This planet will live interesting times during the next decade: A combination of a full size global financial crisis, of major environmental constraints, and of shortage of energy, water, and certain key commodities. Herald Tribune (11/22/07) quotes OECD saying in a recent report: “Losses in the distressed sub-prime mortgage sector of the United States could reach $300 billion, only a portion of which has so far been accounted for by write-offs at major banks… We still have not hit the worst point in resets, delinquencies and ultimate losses on mortgages." Lead by US financial markets, Europe and now China and others are getting closer to technical bankruptcy, when assets market value becomes lower than debt level. In China, the Chinese people discovering the joys of getting rich quick thanks to a booming stock market are applying to it their millennium old gambling inclination.

This financial crisis would be bad in the perspective of conventional free economy. What makes it worse is that the world economy, growing since 2000 at its highest level in some 40 years, demands more energy, more fresh water, and more commodities. Producing more fresh water means ultimately consuming more energy. Mining, growing and transforming more commodities whether agro, chemical, metal or mineral means the same. Ultimately, the world faces a massive energy shortage. But mankind is running out of areas in the world where local environment impact conditions combined with attitude of the local population are favorable to new power generation capacity. Nuclear is clean in CO2, but unpopular. Making it fool proof means higher costs. Coal can be made clean, even CO2 free, but at a higher cost of kWh bringing it a nuclear costs level. Oil and gas are available and can be CO2 clean as well (through CO2 storage for instance), but they don’t come cheap anymore. Renewable energy is available, but very expensive.

To increase energy capacity, we need to massively invest long term. Our financial markets have lost the ability to invest in anything which is not short term, low risk. This factor, combined with environment pressures, means that all new power plants run late. And their capital costs escalate with delays.

According to Greek mythology, when Jason and his Argonauts came to steel the Golden Fleece from Medea’s empire, Medea warned them that wherever they would go, she would, one day, send them the Bill. On top of our facing a combination of bankruptcy and energy shortages, our planet is beginning to present Medea’s Bill to mankind: We never paid for the investments engaged in natural phenomena which took from tens to hundreds of millenniums to generate the fossil reserves of the planet. Our planet did, beginning way before the first hominians began hunting and gathering. By doing so, the planet put in underground storage the CO2 levels which were five times higher than today in our atmosphere in the days of the dinosaurs. We are destroying these reserves as if they were free of charge, while putting back carbon dioxide and methane in the atmosphere, as if the air and a stable climate were free of charge too. During this century, we will start paying Medea’s Bill, and the moratorium will completely change the way we perceive financial planning. This is the end of Stockholders Value Enhancement!

How shall we face this colossal challenge? We will from now on regularly talk about the options and solutions.

Andre Teissier du Cros