Musings on Fisheries Moratoria, especially when you’re near the bottom of the barrel.

from the Canadian sustainable fisheries blog: <http://www.sustainablefisheries.ca/index.php?option=com_content&view=article&id=330:moratorium-means-more-than-northern-cod&catid=25:sustainable-fisheries-news-page&Itemid=2>

Moratorium means more than “Northern Cod”

Friday, 17 August 2012 18:35 |  Author: Gabe Gregory, op-ed |   

Twenty years have past since the groundfish moratoria were declared. Most people think of one species and one groundfish stock when the word moratorium is mentioned. The word moratorium has become synonymous with the Northern Cod stock only. This is most unfortunate because while northern cod was our largest and most important groundfish stock, it represented only about 25% of groundfish landed. The magnitude of the groundfish collapse impacted much beyond Northern Cod.

The groundfish moratoria devastated the rural economy of our Province. The most productive towns and communities in the industry were lost due to the groundfish collapse. These include Port aux Choix, Port aux Basques, Ramea, Burgeo, Hr. Breton, Gaultois, Fortune, Grand Bank, Burin, Marystown, Trepassey, Hr. Grace, Port Union and St. Anthony. In addition, many other communities lost the most important component of their economy. While the inshore groundfish industry was primarily based on cod, it seasonally provided substantially more employment for longer periods and contributed to the economy of many more communities than is currently derived from shellfish.

TAGS: groundfish,moratorium, northern cod, shellfish, rebuilding strategy, NL fishery

The groundfish collapse has had a profound effect on the south and west coast communities of NL. In fact, NL’s most productive cod stock was the stock known as Northern Gulf cod. For many years the Gulf cod stock yielded in excess of 100,000 tonnes mainly by inshore-based fleets. In addition, tens of thousands of tonnes of Gulf redfish and flatfish were harvested. Now you come to realize how important groundfish stocks were to the communities along NL’s west coast. Similarly, the south coast communities were supplied by vast groundfish landings from Grand Banks and St. Pierre Bank stocks of flounder, cod, redfish, yellowtail, greysole and haddock. These stocks combined yielded much greater harvests and employment than those derived from Northern cod.

Why is it that as NLer’s we have forgotten what we have lost and what the groundfish collapse/moratoria really and truly mean? Why is it that after twenty years we have no recovery of groundfish? The reasons vary but chief among them is our failure to implement conservation- based fish management of our fish resources. Rather than follow sound scientific advice and the principles of the precautionary approach to manage fish resources, we continue to establish annual catch limits based on short-term socio-political motivations while at the same time largely ignoring science. The fact is that groundfish species have life spans ranging between a decade and two (flatfishes and cod) while others range up to five decades and longer (redfish).

Unfortunately, the past two decades have not been devoted to rebuilding groundfish stocks. We have instead chosen to continue to exploit groundfish stocks at much lower levels. These lower harvest levels however, reflect relatively high exploitation on these stocks, particularly given their depressed spawning stock biomass levels, poor recruitment, etc. The decisions to exploit groundfish resources are driven by our need to sustain a very marginal economic attachment to the fishery to gain access to income support through the EI system. Indeed, our once productive communities have all been replaced by an unsustainable over-reliance on depressed and over-exploited fishery resources and the EI system.

The marginal attachment to the fishery is probably best exemplified by reviewing fishing effort and participation. It is alarming to compare the participation rates in the fishery today as compared to just a couple of decades ago.  During the recent MOU process it was revealed that the average larger fishing enterprise (> 40 feet) operates less than 40 days per year while the smaller vessels (< 40 feet) operate less than 20 days on average. Consequently, dependence on income support (fishers EI program) has increased over the past two decades. By comparison, in the 1980’s, fishing enterprises operated several months each year (May-October) and accessed EI during the months of November through April.

Even though shellfish, particularly snow crab, is more abundant, it too is being over-exploited. Over large areas, this resource is experiencing severe decline as over-exploitation is taking its toll. As shellfish declines there will likely be even greater pressures politically and socially to increase exploitation on depressed groundfish resources. There is currently no means within the fishery management systems to adjust to this resource reality.

So how do we really start to rebuild our fish resources and our rural economy? First we must use sound fishery management principles such as the precautionary approach to determine exploitation of fish resources based on the best available science. That means reducing our annual harvests and by-catches of most species. Second, we must protect and conserve any recruitment to groundfish stocks and enable successive year-classes to contribute to stock growth. That means restraining and curtailing fishing effort in favour of stock growth which must remain a steadfast goal for a period of at least the generational life span of the species (about two decades for cod). Third, we must impose the same rigorous management approach to the straddling stocks on the Grand Banks as we place upon ourselves. That means implementing conservation- based management within Canada and NAFO. We cannot expect of others what we are unwilling to do ourselves.  Fourth, we must implement sound economic principles to the management of the fishery. That means managing the fishery as we would any other natural resource. Strategies such as that outlined have been introduced round the world with much success.

A rebuilding strategy will create short-term challenges; however, the pay-off will be tremendous for generations to come. The options are limited as our fishery resources are continuing to decline and we will eventually have more widespread hardship in the rural areas than has been endured for the past two decades. While there are reasons to be optimistic about our future, opportunities can only be realized by managing differently. We should not expect any different outcomes by continuing on the path we have been on for the past two decades.

Groundfish stock rebuilding is possible. We need to change our priorities and place conservation, adherence to scientific advice, and best practices in fisheries management at the forefront.

Gabe Gregory

St. Philips, NL

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A Message From the Nieman Foundation About the Watchdog Project

In the event that you also think [good] journalism makes a difference. . . . especially read Barry Sussman’s farewell column below. .. Also, check the Nieman website for other resources.  bp

From: Nieman Foundation <editors@niemanwatchdog.org>
Subject: A Message From the Nieman Foundation About the Watchdog Project

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 A new direction for the Nieman Watchdog Project
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The Nieman Watchdog Project was launched in 1996, animated by a singular goal: to examine and invigorate journalism in its fundamental role of serving the public interest. The Watchdog Project — funded by 1950 Nieman Fellow Murrey Marder, a former diplomatic correspondent for The Washington Post — has been an important and enduring feature of Harvard’s Nieman Foundation for Journalism, and one that has evolved to address emerging issues in accountability journalism.

 

Next week, the Project will take a new direction. On Aug. 24 the Nieman Watchdog website will end its eight-year run as a separate entity; past articles will remain accessible online at niemanwatchdog.org. Going forward, we will integrate new articles about watchdog journalism into Nieman Reports, which publishes as a print quarterly as well as online and serves an influential international audience of journalists. The material is a natural fit in Nieman Reports, where Watchdog Project stories once ran and where for more than 60 years the Nieman Foundation has examined the rights and responsibilities of news organizations and journalists.

 

In addition to publishing in Nieman Reports, the Watchdog Project will add two other components to enhance the Nieman Foundation’s longstanding commitment to accountability journalism:

 

Beginning with next year’s class of Nieman Fellows, the Nieman Foundation will invite watchdog journalists to study for a year at Harvard through the Murrey Marder Nieman Fellowship. Successful applicants will join other Nieman Fellows in a year of intense examination of journalistic priorities as well as independent pursuits. In addition, harnessing the intellectual and creative resources of journalists and Harvard, the Nieman Foundation will organize a series of seminars and other special events to examine the successes and failures that characterize the current state of watchdog journalism in Washington and beyond.

 

Since 2004, under the direction of Barry Sussman, the Nieman Watchdog site has explored the ways in which journalists do or do not hold powerful individuals and institutions accountable. Morton Mintz, NF ’64, has been a senior adviser to the Watchdog Project from its outset and the site’s many contributors have included policy experts, academics, journalists and think-tank analysts. The site will remain online as a searchable archive while new articles about watchdog journalism by Watchdog’s deputy editor Dan Froomkin and others will appear occasionally on the Nieman Reports website.

 

The foundation is grateful to all who have contributed to niemanwatchdog.org through the years and excited about the next chapter in the Watchdog Project.

 

 

 

Looking back at Nieman Watchdog

COMMENTARY | August 20, 2012

Barry Sussman reflects on the accomplishments of the Nieman Watchdog website, and the challenges to watchdog journalism that remain ahead.


Read the Nieman Foundation’s announcementfor details about the future of the Nieman Watchdog project.

By Barry Sussman
sussmanb1@gmail.com

It has been my pleasure to be editor of Nieman Watchdog but all things come to an end and this is a goodbye column. We went online in 2004. About 350 writers, many of them leaders in their fields, have taken part, almost all sharing the same goal: to encourage the press to do better reporting on public policy issues. There’s plenty of work toward that end that needs to be done. Important issues are neglected, editing is sloppy, the daily report is thinner, etc., etc.

There just isn’t enough good journalism, and there is too much forfeiting when it comes to seeking out important news. War coverage is a dismal case in point. As John Hanrahan wrote on this site, at any given time only handfuls of American reporters have covered the news from Afghanistan these last 11 years; as Sig Christenson reported in 2007, aside from the big, elite media only three regional news organizations consistently sent reporting teams to Iraq during the war there. Imagine: two terrible, lengthy wars with hardly any coverage. In surveys we did, Nieman Fellows around the world lambasted the American press – gave it a grade of D – for its coverage of the run-up to the Iraq war, and implored American reporters to get out of their “he said, she said” political mode, a lament that still applies.

As a group, the traditional U.S. press has badly failed at reporting dissent in America – there’s abundant newsworthy protest but you can seldom tell it from the news media – and has failed at reporting on poverty, failed at follow-up reporting on the Bush administration torture policies and other actions, and failed to sufficiently report the Obama administration’s high-handed refusal to deal with those issues. Instead of ridiculing the obstructionist Republican party leadership in Washington and the states, as it should, the mainstream press treats them as if they have goals other than serving large corporations and the rich and suppressing the vote. Not to defend Democrats, but if the press did decent, steady reporting on politics, made fun of GOP fantasies, and if the Democrats behaved, as Paul Wellstone once put it, more like the “Democratic wing of the Democratic party,” then it would be hard to imagine more than a few Republicans winning national office. The press ignores climate change, a world crisis, for weeks at a time. Corporate influence on America and the remnants of a labor movement are seldom reported on at all.

Not all the news about journalism is bad. Day after day the New York Times is giving people their dollar’s worth with imaginative stories, a varied editorial page and solid investigations. At times The New Yorker, the New York Review of Books, McClatchy, Rolling Stone magazine, and writers at the Washington Post do brilliant, independent reporting and commentary. Warren Buffett, promisingly, has bought dozens of regional and small town papers where, one thinks, things can only get better. An online group, theInvestigative News Network, begun in 2009, now includes 60 news organizations and seems to have taken root. Newsrooms are popping up at universities such as American University where Charles Lewis runs theInvestigative Reporting Workshop. ProPublica, the Center for Public Integrityand the Center for Investigative Reporting are doing important stories that run prominently on TV and on the front pages at major newspapers. And for people of all tastes, there is Huffington Post, the media cornucopia.

I saw it as the role of NiemanWatchdog to press for better reporting, and I’d like to single out a few contributors in particular who helped do that.

One was the late Lt. General William Odom, a cold war hawk, National Security Agency director under Ronald Reagan, historian, intellectual, author of seven books, a political science teacher at Yale – and an early, outspoken opponent of the Iraq war who began taking part in NiemanWatchdog in 2005 when, he told us, op-ed pages rejected everything he submitted. Odom’s first piece was titled “What’s wrong with cutting and running?” Its premise was that every stated reason to stay in Iraq was really a reason to get out. Odom did occasional pieces for us afterward and they were noted widely enough so that cable TV and talk radio called on him frequently; he was asked to testify at Congressional hearings and the Washington Post devoted more than half an Outlook section front page to an article of his titled “Victory is not an option.” Odom believed Nieman Watchdog was a key to his return to the limelight. If so, it shows the vitality and power of the Internet – a few articles on a not very widely known website brought Odom back, from being shunned to being very much sought after.

Then there is Henry Banta, a renaissance man posing as a D.C. lawyer. Hank has written about 50 pieces for Nieman Watchdog. His specialty is making complicated economic ideas clear enough so that even reporters can understand them, but he can tackle any subject.

Reporters and editors would do well to look up Bruce Kushnick on our site; they’ll find years of stories including very recent ones, all relevant and begging to be followed up, on the failure of the FCC to regulate the telecoms (instead Verizon, ATT and the telecoms in general are regulating the FCC). Other contributors of note include Judith Stein on health care reform and Medicare; Judith Bell on poverty; Gilbert Cranberg and Herb Strentz on explaining Iowa and other meritorious efforts; Diane Ravitch, Bill Claiborne, Martin Lobel, Jerome Starkey, Philip Coyle, Steven Kleinman, Linda Bilmes, William Astore, Philip Meyer, Chas Freeman, Mary Curtis, Myra MacPherson, John Hanrahan, Karen Greenberg, and many others.

The Nieman Watchdog site was funded by Murrey Marder’s donation to the Nieman Foundation. My colleague, Dan Froomkin, and I have edited it with Murrey’s “wake up angry” stricture in mind. Realistically, it is Dan’s site as much as mine; he got Odom and many others to take part. We have been assisted by a capable researcher, Nonna Gorilovskaya. Helping shape the thinking from the beginning, with Murrey, were the distinguished longtime Washington Post investigative reporter Morton Mintz, who served as senior adviser and contributor, and former Nieman Foundation curator Bob Giles. Giles saw to it that the site got off the ground and offered encouragement and smart editing and other advice until his retirement in 2011. Also, no technical glitch or serious problem has been too tough or weird for the creative, always available Fabio Silva.

My thanks go to those who have written for Nieman Watchdog, to the thousands who subscribe to our email updates and also to more casual readers. Keep the pressure on.

It has been fun.

Barry_thumb_new
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20 August 2012 — Natural Hazards Updates: Forest Fires at Night

There a new sensor on a recent satellite that makes these forest fires clearly visible at night


— FIRES (1 updated events, 1 new images) —

NIGHT VIEW OF WESTERN WILDFIRES
In August 2012, lightning sparked numerous wildfires throughout the western United States.
* http://earthobservatory.nasa.gov/NaturalHazards/view.php?id=78895&src=nha
 *** VIIRS(Suomi NPP) image from Aug 17, 2012 (Posted on Aug 17, 2012 5:02 PM)

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RainScaping Update

Issued: August, 2012
RainScaping Update

 The goal of life is living in agreement with nature. -Zeno

Master Watershed Steward Certification Course

The Watershed Stewards Academy is currently recruiting COMMUNITY LEADERS for its next Master Watershed Steward Certification Course.

WSA trains and supports community leaders called Master Watershed Stewards to help their communities reduce pollution and restore their waterways. If you are interested in being certified as a Master Watershed Steward, please attend one of several informational meetings this summer (August 21, 27 or September 5th) to learn more about the program. All informational sessions will be held at Arlington Echo Outdoor Education Center from 6:30-7:30 pm. Applications will be accepted through September 12, 2012. The Certification Course is composed of approximately 13 sessions from October 2012-March 2013. Additional information including course dates and a downloadable application is available on the WSA website at – www.aawsa.org.

To sign up for an informational meeting, visit – www.aawsa.org. Specific questions may be directed to Suzanne Etgen, WSA Program Coordinator at Arlington Echo Outdoor Education Center: 410 222 3822.

Chesapeake Ecology Center, 10th Anniversary Celebration! Garden Open House & Native Plant Sale!

Saturday, September 15
9 a.m. – 1 p.m.
(Rain date: Sunday, September 16)

245 Clay Street
Annapolis, MD 21401

All are invited to this free event and celebration of the 10th Anniversary of the Chesapeake Ecology Center (CEC)! Join Master Gardener tour guides for tours of the Native Plant Demonstration Gardens at the CEC. Learn about native plants, rain gardens, and other conservation landscaping practices. This is also their annual fundraiser, and native plants at discount prices will be made available.

The CEC is located at Adams Academy at Adams Park Middle School, in Annapolis, MD, just two blocks from the Navy Stadium. Visit – www.ChesapeakeEcologyCenter.org – for more information and directions to the CEC.

RainScaping in Action at the Maryland Department of Natural Resources

In the spring of 2012, over 40 individuals learned first-hand about rain garden installation at the Maryland Department of Natural Resources (DNR) by participating in a major restoration of two rain gardens. The 2012 restoration project is a “facelift” of the two parking lot rain gardens, aka bioretention cells, at the Tawes Office Building. View photos here.

A new 2012 RainScaping Brochure was also produced as part of this outstanding initiative. Download it here.

RainScaping In Action at Quiet Waters Park

Quiet Waters Park (QWP) broke ground this past spring on its Reading and Butterfly Garden, which includes the Watershed Education Experience. View photos here.

The new installation—near the water fountain/ice-skating rink—was inspired by Garrett’s Light, an organization established in memory of Garrett Wall Feldman.

“This new park attraction will create a place where the community can celebrate the joy of reading and being together in a natural, peaceful and healthy environment,” QWP officials said in a release.

Lobelia cardinalis
Brilliant red spikes set against green and purple bronze colored foliage. Each individual spike of scarlet flowers opens from bottom to top and stays in bloom for several weeks. Hummingbirds and swallowtail butterflies love the nectar. Benefits:

  • Tremendous nectar source for hummingbirds and swallowtail butterflies
  • Electric red blooms for several weeks in summer
  • Excellent cut flower
  • Grows easily in wet soil
  • Plant in sun to moderate shade
  • Please direct comments and feedback to info@rainscaping.org.

      © Copyright 2012 Rainscaping  |  Produced by Clarity Connect, Inc.  

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    Homework Assignment

    Using materials from this case study in the Sunday NY Times, 14 June 2012, and your common sense, fine two things right and 14 things wrong with the US economic and financial system.

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    Vibrio Toxin May Be More Common Because of Global Warming

    I think these things work about the same on both sides of the Atlantic. . . .  from Reuters — http://www.reuters.com/article/2012/07/22/us-climate-oceans-bacteria-idUSBRE86L0ET20120722

    Have not seen any data from Chesapeake Bay Program on water warming (or cooling) over the past 50 years. for example.

    Bacteria outbreak in Northern Europe due to ocean warming, study says

    By Nina Chestney
    LONDON | Sun Jul 22, 2012 1:03pm EDT
    (Reuters) – Manmade climate change is the main driver behind the unexpected emergence of a group of bacteria in northern Europe which can cause gastroenteritis, new research by a group of international experts shows.

    The paper, published in the journal Nature Climate Change on Sunday, provided some of the first firm evidence that the warming patterns of the Baltic Sea have coincided with the emergence of Vibrio infections in northern Europe.

    Vibrios is a group of bacteria which usually grow in warm and tropical marine environments. The bacteria can cause various infections in humans, ranging from cholera to gastroenteritis-like symptoms from eating raw or undercooked shellfish or from exposure to seawater.

    A team of scientists from institutions in Britain, Finland, Spain and the United States examined sea surface temperature records and satellite data, as well as statistics on Vibrio cases in the Baltic.

    They found the number and distribution of cases in the Baltic Sea area was strongly linked to peaks in sea surface temperatures. Each year the temperature rose one degree, the number of vibrio cases rose almost 200 percent.

    “The big apparent increases that we’ve seen in cases during heat wave years (..) tend to indicate that climate change is indeed driving infections,” Craig Baker-Austin at the UK-based Centre for Environment, Fisheries and Aquaculture Science, one of the authors of the study, told Reuters.

    OCEAN WARMING

    Climate studies show that rising greenhouse gas emissions made global average surface temperatures increase by about 0.17 degrees Celsius a decade from 1980 to 2010.

    The Vibrio study focused on the Baltic Sea in particular because it warmed at an unprecedented rate of 0.063 to 0.078 degrees Celsius a year from 1982 to 2010, or 6.3 to 7.8 degrees a century.

    “(It) represents, to our knowledge, the fastest warming marine ecosystem examined so far anywhere on Earth,” the paper said.

    Many marine bacteria thrive in warm, low-saline sea water. In addition to warming, climate change has caused more frequent and heavier rainfall, which has reduced the salt content of estuaries and coastal wetlands.

    As ocean temperatures continue to rise and coastal regions in northern regions become less saline, Vibrio bacteria strains will appear in new areas, the scientists said.

    Vibrio outbreaks have also appeared in temperate and cold regions in Chile, Peru, Israel, the northwest U.S. Pacific and northwest Spain, and these can be linked to warming patterns, the scientists said.

    “Very few studies have looked at the risk of these infections at high latitudes,” Baker-Austin said.

    “Certainly the chances of getting a vibrio infection are considered to be relatively low, and more research is focused on areas where these diseases are endemic or at least more common,” he added.

    Previous Vibrio outbreaks in colder regions have often been put down to a sporadic event or special conditions rather than a response to long-term climate change.

    This is because the effects of global warming can be more pronounced at higher latitudes and in areas which lack detailed historical climate data, the study said.

    Baker-Austin said there was a growing realization that climate and the emergence of some infectious diseases were closely linked but there are some “huge data gaps in that area which need addressing.”

    (Editing by Tim Pearce)
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    Next, the Humanitarian of the Year Award, presented by the Kalisnikov Foundation.. . . .

    UNESCO set to award science prize sponsored by African dictator

     

    Obiang-227x300

    Teodoro Obiang Nguema Mbasogo has been president of Equatorial Guinea since 1979.

    Wikipedia

    The United Nations Educational, Scientific and Cultural Organization (UNESCO) will award a prize for life-sciences research sponsored by Teodoro Obiang Nguema Mbasogo, President of Equatorial Guinea.

    The controversial prize was first proposed in 2008 but has been in limbo for the past four years as a result of opposition from western diplomats, who pointed to corruption and human-rights abuses in the country (see ‘UNESCO delays controversial science award‘). But Obiang didn’t give up (see ‘Controversial science prize back on UNESCO’s agenda‘), and in March, UNESCO’s executive boardnarrowly voted to change the award’s name and push ahead. The award is now called the Unesco–Equatorial Guinea International Prize for Research in the Life Sciences, to reflect the fact that the money, US$3 million over five years, will now be provided by the government of Equatorial Guinea, rather than Obiang’s private foundation. This change in sponsor from what was listed in the prize statutes had led UNESCO’s lawyers to advise against giving out the money, but UNESCO director general Irina Bokova, who personally opposed the award, felt she had to follow the wishes of the executive board, UNESCO officials told the New York Times.

    The first three winners, who each get $100,000, will be given their prize at UNESCO headquarters in Paris tomorrow. They are: Maged Al-Sherbiny, from Egypt, for his work on vaccine development and diagnostics for hepatitis C and schistosomiasis; Felix Dapare Dakora, a plant scientist at Tshwane University of Technology in Pretoria, South Africa, for tackling food scarcity through his work on the symbiosis between legumes and soil bacteria; and Rossana Arroyo, a molecular biologist at the Centre for Research and Advanced Studies of the Mexican National Polytechnic Institute in Mexico City for her work on the parasitic disease trichomoniasis.

    4ndtfdmtfcs
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    Explanations of the Banking Scandal: One via The Economist; the other from Woodie Guthrie

    Here’s what the Economist says:  — when you feel your eyes glazing over jump to the bottom to see Woodie’s answer:

    The LIBOR scandal

    The rotten heart of finance

    A scandal over key interest rates is about to go global

    Jul 7th 2012 | from the print edition

    20120707_fbd001_0

    THE most memorable incidents in earth-changing events are sometimes the most banal. In the rapidly spreading scandal of LIBOR (the London inter-bank offered rate) it is the very everydayness with which bank traders set about manipulating the most important figure in finance. They joked, or offered small favours. “Coffees will be coming your way,” promised one trader in exchange for a fiddled number. “Dude. I owe you big time!… I’m opening a bottle of Bollinger,” wrote another. One trader posted diary notes to himself so that he wouldn’t forget to fiddle the numbers the next week. “Ask for High 6M Fix,” he entered in his calendar, as he might have put “Buy milk”.

    What may still seem to many to be a parochial affair involving Barclays, a 300-year-old British bank, rigging an obscure number, is beginning to assume global significance. The number that the traders were toying with determines the prices that people and corporations around the world pay for loans or receive for their savings. It is used as a benchmark to set payments on about $800 trillion-worth of financial instruments, ranging from complex interest-rate derivatives to simple mortgages. The number determines the global flow of billions of dollars each year. Yet it turns out to have been flawed.

    The rotten heart of finance

  • First-mover disadvantage
  • Related topics

    Over the past week damning evidence has emerged, in documents detailing a settlement between Barclays and regulators in America and Britain, that employees at the bank and at several other unnamed banks tried to rig the number time and again over a period of at least five years. And worse is likely to emerge. Investigations by regulators in several countries, including Canada, America, Japan, the EU, Switzerland and Britain, are looking into allegations that LIBOR and similar rates were rigged by large numbers of banks. Corporations and lawyers, too, are examining whether they can sue Barclays or other banks for harm they have suffered. That could cost the banking industry tens of billions of dollars. “This is the banking industry’s tobacco moment,” says the chief executive of a multinational bank, referring to the lawsuits and settlements that cost America’s tobacco industry more than $200 billion in 1998. “It’s that big,” he says.

    As many as 20 big banks have been named in various investigations or lawsuits alleging that LIBOR was rigged. The scandal also corrodes further what little remains of public trust in banks and those who run them.

    Like many of the City’s ways, LIBOR is something of an anachronism, a throwback to a time when many bankers within the Square Mile knew one another and when trust was more important than contract. For LIBOR, a borrowing rate is set daily by a panel of banks for ten currencies and for 15 maturities. The most important of these, three-month dollar LIBOR, is supposed to indicate what a bank would pay to borrow dollars for three months from other banks at 11am on the day it is set. The dollar rate is fixed each day by taking estimates from a panel, currently comprising 18 banks, of what they think they would have to pay to borrow if they needed money. The top four and bottom four estimates are then discarded, and LIBOR is the average of those left. The submissions of all the participants are published, along with each day’s LIBOR fix.

    In theory, LIBOR is supposed to be a pretty honest number because it is assumed, for a start, that banks play by the rules and give truthful estimates. The market is also sufficiently small that most banks are presumed to know what the others are doing. In reality, the system is rotten. First, it is based on banks’ estimates, rather than the actual prices at which banks have lent to or borrowed from one another. “There is no reporting of transactions, no one really knows what’s going on in the market,” says a former senior trader closely involved in setting LIBOR at a large bank. “You have this vast overhang of financial instruments that hang their own fixes off a rate that doesn’t actually exist.”

    A second problem is that those involved in setting the rates have often had every incentive to lie, since their banks stood to profit or lose money depending on the level at which LIBOR was set each day. Worse still, transparency in the mechanism of setting rates may well have exacerbated the tendency to lie, rather than suppressed it. Banks that were weak would not have wanted to signal that fact widely in markets by submitting honest estimates of the high price they would have to pay to borrow, if they could borrow at all.

    In the case of Barclays, two very different sorts of rate fiddling have emerged. The first sort, and the one that has raised the most ire, involved groups of derivatives traders at Barclays and several other unnamed banks trying to influence the final LIBOR fixing to increase profits (or reduce losses) on their derivative exposures. The sums involved might have been huge. Barclays was a leading trader of these sorts of derivatives, and even relatively small moves in the final value of LIBOR could have resulted in daily profits or losses worth millions of dollars. In 2007, for instance, the loss (or gain) that Barclays stood to make from normal moves in interest rates over any given day was £20m ($40m at the time). In settlements with the Financial Services Authority (FSA) in Britain and America’s Department of Justice, Barclays accepted that its traders had manipulated rates on hundreds of occasions. Risibly, Bob Diamond, its chief executive, who resigned on July 3rd as a result of the scandal (see article), retorted in a memo to staff that “on the majority of days, no requests were made at all” to manipulate the rate. This was rather like an adulterer saying that he was faithful on most days.

    Barclays has tried its best to present these incidents as the actions of a few rogue traders. Yet the brazenness with which employees on various Barclays trading floors colluded, both with one another and with traders from other banks, suggests that this sort of behaviour was, if not widespread, at least widely tolerated. Traders happily put in writing requests that were either illegal or, at the very least, morally questionable. In one instance a trader would regularly shout out to colleagues that he was trying to manipulate the rate to a particular level, to check whether they had any conflicting requests.

    The FSA has identified price-rigging dating back to 2005, yet some current and former traders say that problems go back much further than that. “Fifteen years ago the word was that LIBOR was being rigged,” says one industry veteran closely involved in the LIBOR process. “It was one of those well kept secrets, but the regulator was asleep, the Bank of England didn’t care and…[the banks participating were] happy with the reference prices.” Says another: “Going back to the late 1980s, when I was a trader, you saw some pretty odd fixings…With traders, if you don’t actually nail it down, they’ll steal it.”

    Galling as the revelations are of traders trying to manipulate rates for personal gain, the actual harm done would probably have paled in comparison with the subsequent misconduct of the banks. Traders acting at one bank, or even with the clubby co-operation of counterparts at rival banks, would have been able to move the final LIBOR rate by only one or two hundredths of a percentage point (or one to two basis points). For the decade or so before the financial crisis in 2007, LIBOR traded in a relatively tight band with alternative market measures of funding costs. Moreover, this was a period in which banks and the global economy were awash with money, and borrowing costs for banks and companies were low.

    “Clean in principle”

    Yet a second sort of LIBOR-rigging has also emerged in the Barclays settlement. Barclays and, apparently, many other banks submitted dishonestly low estimates of bank borrowing costs over at least two years, including during the depths of the financial crisis. In terms of the scale of manipulation, this appears to have been far more egregious—at least in terms of the numbers. Almost all the banks in the LIBOR panels were submitting rates that may have been 30-40 basis points too low on average. That could create the biggest liabilities for the banks involved (although there is also a twist in this part of the story involving the regulators).

    As the financial crisis began in the middle of 2007, credit markets for banks started to freeze up. Banks began to suffer losses on their holdings of toxic securities relating to American subprime mortgages. With unexploded bombs littering the banking system, banks were reluctant to lend to one another, leading to shortages of funding system-wide. This only intensified in late 2007 when Northern Rock, a British mortgage lender, experienced a bank run that started in the money markets. It soon had to be taken over by the state. In these febrile market conditions, with almost no interbank lending taking place, there were little real data to use as a basis when submitting LIBOR. Barclays maintains that it tried to post honest assessments in its LIBOR submissions, but found that it was constantly above the submissions of rival banks, including some that were unmistakably weaker.

    At the time, questions were asked about the financial health of Barclays because its LIBOR submissions were higher. Back then, Barclays insiders said they were posting numbers that were honest while others were fiddling theirs, citing examples of banks that were trying to get funding in money markets at rates that were 30 basis points higher than those they were submitting for LIBOR.

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    Nature Report

    1) Yesterday early AM I saw a single otter swimming upstream at the head of Church Creek, as I was starting kayaking. .  . sorry, didn’t get my camera out in time.

    2)
    Large (mature) stinging nettles  (jelly fish) showing up in Church Creek, more than half way up. Been several years since I’ve seen them in the Creek in any numbers — last year was too wet (i.e., too much freshwater in the upper parts of the Creek), and the year before they started to show up about this time, but then there were several storms that drove them away. 
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    US Beaches

    Here’s a summary of the US Beach report for all beaches monitored (in 30 states) — sort of the annual version of what RiverKeeper Capt. Muller does every WEEK for the South River —

    Here’s just how filthy that beach water is

    Playa-jobos-beach-noaa

    Appearances can be deceiving.

    The Natural Resources Defense Council (NRDC) has released its annual “Testing the Waters” report, an overview of the nation’s beaches.

    You’ll want to read this before taking a dip.

    Over the 22 years the NRDC has created the report, 2011 saw the third-highest levels of beach closings and advisory days. What does that mean? What, exactly, would you be swimming in?

    Most beach closings are issued because beachwater monitoring detects unsafe levels of bacteria. These unsafe levels indicate the presence of pathogens — microscopic organisms from human and animal waste that pose a threat to human health. The key reported contributors of these contaminants are (1) stormwater runoff, (2) sewage overflows and inadequately treated sewage, (3) agricultural runoff, and (4) other sources, such as beachgoers themselves, wildlife, septic systems, and boating waste.

    Oh, neat. Here’s how that pollution has varied as a cause of beach closures over the years:

    Screen-shot-2012-06-27-at-11-1

    Click to embiggen.

    The organization also compiled a list of the worst-offending beaches, those that repeatedly had bad, polluted water. That data includes this caveat:

    It is important to note that while a high percent exceedance rate is a clear indication of contaminated coastal recreational waters, it is not necessarily an indication that the state’s beachwater quality monitoring program is deficient or fails to protect public health when beachwater quality is poor.

    In other words, the beaches probably don’t let you swim when it’s really bad. We went ahead and put those beaches (both ocean and lake) on a map for you. Pro tip: Check with the proper authorities (cosmic or otherwise) before taking a big gulp of water.

    The data, we’ll note, is from 2011. In other words, the beaches above could now be the cleanest in the world! But you probably shouldn’t bet on it.

    If you’re more of a glass-half-full-of-clean-swimmable-water sort of person, the NRDC also provides a list of the cleanest states. Delaware, you’re in luck.

    Screen-shot-2012-06-27-at-11-3

    Click to embiggen.

    In summary: If you leave the house at all this summer, do so in a watertight wetsuit. Or, alternately: If you do go swimming, check this space in a year to see if it explains why you spent August in the bathroom.

    Philip Bump writes about the news for Gristmill. He also uses Twitter a whole lot.

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