A few minutes ago, the latest figures on economic growth were released from the office for national statistics. Exactly on cue from my earlier predictions, the slide has begun. In the last three months of 2010 the economy contracted -0.5%. If this repeats itself in the current quarter we are back in an official recession (defined by two quarters of negative growth). The -0.5% quarter figure works out at roughly 2% over the course of the year. The petering off of the soaring oil price was last week a signal that we have again breached supply capacity limits. We have hit the next bump on the plateau of oil production. Expect the economy to undergo a strong recession, which if we recover from will resume itself once commodity prices soar again. Each time this cycle repeats the price threshold for collapse will become lower, as demand rises and supply contracts.
The BBC reports that the -0.5% figure was a shock. It certainly was to all the mainstream pundits and politicians who are clueless when it comes to the limits to growth. The worry is now that they have exhausted the monetary capacity in the economy - interest rates are still very low and inflation is high. The government will not be able to solve its deficit problems simply by cutting if this results in economic contraction, or if the economy contracts irrespective of the austerity, because tax receipts fall off. There is very little the government can now do to protect the economy from the inevitable downturn, and the fools in the city should get away from their computers are start learning about the real world. No matter how much money and entrepreneurship you can generate, these only facilitate resource extraction, but the evidence suggests that resource extraction is now being limited by oil supply constraints, which feed through to other commodities, such as food which is grown using oil, and metals which are extracted and transported using oil. I would suggest that the sudden downturn in the economy has been sparked by the sudden rise in inflation, which has reduced the purchasing power of money, and thus constrained unit consumption. Economic forecasts have been partly based on consumer spending data, but this measures only how much money is spent, not the purchasing power of that money.
I will accelerate my work on the e-book entitled "The Real Crisis" which seeks to make sense of the economic headlines of the last three years, as it seems that if I do not, then people will yet again be left to the unpredictable and foolish whims of the media barons in their understanding of the economy. Yet again, the money masters will fail to see that growth has nothing to do with pieces of paper, but everything to do with the ability to produce things that give them their value. That we can no longer do at an advancing rate. Expect the Labour party to argue for more Keynesian style investment to boost growth by stimulating the much touted "multiplier" effect, where increasing production in one sector of the economy will lead to further investment in others. This only works where firms and individuals are confident about the future performance of their investments, and at the moment they have absolutely no reason to be. What happened to Iceland in 2008, and Japan through the 90s is about to happen to the world. Expect the Coalition to cluelessly plough ahead with their austerity regime - either understanding nothing about why the economy won't bark to the same old tricks - or understanding something but not letting on for fear of damaging confidence in the markets. No politician is going to admit to the end of growth; they would crash the stock markets overnight, but to be honest, that is probably on the way irrespective of what anybody says.
It really doesn't matter if you disagree with my pessimism. I have been right so far on the economy. On oil, on gold, on pretty much everything. So quite frankly, if you disagree, go take a hike. I hope I am wrong. I hope! But to be quite honest, I'm rather looking forward to seeing the looks on the arrogant faces of Osborne and co as their house of cards tumbles into quagmire.
Tuesday, 25 January 2011
Monday, 24 January 2011
Go make your cuts and see if I care!
The government should protect us from each other, foster peace within society, and ensure that everybody has food to eat, that they are healthy and educated, and that they have a bed to sleep in at night and a roof over their head. Other than that, fiscal profligacy can simply no longer be justified. As long as the government provides our basic entitlements, there are few who can complain. We have a stack of crises, the ticking time bomb of debt and the lack of growth that conspire to bring us down. It is time to grin and bear it. The economy is a zero sum game, based on the exploitation of a closed ecological system- the earth. Indistinguishable politicians of left and right alike have found themselves engaged in a battle of top trumps, each trying to boast the best policies for "boosting demand" and "increasing consumption". But what is the social merit in making an already profoundly rich country more greedy than it already is. Increasing GDP is paramount to speeding up our unsustainable consumerist binge that comes at the expense of the type of investment we need to develop a steady state society. The quicker we grow our economy, the quicker the window of hope for a new world of green enterprise and sustainable industry closes. The cuts will help send a shock-wave to consumers that enough is enough. It is time for our economy to entire a state of hibernation, so as to let its immune system recover from decades of "product drugging".
I am probably going to be alive for another 50 years or so, and as such, I am concerned about what those years hold for our way of life. The government is increasing worried about blackouts this decade. We must replace 90% of our electricity generating infrastructure by 2030, and unreliable, intermittent renewable such as wind and solar cannot safely provide more than 10-20% of this. The amount of electricity produced needs to be kept within a small margin of the design capacity of the grid, otherwise the grid either overloads or collapses, resulting in blackouts. Even if we manage to bring a new generation of nuclear plants on stream, and replace our old coal and gas fired power plants as they are due for decommissioning, we face an enormous challenge. It is increasingly difficult to increase the supply of these fuels to meet demand, and the price escalator is already sinking in, exacerbating itself every-time the economy undergoes a growth spurt. And if we do manage to keep the lights on, we will miss the crucial threshold for keeping greenhouse gas emissions within 450 parts per million so as to prevent runaway, uncontrollable global warming.
I am prepared to accept the hard choice between our way of life, and our life itself, at least while we undergo a transition to some kind of more sustainable society. Is the government ready to make these difficult choices to? It seems so. They just aren't telling you why they are making the cuts.
I am probably going to be alive for another 50 years or so, and as such, I am concerned about what those years hold for our way of life. The government is increasing worried about blackouts this decade. We must replace 90% of our electricity generating infrastructure by 2030, and unreliable, intermittent renewable such as wind and solar cannot safely provide more than 10-20% of this. The amount of electricity produced needs to be kept within a small margin of the design capacity of the grid, otherwise the grid either overloads or collapses, resulting in blackouts. Even if we manage to bring a new generation of nuclear plants on stream, and replace our old coal and gas fired power plants as they are due for decommissioning, we face an enormous challenge. It is increasingly difficult to increase the supply of these fuels to meet demand, and the price escalator is already sinking in, exacerbating itself every-time the economy undergoes a growth spurt. And if we do manage to keep the lights on, we will miss the crucial threshold for keeping greenhouse gas emissions within 450 parts per million so as to prevent runaway, uncontrollable global warming.
I am prepared to accept the hard choice between our way of life, and our life itself, at least while we undergo a transition to some kind of more sustainable society. Is the government ready to make these difficult choices to? It seems so. They just aren't telling you why they are making the cuts.
Friday, 21 January 2011
Teetering on the brink?
Today I lost the last shred of confidence I had in the world economy. It started at about 1 o'clock in the afternoon, after reading Lisa O'Carrol's blog on the Guardian. She warned that unless Ireland experiences strong economic growth in 2011 then the shit will hit the fan. She also pointed out that she knew of no optimistic forecast for GDP growth in Ireland this year. Me neither.
This problem is not just repeated across on the continent with the PIGS (Portugal, Italy, Greece, and Spain) but the UK's own debt problems are spiralling out of control. According to data from the Economist, the UK's public sector deficit (the amount it borrows relative to the size of the economy) has risen from 10.1% to 13.5% since the coaltion government took office. The bond yields (the interest rate paid on new debts) has risen to a point in Greece where they are higher than when the Papandreous government when cap in hand to the IMF last year. But the government's deficit is just the tip of the iceberg. Every year, private sector corporations and individuals in the western world extent their leveraged lifestyle by securing debt on debt. The wild consumerist ponzi scheme of the 90s and 00s is coming to a brisk halt. The BBC reports today that mortgage lending fell 6% in december. The UK is paralysed by low growth and high inflation, leaving the Bank of England to choose between raising interest rates to tackle inflation, which would slow the economy and worsen the public sector debt problem, or leaving interest rates low, but further allowing inflationary pressures to force people into even more debt to get by. Commidty prices have soared in the last 3 months. Oil is up nearly 25%, many metals and foods have performed equally boyantly in the face of a burgeoning Chinese economy. Easyjets shares were down 16% yesterday, a sign of the fact that you cannot go on running budget airlines in a world of finite oil.
The flurry of news hype about "shale gas" is a ploy to alleviate fears of a major energy crunch. The energy guru's are pulling every rabbit out of every hat in an attempt to distract us from the facts. Even if shale gas will keep our homes warm in the decades to come, it will come at a significant price. The money need to make the neccecssary investments in shale gas infrastructure would be far better spent on secure renewable energy supplies. A new film "Gaslands" highlights the some of the side affects of shale gas extraction. Shale gas is extracted by conducting underground explosions in the shale beds, and pumping in chemicals (many of which are derived from oil, production of which has been flat for 6 years) to force the natural gas out of the rocks and up to the surface. This process invariably damages underground geological formations (you are setting off explosions), and in some cases the gas gets released into underground freshwater stores. Drink gas polluted water and you get very ill indeed.
A few weeks ago, I became concerned that rising oil prices and food shortages would manifest themselves with empty shelves in the near future. This is happening quicker than I could have ever imagined. I decided to select 50 food items from the Tesco UK website, and set off to see how many of these were in stock. How many? 44. So 12% were out of stock. Supermarket staff seem to have been pulling items to the front of shelves to give the impression that they are well stocked, but this is a gimmick. The shelves are far less densley stocked than in the past. This is partly due to market pressures. Supermarkets do not want to overstock. There is strong competition, and more people are ordering from home, but even so, when you find that 12% of the items on your shopping list are not avaiable, you should be concerned. Supplies of food are not low enough yet to fundamentally change the impression you get when you go shopping, yet slowly but surely we are going to see more and more of those empty shelves. It will probably take closer to 25% of shelves being empty before people take notice. The collpase is coming. Buy food. Buy oil. Sell stocks and shares and money.
This problem is not just repeated across on the continent with the PIGS (Portugal, Italy, Greece, and Spain) but the UK's own debt problems are spiralling out of control. According to data from the Economist, the UK's public sector deficit (the amount it borrows relative to the size of the economy) has risen from 10.1% to 13.5% since the coaltion government took office. The bond yields (the interest rate paid on new debts) has risen to a point in Greece where they are higher than when the Papandreous government when cap in hand to the IMF last year. But the government's deficit is just the tip of the iceberg. Every year, private sector corporations and individuals in the western world extent their leveraged lifestyle by securing debt on debt. The wild consumerist ponzi scheme of the 90s and 00s is coming to a brisk halt. The BBC reports today that mortgage lending fell 6% in december. The UK is paralysed by low growth and high inflation, leaving the Bank of England to choose between raising interest rates to tackle inflation, which would slow the economy and worsen the public sector debt problem, or leaving interest rates low, but further allowing inflationary pressures to force people into even more debt to get by. Commidty prices have soared in the last 3 months. Oil is up nearly 25%, many metals and foods have performed equally boyantly in the face of a burgeoning Chinese economy. Easyjets shares were down 16% yesterday, a sign of the fact that you cannot go on running budget airlines in a world of finite oil.
The flurry of news hype about "shale gas" is a ploy to alleviate fears of a major energy crunch. The energy guru's are pulling every rabbit out of every hat in an attempt to distract us from the facts. Even if shale gas will keep our homes warm in the decades to come, it will come at a significant price. The money need to make the neccecssary investments in shale gas infrastructure would be far better spent on secure renewable energy supplies. A new film "Gaslands" highlights the some of the side affects of shale gas extraction. Shale gas is extracted by conducting underground explosions in the shale beds, and pumping in chemicals (many of which are derived from oil, production of which has been flat for 6 years) to force the natural gas out of the rocks and up to the surface. This process invariably damages underground geological formations (you are setting off explosions), and in some cases the gas gets released into underground freshwater stores. Drink gas polluted water and you get very ill indeed.
A few weeks ago, I became concerned that rising oil prices and food shortages would manifest themselves with empty shelves in the near future. This is happening quicker than I could have ever imagined. I decided to select 50 food items from the Tesco UK website, and set off to see how many of these were in stock. How many? 44. So 12% were out of stock. Supermarket staff seem to have been pulling items to the front of shelves to give the impression that they are well stocked, but this is a gimmick. The shelves are far less densley stocked than in the past. This is partly due to market pressures. Supermarkets do not want to overstock. There is strong competition, and more people are ordering from home, but even so, when you find that 12% of the items on your shopping list are not avaiable, you should be concerned. Supplies of food are not low enough yet to fundamentally change the impression you get when you go shopping, yet slowly but surely we are going to see more and more of those empty shelves. It will probably take closer to 25% of shelves being empty before people take notice. The collpase is coming. Buy food. Buy oil. Sell stocks and shares and money.
Tuesday, 11 January 2011
Australias floods - climate change in action?
I'll keep this one short because I don't have much to say, but the Australian floods have really been getting on mind mind. Especially as none of the news coverage has even mentioned "global warming" or "climate change" so far.
What I fail to understand about Australia is that for 30 years, the Green movement told the world that rising seas levels had a "hit list" of cities. That's 30 years that these idiots have taken to still fail to believe in something that is actually happening right now in front of their face- DUH!! Surprise surprise the area underwater now in Australia was predicted as a danger zone for freak floods caused by climate change. Yet even though Australia is clearly feeling the hit of the warmer world, it's people and it's government still act as if climate change isn't a problem. Only Australia and the US failed to sign the Kyoto Protocol to cut carbon emissions back in 1997. Now you could say they are paying the price. As of March 2010 only 44% of Australian's believe in man made climate change. This particular kind of foolishness is like a 100 a day smoker with lung cancer not believing that their illness was caused by their habit. Sometimes you just have to accept that after doing something which is in the short term enjoyable, you may face undesired long term consequences. It is no good for the Australians' to simply deny the root cause of the ever more frequent freak weather events that they are experiencing. This particular kind of intellectual primacy is only going to f**k them up even more in years to come. It's not that I hold a particular grudge against Australians- in fact I feel sorry for the 44% of the who do accept reality, but I just refuse to feel sorry for the 56% of them who complain about a crisis that they are largely responsible for. At 17.9 tonnes of CO2 per capita, Australia is one of the worst global warming culprits in the the world. Only a few island states that are heavily dependent on long distance imports (like Trinidad and Tobago), oil rich middle eastern lands (like Qatar that comes in at number one), and the odd tax-haven of the super rich (like Luxembourg) beat the Aussies and the Yanks at the race to scorch the earth.
It's about time the 56% of Australian's who don't believe in climate change grew up and accept that they have misbehaved and are now paying the price. Things are only going to get a lot worse for them if they don't.
What I fail to understand about Australia is that for 30 years, the Green movement told the world that rising seas levels had a "hit list" of cities. That's 30 years that these idiots have taken to still fail to believe in something that is actually happening right now in front of their face- DUH!! Surprise surprise the area underwater now in Australia was predicted as a danger zone for freak floods caused by climate change. Yet even though Australia is clearly feeling the hit of the warmer world, it's people and it's government still act as if climate change isn't a problem. Only Australia and the US failed to sign the Kyoto Protocol to cut carbon emissions back in 1997. Now you could say they are paying the price. As of March 2010 only 44% of Australian's believe in man made climate change. This particular kind of foolishness is like a 100 a day smoker with lung cancer not believing that their illness was caused by their habit. Sometimes you just have to accept that after doing something which is in the short term enjoyable, you may face undesired long term consequences. It is no good for the Australians' to simply deny the root cause of the ever more frequent freak weather events that they are experiencing. This particular kind of intellectual primacy is only going to f**k them up even more in years to come. It's not that I hold a particular grudge against Australians- in fact I feel sorry for the 44% of the who do accept reality, but I just refuse to feel sorry for the 56% of them who complain about a crisis that they are largely responsible for. At 17.9 tonnes of CO2 per capita, Australia is one of the worst global warming culprits in the the world. Only a few island states that are heavily dependent on long distance imports (like Trinidad and Tobago), oil rich middle eastern lands (like Qatar that comes in at number one), and the odd tax-haven of the super rich (like Luxembourg) beat the Aussies and the Yanks at the race to scorch the earth.
It's about time the 56% of Australian's who don't believe in climate change grew up and accept that they have misbehaved and are now paying the price. Things are only going to get a lot worse for them if they don't.
Saturday, 8 January 2011
No more bubbles?
It is widely understood that "speculative bubbles" can bring about economic collapse. This happens when the banking system invests (lends) to fuel a booming industry/ market, such as the housing market in 2008. When the line of credit runs dry, demand plummets, and prices fall. Investors struggle to repay back debts which they used to purchase the house / stock because they could never sustainably afford to pay in the first place, and relied to some extent on simply rolling over debt instead of actually paying it down. The greater the "rollover ratio", the more unstable the market, and the greater the eventual collapse. The damage to the economy in the event of a bubble bursting is largely determined by the ability of the banking system to find a new bubble to offset the losses of the old one. Ultimately, the banking system must be supported, otherwise the entire economy collapses.
In 2008, government's became fearful that losses in the housing market that had started in 2007 were not under control, and decided that enormous bailouts would be necessary. Worryingly, we have failed to make a full "recovery" because of lackluster growth. In a letter on the 6th January, Timothy Geithner, US treasury secretary, warned that the Treasury had no further financial capacity to resort to emergency measures to avert a default on its debts if Congress did not raise the "debt limit". He also warned that even austerity could not avert a sovereign debt default at this late stage. The only way the treasury can pay their debts is to borrow more money. This is exactly the stage that both the Northern Rock bank got to in 2007, and as Gordon Brown's new book "Beyond The Crash" reveals; Lehman Brothers in 2008- as they were relying on overnight finance to remain above their reserve requirements. Obviously, this shows the stupid side of reserve requirements, because even if a bank can't use the money it has on deposits, it can simply "borrow" more!
In 2011, we look set to continue to see the upwards spiral in commodity prices, driven by profligate emerging markets in the east. Of particular concern is oil, expenditure on which already accounts for 7% of GDP. Whenever the futures price has ever gone above 5.5%, the economy slows down or enters recession. Some see the oil price spike in 2008 as a catalyst for the banking crisis. The banking system has received about as much monetary stimulus as possible, so when it faces the next bubble, there will be much less government's can do to rescue it. If the oil price does surge to high, the economy will be damaged anyway, so the banking system will find it even harder to find that elusive new "bubble" to invest in. Some are beginning to suggest that there are no more bubbles to be had.
In 2008, government's became fearful that losses in the housing market that had started in 2007 were not under control, and decided that enormous bailouts would be necessary. Worryingly, we have failed to make a full "recovery" because of lackluster growth. In a letter on the 6th January, Timothy Geithner, US treasury secretary, warned that the Treasury had no further financial capacity to resort to emergency measures to avert a default on its debts if Congress did not raise the "debt limit". He also warned that even austerity could not avert a sovereign debt default at this late stage. The only way the treasury can pay their debts is to borrow more money. This is exactly the stage that both the Northern Rock bank got to in 2007, and as Gordon Brown's new book "Beyond The Crash" reveals; Lehman Brothers in 2008- as they were relying on overnight finance to remain above their reserve requirements. Obviously, this shows the stupid side of reserve requirements, because even if a bank can't use the money it has on deposits, it can simply "borrow" more!
In 2011, we look set to continue to see the upwards spiral in commodity prices, driven by profligate emerging markets in the east. Of particular concern is oil, expenditure on which already accounts for 7% of GDP. Whenever the futures price has ever gone above 5.5%, the economy slows down or enters recession. Some see the oil price spike in 2008 as a catalyst for the banking crisis. The banking system has received about as much monetary stimulus as possible, so when it faces the next bubble, there will be much less government's can do to rescue it. If the oil price does surge to high, the economy will be damaged anyway, so the banking system will find it even harder to find that elusive new "bubble" to invest in. Some are beginning to suggest that there are no more bubbles to be had.
Tuesday, 4 January 2011
Runaway is on the way.
Climate change may have slipped off the mainstream media's radar of late, but after reading truly terrifying new book called "The Crisis of Civilization", I am worried. The book is so brilliantly referenced, I simply cannot find any fault in it.
It seems unless the world cuts CO2E (Carbon Dioxide and equivalents) emissions by 90% within 15 years, global warming will pass the point of no return, and we can look forward to a word up to 8 degrees warmer than it is today (15 degrees). The reason why you have not heard this before, is that conventional climate change models do not include "positive and negative feedback". These are things which either amplify or subdue the effect of climate change. As we pass each feedback point, the rate of climate change will increase beyond our own impact, and when we pass a crucial threshold (thought to be somewhere between 1 degree and 2 degree above where we are today) we will have triggered so much warming, that further feedbacks are inevitable, no matter how much we emit.
Examples of the feedback affect are the cooling of the gulf stream. As arctic ice melts, the warm current that provide unnaturally high temperatures in Western Europe, will shut down, meaning that in the UK for instance, we will not feel the temperature rise in the same way as the rest of the world. Another negative feedback is that plants grow slightly better in higher concentrations of CO2, but both of these are negligible and highly regional. More importantly, there are a number of positive feedbacks. Desertification is one, which quickens forest loss, as is the melting of the permafrost in Siberia, which if it continues will lead to runaway global warming ON ITS OWN, because millions of years of methane is stored in the (up until now frozen) tundra (bog/soil) underneath. For the unaware layman, methane is some 23 times more potent a greenhouse gas the CO2. We should be worried.
It is strongly arguable that we should be grateful if the economy contracts. If the austerity plans that we are undergoing fail, this could be good. However, there are certainly better, more equitable and egalitarian ways to scale back the intensity of our economies. There is a "quality rather than quantity" option. However, if we continue to adapt towards the "quality economy" at current rates, we will have to many years of waste before we get there. Ironically, brutal austerity might be our best bet if we are to avoid setting off 6 degree global warming. Practically speaking, the best thing to do in the immediate future is to encourage any politician which plans that under normal economic circumstances would be regarded as sacrilege. George Osborne's plans might be wrong when held up to a traditional criteria, but if the government fails in their objective to boost consumption growth, we may have to accept the plus side.
Most people do not understand what an "eight degree world or even a six degree world" would look like. It almost certainly could not sustain current levels of crop production, which depend on 10 fossil fuel calories for each food calorie anyway- a paradigm which will definitely not continue beyond the next 20 years. A joint study between Finnish and Swedish climate scientists found that for every 1 degree temperature increase, crop yields decline 10%. It is a pretty safe bet that world population is going to be a lot smaller in the future than it is now. For those who do not trust climate scientists due to the hyped up "climategate" scandal, it would ask them "what was the scandal?" they probably do not even know that after a thorough government investigation, the scientists had committed, surprise surprise no fraud after all. Doubt over climate change is perpetrated by think tanks and political groups financed by corrupt and selfish business interests who put short term profit above the ability to survive the future.
If we do not avert runaway climate change, it is likely we will all die in methane fueled fireballs in around 2100. I'm not joking. There are enormous undersea stores of "methane hydrates" which will start to release enormous eruptions of methane as the ocean acidifies. We have already past the point where the oceans can no longer hold any more of such gases. It is no longer a sink for greenhouse gases, so it just releases any extras. Methane clouds will dramatically aggravate global warming, sparking forest fires in many regions of the world. The Amazon rain forest has no naturally inbuilt resistance to such fires because it is used to a certain degree of moisture (it is a rain forest). As the Amazon heats up, it will disappear. It is expected that it cannot survive beyond 4 degrees of global warming. This means 2 degrees in effect, since when we pass 2 degrees, 4 degrees and so on will be inevitable. It is not known when global temperatures will stabilize, but by the time global warming stops, civilization will be dead.
There is not much time to act. Most people on this earth are so financially stretched that the only way to make a change is to have good leadership from the top. The rich must pay there fair share, because they have the financial capacity to do so. Politicians must take a lead, but not the current lot. We must realize that they have acted like The Boy Who Cried Wolf for so long, and we should not longer fall for the lies of the corrupt and morally bankrupt parties who have ruled us for the last few centuries. The people who have been running this planet for the last few hundred years are loosing it, and it is time for us to embrace the last echelons of democracy, by seeing past the damn of lies and propaganda and voting for parties that will either a) accidentally bankrupt the economy through failed economic policies or b) more hopefully "Green" parties that will oversee a transition to an economy that has healed itself through a radical yet feasible transition rather than a sudden bankruptcy.
It seems unless the world cuts CO2E (Carbon Dioxide and equivalents) emissions by 90% within 15 years, global warming will pass the point of no return, and we can look forward to a word up to 8 degrees warmer than it is today (15 degrees). The reason why you have not heard this before, is that conventional climate change models do not include "positive and negative feedback". These are things which either amplify or subdue the effect of climate change. As we pass each feedback point, the rate of climate change will increase beyond our own impact, and when we pass a crucial threshold (thought to be somewhere between 1 degree and 2 degree above where we are today) we will have triggered so much warming, that further feedbacks are inevitable, no matter how much we emit.
Examples of the feedback affect are the cooling of the gulf stream. As arctic ice melts, the warm current that provide unnaturally high temperatures in Western Europe, will shut down, meaning that in the UK for instance, we will not feel the temperature rise in the same way as the rest of the world. Another negative feedback is that plants grow slightly better in higher concentrations of CO2, but both of these are negligible and highly regional. More importantly, there are a number of positive feedbacks. Desertification is one, which quickens forest loss, as is the melting of the permafrost in Siberia, which if it continues will lead to runaway global warming ON ITS OWN, because millions of years of methane is stored in the (up until now frozen) tundra (bog/soil) underneath. For the unaware layman, methane is some 23 times more potent a greenhouse gas the CO2. We should be worried.
It is strongly arguable that we should be grateful if the economy contracts. If the austerity plans that we are undergoing fail, this could be good. However, there are certainly better, more equitable and egalitarian ways to scale back the intensity of our economies. There is a "quality rather than quantity" option. However, if we continue to adapt towards the "quality economy" at current rates, we will have to many years of waste before we get there. Ironically, brutal austerity might be our best bet if we are to avoid setting off 6 degree global warming. Practically speaking, the best thing to do in the immediate future is to encourage any politician which plans that under normal economic circumstances would be regarded as sacrilege. George Osborne's plans might be wrong when held up to a traditional criteria, but if the government fails in their objective to boost consumption growth, we may have to accept the plus side.
Most people do not understand what an "eight degree world or even a six degree world" would look like. It almost certainly could not sustain current levels of crop production, which depend on 10 fossil fuel calories for each food calorie anyway- a paradigm which will definitely not continue beyond the next 20 years. A joint study between Finnish and Swedish climate scientists found that for every 1 degree temperature increase, crop yields decline 10%. It is a pretty safe bet that world population is going to be a lot smaller in the future than it is now. For those who do not trust climate scientists due to the hyped up "climategate" scandal, it would ask them "what was the scandal?" they probably do not even know that after a thorough government investigation, the scientists had committed, surprise surprise no fraud after all. Doubt over climate change is perpetrated by think tanks and political groups financed by corrupt and selfish business interests who put short term profit above the ability to survive the future.
If we do not avert runaway climate change, it is likely we will all die in methane fueled fireballs in around 2100. I'm not joking. There are enormous undersea stores of "methane hydrates" which will start to release enormous eruptions of methane as the ocean acidifies. We have already past the point where the oceans can no longer hold any more of such gases. It is no longer a sink for greenhouse gases, so it just releases any extras. Methane clouds will dramatically aggravate global warming, sparking forest fires in many regions of the world. The Amazon rain forest has no naturally inbuilt resistance to such fires because it is used to a certain degree of moisture (it is a rain forest). As the Amazon heats up, it will disappear. It is expected that it cannot survive beyond 4 degrees of global warming. This means 2 degrees in effect, since when we pass 2 degrees, 4 degrees and so on will be inevitable. It is not known when global temperatures will stabilize, but by the time global warming stops, civilization will be dead.
There is not much time to act. Most people on this earth are so financially stretched that the only way to make a change is to have good leadership from the top. The rich must pay there fair share, because they have the financial capacity to do so. Politicians must take a lead, but not the current lot. We must realize that they have acted like The Boy Who Cried Wolf for so long, and we should not longer fall for the lies of the corrupt and morally bankrupt parties who have ruled us for the last few centuries. The people who have been running this planet for the last few hundred years are loosing it, and it is time for us to embrace the last echelons of democracy, by seeing past the damn of lies and propaganda and voting for parties that will either a) accidentally bankrupt the economy through failed economic policies or b) more hopefully "Green" parties that will oversee a transition to an economy that has healed itself through a radical yet feasible transition rather than a sudden bankruptcy.
Monday, 27 December 2010
The perils of big government and the even bigger perils of having no food.
I am not a Conservative in the traditional sense, but I recognise that there is waste when you add unnecessary webs of transactions to our economic system. The proliferation of government bureaucracy and the sprawling banking system have acted as parasites that consume wealth by, in the first case, taxing it, and in the second case, bleeding it off through making profits on new loans. If we are to overcome the many economic challenges modern society faces, then we must inevitably innovate and invent, since modern technology is undeniably insufficient to solve the age old impossibility of continued exponential growth on a finite planet. In theory, there are solutions that we don't know of yet, but if we hold ourselves back by refusing to unleash the market, then we will trap ourselves. For example, perfect economic equality is going to result in a situation where no one person has enough to make the investments in green infrastructure and capital that we will need to adapt to the coming energy and resource crunches. The last crunch was in something that is actually artificial. The credit crunch was odd because it was explained as a shortage of money to lend. This excuse preys upon people's ignorance of what "credit" actually is. If you are a bank and you want to issue a loan, you just invent it digitally. We should not mistake the financial crisis, for the real underlying crisis. It is impossible to have a shortage of something that is infinite. Banks can actually create as much money as they like. Of course they don't, because they would send inflation too high, which would defeat the value of the repayments they receive. The economic crisis is simply a cover up for the peaking of several natural resources. I overheard some people talking about how "nothing was making any money at the moment", but I promise you, they are wrong, the one thing that is doing spectacularly well in the current economic climate is commodities. Take a look at the price data for commodities on the BBC News Website, under Business -- Market Data, and you'll see what I am on about.
The government's should recognise that the value of a unit of money is determined by the other money in circulation. If it takes people a third of their incomes, people will be a third poorer, but if they simply printed the money, there would be no need for the misery of taxation, and the effect on people's earnings would be the same, although it would be impossible to progressively discriminate between people on different income levels. Contrary to what some say, this would not cause hyper inflation. Hyper inflation is uncontrollable, rapidly rising inflation, but if government's simply created all the money they need, this would allow the to spend the necessary money needed to remodel our economy. It would not cause inflation, it would simply depreciate the currency. There is a slight difference. Inflation is how prices correct themselves upwards when there is too much effective demand for the goods the economy produces, but if government's expanded the money supply, they would not increase prices on the whole, and they would also boost the affordability of exports for foreign consumers. This would be very useful, because if we are to undertake a second, Green industrial revolution, then it would enable us to encourage the world to purchase the new inventions.
There is a fundamental difference between economic growth and economic development. The debate is similar to the quantity or quality debate, and like most people, I would opt for the later. Most of us live ridiculously busy lives, doing completely unnecessary things just to fill time, because of some sort of externally imposed obligation. At work, we are expected to spend our time being "productive", but what is accepted as "productive" is quite the contrary these days. The loose attitude to what constitutes worthwhile work has lead to the tick box culture, where people sit around doing office jobs that serve next to no benefit to the economy. In fact, it would be more profitable in some cases to pay people to do nothing, because you wouldn't be paying for all the paper, the pointless phone-calls, and so on. Perhaps Mr. Osborne would like to consider this when he makes cuts to public services. You could simply continue to pay people their salaries without actually requiring them to work, the savings being made from what the consume when they work. In the past people produced a financial benefit to the economy when they worked, and whilst this often holds true today, in some cases, we have "consumer-workers", who cost more on top of their salary to employ.
Whilst I have often written of how society will really struggle in the coming years, I accept that there seems no reason to sit back and let it fail. If we are going to fail anyway, then we might as well do so fighting. I would rather see the productive sector of the economy innovate our way out of the coming crisis, rather than sit back idly. However, a few words of caution are unnecessary, otherwise we may be sorely disappointed if we cannot buck the bad. Some analysts point to the meltdown of 2008 as the end of growth, triggered by the tipping point at which hydro-carbon energy extraction peaked, with led to rising extraction costs for the materials we use to conduct "economic activities". It is all very well however to understand recent history, but we should now ask whether there is any light at the end of the tunnel.
In this months issue of BBC Focus, the flagship science and technology magazine, Stephen Baxter speculates about what the future might look like, or rather "looks ahead 100 years to our high-tech future". We should probably take any long-shot view with a pinch of salt, as remarkably, many of his ideas are highly similar to what people thought the year 2000 would look like, back in the 1970s. Anyway, we should at least investigate whether any of the solutions he proposes are feasible. However, Stephen goes from one predictable rehash of current technology to another. One of the wackiest ideas he proposes is strip mining for water on the moon, which would obviously consume enormous amounts of energy that we simply do not have, but like many futurologists, he fails to make this link. However, in his piece on energy, he talks about solar and wind power- existing technologies. I can tell you now, there are only certain materials which would can manufacture solar cells or wind turbines from. These range from metals such as steel, which will run out within 30 years, to plastic manufactured from oil which will run out in 40, to various other ingenious substitutes for these resources, which will of course also run out. There are simply limits to the maximum amount of manufactured "stuff" you can have standing at any one time. The only long term solution is to hope that population shrinks naturally so that per capita GDP continues to increase, to bring people out of poverty, even whilst the economy overall stabilises or contracts.
Sadly, it is likely that population will not shrink naturally, but instead quite brutally. As oil and gas become too expensive (they won't actually run out- but it will feel like it) then we will have a death of intensive mechanised agriculture. Firstly ammonia is the basic feedstock for most farmed plants, but this is manufactured from natural gas. Crops are planted, sprayed with water, harvested, distributed, packaged, and so on, by machines that run on oil and sometimes "bio-fuels" (which are grown from the ground using oil anyway, and according to some studies actually give a lower energy return than that invested meaning that when you use 1 barrel of "bio-oil" you actually use more than 1 of normal oil anyway). However, we can adapt to lower food yields if we simply distribute what we have better. This is probably not going to happen with the current state of the world though. A recent article on the BBC news website celebrated £40m of UK aid as part of a package to poorer countries. To most people, something like £40m is a wonderfully large amount of money, but it is actually less than 1/100,000th of what the nation earns each year. Another factoid to ponder is that there are 10 calories of hydrocarbon energy in every calorie of real food we consume. We are going to have to adapt very quickly as oil production hits the downside of the mountain, otherwise food production would also collapse. Most people simply attach oil to consumer luxuries such as Sports Utility Vehicles, but when people see the empty shelves in the supermarket, the shortage will really hit home.
The government's should recognise that the value of a unit of money is determined by the other money in circulation. If it takes people a third of their incomes, people will be a third poorer, but if they simply printed the money, there would be no need for the misery of taxation, and the effect on people's earnings would be the same, although it would be impossible to progressively discriminate between people on different income levels. Contrary to what some say, this would not cause hyper inflation. Hyper inflation is uncontrollable, rapidly rising inflation, but if government's simply created all the money they need, this would allow the to spend the necessary money needed to remodel our economy. It would not cause inflation, it would simply depreciate the currency. There is a slight difference. Inflation is how prices correct themselves upwards when there is too much effective demand for the goods the economy produces, but if government's expanded the money supply, they would not increase prices on the whole, and they would also boost the affordability of exports for foreign consumers. This would be very useful, because if we are to undertake a second, Green industrial revolution, then it would enable us to encourage the world to purchase the new inventions.
There is a fundamental difference between economic growth and economic development. The debate is similar to the quantity or quality debate, and like most people, I would opt for the later. Most of us live ridiculously busy lives, doing completely unnecessary things just to fill time, because of some sort of externally imposed obligation. At work, we are expected to spend our time being "productive", but what is accepted as "productive" is quite the contrary these days. The loose attitude to what constitutes worthwhile work has lead to the tick box culture, where people sit around doing office jobs that serve next to no benefit to the economy. In fact, it would be more profitable in some cases to pay people to do nothing, because you wouldn't be paying for all the paper, the pointless phone-calls, and so on. Perhaps Mr. Osborne would like to consider this when he makes cuts to public services. You could simply continue to pay people their salaries without actually requiring them to work, the savings being made from what the consume when they work. In the past people produced a financial benefit to the economy when they worked, and whilst this often holds true today, in some cases, we have "consumer-workers", who cost more on top of their salary to employ.
Whilst I have often written of how society will really struggle in the coming years, I accept that there seems no reason to sit back and let it fail. If we are going to fail anyway, then we might as well do so fighting. I would rather see the productive sector of the economy innovate our way out of the coming crisis, rather than sit back idly. However, a few words of caution are unnecessary, otherwise we may be sorely disappointed if we cannot buck the bad. Some analysts point to the meltdown of 2008 as the end of growth, triggered by the tipping point at which hydro-carbon energy extraction peaked, with led to rising extraction costs for the materials we use to conduct "economic activities". It is all very well however to understand recent history, but we should now ask whether there is any light at the end of the tunnel.
In this months issue of BBC Focus, the flagship science and technology magazine, Stephen Baxter speculates about what the future might look like, or rather "looks ahead 100 years to our high-tech future". We should probably take any long-shot view with a pinch of salt, as remarkably, many of his ideas are highly similar to what people thought the year 2000 would look like, back in the 1970s. Anyway, we should at least investigate whether any of the solutions he proposes are feasible. However, Stephen goes from one predictable rehash of current technology to another. One of the wackiest ideas he proposes is strip mining for water on the moon, which would obviously consume enormous amounts of energy that we simply do not have, but like many futurologists, he fails to make this link. However, in his piece on energy, he talks about solar and wind power- existing technologies. I can tell you now, there are only certain materials which would can manufacture solar cells or wind turbines from. These range from metals such as steel, which will run out within 30 years, to plastic manufactured from oil which will run out in 40, to various other ingenious substitutes for these resources, which will of course also run out. There are simply limits to the maximum amount of manufactured "stuff" you can have standing at any one time. The only long term solution is to hope that population shrinks naturally so that per capita GDP continues to increase, to bring people out of poverty, even whilst the economy overall stabilises or contracts.
Sadly, it is likely that population will not shrink naturally, but instead quite brutally. As oil and gas become too expensive (they won't actually run out- but it will feel like it) then we will have a death of intensive mechanised agriculture. Firstly ammonia is the basic feedstock for most farmed plants, but this is manufactured from natural gas. Crops are planted, sprayed with water, harvested, distributed, packaged, and so on, by machines that run on oil and sometimes "bio-fuels" (which are grown from the ground using oil anyway, and according to some studies actually give a lower energy return than that invested meaning that when you use 1 barrel of "bio-oil" you actually use more than 1 of normal oil anyway). However, we can adapt to lower food yields if we simply distribute what we have better. This is probably not going to happen with the current state of the world though. A recent article on the BBC news website celebrated £40m of UK aid as part of a package to poorer countries. To most people, something like £40m is a wonderfully large amount of money, but it is actually less than 1/100,000th of what the nation earns each year. Another factoid to ponder is that there are 10 calories of hydrocarbon energy in every calorie of real food we consume. We are going to have to adapt very quickly as oil production hits the downside of the mountain, otherwise food production would also collapse. Most people simply attach oil to consumer luxuries such as Sports Utility Vehicles, but when people see the empty shelves in the supermarket, the shortage will really hit home.
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