JPMorgan Chase

Lai See

PUBLISHED : Thursday, 14 June, 2012, 12:00am
UPDATED : Thursday, 14 June, 2012, 12:00am


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Whiff of double standards in government's take on air quality

We hear that following the row over higher electricity tariffs earlier this year, CLP has put more or less on 'permanent hold' the work on converting its Castle Peak 'A' power plant from coal-fired to the cleaner gas-fired boilers. It will now continue to run on coal with just one experimental agglomerator, which removes particle matter, but no scrubbers, which take out sulphur.

The government is pressing the power companies to meet emission standards but it would appear that it only wants them to 'meet' these standards rather than to better them by a wide margin. That is, the Environment Bureau doesn't want them to improve their emissions too much, because the resulting capital expenditure would result in a rise in tariffs.

The scheme of control, which is negotiated with the government, allows companies an agreed rate of return from its depreciated net assets. At the same time, the government urges the power companies to reduce emissions, but it doesn't have the guts to tell the public that this will cost more. Instead, it publicly blames the power companies when they try to raise tariffs.

CLP had wanted to raise tariffs by 9.2 per cent but after the government-inspired row, ended up with a 4.9 per cent increase. The direct effect of this is lower air quality in an arrangement agreed by the bureau.

At the same time, CLP has been forced by the Hong Kong government to buy its gas from the mainland at prices that will have to be negotiated with supplier CNOOC. But since CLP has been cut off from global markets, it's not hard to see who will have the advantage in those discussions.

The Environment Bureau, led by Edward Yau Tang-wah, plays a highly duplicitous role in the politics of Hong Kong air quality. On the one hand it claims that it can't do much about Hong Kong's dirty air and says much of the pollution comes from the Pearl River Delta; on the other it ignores effective measures that could be taken to get old buses and trucks off the road.

When CLP wants to convert to environmentally cleaner gas, the government and the bureau show they have no stomach for a fight with the public and agree to lower standards.

Gag reflex to Shell's Arctic campaign

Someone has picked up on Shell's Lets Go Arctic campaign to drill for oil and gas in the region. They have set up a fake Shell website and asked for spoof Shell advertisements in support of the campaign. A few examples: a pretty white fox prances over the Arctic landscape with the caption: 'You can't run your SUV on cute'. There's a picture of the sunken Titanic next to an iceberg with the caption: 'Never again'. There's a shot of a polar bear swimming in pristine Arctic waters, and the caption reads: 'I'm sure I can live in a perfectly nice zoo somewhere'. For more, go to:

Shell's campaign has been driven by the view that the Arctic holds around 30 per cent of the world's undiscovered natural gas and 13 per cent of its yet-to-find oil. 'This amounts to around 400 billion barrels of oil equivalent, 10 times the total oil and gas produced to date in the North Sea,' Shell says.

Fine drops nothing to whine about

The one positive thing that can be said for our uncertain economic times is that the price of drowning our sorrows has declined.

By that we mean that the Liv-ex Fine Wine 100 Index has declined 2.18 per cent since the beginning of the year and 22.5 per cent over the last 12 months, but is up 19.6 per cent over the past five years.

The Liv-ex Fine Wine 50 Index, which tracks Bordeaux first growths, has done similarly over the last 12 months but is up 43.2 per cent over the past five years. This is presumably on account of our motherland's recently discovered affinity for all things Bordeaux.

Schwarzman misses mark

Good to see Blackstone CEO Stephen Schwarzman stepping up to the plate to defend JPMorgan's Jamie Dimon over his firm's recent US$2 billion snafu. The loss has triggered at least five federal probes and two planned Capitol Hill hearings with Dimon. It has also renewed the debate on whether the curbs on banks' proprietary trading have been tightened sufficiently.

However, Schwarzman appears to think everyone is making too much fuss over the JPMorgan loss. 'Occasional losses are inevitable,' said he. 'Publicly excoriating JPMorgan serves no purpose except to reduce people's confidence in the financial system.'

But Lai See's view is that recent experience suggests that Schwarzman's comments are wide of the mark, and the confidence people have in the financial system is misplaced.