California’s Drought Could Tip America Toward Economic And Social Turmoil

July 23, 2014 by John Myers 

 

 

THINKSTOCK

“We never know the worth of water, till the well is dry.” — saying No. 5451, as collected and listed in Gnomologia by Thomas Fuller, M.D.

Some of the worst drought conditions in recorded history have stricken California, and this will have a blistering effect on America’s economy.

California is into its third year of severe drought, a situation that promoted U.S. Agriculture Secretary Tom Vilsack to announce $9.7 million in new agriculture aid. This will top the Barack Obama Administration’s aid to the Golden State at more than $50 million dollars, a total that will undoubtedly grow because of Washington’s worries of a perfect storm — a tsunami of illegal immigrants and a dearth of water.

Last Saturday, the Los Angeles Times carried a story headlined, “California drought will only get worse, experts say.” The story reported that 80 percent of the State is suffering extreme drought, and Brian Fuchs of the National Drought Mitigation Center believes that conditions are not likely to improve. When asked if it is possible that the State is suffering its worst water shortage in 50 years, Fuchs suggested it could be the worst drought in 200 to 300 years and then understated the situation by saying, “It would be a significant event.”

Fuchs echoed what B. Lynn Ingram, a professor of earth and planetary sciences at the University of California, Berkeley told The New York Times in February, “We are on track for having the worst drought in 500 years.”

An understanding of the implications of a major weather change dating back half a millennium on a crucial region of the world is difficult to understate.

The Most Precious Commodity

Economic implications in themselves from such drought have to be seriously weighed. California Ag-growers are a critical part of the State’s economy, which is the largest in the Union. Besides being the No. 1 agriculture-producing State in the U.S., California has the world’s eighth-largest economy, with a gross State product of more than $2 trillion, or more than 13 percent of the total U.S. gross domestic product. A key component to California’s economy is agriculture.

As a cattle and grain writer for my first few years out of college, I can tell you water is the key component in being able to raise livestock or grow crops. And I know the stories that my father and uncle told about the Dust Bowl and how it endured in their memory because of the personal hardship they saw.

Given that California is the fifth-largest supplier of food and agriculture commodities in the world with annual sales of more than $44 billion, a catastrophic drought will have serious implications that will be felt throughout North America and beyond.

Fortune reported last week that the drought will cost the State $2.2 billion alone this year. And if dry conditions persist as expected, that total will escalate quickly, leaving the U.S. particularly vulnerable to inflation. Already, the dollar has been severely undermined by the Federal Reserve’s campaign of buying U.S. Treasuries, creating escalation in the money supply over the past few years. Inflation has been offset to a large degree because of the excess of cheaply imported manufactured goods (particularly from Asia) and a surplus of farm commodities within North America.

However, the first indicators of inflation are already present. The U.S. Department of Agriculture reported that the cost of food has increased 2.5 percent in the past year. That is a good number, but the Federal government is predicting — overly cautiously, I believe — that food prices will rise by an additional 3.5 percent in 2014, with prices for dairy and fresh vegetables expected to increase the most.

This is still modest inflation compared to what we can expect in 2015, and that is because California’s agriculture industry is desperately tapping groundwater. This cannot persist forever; because like oil, groundwater is a finite resource.

Last week, The Associated Press reported on the escalating West Coast drought and a study from the University of California, Davis, Center for Watershed Sciences. :

“It’s tougher than we thought,” Richard Howitt, a University of California, Davis professor emeritus of agriculture and resource economics.

The drought has not driven up food prices because crops such as corn and grain can be grown in other areas of the country, and farmers in California can use their more expensive water on specialty crops such as almonds that already fetch a high price from consumers, Howitt said.

To nourish those crops, farmers have been pumping more groundwater as the mountain snowpack sends less water to state reservoirs and canals. Howitt urged farmers to take the lead in managing their scarce groundwater.

The groundwater is not being replenished…

La-La Land Is A Smelting Pot For Social Unrest

The media and the markets are looking at the global unrest in Eastern Europe and the Mideast. My worry is a domestic uprising. California has a bad record when it comes to riots. Given the social and political problems presented by wave upon wave of illegal immigrants and now this looming water crisis, an explosive fuse may have been set at the Nation’s southwestern edge. It is important to consider that this California catastrophe did not begin this decade with a drought. It manifested itself with race riots in the 1960s and economic upheaval in the 1970s.

In many ways, the promise that was plump for California in the 1950s has been rotted away by liberal evangelists who have packed their propaganda inside the entertainment industry in wanton disregard for the Nation. For its part, much of the country has too easily inhaled California’s crass culture, loose morals and progressive agenda. And the establishment in the East has made it an easy sell over the past half century. But influence and wealth will not take way this impending catastrophe. So it is again that California will be a trend setter for America — not in fashion, taste or culture, but in displacement, unemployment and urban violence.

It all starts and ends with water — the shortage of water in California that could spark violence and the necessity of water to survive it.

Yours in good times and bad,

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China Meat Scandal Hits Starbucks, Burger King

 

By JOE McDONALD AP Business Writer

 

A suspect meat scandal in China engulfed Starbucks and Burger King on Tuesday and spread to Japan where McDonald's said the Chinese supplier accused of selling expired beef and chicken had provided 20 percent of the meat for its chicken nuggets.

Chinese authorities expanded their investigation of the meat supplier, Shanghai company Husi Food Co. A day after Husi's food processing plant in Shanghai was sealed by the China Food and Drug Administration, the agency said Tuesday that inspectors also will look at its facilities and meat sources in five provinces in central, eastern and southern China.

The scandal surrounding Husi Food, which is owned by OSI Group of Aurora, Illinois, has added to a string of safety scares in China over milk, medicines and other goods that have left the public wary of dairies, restaurants and other suppliers.

Food safety violations will be "severely punished," the food agency said on its website.

Starbucks Corp. on Tuesday said it removed from its shelves sandwiches made with chicken that originated at Husi. Burger King Corp. said it stopped using hamburger it received from a supplier that used product from Husi. Pizza restaurant chain Papa John's International Inc. announced it stopped using meat from Husi.

In Japan, McDonald's Corp. said it stopped selling McNuggets at more than 1,300 outlets that used chicken supplied by Husi. It said the Shanghai company had been supplying chicken to it since 2002.

A Shanghai broadcaster, Dragon TV, reported Sunday that Husi repackaged old beef and chicken and put new expiration dates on them. It said they were sold to McDonald's, KFC and Pizza Hut restaurants.

McDonald's and Yum Brands Inc., which owns KFC and Pizza Hut, said they immediately stopped using meat from Husi. A third restaurant chain, Taiwanese-owned Dicos, also said Monday it stopped using meat from Husi.

In a statement, Husi said it was "appalled by the report" and would cooperate with the investigation. It promised to share the results with the public.

"Our company management believes this to be an isolated event, but takes full responsibility for the situation and will take appropriate actions swiftly and comprehensively," Husi said.

Some companies said they didn't deal with Husi but had discovered their suppliers bought meat from that company.

Food and drug safety is an unusually sensitive issue in China following scandals over the past decade in which infants, hospital patients and others have been killed or sickened by phony or adulterated milk powder, drugs and other goods.

Foreign fast food brands are seen as more reliable than Chinese competitors, though local brands have made big improvements in quality.

"If confirmed, the practices outlined in the report are completely unacceptable to McDonald's," the company's Chinese business said in a statement.

Yum's KFC is China's biggest restaurant chain, with more than 4,000 outlets and plans to open 700 more this year.

The company, based in Louisville, Kentucky, said in a statement that "food safety is the most important priority for us."

"We will not tolerate any violations of government laws and regulations from our suppliers," it said.

KFC sales in China plunged after state television reported in December 2013 some poultry suppliers violated rules on drug use in chickens. KFC overhauled quality controls and eliminated more than 1,000 small poultry producers from its supply network.

In Japan, McDonald's spokesman Kenji Kaniya said the affected stores are in Tokyo area and the cities of Nagano and Shizuoka.

Other chicken used by McDonald's in Japan comes from suppliers in Thailand and China, Kaniya said.

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More Chinese people going online via phones than PCs

BEIJING: The number of China's internet users going online with a mobile device — such as a smartphone or tablet — has overtaken those doing so with a personal computer (PC) for the first time, said the official China Internet Network Information Center (CNNIC) on Monday.

China's total number of internet users crept up 2.3% to 632 million by the end of June, from 618 million at the end of 2013, said CNNIC's internet development statistics report.

Of those, 527 million — or 83% — went online via mobile. Those doing so with a PC made up 81% the total.

China is the largest smartphone market in the world, and by 2018 is likely to account for nearly one-third of the expected 1.8 billion smartphones shipped that year, according to data firm IDC.

The increase in internet users was mainly driven by mobile, which grew 5.4% from the 500 million users at the end of 2013. The number of mobile shoppers surged 42% from December through June.

Chinese e-commerce is dominated by Alibaba Group, which is preparing for a mammoth initial public offering widely expected to take place in September.

Alibaba's biggest competitor is JD.com, which specializes in business-to-customer e-commerce in a similar vein to Amazon.com, and is 17.6% owned by Alibaba arch-rival Tencent Holdings.

Other online mobile services with rapid growth from the end of 2013 include music, video, gaming, search, and group-buying, all of which experienced double-digit increases.

The fastest growing services were mobile payment, where users shot up 63.4%, online banking, with a 56.4% rise, and mobile travel booking, which was up 65.4%.

But not all internet activity saw growth. Users of microblogs such as Tencent Weibo and that offered by Weibo fell for the second six-month period in a row, by 1.9% to 275 million.

They numbered 331 million at the end of June last year before the government in September started clamping down on "online rumours" which it said threatened social stability.

Blockbuster mobile messaging apps such as Tencent's WeChat have since become venues of choice for users who want to express views without fear of retribution.

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Typhoon slams into southern China, one dead

Pursuant to my helper's absence for few days, I decide to post this myself. He's from Philippines. Looks like they updated from Wed. as features China more.

BEIJING, July 18 (Reuters) - A super typhoon slammed into China on Friday killing one person, as the government ordered an all-out effort to prevent loss of life from a storm that has already killed at least 64 people in the Philippines.

Typhoon Rammasun, with winds of up to 180 kph (112 mph), made landfall at Wenchang city on south China's island province of Hainan on Friday afternoon, the National Meteorological Center said on its website.

The typhoon, which is shaping up to be the strongest to hit Hainan in more than 40 years, will bring heavy rain throughout the weekend before moving southwest and weakening on Monday, the Xinhua state news agency said.

By mid-evening on Friday, the storm had made landfall in Guangdong province on the mainland. It is likely to hit the southwestern Guangxi region late on Friday.

Waves could reach up to 13 m. (43 feet) high in northern parts of the South China Sea and residents are being warned away from coastal areas, Xinhua said.

The Hainan government said it had ordered fishermen back to port while all airports, train stations and ports had been closed.

State media said access to all scenic spots on the island, which styles itself as China's answer to Hawaii, had been closed, and more than 70,000 people evacuated.

Premier Li Keqiang said people's lives must come first in the severe situation, the Hainan government said.

"Prevent any accidents that may be caused (by the typhoon) and reduce disaster losses as much as possible," it cited Li as saying.

Typhoons are common at this time of year in the South China Sea, picking up strength from the warm waters and dissipating over land.

Flooding across a large swathe of southern China in the past week has already killed at least 34 people.

(Reporting by Ben Blanchard, Hui Li and Michael Martina; Additional reporting by Rosemarie Francisco in MANILA; Editing by Clarence Fernandez and Robert Birsel)

Here's link to picture ( embed code not found)  :Photos: Typhoon Rammasun slams Chinahttp://newsbcpcol.stb.s-msn.com/amnews/i/f0/ba3f53c57963de76fa1ac397d6e96/_h353_w628_m6_otrue_lfalse.jpg, Philippines

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'Biggest' jobs cuts since 2009 'imminent' at Microsoft: report

What is being billed as the "biggest round of job cuts" to hit Microsoft since 2009 is imminent, according to a report today.

Microsoft “could” unveil staff cuts that were alluded to by chief executive Satya Nadella in his flabby PR-authored communication last week.

The cuts are reported to be the biggest in five years for Microsoft – the last round of this magnitude was in 2009, when former CEO Steve Ballmer cut 5,000 Redmondians – five per cent of staff.

Those were the first round of staff cuts in Microsoft’s history.

According to the report, Nadella will top Ballmer’s number, eliminating positions at the Nokia mobile phone business and in areas of overlap between Microsoft and Nokia.

Also going are people in engineering and marketing for businesses including the global Xbox team.

Marketing is the first point of call for any CEO looking to trim the corporate fat.

Ballmer five years ago also cut staff in marketing and trimmed around the edges of the main business by closing 13 small interests that included MSN Encarta and a number of packaged consumer operations.

Back then, Ballmer was trying to contain spending as Microsoft mis-fired on the second quarter of 2008, covering what should have been a blow-the-doors off Christmas period.

The company missed analyst expectations of $17.1bn for the period, making 17.63bn revenue instead. Profit landed at $4.17bn as Microsoft was hit by a perfect storm of a recession that was affecting consumers’ spending and the rise of the tablet, chiefly the iPad, which was diverting spending from PCs.

This time Microsoft is trying to shape up structurally in the wake of the Nokia mega gulp.

That purchase catapulted Microsoft’s headcount way past the 100,000 barrier that Ballmer had been judiciously keeping beneath with the cuts of 2009.

Nadella will also use the cuts for yet another bout of corporate restructuring, 12 months after the last re-org, again intended to make Microsoft more nimble.

 

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