Reuters AlertNet - Financial crisis sparks concern over climate change funds

[-] Text [+] | Subscribe |

Email |

Print |

RSS

Financial crisis sparks concern over climate change funds - U.N.

19 Feb 2009 16:52:00 GMT

Written by: Nita Bhalla

NEW DELHI (AlertNet) - Funds pledged by rich countries to help developing nations adapt to the impacts of climate change are at risk from the global credit crunch and economic downturn, the United Nations has warned.

Deirdre Boyd, country director for the United Nations Development Programme (UNDP) in India, told AlertNet financing must be made available to help countries like India deal with hazards caused by global warming, such as rising seas and melting glaciers. But she warned the global financial crisis could jeopardise these crucial funds.

"What had happened in recent international meetings was that there was a commitment from donors that they would provide new money for adaptation," said Boyd. "There is now a question mark hanging over the impact of the financial crisis on making available new money for adaptation."

Experts say the effects of global warming threaten the livelihoods of hundreds of millions of people in the Indian subcontinent. As melting glaciers feed into major rivers, more severe flooding is expected, and extreme weather like heatwaves and droughts is likely to become more frequent.

Adaptating to climate change includes measures such as building dykes and embankments to help protect coastal areas from rising seas, growing drought-tolerant crops, and relocating people from flood-prone areas to higher ground.

U.N. projections are that poor nations will need tens of billions of dollars annually by 2030 to cope with climate change, but the amount on offer barely stretches beyond several hundred million dollars per year.

In December, about 190 nations agreed at a U.N. climate change conference to launch a fund to help developing countries adapt to the impacts of global warming such as droughts, floods and rising seas. The fund is worth only around $58 million, although its value could rise to $300 million a year by 2012, depending on market prices for carbon credits.

Boyd said countries like India are particularly concerned that the financial crisis could dent rich countries' willingness to support efforts to cope with climate change in poorer nations.

As negotiations gather pace on a new global climate treaty to succeed the Kyoto Protocol, due to be wrapped up in December, developing countries are insisting that new money should be made available for adaptation rather than diverted from existing development aid.

"The developing nations are worried that that money will be taken from the existing basket rather than being added in," Boyd said.

"We haven't yet seen much of this new money for adaptation and that's the concern. Will we see it now as a result of the financial crisis?"

Reuters AlertNet is not responsible for the content of external websites.

Del.icio.us | Digg

Digg |

NewsVine | Reddit

We welcome argument but AlertNet will not publish comments that are racist, abusive or libellous.

1 response to “Financial crisis sparks concern over climate change funds - U.N.”

Please note that comments should not be regarded as the views of Reuters.

guys background search says:
09 Mar 2009 12:54:04 GMT
USA's FAST ECONOMIC RECOVERY IN 2 STEPS
Step 1 - STOP THE BAILOUTS and FIX THE BANKS - Solve the loan problem. - Solve the derivative problem. - Reassemble whole loan mortgages
The U.S. economy is shrinking fast, because businesses cannot get loans that they need to operate normally. Banks and lenders already own $ billions in bad loans, and they are afraid to make new loans. The government gave $ billions in bailout money for banks to start lending, but banks hoard the money to save themselves.
Our financial system became untrustworthy, because it mixed $ billions in bad loans in with the good loans. Now, banks do not trust any of the loans, and the entire credit market stopped working.
The U.S. economy will continue to shrink until we untangle the loans. Once the bad loans are isolated, they can be fixed one at a time. Then trust will be restored. Credit will flow, and the economy will grow.
So far, our government is spending $ trillions on bailouts and pork projects, out of ignorance and political ideology. The real solution is much less expensive than that.
The USA has fixed this problem before, and it is not hard to fix again. This is how:
A) Start with the Resolution Trust Corporation (RTC), which the federal government setup to solve a Savings and Loan problem in the 1980s.
B) RTC buys up securitized mortgages and derivatives to reassemble whole mortgage loans. 1. "Securitized mortgages" are home loans that have been bundled into large groups and sold to investors. A group of about 4,000 mortgages can be "securitized" and sold just like a stock or bond. Investors like to buy groups of mortgages because they receive all the monthly house payments. 2. Some groups of securitized mortgages were subdivided into smaller pieces, called "derivatives." However, both of the fancy names refer to mortgage loans. 3. The problem is that many bad loans (with no payments) got mixed in with good loans. That turned all the securitized mortgages into bad investments, which are ruining our banks. It is a huge problem, and the government has to fix it, before our economy will recover. 4. Total securitized mortgage and derivative market is estimated at $1.3 Trillion by a Professor of Economics at Ohio State University. (Also see the graph from Deutsche Bank at "The Death of Securitized Mortgages" http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html ) 5. Government should buy up securitized mortgages and derivatives at the lowest market price, which is set via a reverse auction. (Google on "reverse auction".) 6. Squatters, who sit on their mortgage derivatives, in order to extort big $ from the rest of the system, can be forced to sell. (Law is analogous to eminent domain, or sales forced on cybersquatters that registered the domain names of well-established companies.) 7. Government pays mortgage derivative squatters at market price set by previous reverse auctions, perhaps with a penalty to the squatters. 8. Sellers give up all rights. No new law there. 9. Banks, investors, and insurers now have cash instead of questionable mortgage loans and derivatives. So, the banking system is healthy with cash to lend. 10. Credit will flow, and the economy will grow.
C) Government reassembles whole loans from securitized mortgage components and derivatives.
D) Government sorts the newly reassembled whole loans (mortgages) into groups according to risk/quality. 1. Government uses traditional mortgage experts and guidelines to sort the home loans into quality groups, for example, a high quality group would include homeowners with 20% (or more) equity in their house at today's market price; and house payments that are 25 percent (or less) of homeowners monthly income.
E) Government (RTC) sells the reassembled whole loans to traditional mortgage banks. 1. This solves the problem of renegotiating home loans with homeowners. Read on. 2. Law must be changed so that reassembled whole loan mortgages cannot be securitized into derivatives, again. 3. An important purpose is to reconnect each homeowner with his lender, and vice versa. 4. It eliminates incentive for mortgage lenders to make predatory and junk loans. If the loan fails, the lender is stuck with a bad loan. 5. Government recovers much of the $1.3 Trillion purchase cost, because government auctions off the reassembled mortgages. 6. The lower quality, more risky mortgages would fetch a lower price at auction. 7. Mortgage companies, that buy the risky loans, will have more room to negotiate with the homeowners. 8. Some homeowner negotiations will not succeed. Those homeowners will move into affordable rentals. (The government does not owe everyone a free house.) 9. Other renters would like to buy those empty homes at reduced market prices. 10. If the government gets stuck with some homes, the government could profit by selling the homes when the housing market recovers.
F) Insurers like AIG may be reorganized through bankruptcy. 1. Securitized mortgage pools never made business sense, unless they were protected by various insurance schemes. 2. Those insurance schemes always were a scam. 3. Insurance only works when most of the insured assets are never hit with a disaster. That is why flood insurance does not work very well. A major flood ruins all the buildings in a large area, all at the same time. So, the insurance company goes broke, and people that bought the insurance are not protected. That is the problem with securitized mortgage insurance. In an economic downturn, the "disaster" hits all the houses at the same time. Securitized mortgage insurance was doomed to fail, and the insurance companies went broke in 2009. 4. Companies that ran the insurance scam may have to go through bankruptcy. 5. Never ending government bailouts for insurers like AIG are just throwing good money after bad. So, stop the bailouts.
This plan is inexpensive, tried and true. It leaves the banks healthy, with cash to lend. It restores trust in the credit markets, so loans will be made. It reassembles mortgage derivatives into whole loans, and restarts traditional mortgage lending. People can get loans to buy homes. Credit will flow, and the economy will grow.*
Step 2 - " STOP THE PORK and START THE RECOVERY
*The economy will grow if President Obama's massive tax, borrow, and spending plans can be stopped, before he creates another Great Depression. Presidents Hoover and Roosevelt already tried to tax, borrow and spend their way out of a recession in the 1930s. Instead, they created the Great Depression, which lasted 12 years. Straight as he goes, President Obama is doing it, again. Nevertheless, cleaning up the securitized mortgage mess is a necessary first step.
If President Obama announced Steps 1 and 2, today, the stock market would go up within hours. Investors love a real business plan, instead of a political pork plan. Millions of people will be wealthier, feel wealthier, and have more money to spend. That will jump start the economic recovery within days.

When you submit a comment to us we request your name, e-mail address and optionally a link to a website. Please note where you submit a website address, we may link to it via your name. By sending us a comment, you accept that we have the right to show the comment and your name to users. Although we require your email address, this will not be published on the site, and is only required to enable us to check facts with you, e.g. if you are making a claim we can not confirm easily. Additionally, if you would like your comment removed at anytime, you'll have to use this e-mail address when you contact us. To remove a comment at any time please e-mail us at blogs-(at)-reuters-(dot)-com (address obscured to avoid spam) specifying who you are and what you would like removed. We moderate all comments and will publish everything that advances the post directly or with relevant tangential information. We reserve the right to edit comments in order to maintain the quality of the comments, and may not include links to irrelevant material. We try not to publish comments that we think are offensive or appear to pass you off as another person, and we will be conservative if comments may be considered libelous. Reuters will use your data in accordance with Reuters privacy policy. Reuters Group is primarily responsible for managing your data. As Reuters is a global company your data will be transferred and available internationally, including in countries which do not have privacy laws but Reuters seeks to comply with its privacy policy.

Unlike some other content on this website, the written content in this article may be republished or redistributed by any means free of charge. Any use of photographs and graphics on this website is expressly prohibited. You must check whether written content contained in other articles on this website may be republished or redistributed without the express permission of Reuters or the relevant third party provider.