domingo, mayo 01, 2016

VACACIONES MAYO 2016

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VACACIONES MAYO 2016

Jueves 28 de Abril del 2016

Queridos amigos,



Les escribo estas líneas con motivo de mi próximo viaje, el que me tendrá ausente de la oficina y de nuestras lecturas cotidianas, desde el lunes 2 hasta el lunes 23 de Mayo próximo, que me reintegro a mis labores.


Durante estos días no tendré acceso regular al Internet ni a mis correos.
  
  
En los últimos meses la situación económica y financiera internacional se ha seguido deteriorando aun mas, con el consiguiente aumento creciente de la volatilidad de los mercados financieros, según lo ya previsto en mi carta de Octubre pasado, replicada en algunos párrafos líneas más abajo para mayor abundancia, impactando duramente a los países emergentes, las monedas, el petróleo y los precios de los "commodities", el fortalecimiento notable del dólar norteamericano, típico de las épocas de crisis, y una retracción cada vez más marcada del crecimiento del producto mundial, ahora ya reconocido por todos los bancos centrales, lo que nos coloca claramente bajo la sombra del temor de una potencial deflación y de la recesión global, cada vez más inevitable.  
 
En los últimos dos meses el anuncio de una política de aumento de intereses menos agresiva que la anunciada previamente, por parte de la FED, ha debilitado ligera
y temporalmente al dólar, e impactado transitoriamente de manera positiva a los precios de las materias primas y los mercados de acciones.
 
La pregunta es cuanto tiempo puede durar esta situación en una economía global manipulada descaradamente por los bancos centrales y en franco camino de deterioro, con el continuo crecimiento de la desigualdad de los ingresos y una clase media cada vez mas disconforme, como lo reflejan las coyunturas políticas preocupantes de los últimos tiempos, tanto en los Estados Unidos de Norteamérica, como en Europa y el resto del mundo. La enorme volatilidad de los mercados financieros, que pensamos será cada vez mayor, es un síntoma de esta situación insostenible a mediano y largo plazo. 
El artículo de hace unos meses de Doug Nolan, "The Unwind", al que pueden acceder mediante el "link" anterior, describe claramente la situación precaria de la economía global, los mercados financieros, las deudas y el crecimiento económico mundial, por lo que me abstendré de mayores comentarios.  También pueden acceder al  articulo de Doug Nolan, "New World Disorder".  
 
La reciente creciente y notable volatilidad de los mercados financieros, las dudas hamletianas de la Reserva Federal sobre las tasas de interés y la reciente volatilidad de las bolsas, son solo una pequeña muestra de la descomposición de las economías y los mercados globales.

En realidad no podía ser de otra manera, si tenemos en cuenta que no se ha hecho nada en los últimos años para reparar los profundos desequilibrios estructurales en los fundamentos de la economía global, sino que más bien, por el contrario, se ha seguido "maquillando" por parte de los bancos centrales la insostenible situación económica y financiera global, profundizando los desequilibrios y la inestabilidad vía el constante crecimiento de las deudas, aumentando las ineficiencias y dilatando el necesario ajuste. El crecimiento estructural de la economía global es cada vez más frágil, dudoso e insostenible.


Hasta la crisis del 2000 y luego de la del 2008, ahora así llamada la Gran Recesión, la demanda global había sido “subvencionada” por un sistema financiero manipulado e intervenido, creando una demanda y una economía global ficticia, una recuperación así llamada "subprime", liderada por la FED mediante un crecimiento desproporcionado de las deudas, imposible de auto-sustentarse en un crecimiento de la economía real en el largo plazo. 


Deuda, deuda y más deuda, parece ser el mantra de la FED.

Desde entonces, la FED y el resto los bancos centrales de todos los países más importantes del mundo se han negado y se siguen negando a reconocer esta realidad, aceptando el inicio de un ajuste inevitable y estructural, regresando a un nivel real de la economía global de alguna manera manejable. Aún siguen abocados al esfuerzo de una gran represión financiera, manipulando e inflando irresponsablemente los mercados financieros vía una política monetaria de emisiones inorgánicas de papel moneda sin respaldo y muy bajas tasas de interés, o hasta tasas de interés negativas en muchos países del primer mundo. Actualmente se estima que existen aproximadamente 7 trillones de dólares de inversiones en tasas de interés negativas.

Las deudas de consumidores, empresas y gobiernos, eran y son insostenibles.

Por ello creemos que los bancos centrales no aumentarán de "motu propio" las tasas de interés de manera importante a corto plazo, salvo que este aumento provenga final y sorpresivamente de una crisis generada por la desaparición de la confianza de los inversionistas globales en los mercados financieros. Mas bien los bancos centrales seguirán, en la medida de lo necesario, con su política de seguir emitiendo e inyectando moneda sin respaldo a los mercados, bajando las tasas de interés a niveles aun mas negativos e interviniendo los mercados de capitales mediante compras de bonos y de acciones, distorsionando cada vez mas los precios de los activos financieros en todo el mundo.

Inmediatamente sus deudas se volverían obviamente impagables y la crisis que tanto han tratado de evitar reconocer, sobrevendría inevitable.

Solo para mencionar al país con la economía más importante, la deuda de los Estados Unidos de Norteamérica ha crecido por encima de los 18 trillones de dólares, a más del 100% de su PBI. Y si incluimos las deudas contingentes internas, como el Seguro Social y los Fondos de Pensiones, algunos analistas calculan que la deuda norteamericana podría llegar a sumar entre los 80 a 120 trillones de dólares, es decir, entre 5 a 7 veces el producto bruto anual. Y en aumento.

Para un análisis detallado del desarrollo de esta problemática y la verdadera situación actual, ver los artículos del blog, aquí, aquí y aquí.

Esta situación se ha seguido agravando en los últimos años y es insostenible en el mediano y largo plazo.  (ver articulo)

Para evitarlo, es que los bancos centrales han tenido que esforzarse en mantener ficticiamente una apariencia de normalidad en el "statu quo", inyectando cantidades innombrables de papel moneda sin respaldo a los mercados financieros y reducido las tasas de interés a niveles nunca vistos por largo tiempo, desde que la historia económica recuerda. (QE1, QE2, QE3, Q4, Abenomics, China, etc….)

Todo ello nos hace presumir que todo ello se lleva a cabo por el fundamentado temor a perder el control del esquema Ponzi mundial, que es lo que son ahora la economía global y los mercados financieros, y por ende se derrumbe el castillo de naipes enfrentando de golpe un ajuste económico enorme y hasta la posibilidad de una revolución social incontenible, guerras, etc.

El hecho es que el esfuerzo de política monetaria intervencionista llevada a cabo por la mayoría de los bancos centrales del mundo, en los últimos 15 años, más intensa y desproporcionadamente desde los últimos siete años, además, ha producido la transferencia más importante de riqueza que se recuerda en la historia, de manos de los pensionistas y los ahorristas, hacia las clases privilegiadas y los bancos. 

Mas importante todavía, se ha distorsionado y manipulado fundamentalmente las reglas de la economía del libre mercado con consecuencias funestas y aun impredecibles en el mediano y largo plazo para los consumidores e inversionistas del mundo, incrementando la locación  ineficiente de los recursos de inversión, además de multiplicar el costo de la inevitable implosión de los mercados financieros, tanto de las acciones, como de los bonos y otros instrumentos de inversión financiera.

Todo esto para no mencionar a los derivados financieros, estimados por algunos analistas en más de 1 cuatrillón de dólares (1000 trillones de dólares),  que se ciernen como una espada de Damocles, sobre todo el sistema financiero y económico internacional.

El mismo FMI ha advertido hace ya unos meses de la posibilidad que la economía global está entrando a un periodo de "stagnación" y a una probable nueva recesión, con las consecuencias que ello implicaría. (ver articulo) Y recientemente ha vuelto a reducir su estimado de crecimiento para la economía global de 3.6% a 3.2%. No nos extrañaría que estos estimados se sigan reduciendo en el futuro cercano, especialmente si tenemos noticias negativas del desarrollo de la economía China, en la que algunos analistas esta comenzando a prever un "hard landing" y de la enorme deuda interna de la economía China, influenciando negativamente de manera importante  a los mercados financieros globales.

Obviamente estos organismos no pueden decirnos toda la verdad. Ello sería propiciar ellos mismos el adelanto inevitable del descalabro global, el caos y el ajuste sin anestesia, con resultados imprevisibles. 

La pregunta de fondo es ¿hasta cuándo se podrá o podrán mantener esta realidad bizarra?
Y eso nadie lo puede responder con seguridad. La confianza de los inversionistas en los mercados financieros es la verdadera incógnita.

Por ello ahora tenemos que seguir preguntándonos seriamente, ¿Cuál de todos los potenciales "cisnes negros", conocidos o no, que hoy se ciernen sobre la economía global ,y que son muchos, económicos, sociales y geopolíticos, podrían ser el detonante de la nueva catástrofe?

Solo la historia nos responderá a esta crucial pregunta.


Por ahora, podemos especular que las próximas elecciones norteamericanas en Noviembre próximo son y serán un factor de gran importancia para el comportamiento de la FED, manipulando los mercados lo mejor posible, para influenciar de manera  positiva a la administración saliente, o dicho de otra manera, para evitar perjudicarla lo mayor posible, con un ajuste enorme y anticipado de las grandes incoherencias en la que se encuentra la economía norteamericana y la global como consecuencia de dichas intervenciones de los bancos centrales, en especial de la FED. 

Mientras tanto, en medio de este mundo bizarro, tenemos que insistir nuevamente y más que nunca, que la experiencia y la prudencia, el análisis y la inteligencia, la vigilancia y la paciencia, son los socios más importantes en las decisiones de políticas y estrategias de inversión a corto y mediano plazo.

En un cambio importante de ciclos como en el que pensamos que estamos envueltos hoy día, y en el que más allá de lo circunstancial, el pasado y el futuro se bifurcan y se oponen, los riesgos para los inversionistas son profundos. (ver articulo)

Con estas  anotaciones y advertencias que espero les sean de utilidad, me despido de Uds. con un cordial abrazo hasta el regreso a mis actividades, Dios mediante, a inicios de la tercera semana de Mayo próximo, cuando estaré nuevamente a su gentil disposición.

Gonzalo

PD. Para leer los artículos pueden subscribirse directamente entrando al blog:  www.gonzaloraffoinfonews.com


Op-Ed Contributor

A New Dark Age Looms

By WILLIAM B. GAIL

     Credit Oliver Munday    


Boulder, Colo. — IMAGINE a future in which humanity’s accumulated wisdom about Earth — our vast experience with weather trends, fish spawning and migration patterns, plant pollination and much more — turns increasingly obsolete. As each decade passes, knowledge of Earth’s past becomes progressively less effective as a guide to the future. Civilization enters a dark age in its practical understanding of our planet.
 
To comprehend how this could occur, picture yourself in our grandchildren’s time, a century hence. Significant global warming has occurred, as scientists predicted. Nature’s longstanding, repeatable patterns — relied on for millenniums by humanity to plan everything from infrastructure to agriculture — are no longer so reliable. Cycles that have been largely unwavering during modern human history are disrupted by substantial changes in temperature and precipitation.
 
As Earth’s warming stabilizes, new patterns begin to appear. At first, they are confusing and hard to identify. Scientists note similarities to Earth’s emergence from the last ice age. These new patterns need many years — sometimes decades or more — to reveal themselves fully, even when monitored with our sophisticated observing systems. Until then, farmers will struggle to reliably predict new seasonal patterns and regularly plant the wrong crops. Early signs of major drought will go unrecognized, so costly irrigation will be built in the wrong places. Disruptive societal impacts will be widespread.
 
Such a dark age is a growing possibility. In a recent report, the National Academies of Sciences, Engineering and Medicine concluded that human-caused global warming was already altering patterns of some extreme weather events. But the report did not address the broader implication — that disrupting nature’s patterns could extend well beyond extreme weather, with far more pervasive impacts.
 
Our foundation of Earth knowledge, largely derived from historically observed patterns, has been central to society’s progress. Early cultures kept track of nature’s ebb and flow, passing improved knowledge about hunting and agriculture to each new generation. Science has accelerated this learning process through advanced observation methods and pattern discovery techniques. These allow us to anticipate the future with a consistency unimaginable to our ancestors.
 
The list of possible disruptions is long and alarming. We could see changes to the prevalence of crop and human pests, like locust plagues set off by drought conditions; forest fire frequency; the dynamics of the predator-prey food chain; the identification and productivity of reliably arable land, and the predictability of agriculture output.
 
Historians of the next century will grasp the importance of this decline in our ability to predict the future. They may mark the coming decades of this century as the period during which humanity, despite rapid technological and scientific advances, achieved “peak knowledge” about the planet it occupies. They will note that many decades may pass before society again attains the same level.
 
One exception to this pattern-based knowledge is the weather, whose underlying physics governs how the atmosphere moves and adjusts. Because we understand the physics, we can replicate the atmosphere with computer models. Monitoring by weather stations and satellites provides the starting point for the models, which compute a forecast for how the weather will evolve. Today, forecast accuracy based on such models is generally good out to a week, sometimes even two.
 
But farmers need to think a season or more ahead. So do infrastructure planners as they design new energy and water systems. It may be feasible to develop the science and make the observations necessary to forecast weather a month or even a season in advance. We are also coming to understand enough of the physics to make useful global and regional climate projections a decade or more ahead.
 
The intermediate time period is our big challenge. Without substantial scientific breakthroughs, we will remain reliant on pattern-based methods for time periods between a month and a decade. The problem is, as the planet warms, these patterns will become increasingly difficult to discern. This will present a troubling issue for regions of the world subject to El Niño, monsoon cycles and other long-term weather variability. Predicting extreme weather may become even more trying than it is today.
 
The oceans, which play a major role in global weather patterns, will also see substantial changes as global temperatures rise. Ocean currents and circulation patterns evolve on time scales of decades and longer, and fisheries change in response. We lack reliable, physics-based models to tell us how this occurs. Our best knowledge is built on what we have seen in the past, like how fish populations respond to El Niño’s cycle. Climate change will further undermine our already limited ability to make these predictions. Anticipating ocean resources from one year to the next will become harder.

Civilization’s understanding of Earth has expanded enormously in recent decades, making humanity safer and more prosperous. As the patterns that we have come to expect are disrupted by warming temperatures, we will face huge challenges feeding a growing population and prospering within our planet’s finite resources. New developments in science offer our best hope for keeping up, but this is by no means guaranteed.
 
Our grandchildren could grow up knowing less about the planet than we do today. This is not a legacy we want to leave them. Yet we are on the verge of ensuring this happens.
 
 


What is The COMEX Futures and Options Market Really all About?

By: Julian D. W. Phillips


Let's take a deep look into COMEX in this article that describes COMEX today.

All of us follow COMEX in New York and assess the 'net speculative long position' there, so as to see the actual weight of opinion on the gold price. It gives us a clear market opinion, after all.

But many of you out there may believe that COMEX is a very large factor in the gold price.

Should it be?

It would be easy of us or any other commentator to give their opinion on the matter, but would that be enough to be absolutely right? So as to not give an opinion, we felt it important to go direct to COMEX to get the proper story. We spoke to the Director of Metals Products in the COMEX Marketing Dept. This is what COMEX says;

What you may have thought about COMEX

It may seem reasonable to you to assume that the 'net' position on COMEX would be covered by COMEX actually ensuring that this amount of gold or silver is held in one of their four COMEX approved depositories that are all located in New York city. After all, delivery of the gold and silver is effected via electronic warrant.

This would reassure us that COMEX dealings did affect the gold or silver price, would it not?

After all, supposing someone went short and could not deliver, who would supply the metals?

The implications are that COMEX is constantly adjusting their gold & silver holdings to make sure that no-one would be left without the metal they bought there. Not so!

What really happens?

  1. Does COMEX hold gold or silver to cover the net position to ensure market players will get their metal?
    - COMEX does not ensure the net long positions are covered by gold or silver. But, COMEX does perform oversight and regulatory due diligence, to ensure that no adverse events disrupt the marketplace to ensure that all market participants meet their contractual obligations. Yes, holders of COMEX approved depository electronic warrants can withdraw gold and silver from the depositories.
  2. So where do the sellers of gold or silver come from?
    - The Exchange takes all short notices tendered and matches them to the appropriate long positions per an Exchange system algorithm. COMEX DOES NOT supply the gold. The Seller supplies the gold as part of the contract rules. The deliverable gold resides in four (4) COMEX approved depositories that are all located in New York City and the delivery of the gold is effected via electronic warrant. Find our warehouse stocks on a daily basis on our website: http://www.cmegroup.com/trading/energy/nymex-daily-reports.html
  3. So if a seller doesn't have the gold to supply to the buyer, what happens?
    - COMEX positions in spot (current) month Gold are settled by trading out (rolling) of the position or engaging in the Exchange delivery process. When someone wants to take delivery, they will establish a Long (buy) futures position and wait until a Short (seller) tenders a notice to delivery.
  4. Where does the gold come from, that's held in approved depositories?
    - Should you hold to delivery, you will get your gold! We match buyer and seller....one cannot exist without the other. The majority of positions are settled via trading as opposed to delivery. I cannot comment on where participants buy physical gold.
  5. So how is physical delivery made?
    - The gold contract is physically settled, meaning if you stay to delivery you must deliver gold or you receive gold. If you trade out of your position or roll into other month you are paid or must pay the difference. You must know that less than 1% of the trades actually go to delivery.
  6. What if a seller [Short] does not have the gold to deliver [naked short]?
    - If a short does not have Gold to deliver he must liquidate his position by the last trading day. A short which goes to delivery must have the Gold in an approved depository. This is represented by the holding of electronic depository warrants.
  7. What percentage of sellers are 'naked shorts'
    Gold Bars
    - Don't know what percentage of shorts do not have physical gold and am not aware that any such statistics are kept. I imagine you could get some idea by looking at open interest and comparing that to registered stocks [gold] in the depositories. [Go to the above website and check the totals against the Commitment of Traders report on Fridays and look at "Open Interst" to get that number.]
  8. Does the COMEX gold market directly affect the gold price?
    - Our markets are used primarily for price risk management or financial reasons.....although we can be a source of physical metal we are not used for that reason. The Exchange does not set the price - the market does. The gold price is created by the buyers and sellers.
The exchange in no way determines the price....we only report it.

Conclusion on COMEX

The long and short of it is that COMEX is simply a 'cash' market that does not deal in gold or silver or other items at all. They simply provide a' cash' market where risks are laid off. Yes, physical dealers in gold and silver may well use the market to 'hedge' opposing real physical positions so that they don't face a price risk and yes, traders [or gamblers] use the market to take leveraged, speculative positions that are in no way backed by the physical possession of the metals.

To see how a true "Hedger" uses COMEX see the experience below of one trader protecting himself and profiting by the sound use of COMEX


How a true Hedger acts

Many investors are puzzled by the importance of the COMEX Options & Futures markets on the price of gold.

Take a look at the Diagram here and you see that 86% of trading in gold Futures and Options takes place in London and New York.

Bullion Big Shot


Many may well believe that this translates into 86% of trading in gold [physical gold] takes place in these two centers. But this is not correct. The best way to illustrate this is to give you an example of a company that manufactures gold jewelry, as its main business.

This company needs to take delivery of a tonne of gold for the manufacture of jewelry between September and the November and then deliver it to retail jewelers. Its business is manufacturing only, but it finds itself at the mercy of a constantly moving gold price. These moves can be large enough to destroy profit margins.

The company cannot afford to suffer the risks on the gold price.

It is at this point that they need to turn to the COMEX Futures & Options to lose the risk of the gold price.

The head of the jewelry manufacturing company decides on when they enter the contract to buy the needed 1 tonne of physical gold. This may be at a time well ahead of September, the delivery date.

He may believe that the price he can buy for is the lowest price he will see before September. So he goes 'long' of one tonne of physical gold just as he needs to be, so he can take delivery in September to get on with the business he is in. He does this by buying it on a bullion market, or from a refinery, or a bullion dealer.

But can he afford to take such a risk with such a changing price in gold? The price may drop before then and he is left with a cost that may prove too much for his business.

So he 'hedges' by selling a tonne of 'paper' gold on the Futures market. Now he hasn't 'zero' positions, but one physical long and one short hedge position, but zero risk, as any losses he makes on one position will be covered by profits on the other position.

Now the price drops horribly. He then believes it has gone far too low, so he buys another tonne of paper gold on the Futures market and makes a profit [technical] from his short position. Now he is left with his original physical long physical position, a 'hedged' short position and a new long position. The effect of his profits on his short position has left him, in effect, with a much lower price on his physical long position.

But he has a risk position, nevertheless, as the net position is; two long and one short. But netting out these is what he started with. So now the manufacturer still wants to cover his risk, although his net price is lower than the price he originally paid.

He is willing to open another short position to remove all risks if the price rises again. The price then rises again so he does open a new short position. Now he has four positions, three of which are in the Futures market. Each time he makes a 'profit' on matching positions, in effect he lowers his entry price.

He is not speculating, in the modern sense of the word, as the only risk he really takes is on the original physical position.

It is not uncommon for such a hedger to have 50 plus positions against the original exposure. He doesn't need a large change in price to continue increasing his positions. The reason it is not so speculative is that his original position needed hedging and subsequent actions are only undertaken when a profit is sure.

A speculator takes a view on the price itself with no underlying motive except price direction. He usually exposes himself to high risk that remains uncovered. Frequently, such traders take losses. We questioned one trading house, who informed us that even amongst professional speculators the success rate was only 52% at best amongst amateurs.

This example helps one to understand that COMEX is not about gold supply and demand, simply about price. It is a money market separate from the gold market or the pork belly market.
It serves a vital function, but should not lead the gold price but follow it.

Now look at the diagram we featured here once more.

Bullion Big Shot


What Will the Bank of Japan Think of Next?

BOJ Chief Kuroda all but promised more monetary easing, but what buttons will he push?

By Alex Frangos


For the Bank of Japan, it is no longer if, but how.

Bank of Japan Governor Haruhiko Kuroda all but promised more easing in an interview with The Wall Street Journal Monday, saying, “without hesitation we would adopt additional monetary easing” if deemed necessary.

He most likely deems it very necessary, for two reasons. The first is the yen’s remarkable strengthening in recent months, which has put downward pressure on prices and thrown a major obstacle in front of the BOJ’s 2% inflation target.



The second is the BOJ’s credibility. It is at stake after the central bank’s last surprise move—implementing negative interest rates in January—seemed to backfire, causing the yen to strengthen further. Time may yet prove negative rates effective. But for now, negativity in rates has simply created negativity about central banks in general.

When the BOJ next meets April 28, it will be looking to prove it can still move markets in the right direction. So expect something unexpected—like massive equity purchases. The BOJ already scoops up ¥3 trillion ($27.57 billion) in ETFs each year as part of its broader ¥80 trillion program. HSBC HSBC 2.45 % ’s Izumi Devalier figures that could jump to ¥10 trillion.

The BOJ could also take a cue from the European Central Bank and venture further into corporate bonds.

That doesn’t mean investors should rule out another interest-rate cut. Mr. Kuroda may prefer to wait and see how the first cut plays out rather than double down so quickly, but his penchant for surprise shouldn’t be underestimated. And the initial move into negative rates left room to be much bolder.

One thing Mr. Kuroda seems to have ruled out for now: so-called helicopter money, or direct government debt monetization. Of course Mr. Kuroda declared himself against negative rates, weeks before announcing them.

Alas, perhaps the biggest move to restore confidence is out of the BOJ’s hands: canceling an increase in the value-added tax set to take effect in April 2017. That’s up to Prime Minister Shinzo Abe.

There are inklings the prime minister may acquiesce. But unless the tax is shelved, any further BOJ easing may face another weak reception.


Breaking Free from Fossil Fuels

Payal Parekh

fossil fuel pollution

BERN – There has never been a better time to break free from fossil fuels. Record-breaking global temperatures, plummeting fossil-fuel prices, historic investments in renewable energy, and global pressure to honor climate pledges are all coming together to create the ideal setting for this world-changing shift.
 
The shift could not be more urgent. The United Nations climate agreement forged in Paris last December reconfirmed the level of 2°C above pre-industrial levels as a hard upper limit for global warming, beyond which the consequences for the planet become catastrophic. But it also included commitments to “pursue efforts” to limit warming to 1.5°C. Judging by the latest data published by NASA, achieving that lower limit should be viewed as an imperative.
 
The new data confirm that 2015 was the hottest year on record, and show that the global run of record-breaking temperatures continued through the first two months of this year. According to NASA, global temperatures in February were 1.35°C above average, based on a 1951-1980 baseline.
 
Fortunately, the privileged position of fossil fuels already seems to be weakening. In fact, according to the International Energy Agency (IEA), global greenhouse-gas emissions and economic growth have already decoupled, with global energy-related CO2 (the largest source of human greenhouse-gas emissions) having remained at the same level for the second year in a row. This means that fossil fuels are no longer the lifeblood of our economy.
 
It seems that the precipitous decline in oil prices – by two-thirds over the last 18 months – has not, as many feared, encouraged increased consumption. What it has done is deal a major blow to the profits of fossil-fuel giants like Shell, BP, and Statoil.
 
Coal is not faring any better. Following China’s announced moratorium on new coal-fired power plants at the end of last year, Peabody, the world’s largest coal company, recently filed for bankruptcy protection in the US, after it could no longer make its debt payments, partly because of waning demand for coal.
 
Meanwhile, renewable energy sources are receiving record amounts of investment – some $329.3 billion last year, according to research from Bloomberg New Energy Finance. As a result, a cleaner, fairer, and more sustainable future, powered entirely by renewables, is starting to become a real option.
 
Yet there is still a long way to go. Most governments are still clinging, to varying degrees, to destructive fossil fuels, with their volatile prices and devastating environmental impact, even as this dependence destabilizes their economies.
 
Those committed to addressing climate change – from international organizations to local communities to individual citizens – must urgently build on the momentum acquired over the last year, by maintaining strong pressure on governments and companies to pursue the policies and investments needed to complete the break from fossil fuels. Just as a warming planet puts us all at risk, scaling up action early benefits everyone. And it is up to everyone to hold leaders accountable to their promises, and to science.
 
Global movements such as Break Free have been exemplary in this regard. By backing campaigns and mass actions aimed at stopping the world’s most dangerous fossil-fuel projects – from coal plants in Turkey and the Philippines, to mines in Germany and Australia, to fracking in Brazil, and oil wells in Nigeria – Break Free hopes to eliminate the power and pollution of the fossil-fuel industry, and propel the world toward a sustainable future.
 
Recognizing the scale and urgency of the challenge ahead, Break Free is prepared to intensify its peaceful resistance against new and existing fossil-fuel projects. The key will be the strength and bravery of communities demanding that we keep fossil fuels in the ground and instead build a healthier and more just world, in which everyone has access to sustainable energy.
 
The world is closing in on a historic shift in our energy system. To accelerate progress, we must confront those who are profiting from climate change and defend the interests of ordinary people. Next month’s mobilizations against fossil-fuel projects are an important step in the right direction.
 
The struggle finally to break free from fossil fuels is a global one. Nobody can afford to ignore it.