This week’s report from not-for-profit group the Thinking Ahead Institute – which aims to improve the investment world – ranks the top 15 extreme risks as follows: temperature change, global trade collapse, cyber warfare, resource scarcity, currency crisis, [economic] depression, infrastructure failure, a banking crisis, sovereign default and stagnation being the top 10 – biodiversity collapse in 11th place.
Pope Francis certainly had his finger on the pulse last weekend when he held an open-air mass for a million in the Diocesan Grounds of Soamandrakizay, Antananarivo, capital of Madagascar. A nation of 24m, where 75 per cent live on less than $2 per day and only 13 per cent have access to electricity, it's seen almost half the island succumb to deforestation over the last 60 years.
His sermon, which recognised that following Jesus is not easy, focused on family relationships, building solidarity, and gratefulness. "The deterioration of that biodiversity compromises the future of the country and of the earth, our common home. There can be no true ecological approach... to safeguard the environment without the attainment of social justice capable of respecting the right to... the Earth’s goods, not only of the present generation, but also of those yet to come’’.
Wholesale cotton prices, both in the US and on Zhengzhou’s Commodity Exchange, have been trading down steadily since the third quarter of 2018 and are roughly one-third of what they were at 2011’s peak speculative commodity boom record high. A combination of banks pulling out of this area of business, realisation that garment production takes a heavy toll on the environment, and a move away from fast-fashion appear to be the causes.
Despite the proliferation of coffee shops on what’s left of the high street, wholesale prices have halved since 2017 and are also one-third of 2011’s peak. The difference here, though, is that at $2.50-$3.00 per pound, they merely matched peaks in 1986 and through the 1990s. Coffee farmers are going to the wall (as they have always received a small fraction of the market value), generating warnings of social catastrophe.
Corn has many uses, both edible and industrial, one of which is corn syrup, the sweetening agent used extensively in fizzy drinks. Despite repeated exhortations for us to consume less sugar, today’s prices are not very different to where they were in the 1970s, 1980s and since 2007. Intuitively, one feels this must be linked with the increased prevalence of diabetes not just in the western world but also in emerging market countries.
For my final chart, I wanted a car manufacturer, and Ford Motor Company duly obliged this week by having its credit rating cut to junk by Moody’s. Sticking to a neat downward trend channel since 2014, we are now back to where we first rallied to in 1986, and worth a tiny fraction of 1999’s peak at $62 a share. A sorry little shadow of its former self, it is among the many automakers struggling with emissions scandals, anti-pollution legislation (especially in mega-cities) and the increased use of public transport.
To this add in consumers who have had to tighten their belts for one reason or another, so in India vehicle sales dropped from 227,000 two years ago to 183,450 this July. More worrying is that in the US orders for heavy truck slumped by 80 per cent over the last 12 months.
