PAGE 2 I THE MEREDITH HERALD 1 SEPTEMBER 24, 2008
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TEIVIPERATURES, Continued from Page 1
methane, and other gases emitted
from burning these fossil fuels are
also making it hard for excess heat
to escape from the earth’s surface.
These gases all accumulate in the
atmosphere and create a barrier that
prevents heat from being released;
as more gases collect, the barrier be
comes larger and eventually causes
the earth’s temperature to increase.
Scientific research links climate
change to industrialization, show
ing a significant rise in greenhouse
gas levels in the past 150 years. But
what does this datum mean for the
already-industrially revolutionized?
According to researchers, changes
in precipitation, more severe
storms, sea-level changes and other
weather woes categorized under
the umbrella (pun intended) term
“climate change.” But remember,
these progenitors of production
and pollution also gave us the tele
phone, which led to the cell phone;
vulcanized rubber, which led to car
tires; sewing machines, which led to
ready-made clothes, and a middle
class, which continues to supply the
money and demand. One has to give
to gain, right?
It appears so, given the cur
rent climate-change/consumer
rate of exchange. A few months
ago, Wilmington’s ABC-news af
filiate WWAY-3 reported that beach
erosion is increasing due to climate
change. The good news is that the
nourishment methods used at Caro
lina and Wrightsville Beaches 40
years ago proved beneficial in man
aging erosion and provided protec
tion in hurricanes. The bad news
is that man-made sand dunes don’t
stop the sea level from rising. EPA
tide records indicated that sea levels
increased nearly six inches during
the last century and the Intergov
ernmental Panel on Climate Change
predicts that number will likely qua
druple in the next century—a costly
climb that could amount to $34 bil
lion lost in eroded or inundated land
(www.ipcc-wg2.org).
But the worst news? While salt
water has long been hailed as a cure-
all, the Division of Coastal Manage
ment is trying to elevate sand to a
similar status. According to the
site’s panegyric page, which prom
ises information of protecting prop
erty, only massive, Coastal Resourc
es Commission-approved amounts
of bagged or bulldozed sand can
safeguard oceanfront land against
erosion. They do briefly mention
the other option—the permanent,
problem-solving solution of moving
a structure more inland—but let’s
be realistic: It’s not the beach that
oceanfront owners drive their lux
ury SUVs hundreds of miles to go
see, but the view of the beach from
their multi-million dollar homes. If
that house is destroyed, something
bigger and better can always replace
it. Too bad the same isn’t true for
Earth.
The full report, “Proxy-based
reconstructions of hemispheric
and global surface temperature
variations over the past two mil
lennia,” published in the September
9 PNAS volume, can be viewed at
www.pnas.org. ■
AMERICA’S LOOMING FINANCIAL CRISIS
By Melissa Santos
Staff Writer
America’s deteriorating economic health has been the subject of countless
news articles since the subprime crisis set in last August, and it is cited as
a major concern among voters this election year. With the government’s
recent takeover of mortgage giants Fannie Mae and Freddie Mac, the U.S.
automakers’ appeal for billions in low-cost loans, and this past weekend’s
Wall Street shake-up, the American public is looking toward the fiitiire and
seeking solutions from the two presidential candidates. As of now, neither
Obama nor McCain has released a detailed plan of action, though both agree
that the federal takeover of Fannie and Freddie was necessary and both sup
port the automakers’ request. (No surprise, as Michigan is a swing state.)
But whichever candidate is elected must examine the economy’s current,
continuing descent and address the problems in a way that simultaneously
strengthens the economy and bolsters the people’s confidence.
In an effort to re-energize the housing market, the Bush administration
placed Fannie Mae and Freddie Mac into a conservatorship, with plans to
inject billions (most experts predict about $25 billion) of dollars into the
two companies. But this takeover affects more than the housing market; if
the Treasury did not intervene and Fannie and Freddie had failed, it would
have ruptured America’s financial system and upset the global one. Fannie
Mae, founded in 1938, and Freddie Mac, created in 1970, hold mortgages,
but they also buy mortgages and repackage those loans to be sold, which in
turn gives banks money for new loans and the market liquidity.
If these bonds lost value, the banks that held them would stop approving
all types of loans, leaving consumers without money to borrow for homes,
cars, school and business ventures— essentially bringing the economy to a
halt. By stepping in, the government hopes to provide some stability in the
current housing crisis and keep the parenting companies of the 30-year fixed
mortgage afloat. So far, the plan appears to be going well, as mortgage rates
fell following the Treasury’s announcement. But real indicators of success
are yet to be seen; until investors lend money at good rates and the compa
nies’ stock rises, the efifectiveness of this move remains uncertain.
Also unclear is the future of the American automotive industry. When
Congress voted to decrease fiiel economy standards at least 40% by 2020,
they also agreed to assume the costs involved with transitioning to lower^
efficiency cars. That money, however, has not yet been appropriated and
Photo courtesy smBllbtileclinology.oom
manufacturers continue to see a low number of sales and a high number of
layoffs. Now Detroit auto makers are seeking aid from the federal govern
ment, in the form of $25 billion in low-interest loans. While both McCain
and Obama side with the auto industry, many critics are raising the ques
tion; Where do government bailouts stop?
At Wall Street, apparently. After receiving much criticism for saving the
investment bank Bear Steams by arranging its sale to JP Morgan Chase
earlier this year, the government decided not to intervene on behalf of Leh
man Brothers, a 158-year-old investment firm. Secretary of Treasury Henry
Paulson said the Lehman situation was different from Bear Steams because
there was sufficient time for Lehman to prepare for catastrophic events or
to borrow money from the Fed, leaving the firm’s fate up to Wall Street.
After potential buyer Barclays Bank from Britain dropped out and possible
buyer Bank of America bought established brokerage firm Merrill Lynch
instead, Lehman filed for the biggest bankruptcy in history, leaving over
25,000 employees unemployed. The collapse of Lehman and the buyout of
Merrill Lynch leave only two independent brokerage firms on Wall Street—
Goldman Sachs and Morgan Stanley.
The past year has been economically sobering for America. With large
mortgage companies needing rescuing, the automotive industry idling, and
Wall Street crumbling, tax payers are reminded of the adage “things are
darkest before the dawn,” but very few are optimistic that a new day is in
sight. The incoming president will inherit a slew of economic problems and
with them, intense pressure not only to bring the economy but of this mal
aise but also to restore America’s faith in government. ■