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The United Nations Environment Group has announced that global fish populations are endangered, and by 2050 we may see world fish stocks disappear.

“If the various estimates we have received… come true, then we are in the situation where 40 years down the line we, effectively, are out of fish,” Pavan Sukhdev, head of the UN Environment Program’s green economy initiative, told journalists in New York.

A Green Economy report due later this year by UNEP and outside experts argues this disaster can be avoided if subsidies to fishing fleets are slashed and fish are given protected zones — ultimately resulting in a thriving industry.

Some fishing grounds are already being protected by quota systems, as we discussed in our post last September 6. Of course subsidies should be eliminated,  but how to enforce protected zones? Not all fish are migratory, but those that are will not be helped by a zone where fishing is not allowed.

One policy that may be more enforceable is to restrict the technology allowed on the boats. Drag-nets and the huge fishing ships lower the cost of catching huge harvests, and I would think that inspections of boats would be easier than policing huge fishing grounds. Of course, countries can also limit the size of their fishing fleets by simply resticting the number of boats registered.

This is a giant and tragic example of Tragedy of the Commons, where the lack of effective property rights leads to over exploitation of resources. Without being able to establish property rights for the open ocean, the UN may have trouble seeing positive response to their warnings.

Meanwhile, is there a futures market for tuna?

crowding-out on a global scale

Fears of a hand-cuffed financial industry have driven the value of the Euro to 18 month lows, and markets world-wide are dropping in value because of fears for the European economy.

The president of the European Central Bank, Jean-Claude Trichet, in an interview published Saturday, warned that Europe was facing “severe tensions” and that the markets were fragile.

For Europe’s banks, the problems are twofold. Short-term borrowing costs are rising, which could lead institutions to cut back on new loans and call in old ones, crimping economic growth.

At the same time, seemingly safe institutions in more solid economies like France and Germany hold vast amounts of bonds from their more shaky neighbors, like Spain, Portugal and Greece.

Investors fear that with many governments groaning under the weight of huge deficits, the debt of weaker nations that use the euro currency will have to be restructured, deeply lowering the value of their bonds. That would hit European financial institutions hard, and may ricochet through the global banking system.

At the same time, some European producers are happy with the Euro devaluation, as export revenues have already increased and export demand should increase. World-wide, one fear stems from the big increase in government deficit levels.

The world’s budget deficit as a percentage of gross domestic product now stands at 6 percent, up from just 0.3 percent before the financial crisis. If public debt is not lowered back to precrisis levels, the I.M.F. report said, growth in advanced economies could decline by half a percentage point annually.

If the fears turn-out to be justified, this seems a classic example of crowding out, where government deficit spending raises interest rate to levels that discourage private investment.

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