May 29th, 2008
02:16 PM GMT
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LONDON, England – There was something different about this protest. It just wasn't what I expected from a bunch of truckers gathering in central London to protest the high cost of diesel.

It began in much the way I thought it would: truckers honking their horns, waving placards, holding banners that said, "OUT BROWN." It looked like any other rally, any one of the colourful protests you frankly, see quite often on the streets of London.

Sharon Knight delivers her emotional speech.
Sharon Knight delivers her emotional speech.

Then the speeches began. I leaned in to listen. Not because of what was being said (diesel prices are too high, the government is no good, our industry is being wiped out etc etc) but because of who was at the podium, and the passion with which she spoke.

Yes, she.

I admit my surprise at seeing a lady in black patent leather stilettos lead the speeches at a truckers protest. I was even more surprised when Sharon Knight, part of a family run trucking business, couldn't hold back her tears.

Diesel in the UK now costs up to $2.60 a litre. Guess what that translates into across the Atlantic? Roughly $9 a gallon! Almost half of that cost is tax imposed by the British government. Truckers are paying around 35 percent more to fill up their vehicles diesel from last year, forcing many to shut shop.

Sharon was one of the people who took a letter to Downing Street, calling on the government to help. Of course Prime Minister Gordon Brown can't bring down the global price of oil, but what he can do, say the truckers, is cut taxes on fuel.

It's getting late, Sharon told us. If the government doesn't step in soon, many transport and haulage companies will be out of business. They'll lose their incomes and a way of life. The only way of life many of them know. It's easy to understand why Sharon couldn't hold back her tears.

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May 28th, 2008
09:33 AM GMT
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LONDON, England – There is real concern now about the impact that escalating oil prices will have on the global economy. London has been swamped by truckers and Barcelona by fisherman - all complaining about the rising cost of fuel. American car owners are demonstrating by cutting down on journeys to save gas. Politicians fear high oil prices will spark higher inflation in economies that are already slowing down.

But rising oil prices do not matter a jot to the global economy , at least in theory. Any changes in the price of oil have a neutral effect. The cost to those countries buying it is offset by the money made by those selling it. Overall the effect of a rise, or indeed a fall, in oil prices is nil. The cash is simply being shifted around the globe. It's swings and roundabouts, as they say.

But if the U.S. economy goes down, surely it will take the rest of the world with it? Not according to Paul Donovan, Senior Economist at UBS. He points out that countries in the Middle East are consuming far more than they were 10 to 15 years ago, as evidenced by the huge building projects in Dubai.

"You are rebalancing power in the world economy, there is no doubt about that," says Donovan. "It's very disruptive but the net effect is simply to redistribute wealth from countries like the U.S. and UK to the Middle East or countries like Russia."

In other words, Europe and America may be suffering but other continents are gaining, so no need to fear a global recession. The Middle East and Russia are strong enough to prop up the whole system. Do you agree?

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May 27th, 2008
09:03 AM GMT
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LONDON, England – I just missed this wave when it first hit a few years ago. Four companies have been started that allow people to pitch up to any of their cars to rent on the spot, for an hour or for a week.

People all over London are now ditching the cars and joining car clubs to save money and only rent a car when they need it. Members pay about $100 a year and then go online to see if the car near them is available when they need it.

One company, Streetcar, claims a regular user can save $4,000 a year by not paying insurance, road tax, repair bills and not paying for the gas for the first 30 miles.

With gas prices here in the UK now topping $10 a gallon, membership is soaring.

Nationally, membership rose 22 percent in the first quarter of the year to 45,000 drivers. Car companies are also now adding vans because companies are clambering for the quick rental to take employees on day trips.

We interviewed a guy who ditched his Jaguar and now just rents a car when he needs it. He does it for green reasons. Ironically he agrees with other members who say they actually use public transport more because they don’t want to pay an hourly rate to pop to a shop. So they pay to drive ... less.

This has caught the eye of local governments. A number of them in London have marked out spots for these private companies to park their cars. They see it as a way to cut down on traffic. One study claims that for every car share automobile, 20 cars are taken off the road. Families seem willing to attempt this system instead of buying a second car.

What impressed me was how the companies have been created around technology which was not widespread and reliable even five years ago or so. You can book your car through a secure Web site after you look on an interactive map to see what cars are available.

You can also pitch up to a car and use your mobile phone to send a text and then receive a confirmation back on your phone. The car is then unlocked remotely.

Why it seems to be working for busy people is this: We all know we are going to drive. It's not much use taking a bicycle to IKEA. So this is a way to save money and cut down on our carbon footprint.

Watch my report

What do you think about car sharing?

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May 26th, 2008
08:59 AM GMT
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LONDON, England – The car industry is to manufacturing what Madonna is to music. It is constantly having to reinvent itself to stay relevant, and has been pretty successful.

Chairman Ratan Tata poses next to the Tata Nano.
Chairman Ratan Tata poses next to the Tata Nano.

One of Madonna's more memorable phases for me was when she was constantly stripping (well I was a teenager) and that seems to be the phase the car industry is going through now. All the big car makers seem to be coming up with stripped down versions of vehicles with none of the mod cons.

Italy's Fiat is developing a new low-cost car. Its follows in the tracks of Renault with its Logan and Tata with its Nano. They are all betting on the fact that the no frills segment will grow significantly over the next few years.

The market for cars in the developed world is saturated so car makers are hoping to sell cars to those that haven't got one yet in places like India, China and Brazil.

It's a risk though. How easy will be it to get the price down far enough to tempt people to upgrade from their mopeds, rickshaws and tuks? The margins will inevitably be thin so sales will have to be large enough to bring in decent profits. Are larger vehicles the best solutions in those markets? And can you use the same model in several different markets - will the Nano work outside South Asia?

One interesting thought is there may also be demand in developed markets for low-cost cars as people tighten their belts and want to spend less on the initial outlay and running costs.

Do you think the car makers are right to bet on low-cost cars?

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May 23rd, 2008
04:20 PM GMT
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LONDON, England – It might seem like an easy question. With oil companies posting record profits and Gulf countries buying up assets around the world, it's easy to see where much of it is going. Still, they will tell you they don't set the oil price; that is done in the futures markets in New York and London.So I set out to break down where all the money goes.

How difficult it is to extract the oil plays into the cost equation.
How difficult it is to extract the oil plays into the cost equation.

It's very easy to find out who makes money in the United States from a gallon of gas. Those stats are published every month by the Department of Energy. In March, four percent of the price went to those who transport the fuel and another four percent went to marketing; those who sell it on the retail side (it's often said they only really make a profit from the bad food and cigarettes people buy after filling up). Then eight percent of the price went to those who refine crude oil into fuel.

The government then takes its share (12 percent is tax in the USA compared to tax of 50 percent in France and Germany and more than 60 percent here in the UK). OPEC likes to point out that from 2002-2006 the G-7 countries earned $460bn from tax on oil while OPEC countries earned $410bn from selling oil.

Now, let's go back to that gallon of gas. The biggest chunk (72 percent) of the price is crude oil. That is where the sticker shock is coming from; $130 plus in the futures market for a barrel of crude.

So, where does that money go? BP spent some considerable time trying to explain this to me. It's much harder to break it down because it can cost around $1 to get a barrel out of places like Saudi Arabia, while it can cost $70 to extract oil from deep water. With that in mind, BP says in 2007 it earned on average $67.35 for every barrel extracted - it rose to $90.92 for Q1 2008 – and that it cost on average $20.17 to get that 2007 barrel.

The green lobby will of course say they should spend those profits on alternatives to fossil fuels. Others will say big oil must spend more of its profits to find new sources of oil. One survey found that three big oil firms, Shell, BP and Exxon Mobil had a combined $29bn in capital spending during the first quarter of this year. But the three gave $20.7bn back to shareholders.

Mike Watts of Cairn Energy said that his company for one will spend more to find sources of oil because it looks like high prices are here to stay. Cairn is willing to risk the enormous cost of exploring for oil in places that would have been to expensive to contemplate when oil was at $60.

He likes the look of oil in Greenland.

Of course the private oil companies don't get all the money. No one can drill for oil without striking a deal with the government lucky enough to have black gold. Some contracts include a 50-50 split while other contracts have built-in royalties. What's interesting here is that the state oil companies in the developing world have learned a great deal from the likes of Shell, BP, Chevron, Total and Eni and are now becoming bigger players themselves.

It's thought they will start to bid on contracts in places like the Arctic giving the vast amount of money they are earning from the current climate. Look for India and China's state-owned oil companies to become competitors forcing the private companies to spend even more to get oil contracts.

That could mean even higher oil prices.

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May 21st, 2008
10:42 AM GMT
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NEW YORK CITY - I was interviewing a tech CEO recently and asked him what his favorite gadget was. "The Kindle," he replied without hesitation. He is not alone. Amazon.com's electronic reading device is quickly developing an enthusiastic fan base. The digital device, which allows users to download books, magazines, newspapers and blogs wirelessly, retails for $399. It sold out almost instantly after its debut last November. Amazon has since re-stocked and is featuring the product prominently on their home page.

The Kindle is the latest must-have gadget.
The Kindle is the latest must-have gadget.

Can the Kindle could do for Amazon what the iPod did for Apple? It is certainly generating some serious buzz. This week Goldman Sachs analyst James Mitchell put Amazon on his recommended list and raised his price target, in part on the sales potential of the Kindle. Mitchell points out that Amazon's sales growth last quarter matched that of Google.

Another firm, Citibank, reckons the Kindle could make of 3 per cent of Amazon's total business by 2010. I say "reckons" because right now these are all just educated guesses.

To the irritation of many, Amazon is being very tightlipped about actual sales numbers. Maybe they are afraid of the competition. Their online music store, which launched after Apple's iTunes was already established, never managed to catch up. Amazon, no doubt, does not want to make the same mistake in publishing.

Right now the Kindle has an early advantage. While it is rather ugly to look at, its memory, quick downloads speeds and easy to read wide screen appear to be winning people over. The question is: will we embrace digital books the same way we embraced digital music?

I was a little skeptical at first. It is hard to imagine we would have another break-out device like the iPod. Plus, I have a sentimental attachment with books that have been given to me over the years. The more thumbed through and worn, the better. For a long time I had more bookshelves than any other type of furniture.

But things change. A growing family means I have less space and time. The more I think about it, the idea of having old favorites and new releases all on one handy little device is extremely appealing. Being able to wirelessly download papers and magazines is also a big plus.

Dave DeWalt of McAfee, the tech CEO I mentioned earlier, said one of the favorites things on his Kindle was his daily subscription to his hometown newspaper - something he could never buy at a store.

Amazon CEO Jeff Bezos thinks the Kindle offers more than just convenience. In his most recent letter to shareholders, Bezos said he hoped the Kindle would help improve people's attention spans and offer an alternative to Blackberries and smart phones which have turned us into "info-snackers."

I am not sure I buy into that. I am fairly sure it is my hectic life and not my Blackberry that is preventing me from reading more novels. Still - a device which makes it easy for me to carry around hundreds of titles might help me get back on track. I have certainly bought a lot more music online then I ever did in a record store. But you can listen to music while doing other things. You still need to sit down and find time to read, even if it is on a small little machine.

What do you think info-snackers? Does the Kindle have the potential to be the next I-pod? Would owning an electronic reading device encourage you to buy more books?

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May 21st, 2008
07:35 AM GMT
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LONDON, England – On May 7 I wrote a blog about the possibility of oil hitting $200 a barrel. Since then, oil has continued to move higher. And now the futures market is pricing oil at close to $140 as far away as December 2016. Even by this year's end there are predictions that oil, trading at $129 dollars a barrel now, will reach $150 a barrel.

Motorists are feeling the pain of higher oil prices at the pump.
Motorists are feeling the pain of higher oil prices at the pump.

That's the forecast of T. Boone Pickens. He's a man you may not have of heard of before, but he's well known in the oil world and well known among many on Wall Street. When he speaks, people listen. He speaks in language easily understood. His reasoning for oil hitting $150 a barrel by year end is simple.  "Eighty five million barrels of oil a day is all the world can produce and the demand is for 87 million," he said in an interview.

His prediction of course, follows Goldman Sachs which sees oil prices averaging $141 in the second half of the year. Goldman Sachs really turned heads when it predicted earlier this month that oil would reach $200 a barrel within 6 months to two years. Oil a year ago was trading at less than half its current price.

Is there a speculative element in oil's rise? Of course. Might there even be an element of panic? When oil on the futures market jumps 9 bucks in one day, panic may be a factor. But there are also plenty of fundamental reasons people are predicting higher oil prices ahead, even out to 2016. I can't predict where oil prices will be eight years from now. But I do know they aren't going to fall dramatically anytime soon, if ever again, short of world wide depression.

None of us, with the exception of producers, like high oil prices. But few of us are willing to drive less or fly less, or radically shift our home heating and cooling needs. It's much easier blaming the Chinese and the speculators.

Too bad, it's blame misplaced. Can we really blame the Chinese for wanting to continue to build their economy, after we in the West have been using oil for much, much, longer to build our economies?

As for the world's largest oil consumer, the United States, Americans are complaining about the price of gasoline, but they're hugely dependent on their cars and many of them hugely lazy and overweight. Their definition of taking a dog for a walk is driving with one hand on the steering wheel and the other hand on the leash.

Who do you blame? Do you think oil prices will remain high for several years to come? Let me know your thoughts.



May 19th, 2008
05:18 PM GMT
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LEWES, England - It sounds a bit crazy really. Why would a small town mint its own currency to use in local shops?

But there are a few places that do just that and Lewes, in the southern English county of East Sussex, wants to join that list by the end of the year.

The theory goes like this – you get £1.10 ($2.20) worth of goods in a shop with one Lewes pound. That discount is the incentive to use it. The local shop absorbs that loss but gets more business to make up for the discount. The shop would then use that Lewes pound to buy its goods, from a local farmer or craftsman.

Advocates say a pound that stays in town is recycled four or five times, while a pound spent a chain store leaves town immediately – the so-called leaky economic theory.

It also part of the green agenda. After all, walking to local shops and buying your veg, milk, cheese etc. from local suppliers cuts down on transportation costs.

One store owner we talked to loved it. So did the local brewery, but only if it could use the alternative pounds to buy its supplies. That will be the test. The few townies we talked to actually made fun of the whole thing. It just seems a nuisance to them.

Totnes in Devon has had a local currency for a few years. And in Western Massachusetts (where else?) local stores take BerkShares which look a bit like euros but for the pictures of local notables.

The questions asked include how are they different from gift certificates? (They don't expire, can be used for anything in the store, can be used multiple times, can be used in any participating store). Are they legal? (Of course, they are just promissory notes like any other "currency" and aren't backed up by anything more than confidence - like any other "currency.")

The backers in Lewes say we have reached peak oil, and that prices will only rise as the amount of oil shrinks. That of course is debatable. But they want to voluntary return to a time when people shopped locally and there were plenty of local farmers etc. to meet that need. They fear a time when it will just be too expensive to ship food in from far away suppliers, but by then the local suppliers will already be out of business.

But for people to now make the effort to use a parallel currency there will have to be a lot of local goodwill.

Watch my video report from Lewes

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May 18th, 2008
07:02 PM GMT
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LONDON, England – I want to ask a controversial question. What do you fear more, terrorism or a recession? Now before you think I'm insensitive or have gone off the deep end, let me explain how I came to ask this.

Which do you fear more: Terrorism or recession?

I was leaving the CNN building and outside, one of our camera crews had set up to do a live report. I asked the producer what the reporter would be talking about. "Terrorism," she replied.

So I asked her, what do you fear more, terrorism or a recession? She gave me one of those looks which said, you can't be serious Todd, suggesting that the one and only correct answer is terrorism.

But it's not the only answer, and here's why.

The cameraman said he actually feared a recession more. "What do you mean?" the producer asked, incredulously.

The cameraman said he figured his chance of being a victim of terrorism was pretty low, so he feared a recession more. And this is a guy who has seen death up close.

In no way am I downplaying a terrorist attack. Obviously when it happens, it has a devastating effect. We have seen the aftermath of 9/11, the Madrid bombings, the London bombings, and elsewhere.

The image of those planes flying into the World Trade Center in New York City, smoke billowing as people ran from the towering infernos, will forever be etched in our minds.

I can also remember feeling uneasy the first few days after the bombings in London in July of 2005, but then life regained its normalcy, its everyday rhythm.

Even in the immediate aftermath, I was struck by how many people went on with their daily lives, taking public transportation or standing and drinking outside pubs, refusing to give in to the fear that terrorists want to instill.

However, right now, I suspect if I asked many people what do you fear more, an act of terrorism or recession? Many would answer a recession.

I think for many of us, an act of terror is something we can't control, because we don't know when or where it will happen.

When it happens our hearts go out to the victims, and families, and we also feel angry and violated because innocent people die or are seriously injured and traumatized.

But as horrible as terrorism is, it could be argued that a recession affects many, many more people, millions who don't lose their lives, but lose their jobs, their identities, homes, and possibly relationships also with devastating effect.

So is it any small wonder that the cameraman and others might fear a recession more than a terrorism attack?

As I said in the first sentence, it's a controversial question, but in these times when there's so much talk of recession, it's a question I'm asking.

Tell me what you fear more, I'd like to know where you stand on the issue.



May 14th, 2008
09:52 AM GMT
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LONDON, England – What matters more, what a Wall Street executive thinks, or what the chairman of the U.S. Federal Reserve thinks?

Obviously for the markets, it's what the Fed chairman thinks. And while some on Wall Street say the worst is over, Ben Bernanake has a more sobering assessment.

He says it will take "some time" for financial institutions to work through the crisis, including raising capital and improving risk management.

Meanwhile, the Fed is doing some soul searching of its own.

A front page article in the Financial Times says the Fed is rethinking the way it deals with asset bubbles, including extra regulation.

The treasury has already proposed that the Fed have more authority to make financial institutions change behavior that is a risk to financial stability.

"Top officials are re-examining the Alan Greenspan doctrine that central banks should not try to tackle asset bubbles and should focus on mitigating the fallout when they burst," the FT wrote.

"Any move by the Fed to focus more explicitly on asset prices rather than take into account their expected effect on growth and inflation would be a radical break. The Fed has long stood out among the central banks as the least willing to embrace the idea that it should 'lean against the wind' when asset prices are rising rapidly," the FT added.

Greenspan believed it wasn't possible to identity bubbles before they broke, and raising interest rates beforehand could be counterproductive.

Should the Fed raise interest rates higher than they would otherwise be to try and prick an asset bubble? Who determines that prices have gone beyond where they should be? Interesting questions.

But given this housing and credit bubble isn't the first this decade - remember the dot.com bubble and its shattering aftermath - the idea of trying to do something preemptive is intriguing. Whether its practical is another matter. Tell me what you think!



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