finance ministers from the 17 countries sharing the euro, the European Central Bank and the IMF were locked in a third round of talks today to decide how to make Greek debt, expected to rise to 190 percent of GDP next year, more sustainable by reducing it to 120 percent or below by 2020. The International Monetary Fund wants Euro-zone finance ministers to agree to cut Greece's debt by 20 percent of GDP now and commit to further debt reduction in the future to get the country's finances back on a sustainable path. The IMF and the ministers are at odds on how to achieve the goal, with the IMF pushing for a bolder reduction of Greek debt through the forgiveness of some of the official loans to Athens which now make up the bulk of the country's obligations. Greece's biggest creditor, Germany, opposes any debt forgiveness for Athens.

The IMF argues that if there is no debt reduction up front, the Greek economy will not grow, nobody will invest and Greeks themselves will not spend, derailing other macro-economic assumptions of its adjustment program.

Mary Schapiro will step down as chairman of the Securities and Exchange Commission next month; Schapiro has lead the SEC since being appointed in 2009. President Obama designated Elisse Walter, an SEC commissioner, to replace Schapiro.

Under Schapiro, the SEC reached its largest settlement ever with a financial institution. Goldman Sachs agreed in July 2010 to pay $550 million to settle civil fraud charges that it misled investors about mortgage securities before the housing market collapsed in 2007. Similar settlements followed with Citigroup, JPMorgan Chase and others. The SEC has authority to pursue civil charges.

Although there were large fines, there was little accountability required by Schapiro's SEC. For example, in the Goldman Sachs case: no senior executives were singled out. The penalty amounted to roughly two weeks of earnings at Goldman. And Goldman was allowed to settle the charges without admitting or denying any wrongdoing, as were other large banks that faced similar charges.

Among the leading critics was U.S. District Judge Jed Rakoff, who questioned how the SEC could allow an institution to settle serious securities fraud without any admission or denial of guilt. Rakoff later threw out a $285 million deal with Citigroup because of that aspect of the deal.

Regulators sued Intrade today. Intrade is the online prediction market that gained popularity as an informal oddsmaker for the presidential election, saying it illegally let customers bet on future economic data, the price of gold and even acts of war. The Commodity Futures Trading Commission said in a complaint in federal court that Intrade and its operator solicited customers to trade investment contracts that technically are options. Options must be traded on approved, regulated exchanges.

The private Swiss bank, Pictet, is under investigation by US authorities trying to determine if the bank helped wealthy Americans seeking to avoid paying taxes. The investigation is part of a global offensive on the tradition of strict banking secrecy that has helped Switzerland build up a $2 trillion offshore wealth management industry. UBS was the first Swiss bank to come under scrutiny by the US authorities in a tax evasion crackdown, an investigation it settled in 2009 by handing over client data, admitting wrongdoing, and paying a $780 million fine to avert prosecution. US officials have subsequently mined the UBS data as well as a flood of voluntary disclosures by U.S. citizens and have widened their investigation to other Swiss banks, including Credit Suisse and Julius Baer. Switzerland is trying to get those investigations dropped in return for the payment of fines and the transfer of names of US clients. It is also seeking a deal to shield the remainder of its 300 or so banks from US prosecution.

Tax avoidance, flash crash trading from Knight Capital, insider trading at SAC, don't forget MF Global. The new head of the SEC should get busy, and please, please no more deals that don't admit or deny guilt. I'm getting sick of two-tiered justice.

That radical green pressure group PriceWaterhouseCoopers warns that even if the current rate of global decarbonisation were to double, we would still be on course for six degrees of warming by the end of the century. Confining the rise to two degrees requires a sixfold reduction in carbon intensity: far beyond the scope of current policies. The World Bank, another group of tree-huggers, expects warming in the range of 4 degrees.

And that Brings us to Doha 2012, in the gas-rich, gas-flaring nation of Qatar. The tiny Persian Gulf emirate owes its wealth to large deposits of gas and oil, and it emits more greenhouse gases per capita than any other nation. And it is now playing host to a United Nations climate change summit, which tend to be messy affairs, going back to the 1997 conference that produced the Kyoto Protocol, which has now largely unraveled. While there is always the potential for a diplomatic disaster at any negotiation involving 194 countries, the agenda for the two-week Doha convention includes an array of highly technical matters but nothing that is likely to bring the process to a screaming halt.

Despite the occasional chaos at the summits over the past three years, negotiators achieved a number of significant steps, including pledges by most major countries to reduce their emissions of climate-altering gases, a promise by rich nations to mobilize $100 billion a year by 2020 to help more vulnerable states adapt to climate change, a system for verifying emissions cuts and programs to help slow deforestation. The delegates in Doha hope to firm up these promises and create the concrete means to fulfill them.

The success of the Doha 2012 talks will likely hinge on the approach of the world’s two biggest greenhouse gas emitters and robust economies, the United States and China.

In the aftermath of Hurricane Sandy, which inflicted tens of billions of dollars in damage, it’s might sound like a good idea to take some preventive measures. Sandy was not an isolated incident: only last year, Hurricane Irene caused nearly sixteen billion dollars in damage, and there is a growing consensus that extreme weather events are becoming more common and more damaging. The annual cost of natural disasters in the US has doubled over the past two decades. Instead of just cleaning up after disasters hit, we would be wise to take steps to make them less destructive in the first place.

There are several interesting ideas, including building seawalls , burying power lines, and elevating buildings and subway entrances. The question is whether we can find the political will to invest in such ideas. Several new York politicians have called for major new investment in disaster prevention, but it appears Congress is more willing to spend money on relief than on preparedness. That’s what history would lead you to expect: for the most part, the U.S. has shown a marked bias toward relieving victims of disaster, while underinvesting in prevention. A study by the economist Andrew Healy and the political scientist Neil Malhotra showed that, between 1985 and 2004, the government spent annually, on average, fifteen times as much on disaster relief as on preparedness.

Politically speaking, it’s always easier to shell out money for a disaster that has already happened, with clearly identifiable victims, than to invest money in protecting against something that may or may not happen in the future. Voters reward politicians for spending money on post-disaster cleanup, but not for investing in disaster prevention, and it’s only natural that politicians respond to this incentive. The federal system complicates matters, too: local governments want decision-making authority, but major disaster-prevention projects are bound to require federal money. And much crucial infrastructure in the U.S. is owned by the private sector, not the government, which makes it harder to do something like bury power lines.

We’ve been skimping on maintenance of roads and bridges for decades. In 2009, the American Society of Civil Engineers gave our infrastructure a D grade, and estimated that we’d need $2.2 trillion to bring it up to snuff. Our power grid is, by the standards of the developed world, shockingly unreliable. A study by three Carnegie Mellon professors in 2006 found that average annual power outages in the U.S. last four times as long as those in France and seven times as long as those in the Netherlands.

Disaster-prevention measures are expensive: a New York seawall might cost from ten to twenty billion dollars. Yet inaction can be even more expensive; after Katrina, the government had to spend more than a hundred billion dollars on relief and reconstruction; and there are good reasons to believe that disaster-control measures could save money in the long run. The A.S.C.E. estimates that federal spending on levees pays for itself six times over, and studies of other flood-control measures find benefit-to-cost ratios of three or four to one. A 2005 independent study of disaster-mitigation grants made by FEMA found that every dollar in grants ended up saving taxpayers $3.65 in avoided costs. Right now, it's cheap to borrow money for infrastructure; the projects would create immediate employment.

The size of our current deficit does not change the math.

Tuesday, November 20, 2012 - Extracting Meaning

Extracting Meaning

by Sinclair Noe

DOW – 7 = 12,788
SPX +0.92 = 1387
NAS + 0.61 = 2916
10 YR YLD + .04 = 1.66%
OIL + 1.22 = 86.67
GOLD – 3.80 = 1729.10
SILV + .08 = 33.29

There may be a ceasefire in the Middle East. An official for Hamas says a ceasefire deal has been reached. Officials for Israel and Egypt say not quite, some details are being worked out. Israel pressed on with its strikes in Gaza on the seventh day of its offensive and Palestinian rockets still flashed across the border. Secretary of State Clinton is in Israel to help broker a deal. A ceasefire may be announced within the hour, but that would just be a small step; actually enforcing the ceasefire would be more telling.

Federal Reserve Chairman Bernanke delivered a speech today to the New York Economic Club. Bernanke said one reason the recovery has been so disappointing is that the financial crisis appears to have lowered, at least for a time, how fast the economy can grow over the long run.

The crisis has reduced labor force participation and lowered productivity as businesses have trimmed investment. This suggests that the nation’s potential output has grown more slowly than expected in recent years. Potential output combines the economy’s long-run productivity rate and labor force growth. This means the economy has to grow faster than potential to bring down the unemployment rate. In some ways, this is Bernanke making the case against austerity and for stimulus.

However, Bernanke did not take sides on the fiscal cliff, only to say that politicians should not go over the cliff: “Uncertainty about how the fiscal cliff, the raising of the debt limit and the longer-term budget situation will be addressed appears already to be affecting private spending and investment decisions, and may be contributing to an increased sense of caution in financial markets.” He urged the members of Congress not to kick the can down the road. He said that putting off policy choices would only “prolong and intensify these uncertainties.”

In a question-and-answer session, Bernanke warned that Fed policy could not protect the economy if it goes over the cliff. “I don’t think the Fed has the tools to offset that,” he said. That's not exactly true. The Fed does have tools. The question is whether the Fed is willing to use them.

On the upside, Bernanke said not going over the fiscal cliff could be a good thing: “A plan for resolving the nation’s longer-term budgetary issues without harming the recovery could help make the new year a very good one for the American economy.”

Morgan Stanley has issued a report on the global economy and they are somewhat less sanguine than Bernanke. Morgan Stanley warns: the global economy is likely to be stuck in the "twilight zone" of sluggish growth in 2013, but if policymakers fail to act, it could get a lot worse. The bank's economics team forecasts a full-blown recession next year, under a pessimistic scenario, with global gross domestic product likely to plunge 2 percent.

The report says that: "More than ever, the economic outlook hinges upon the actions taken or not taken by governments and central banks.” Under the bank's more gloomy scenario, the US would go over the "fiscal cliff" leading to a contraction in US GDP for the first three quarters of 2013. In Europe, the bank's pessimistic scenario assumes a failure of the European Central Bank in cutting rates and a delay of its bond-buying program. The bank's most optimistic scenario forecasts GDP growth of 4 percent in 2013 compared to around 3.1 percent this year.

John Templeton, one of the greatest investors of all time, said that investors should buy at the point of maximum pessimism. Easy to say, hard to do, unless you have some unique insight or knowledge.

Prosecutors have charged a former SAC Capital employee with insider trading in a series of transactions that hedge fund titan Steven Cohen had personally signed off on.

In what they called "the most lucrative" insider-trading scheme ever, prosecutors alleged that Mathew Martoma helped Cohen's firm avoid losses and reap profits totaling $276 million in the summer of 2008 by using insider tips he got from a doctor about Elan Corp and Wyeth.

Martoma is the fifth person associated with SAC Capital, one of the most widely followed and influential hedge funds, to be charged with insider trading in either a criminal or civil proceeding. He had worked for a unit of SAC Capital called CR Intrinsic Investors in Stamford, Connecticut until 2010.

The criminal complaint against Martoma, while not mentioning Cohen by name, refers to him as the "owner" of the hedge fund and makes clear that Cohen and Martoma talked often about the fund's trading in shares of Elan and Wyeth. The court papers do not indicate that Cohen had knowledge of how Martoma obtained his information.

According to court papers, Martoma spoke in July 2008 to the "hedge fund owner" and recommended selling shares of Elan and Wyeth before a negative announcement on clinical trial results for an Alzheimer's drug jointly developed by the two companies. CR Intrinsic had initially taken long positions in Elan and Wyeth stocks before reversing itself over the course of one week, selling some stock and building up massive short positions that accounted for one fifth of all trading in Elan.

Martoma's lawyer, Charles Stillman, said his client was an "exceptional portfolio manager" and he is confident Martoma will be exonerated. A spokesman for SAC Capital said "Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government's inquiry".

The charges against Martoma stem from the U.S. government's long-running investigation into improper trading in the $2 trillion hedge fund industry, which the Federal Bureau of Investigation has called, Operation Perfect Hedge. To date, the investigation has led to more than 50 convictions. Two former traders, Noah Freeman and Donald Longueuil, pleaded guilty to insider trading charges last year. Jon Horvath, a former analyst at a division of SAC pleaded guilty to insider trading charges in September. Another former SAC Capital employee, Jonathan Hollander, settled civil charges of insider trading last year with the SEC.

Hewlett-Packard acquired British software company Autonomy last year for $10.3 billion and today HP wrote that investment down by $8.8 billion. Apparently $5 billion of the $8.8 billion dollar writedown was due to: “accounting improprieties, misrepresentations and disclosure failures” at Autonomy.

I don't know much about HP and even less about Autonomy. Autonomy described itself in its last annual report as “the leading provider of Pan-Enterprise Search and Meaning Based Computing (MBC) solutions. Autonomy’s unique Intelligent Data Operating Layer (IDOL) platform enables organisations to harness the full richness of human information by extracting meaning from the mass of unstructured information they handle every day, which analysts estimate to constitute over 80% of all enterprise data.”

I don't know what that means but I don't think computers can harness the full richness of human information, although I might be wrong. If the software was so great, then why didn't HP use it to extract the full meaning of an $8.8 billion dollar writedown? Maybe the next multi-billion dollar acquisition will be software that can tell the difference between artificial intelligence and natural stupidity.

Almost 200 nations will meet in Doha from 26 November to 7 December to try to extend the Kyoto protocol, the existing plan for curbing greenhouse gas emissions by developed nations that runs to the end of 2012.

On Monday, the World Bank said current climate policies meant the world was heading for a warming of up to 4C by 2100. That will trigger deadly heat waves and droughts, cut food stocks and drive up sea levels.

Today, a coalition of the world's largest investors called on governments to ramp up action on climate change and boost clean energy investment or risk trillions of dollars in investments and disruption to economies.

In an open letter, the alliance of institutional investors, responsible for managing $22.5 trillion in assets, said rapidly growing greenhouse gas emissions and more extreme weather were increasing investment risks globally. The group called for dialogue between investors and governments to overhaul climate and energy policies. The group said the right policies would prompt institutional investors to significantly increase investments in cleaner energy and energy efficiency, citing existing policies that have unleashed billions of dollars of renewable energy investment in China, the United States and Europe.

And yet... change seems to move at a glacial pace.

Economists and financial theorists still do not get the vital interconnection between the true nature of the economic system and a healthy ecosystem. What will it take? One complex, indivisible, systemic crisis. We are now a couple of weeks into the aftermath of Hurricane Sandy and no one has yet improved upon the analysis of Bloomberg Businessweek's cover story on November 1 : "It's global warming, stupid."

We need an economy of sufficiency that does not demand exponential growth of material output from finite resources on a planet that is fixed in scale. This leads us well past pricing externalities; there are some things that go beyond pricing.

I thought I'd throw that out there because next week 200 nations will meet in Doha and it probably won't get much media coverage.