If US banks are coining it in now, what's going to happen when the economy really recovers?

The first results come in.

If you look hard enough, you can just about find evidence of the US economy moving in the right direction.

Figures released yesterday highlighted that US banks re-possessed 17 per cent fewer homes in 2012 than in 2011. Meantime, a report from the US Commerce Department showed that housing stats rose by 12.1 per cent in December year-on-year to hit their highest monthly level since June 2008.

The slow rebound in US house prices provides further evidence of possible green shoots of recovery. The huge tide of negative equity has been a disaster for the US economy. Almost 11m US homes, or about 22 per cent of all residential properties with a mortgage were in negative equity at the end of the third quarter. The recent slight rise in US house prices meant that around 100,000 mortgage customers slipped back into positive equity in the quarter running up to Christmas with scope for a further 1.8m US homeowners estimated to have some equity in their homes during 2012.

From the evidence of the first banks to post annual results as the reporting season kicked off this week, US banks are already coining it in.

The largest US bank, JPMorgan Chase reported its highest ever annual profit after tax, $21.3bn, up 12 per cent for the year.

The country’s fourth-largest lender, Wells Fargo also hit a record high net profit: $18.9bn, up 19 per cent from 2011.

Hot on its heels, the fourth-largest lender, US Bank, posted a record full year profit of $5.6bn, up 16 per cent year-on-year.

Stand by, perhaps in a year or two, for commentators and politicians to express moral indignation at excessive bank profits if and when the US economy really does start to recover.

US unemployment remains stubbornly high at almost 8 per cent, but just a 1 per cent fall will feed through into a further sharp rise in US bank profits. At JPMorgan, 2012 earnings would have been even higher but for a $6bn trading loss at the bank last year.

Chase "punished" CEO Jamie Dimon by slashing his 2012 pay package to a mere $11.5m from $23.1m the previous year. He should however be able to jog along on his reduced pay package. At the last count, he owned bank shares worth $263m.

Sky's the limit. Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

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The wildfire victims of forestry neglect - and the trees that saved them

Events in Portugal show how present mismanagement of the natural world reaches far beyond climate change, while also leaving communities more vulnerable to its effects.

When guesthouse owner Liedewij Schieving first heard about the wildfire in nearby Pedrogado Grande, she wasn’t overly concerned. “We always have fires here,” she explains at her home deep in the central Portugese forest.

It was only later that night, eating outside with her 11 guests, that the fear set in: “The wind was starting to smell and the sunset looked weird and dark.” By early the next morning the vast wall of flames had breached their remote valley. “I’ve never been in a war,” Liedewij says, still shaken, “but it was how I imagine war to sound.”

Soaring to temperatures of over 800 centigrade - high enough to melt windscreens and sink tyres into tarmac - the inferno eventually burned over 30,000 hectares of forest. By the time it was quelled, 64 adults and children had lost their lives, some dying trapped in their cars as they tried to escape down an unsafe road. “The biggest tragedy of human life we have known in years,” is how the country’s Prime Minister responded to the news on 18 June.

Two months later, the Pedrogado fire has proved the precusor to another summer of extreme weather events. Across southern and central Europe recent weeks have seen high winds and low humidity whip up wildfires everywhere from Spain to Serbia. At time of writing, 2,000 people in Portugal are trapped in the town of Mação as flames and smoke block their exit. In France, fires recently forced over 20,000 people from their homes and campervans.

Climate change is an unmistakable culprit. A Carbon Brief analysis of 140 studies from around the world found that 63 per cent of extreme weather events are linked to human-caused warming - making them either more likely or more severe.

Yet as countries assess the damage, evidence of humanity’s wider mismanagement of nature is also becoming harder to ignore. In Portugal, the excessive planting of eucalytpus trees is taking some of the blame for recent events. The species is the timber of choice for the country’s powerful paper industry, covering both industry-owned plantations and hundreds of tiny private smallholdings who sell it on. But it also happens to be highly flammable: think Grenfell cladding but spread over nearly a million hectares of land.

Liedewij’s story is evidence of this. Where dense eucalyptus forest once hid her home in dappled shade, the hillside is now charred and bare. “It was terrible,” she says of the moment she opened the gates for the farm animals before fleeing the valley, “we thought we were leaving them behind to grill”. Except that, as in all good disaster films, Liedewij’s goats didn’t burn - and nor did her picturesque house. Instead, fire-retardant willow trees by a nearby stream held the flames naturally at bay. On returning the next morning, she even found the hens laying eggs.

Liedewij Schieving outside her B&B at Quinta da Fonte - the bare hills behind the house show just how close the fire came.

Seen from above, her remote farmstead is now a tiny island of green amid a sea of black. She still panics at the smell from the woodfired heating, but support has poured in from friends both in Portugal and her native Holland, and she soon plans to fully re-open Quinta da Fonte B&B. Many guesthouses in nearby villages have already got back up and running.

Others among her neighbours, however, are not so lucky. Over 10,000 separate fires have destroyed 141,000 hectares of land in Portugal this year alone, with the annual cost of wildfire losses estimated to reach around €200m. A situation that risks further perpetuating the cycle of poverty and neglect that also played their part in the tragedy.

According to Domingos Patacho from the environmental NGO Quercus, the forest has become more hazardous as many of central Portugal's thousands of smallscale landholders leave their land untended to seek better wages elsewhere. Meanwhile, those who remain are often financially dependent on the income from the eucalyptus. They could choose to plant less flammable and water-hungry species, such as native corks or oaks, Patacho explains, but these can take twice as long to mature and provide a return.

The result is rising tension between the Portugese paper industry and the central government. After the June fire, the parliament pledged to push ahead with plans to limit the monoculture plantations. But the country’s Association of the Paper industry has previously warned that any ban on new plantations could hurt exports and jobs.

The reality is that both sides of the eucalyptus spread - both industry-owned and private - need improved regulation. But in a country only recently released from EU imposed austerity measures, debates over how enforcement could be financed are particularly tense. Not least since many areas do not even have an up to date land register, Patacho expplains.

At ESAC, an agrarian research base in central Portugal, professor Antonio Ferreira believes the time is now ripe for discussion between politicians, citizens and researchers about the future of forest land-use as a whole. The country needs to encourage people “to re-introduce native species, which will diversify the landscape and economic activity in those areas,” he says.

And the impulse is far from limited to Portugal. “We need to look at all the social aspects to get the full picture as well as the scientific side of forest management,” says WWF’s Jabier Ruiz of Europe’s wider wildfire problems. One route out of the woods may be greater EU policy support for those living in marginalised, rural areas, he adds.

What is clear is that as the continent warms, the need to improve the balance between social, environmental and commercial interests becomes ever more crucial. And while politicians debate, work at Liedewij’s home is already underway. Over the next few weeks, a group of her eco-minded friends, builders and topographers will help her re-build and re-landscape her farm. From digging terraces to stop landslides, to preventing the eucalyptus from re-emerging too close to the roads, their aim is to regrow a forest that works for all: a slow-burn project perhaps, but a bright one.

India Bourke is an environment writer and editorial assistant at the New Statesman.