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Are we living in the middle ages? ... it seems so. The violence in our world is out of control.
The pictures are brutal. But far from our homes. Nevertheless, gradually the global consciousness becomes alive and we change the way we do things. We change the way we think and behave. It has to be. It is not good enough to kill ourselves and our world for a few dollars more.
We can not continue to behave like this with the technology we have. The inequality, between rich and poor, that has bought the technology is not necessary. It is merely accepted. The story of the emperor's new clothes is all too real today. We have bought fine homes, food, clothes, entertainment and holidays, but ignored the death of humanity.
In the background, two celebrations of freedom took place: Independence Day and Bastille Day. Both of these events were born in times of great change in ethics and society. Both were nurtured by the ideals of Natural Law. We too can look to nature for the way to live together. And manage the complexity with good spirit as well as enlightened minds.
The course is simple and we all know it because of the singularly human quality - empathy. We merely have to do the right thing, the right way. Of course the reality is far more complex and the change requires self sacrifice and discipline. But the guiding principle is always the same. We know what and how to change because we are able to empathise; to put ourselves in the shoes of the other person whether soldier, civilian, politician, rich or poor. Start with ourselves and expand our positive role through our communities. And before it is too late our thoughts will make the world we want to live in. While we still have one.
Normally we focus on the US because its economic performance is such a weight on the performance of other countries because of its size and the use of its currency as a tool of trade and central banks' policies. But it is time to think of China first.
Propelled by strong growth in investment and lending China’s National Bureau of Statistics says second quarter GDP is up 11.3% year on year, its quickest pace in more than a decade. The China Government has said it will continue to clamp down on lending and exports. But most of China's new growth is in property development and provincial governments' pet projects. NBS director Zheng Jingping said, "An economic model based on excessive fixed-asset investments and exports is not sustainable. The Government will be on guard for inflationary pressures."
The quarterly growth rate was the highest since 1994, when the economy was a quarter of its current size, fuelling calls for a more flexible Yuan or another interest rate rise to prevent overheating. Spending on factories and property accelerated last month helping Gross Domestic Product grow faster than the 10% median forecast. Fixed-asset investment in China’s towns and cities jumped 31.3% in the first half of this year compared with a year earlier. Industrial production rose 19.5% last month.
But China's policy makers have reoriented their public statements. The buzzwords and thrusts of the latest Chinese National People’s Congress and the concurrent Chinese People’s Political Consultative Conference are: from speed to quality, manufacturing to innovation, growth to sustainability, energy intensity to saving, wealth to distribution, economy to people focussed, lopsided to balanced development, and urbanisation to ‘creating a Socialist New Countryside’.
Sustainability may not be just a buzzword. With energy consumption per unit production 7x that of Japan, 6x that of the US and 3x that of India, rising protectionism and tightly squeezed profit margins, the energy-intensive model of mass production for export is evidently unsustainable to underwrite the well-being of a population a fifth of humankind. Similarly, China increasingly realises her vulnerability to over-reliance on exports due to under-sized internal consumption demand. While investment has risen from 36% to 44.8% of GDP in 5 years, consumption fell from 62% to 50.7% of GDP. This reflects an increasing propensity to save. 57% of the population remains impoverished farmers trying to catchup with the coastal cities. It is time to reverse the trend, to shift the emphasis, ‘to let the cities feed the villages’. The State Council’s press conference on the NPC summarised the concept of ‘Socialist New Countryside’ in a 20-character slogan: Productivity Development; Better Livelihood; Civilised Culture; Orderly Cleanliness; Democratic Governance’. This is to be achieved through lowering the nation’s rate of growth (by up to 2%), resource diversion, discriminatory taxation, and pro-rural administrative policies.
It is easy to under-estimate the immense challenges of implementation. A recent study by a Jilin University Professor and NPC delegate outlined a host of major obstacles, including inadequate physical and social infrastructure, rapidly rising costs of fertilisers and other inputs, and lack of private finance. Not to mention the status quo’s entrenched interests, including local corruption. There is, however, no question of the leadership’s resolve. All agricultural taxes and fees are to be abolished from this year. $ 42 billion are allocated to rural spending, including free nine-year compulsory education by 2007. And there is the amazing track record of Chinese overcoming adversity and doing things their way.
Japanese consumer prices rose in June, underlining confidence that the world's second-largest economy has emerged from a long period of deflation. A separate report showed that retail sales also increased in June. There had been worries that the Bank of Japan's first rate rise in six years would stall the economic recovery.
In the US, the latest housing data, released by the National Association of Realtors, made clear that a significant slowdown is under way. It showed that the sales pace for existing homes fell for a third straight month in June, the ninth monthly decline since hitting a record last June. On a seasonally adjusted annual basis, the rate of existing-home sales dropped to 6.6 million, down from 6.7 million in May and well below the record 7.3 million pace reported last June. The number of existing homes still on the market, meanwhile, grew to a record of 3.725 million units, representing a 6.8-month supply at the June selling pace, up from 6.4 months in May. The shift of the upper hand from seller to buyer is showing up in home prices. Last month, the national median price rose to $231,000, less than 1 percent higher than in June 2005. That was the smallest year-over-year increase in more than 11 years. And builders are losing their grasp on the new-home market, which is why so many of them have responded by being more aggressive in their use of promotions to sell homes. A check by the National Association of Home Builders of 369 builders across the country found that 75 % are currently including add-ons like pools or garages at no additional cost when they sell a home. That compares with 50 percent a year ago. A handful of builders reported offering free vacations. None did last July. Builders are also helping buyers finance their homes. The survey found that 33% of builders are currently absorbing financing points on mortgages, which allows homeowners to pay lower monthly rates. Only 18% reported doing so a year ago.
John Mauldin notes that markets in luxury items are peaking - this is very worrying. Horses, wine and art are all spiking. It is a sure sign of excess and with excess comes foolishness (and not the good kind). The timing of market corrections is easier to guess now - its close. As usual it will be precipitated by sentiment, and we are wary for signs between now and November.
Even here in Ireland, which has continued to grow fast - this year house prices are up 15%, the first rumblings of a slowdown have been heard. Apparently banks have started to repossess homes, though this is not yet media news. And the banks are quietly renting them to previous owners, thus propping up the demand for houses while preventing defaulters from saving in a new more affordable unit.
of China has launched a sustainable fund.
The BOC fund combines quantitative screening with qualitative assessment
on issues such as corporate governance and social responsibility. Wu Jun,
BOC's International Investment Manager, and Head of Sustainable Investment
noted that "the fund emphasizes not only financial performance and earnings
growth, but also sustainability of the business model, corporate governance,
corporate strategy, and attitude toward social responsibility." The fund
benchmarks its performance predominantly to the MSCI China "A" Shares
On the other end of the spectrum, Butz and Pictet criticize more ethically-oriented SRI practitioners for applying a diffusion of social indicators instead of distilling down to the essential indicator - job creation in their opinion. "[W]ithin standard SRI research today . . . the creation or reduction of jobs is rarely taken into account in a direct way, or, where it is, this important signal is buried under a heap of other social indicators," they write. "Such an approach can be rightly criticized for 'fighting the symptoms rather than the cause." This medical metaphor assumes that curing the cause cures the symptoms, but unfortunately, the mere creation of jobs does not solve workforce homogeneity, gender inequality, racial and sexual orientation discrimination, labor rights abuses, or union-busting. In the appendix, Butz and Pictet transparently acknowledge shortcomings of their approach. "We do not pronounce judgment on the quality of jobs created or destroyed," they admit. "We suppose that the jobs created are in accordance with all applicable laws. This assumption is defendable on the hypothesis that a large multinational company--such as represented in the MSCI World--simply cannot afford to consistently violate workers' rights without having to account for such misconduct sooner or later." But it is naïve to assume that the cost of accountability is a sufficient deterrent to profit from violating workers' rights - they've done it before. And corporate social responsibility is all about exceeding legal obligations, not getting around to meeting them eventually.
In the world of social UNresponsibility, the Mafia made € 89 million a day in Italy last year, through protection rackets, bribes and illegal money-lending, according to a new report. The SOS Impresa report, compiled from government figures, showed Italy's four major criminal syndicates collected €36.5million a day from major companies listed on the Milan stock exchange. Revenues for the Mafia, made up of Cosa Nostra in Sicily, the 'Ndrangheta in Calabria, the Camorra in Campania and the Sacra Corona Unita in Puglia, were up 25% in 2005 to € 35 billion on the previous year. The turnover, excluding income from drugs and guns, puts the Mafia on a par with the country's largest firms. It is unlikely that police or law enforcement organisations have such budgets!
The Equator Principles Financial Institutions has announced the launch of the revised Equator Principles, a benchmark for the financial industry to manage environmental and social risk. The revision underscores how far the financial sector has progressed in embedding in the project finance arena a common set of best practices to manage social and environmental risks related to project financing. The revised principles reflect the experience of the 40 financial institutions around the world that currently apply the Principles. The principles also reflect the recent revisions to the International Finance Corporation's Performance Standards, upon which the Equator Principles are in part based. In developing these changes, the EPFIs actively involved clients, civil society groups and official development agencies, all of whom provided constructive and valuable feedback that the EPFIs reviewed and considered in the revision process.
The Equator Principles apply globally and to all sectors and have been revised in the following ways:
Fourteen of the world's largest investment companies have launched a report for the United Nations Environment Program Finance Initiative, a public-private partnership between UNEP and more than 160 banks, insurers and asset managers, entitled, "Show Me the Money". It confirms the growing importance of environmental, social and governance concerns to the global investment industry. "Show Me the Money" is a 47-page summary report synthesizing more than 1,000 pages of research from the mainstream financial analyst community. The report draws on work by a group of leading financial institutions and covers the impact of qualitative and new risk issues on company value. Industries covered include the auto-industry, aerospace and defense, the media, and the food and beverage industries. Highlights from several of the sector reports include:
The "Vital Signs 2006-2007" report presented by the Worldwatch Institute provides a wealth of information and data on global economic development and its implications on energy security, biodiversity, climate change and the environment. The economic trends highlighted in the report show a healthy global economy with the gross world product reaching a record level of nearly $ 60 trillion. In 2005, more steel and aluminium were produced than ever before and vehicle production reached a record 45.6 million units. The number of internet users grew to 1 billion in 2005. These economic growth figures are, on the other hand, accompanied by less positive trends as regards sustainability:
Coincidentally Lester Brown published Rescuing A Planet Under Stress in the Futurist (abstract in Holonics here). What his article makes clear is that China is now the world's leading consumer, is growing faster than an economy of such size has ever done before and is naturally caught in unsustainable patterns as it emulates rich countries, especially US. China needs help to become clean. Perhaps more so than India because its production is dominated by manufacturing, whereas India has a sound services sector.
The Goldman Sachs Group, which announced what many regard as the banking industry's most aggressive environmental policy less than a year ago, has invested more than $1.5 billion in renewable energy and energy efficiency projects, according to a senior company official. And with big plans to become a major liquidity provider in emerging energy markets, reduce its carbon footprint and support a federal emissions cap-and-trade regime, Goldman appears to be just warming up. Wall Street is watching closely just how far Goldman's new Chairman and CEO Lloyd Blankfein will take the world's largest investment bank in an unprecedented green direction. While environmental and free-market advocates are divided whether Goldman should stay the course and whether other investment banks should follow, Goldman's most recent investments are clearly in the black. Internally, Goldman vowed to cut its indirect greenhouse gas emissions by 7 % from its leased and owned offices by 2012, using 2005 as a baseline. To that end, the company is building a global headquarters in Lower Manhattan that is designed to achieve gold Leadership in Energy & Environmental Design certification from the U.S. Green Building Council. Goldman is striving for LEED Gold certification for all of its renovation and construction projects.
Goldman Sachs has also acquired a global license to incorporate UNEP FI Signatory ASSET4’s environmental, social and governance data and framework into their investment research, benchmarking, portfolio monitoring and risk management processes. The ASSET4 IntegratedRating™ framework provides systematic, consistent and comparable data on the extra-financial performance of the worlds leading companies. By monitoring more than 250 economic, environmental, social and governance factors, the ASSET4 system enables users to see beyond the purely financial aspects of companies, thereby benefiting from an integrated perspective of corporate performance. In addition, Goldman Sachs participated in the latest financing round of ASSET4 for a minority interest and will market the ASSET4 system to its global client base.
The recent reconstitution of the KLD Broad Market Social Index resulted
in the deletion of Coca-Cola over environmental, social,
and governance issues - specifically due to concerns about selling caloric
drinks in schools, community water supply depletion (particularly in India),
and labor rights issues at bottling facilities (particularly in Colombia.)
Recognition of Coke's greenwash is long-overdue. The deletion prompted
TIAA-CREF to divest
the 1.2 million Coke shares worth $ 52.4 million from the CREF Social
Choice Account, the largest socially screened retail fund in the US with
almost $ 8 billion in assets and the biggest licensee of the
In China, new regulations are being introduced for VC and buyouts. So it's little wonder that investments in India are running at three to four times the rate of those in China, at least at present. China's State Administration for Industry and Commerce, Ministry of Commerce (MOFCOM), General Administration of Customs and the State Administration of Foreign Exchange have issued their joint opinions for China's latest venture capital regulations. For the bold among you, you can track down the announcement on the MOFCOM website.
The violence in the Middle East has focussed investor attention on Israel, which has significant VC money, including a recent stake by Buffet. But it seems that investors in Israel have been fairly calm and unconcerned, though perhaps this is wishful thinking. Some comments from PE Week readers:
Robert: “I think these events will be little more than a minor disruption to the venture community. Aside from some army reserves being called to active duty, VCs are located primarily in central Israel, and are hardly affected by the war at the borders. Furthermore, the typical strategy for these venture-backed companies is to relocate to the U.S. as soon as possible.”
Adam from Israel: “This war is necessary to protect my country, which includes the protection of many companies supported by U.S. and European investors. Hezbollah today is firing on Haifa, but soon could expand its rocket range to Tel Aviv or other more VC-heavy areas. Not only are our livelihoods at stake, but so are our very lives.”
Mike, an American citizen living in Lebanon “Investment in Lebanon is at a stand-still as a result of Israel's use of collective punishment on the country of Lebanon, which did not have the resources to address Hezbollah during the single year since Syria has withdrawn. The stock market remains closed, and we are now faced with at least two years of investors backing off from real estate, technology, and manufacturing -- if they choose to look at Lebanon at all. By contrast, when the fighting subsides, Israel's economy will have taken a hiatus but be back to 'normal'.”
We noticed an unusual number of announcements concerning GRI VC investments in July:
US venture capital firms disbursed $ 6.73 billion into 619 deals during Q2 2006, according to data released today by Ernst & Young and VentureOne. This is the highest quarterly total since Q1 2001. The NVCA Q2 venture IPO survey declares that 19 venture-backed companies raised $2 billion through IPOs in the second quarter of this year. This is a 90% jump from Q1 and almost twice the number from Q2, 2005, which saw 10 companies go public. The second quarter also saw 86 venture-backed acquisitions with a disclosed value of $3.2 billion.
Venture capital investment structures are fairly standard - there has been little effort to innovate or negotiate by LPs. Perhaps this is starting to change. The GRI Equity structure is not used by many others, although it aligns interests of GPs with LPs and holdings in a clear and cost competitive way. EMPEA published an article last quarter suggesting a simple moderation of fees charged. And recently another innovation has come to market by Stage 1 proposing a dual structure: Stage 1 will raise a small general fund with an enlarged management fee and a standard carried interest. That management fee, will not be charged on committed capital, but only on invested capital. The firm estimates that this change should result in a guarantee that 92.5% of all LP monies will be invested in portfolio companies. The Stage 1 fund does not contain capital for follow-on investments. Instead, Stage 1 will evaluate each of its fund investments, and then use strict metrics for determining which ones deserve continued support. For example, they must be able to secure a “top-tier” VC firm to help lead the next round (i.e. Stage 1 will not lead twice in a row). For a portfolio company that does meet its hurdle, Stage 1 will form a special purpose investment vehicle. Each SPIV will probably be a bit larger than the entire initial fund, and will follow the aforementioned fee and carried interest structure. SPIVs will be structured as a capital call. This STAGE 1 approach seems complicated, though it attempts to achieve some of the alignment that GRI Equity has created with our integral approach. It will be interesting to see what LP reaction is like.
With the NBS report mentioned above, there is speculation that the Chinese central bank will raise lending rates for a second time this year and order banks to rein in credit in the world’s fastest-growing major economy. China may also allow faster currency gains to curb a trade surplus that has flooded the economy with cash and strained relations with the US. After a one-off appreciation of 2.1 %, the Yuan has strengthened a further 1.4 %, but some analysts say it would need to appreciate another 3% for it to curb market growth. An increase in rates would also help moderate growth in prices of commodities and energy. While high commodity prices might be out of line with what they should be, the continuing growth in demand may encourage investment in processing but the natural limits on supply remain. Until consumption patterns change, or China hits a brick wall (which is not likely for some years) this pressure will continue, albeit with price volatility. With its increasing integration into the global economy, a hard landing for China's economy could have severe repercussions on world markets.
The US economy, the world's largest, has slowed in the second quarter of the year, on the back of rising interest rates and soaring energy costs. Gross domestic product grew at an annual rate of 2.5% in the three months to the end of June, compared to a 5.6% annual rate in the previous quarter. Some slowdown had been expected, but its severity comes as a surprise. The US dollar dropped on the news, as analysts questioned their forecasts for annual US economic growth. One of the main factors in the recent slowdown in growth has been a weakening of consumer activity. However, the Federal Reserve still predicts that the US economy will expand by 3.5% this year, compared with a growth rate of 3.2% in 2005.
The word stagflation has been mentioned by several analysts watching the US, however, it is unlikely that the economy will spiral that way. Nevertheless, inflation to continues to be bolstered by high oil prices, and interest rates must follow. Inflation has not been beaten. The Fed has been slowly raising its borrowing costs as the economy has picked up pace, lifting interest rates 17 times in a row to 5.25%, the highest level in more than five years.
The FED might like to pause but the market animal needs another smack on the nose. While the housing market is seeing signs of slowdown as inventories are high and sellers are beginning to offer premiums (like a tennis court for free) and price reductions in the air, the stock market bounced up as players bet that the FED would pause. But the Fed is more likely to make sure that the consuming puppy is really going to behave and extend the "time out" by another quarter % in August, especially since the jump in stock indicies after Bernanke noted the risk of inflation in mid July. Oil prices nearly touched $ 80 and energy consumption spiked in Europe because of the heat wave putting more pressure on inflation. It is appropriate to raise rates again. In fact if current trends continue our expectation of 5.75% by year end might be too modest.
Some of the spike in energy and metals may be from the ballooning of hedge fund capital - energy hedge funds grew 30x between 2000 and last year, and this will add to price volatility.
Our expectation that high energy costs and climate change would drive
through to food inflation is beginning to be realised
as agricultural commodities are starting to follow the trend of metals
and energy. For example, rapeseed oil, a key raw material for the
production of biodiesel is at its highest levels. Food crops have
risen gently, but harvest have been poor and the peak harvest season is
yet to come in the coming couple of months. High temperatures mean vegetables
are maturing faster than farmers can pick and package them. The extreme
heat has struck down crops across Europe, with economies in the east suffering
in particular. In Poland and Hungary some crops are expected to be 40%
below normal yields, the Association of European Fruit and Vegetable Processing
Industries warned. It said the very hot weather was creating a short picking
season that might deplete frozen vegetable supplies.
In summary we expect continued inflation, followed by interest rate increase and contingent price volatility. Good for traders, not good for everyone else.
Trade talks failed because of the power of farmers and big agri/food businesses ... as expected. The loosers are everyone. Regional trade alliances may transpire but these are difficult to manage and easy to corrupt. Emerging economies are the bigger, more immediate loosers as the opportunity to pull themselves out of poverty through trade will continue to by impeded. But rich countries also have given up much. Protection of faltering industries has consistently proved to be costly to income and employment in the short term and to competitiveness in the longer term. There is an immediately recent example: the lifting of textile quotas in Europe last year - the UK benefitted from this because manufacturers started upgrading production and outsourcing basic production a decade ago. In contrast, most of the rest of Europe griped because they were still vested in old technologies and old factories. It seems that the rich do not want to open the game to the poor.
Everyone blamed everyone else, but took little responsibility for compromise. EU blamed the US conditions attached to cutting farming subsidies which were "unacceptable" for developing countries. But the US said it was "fully committed" to the talks and blamed Europe for its lack of ambition over reaching a deal to cut farming tariffs. After assessing the situation, the WTO decided no more talks should be attempted. Negotiators had been hoping for a deal this year before the special authority US President Bush has to negotiate trade deals expires, making it harder for him to win congressional approval for a treaty. WTO head Lamy warned that the richer members must now keep the negotiation process going, saying: "We have missed a very important opportunity to prove that multilateralism works."
A couple of comments which characterise the problems: "Indian farmers can compete with US farmers but not with the US Treasury." And Tate & Lyle, a global sugar conglomerate based in the UK receives 7 x as much public money (~ £ 250 million) as Oxfam, most of which goes to shareholders!
Russia and the United States have failed to agree on terms for Russia joining the WTO. Russian President Vladimir Putin had hoped for a deal that he could announce at the G8 summit. The Russian Trade Minister, German Gref, said that agriculture was the main remaining obstacle to Russia gaining entry to the WTO. Apparently the issue is the way that Russia restricts imports of food on health grounds. American negotiators want to be sure that it is not done arbitrarily and that Russia's procedures are consistent with WTO rules. The US and Russia did make progress on some other contentious issues, including access to Russia's banking and insurance markets and the enforcement of Russian laws against the piracy of music, computer programs and DVDs. A deal may be concluded before year end.
Media, Pennsylvania has become the first "Fair Trade" town in the US. The city's Council passed a resolution that requires that local businesses source a set percentage of its products from certified Fair Trade sources. "It benefits (consumers) by making a different kind of consumer - consumers who are aware that they can do good by what they purchase. They don't just buy something for themselves," said Hal Taussig, a local activist who helped spearhead the city's Fair Trade resolution.
We have had delicious weather in Ireland which has been an overpowering invitation to play outside! With school holidays on it has meant bike rides, kick-abouts and even swimming in the river. How decadent!
On the subject of sports, we hope you will enjoy the two great takes on Zidane's head-butting - Oh Dear ! video and Coupe de Boule song (#1 in the French hit parade!). It was a shame to end the world-cup on such a note (though the melodramatics from all teams was abhorrent).
And then the Tour de France, a great event has been spoiled by drugs. Perhaps not surprising to those in the know, although the Americans have the best reputation for covering it up. Disappointment abounds. Even to the extent that Michael Robertson of Linspire offered Landis $ 100,000 to take a polygraph to prove his innocence to fans!
I've not mentioned Pratchett for a couple of months but will bring you up to speed. Two more Discworld novels have been enjoyed: Thief of Time and Night Watch. They are cleverly interwoven, without apparently being connected - Night Watch begins in the ending scene of Thief of Time, but with a different set of characters! Night Watch is especially pertinent today as it explores the challenges of keeping the peace in a military situation, the difference between police and soldiers, the role of the privileged in catalysing violence and what to do to keep things under control. The geopoliticians could learn alot from him today.
I also detoured into Truckers, Diggers, Wings a trilogy whose story parodies the emergence of natural intelligence in humans - a clever look at ourselves through the eyes of another. And his two sci-fi books, The Dark Side of the Sun and Strata, both brilliantly written, showing his calibre at a master of different writing styles and cleverly paralleling Discworld to those familiar enough with it. They paint futuristic pictures which challenge the assumptions of our intelligence today and help moderate our hubris.
While I'd love to quote extensively from them all, I'll just recommend you read one or all!
Please forward this publication to family and friends, place it on websites,
print it, duplicate it and post it freely. Knowledge is power!
This report has been prepared for information purposes and is not an offer, or an invitation or solicitation to make an offer to buy or sell any securities. This report has not been made with regard to the specific investment objectives, financial situation or the particular needs of any specific persons who may receive this report. It does not purport to be a complete description of the securities, markets or developments or any other material referred to herein. The information on which this report is based, has been obtained from publicly available sources and private sources which may have vested interests in the material referred to herein. Although GRI Equity and the distributors have no specific reasons for believing such information to be false, neither GRI Equity nor the distributors have independently verified such information and no representation or warranty is given that it is up-to-date, accurate and complete. GRI Equity, associates of GRI Equity, the distributors, and/or their affiliates and/or their directors, officers and employees may from time to time have a position in the securities mentioned in this report and may buy or sell securities described or recommended in this report. GRI Equity, associates of GRI Equity, the distributors, and/or their affiliates may provide investment banking services, or other services, for any company and/or affiliates or subsidiaries of such company whose securities are described or recommended in this report. Neither GRI Equity nor the distributors nor any of their affiliates and/or directors, officers and employees shall in any way be responsible or liable for any losses or damages whatsoever which any person may suffer or incur as a result of acting or otherwise relying upon anything stated or inferred in or omitted from this report.