Parasitocracy

Yup, an aristocracy of parasites. George Monbiot points out the latest in the painful saga of the economically insane: notably CEO's of major financial institutions. Mr. Monbiot:

Matt Ridley used to make his living partly by writing state-bashing columns in the Daily Telegraph. The government, he complained, is “a self-seeking flea on the backs of the more productive people of this world … governments do not run countries, they parasitise them.”(1) Taxes, bail-outs, regulations, subsidies, intervention of any kind, he argued, are an unwarranted restraint on market freedom.
Then he became chairman of Northern Rock, where he was able to put his free market principles into practice. Under his chairmanship, the bank pursued what the Treasury select committee later described as a “high-risk, reckless business strategy”(2). It was able to do so because the government agency which oversees the banks “systematically failed in its regulatory duty”(3).
On 16th August 2007, Dr Ridley rang an agent of the detested state to explore the possibility of a bail-out. The self-seeking fleas agreed to his request, and in September the government opened a support facility for the floundering bank. The taxpayer eventually bailed out Northern Rock to the tune of £27bn.
When news of the crisis leaked, it caused the first run on a bank in this country since 1878. The parasitic state had to intervene a second time: the run was halted only when the government guaranteed the depositors’ money.

And now Matt Ridley has written a book. As expected, it indulges in the same magical thinking that got Northern Rock into trouble in the first place. Evil governments, terrible parasitic bureaucrats, crippling regualtion all come in for the usual bollocking.  As usual, the remedy is more of what failed the last time. Not only should these idiots not be allowed near levers of economic power, clearly they shouldn't be allowed near a cup of coffee. this belief that their ideology must be correct, must actually justify what they do and who they are, that they cannot give it up without a complete mental breakdown. Like cultists at the end of the world; when it doesn't arrive, you double down.
To let Mr. Monbiot finish up:

It is only from the safety of the regulated economy, in which governments pick up the pieces when business screws up, that people like Dr Ridley can pursue their magical thinking. Had the state he despises not bailed out his bank and rescued its depositors’ money, his head would probably be on a pike by now. Instead we see it on our television screens, instructing us to apply his irrational optimism more widely. And no one has yet been rude enough to use the word discredited.

Cheap? Peak? Economic?

Hellhounds on your trail

"If only part of the things brought out prove true, These men have done the American people more damage than all the incidental operations of Al Capone. Capone had the merit of confining his robbery and the infliction of physical violence to the wicked.... [I]f these stories are true these men are not bankers , they are banksters who rob the poor, drive the innocent to poverty and suicide and do infinite injury to those who honestly work and strive. Worse than that, they are traitors to our institutions and national ideas."

        US president Herbert Hoover 1933.

    As 2010 closes out, we're two years into a Democratic administration in the US and at least two years into the worst speculative bubble since the Crash of '29. Praise must go to the Obama administration for their masterful work in preserving the international financial system without actually making any systemic changes to help prevent a recurrence of the same problems. That there is any confidence in the international financial system is testament to the loosely coordinated international effort to disguise the depth of the problems from the public at large while desperately injecting trillions of dollars into resuscitating the system.
    In the US, the administration is allowing millions of foreclosures to go forward under the same conditions that prevailed during the issuing of the original mortgages; that is, a system without protection for the consumer, with perverse incentives built in that breed casualness, incompetence, and outright fraud, and where the 91% of US citizens who consider themselves "middle class" are cheated, lied to, and exploited. (Personally, I love the stories of the people who have frozen the foreclosure proceedings on their homes by the simple act of asking the foreclosing bank to prove that they actually hold the mortgage on the property. With the extensive collateralization and re-collateralization of these debt obligations, the actual ownership of even a portion of a mortgage is often impossible to define).
    The only real difference between this crash and the Crash of '29 is that this time there isn't the panic of depositors trying to get their money out of the bank before the bank fails. The creation of federal deposit insurance has kept the banks, and the countries they do business in, liquid.  But after the Crash in '29, it took the US four years and a change in administration (from Hoover to Roosevelt) before the excesses and failures were recognized and corrective legislation was considered. It is depressing that the most important corrective, the Glass-Steagall act separating commercial from investment banking--repealed under Reagan, seems to be at the heart of the current series of speculative boom and bust cycles. And it is even more depressing that one of the same banks, Citigroup, is again at the epicentre of the crisis.
    There are differences between crashes; the last time it took years for the tricksterism, fraud, and near-criminality to be exposed. This time there are plenty of books and information being generated on the same topics, although they are being presented in formats that most people (particularly in the US) no longer access (books and newspapers, primarily). But the root causes of the crisis' are pretty much identical. Roosevelt intimate and (eventual) Supreme Court justice Felix Frankfurter wrote that:

    [I do] not believe that vice inheres in the rich and virtue in the poor. But for too long we have been largely operating on the assumption that the converse is the truth, and more particularly that the rich are the guardians of wisdom and should control affairs.... The crux of the business is not the wickedness of the Mitchells [head of City Bank in 1933] but the power which is wielded by concentration of financial  power which they are wholly unworthy--no matter who they are--to wield because of the obfuscations and the arrogances which power almost invariably generates. [sic]

       (quoted in Hellhound of Wall Street, Michael Perino, page 223)

    People are no smarter today than 80 years ago (in many respects, they're more ignorant), and although we have some experience with worldwide financial crisis', our governments are still allowing laws to be written by the same group of people the same laws are meant to regulate, we still fall under the spell of the same slogans ("Greed is Good") and economic theories (the Chicago School, neo-liberalism, laissez-faire). The same people selling CDOs knew that a crash was coming--which led them to re-double their efforts to sell more of them in order to get their money while the getting was good. All we've really changed is the degree to which our economies are interlinked. And we still persist in our view that crashes and speculative bubbles are aberrant, rather than the normal operation of the financial system we live under. Welcome to a new decade.

Building Stuff--and Societies

    In the Globe and Mail (Monday, 26 July 2010, pp A1, A8) Douglas Saunders writes about Birmingham, England and the current economic conditions there. His way in to the story is through a small manufacturer, The Acme Whistle Works, which he describes as "an anachronism: a bustling, noisy Victorian factory" . Saunders reports that although employment at the factory is only 68 people, it is the district's second-largest employer. The current international economic crisis has hit Britain's industrial cities even harder than the rest of the county (currently, unemployment in Birmingham is running at about 10.8% overall and 15.4% for men (at least officially. Actual unemployment usually runs much higher than the official statistics)).
    The reason for this is fairly straightforward, and something I've written and talked about before: the hollowing of the economy by exporting manufacturing jobs overseas. At the end of 2008, as the international monetary system came within a whisker of crashing (a situation not yet avoided--see Spain and Greece), there was an outburst of anger over the bailout of the North American auto sector. I argued then that bailing out the auto sector was a very good idea--without the jobs connected to auto-making (well-paid, unionized jobs) it might well crash the Central Canadian economy and, by extension. the national economy as well. Stephen Harper held his nose and approved the bailout. This was the right thing to do; the loans provided a needed boost of confidence in both the manufacturing and financial sectors, and GM has apparently already paid off their line of credit with the Canadian government.
    Douglas Saunders, in his report in the G&M, describes what happened in the manufacturing centre of Birmingham: the removal of government support for the manufacturing sector (not only financial support, but political support; where there were no trade missions selling British products abroad, but also a campaign suggesting that manufacturing had no future in England, which had the effect of removing private sector financial interest in manufacturing), and the expansion of government support for knowledge, finance, and service industry at the expense of manufacturing (replacing rather than supporting the sector). The Labour governments of the day under Blair and Brown poured billions of pounds into "urban rehabilitation," kick-starting the New Economy in places like Birmingham.
    There was a problem with the New Economy, but for 15 years the boom times papered it over. The benefits of the New Economy don't spread through society like the benefits from a maker economy do. To quote Doug Saunders: "Eighty-five per cent of the employment created during that recovery took the form of government jobs, jobs in privatized, former government sectors, or jobs in the service industries that provided for government. At its heart, Birmingham didn't have an economy of its own--its boom was mostly just poor service jobs and government spending."
    Manufacturing jobs, particularly unionized ones, move working-class people into middle-class tax brackets, and spark a propagating wave of consumer spending and wealth creation. Service jobs don't. Service jobs are a race to the bottom, halted only by minimum wage laws. That's why the "Asian Tigers" went after the manufacturing sector--it generates wealth. Knowledge and financial services also generate wealth, but for a much smaller portion of society, and when combined with a decline in manufacturing and a rise in outsourcing,  exports the broad wealth creation as well.
    It's all well and good to talk about upgrading the workforce to participate in the "New Economy." But it overlooks the fact that so much of the workforce is  male and (at best) high school educated. A quick scan of YouTube shows that these people aren't stupid--building a pulse jet and attaching it to a go-kart or kayak may be insane, but you can't be stupid when you do it. But what we are is monkeys, and as such, we like to muck about with our hands. We make things. Things from sticks to pull termites out of their nest so we can eat them, to backyard, Volkswagen-launching trebuchets with no purpose at all except to throw cars around.
    But with the export of manufacturing to progressively lower-waged countries, no one has yet explained to me where the new broad-spectrum wealth creation is supposed to come from.  If I design something cool, I'll send it off to be manufactured in a low-waged economy, and then it will be shipped back here for people to buy. But that generates wealth for me, but not a lot for the rest of my fellow citizens. Retail sales of the whatever generate wealth at the top and minimum wages at the bottom. I hire a maid and a nanny, I don't pay manufacturing job wages, I import low wage help from overseas. Nowhere in that system is there a middle class--there are only the rich and the poor and a small group of hard-core hustlers who want to become rich.
    Yet it is the nation of shopkeepers and small businesses (remember, in Canada small business is rated at under one million a year in sales) that generate a middle class, and its a middle class that generates demand for middle and higher margin items.

Business Insider--The Wealth Slideshow

The Business Insider offers up a reality check on Amerikan wealth; who's getting some and who isn't. And it's pretty clear that the top 1% are getting most all of it. Why am I not surprised?

Techniques of Communication

Once upon a time, rap was the underground CNN. Very serious people like Chuck D used the form to communicate some fairly complex ideas. Herewith, for your edification, two white guys laying down some oldschool education.

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Post-Copenhagen

So what did Canada get from our little trip to Copenhagen? Well, our PM made it clear that when it comes to photo opportunities, he's your guy--witness all the shots with various heads of state on his carbon-intensive journey pre-Copenhagen. But when it comes to facing up to the results of his beliefs and actions, he's really not so ready to get in front of a camera (well, to be fair, with the exception of his trip to China where only the sight of him crawling would really satisfy the Chinese leadership. But I think back to a year ago when Harper wouldn't face parliament after a major miscalculation either. Not really good at owning up to mistakes, our PM.). So poor old Jim Prentiss was trotted out to deliver 9 paragraphs of irrelevancy.
But Canada did get what our government wanted; nothing really changed. A vague commitment to reduce our emissions by 20% from 2006 levels (non-binding and unenforceable) and a promise to contribute to an international fund (dollars that are likely to come out of our current Foreign Affairs budget anyway).
But in terms of real change? Well, all we're going to get is more of the same. Enbridge is trying to build a pipeline across northern BC to haul bitumen (our vaunted "heavy oil") from Fort MacMurray to a tanker terminal at Prince Rupert. The Dogwood Initiative is working hard to keep that from happening, and is experiencing some success. But the extraction at the oil sands is still set to expand without any controls or limitations.
Which is one of the reasons Harper was willing to eat shit in China; China doesn't care what people do in their own country, as long as they fulfil their contractual obligations. So war criminal, genocidal lunatic, or environmental criminal, none of it matters as long as the resources keep flowing. And the US has pointed out that it does have some reservations about Alberta's bitumen extraction process. Several states are now refusing to accept oil from the tar sands, and President Obama announced on his arrival in Copenhagen that the EPA was going to be able to regulate CO² emissions. So Canada is facing growing restrictions on its ability to export dirty oil to the US.
As an aside, the move to declare CO² a pollutant and regulate it through the EPA is an important step for the US. Recent studies have indicated that the introduction of pollution controls in the US in the 1970s was important to the US remaining an economic powerhouse through the rest of the century. By forcing industries to clean up their act, the US government forced production efficiencies on those industries, making them much more competitive. This despite the extra imposed costs. It seems obvious that the same reasoning and results would apply to restrictions on CO².
So our PM, having no intention of imposing restrictions of any type on Alberta's bitumen production (he is, after all, the son of an oil executive, and beholding to oil companies), has realized that its necessary to find new markets that will not put restrictions on methods of production. Enter China.
China indicated at Copenhagen that while they are willing to agree to CO² reductions, they really have no interest in international verification procedures. Regretfully, NASA failed the launch of a satellite capable of doing that monitoring; currently the satellite rests on the bottom of the ocean near the Antarctic ice shelf. So until the US comes up with another 230 million dollars, international monitoring of CO² emissions is nothing but a dream.
But despite their dislike of international monitoring, China bids fair to become the renewable/green energy powerhouse of the 21st century. With the ability to totally ignore local opposition, China has begun building large wind and solar installations to supplement their coal and oil power producing infrastructure. In Canada, we've lost that opportunity with the Harper government's decision to spend infrastructure funds on partisan projects. Instead of taking the opportunity to help Canada into the 21st century, Harper decided instead to continue to believe that its the 1950s, and spend on old school projects. And unless there's someone presenting an oversized Conservative-logo'd novelty cheque, good luck on finding out where our billions of dollars are being spent. The Bush regime perfected the art of spending the country into impotence as a technique of hobbling future governments. Harper does it by cutting taxes (yes, we've gone from an inherited 13 billion surplus back to deficit spending--mostly down to Harper's cutting of the GST and other taxes)(as an aside, I'm actually in favour of taxes like the GST/HST; being strictly consumption-based and applying across the board, they tend to act to discourage spending and encourage saving).
So post-Copenhagen, we're really no further along to where we need to be. No international binding agreement on CO² reduction. The sea levels continue to rise, the poles continue to melt, the death of billions over the next 50-100 years still looms, and future of human life on Earth still hangs in the balance.

Copenhagen

So the Copenhagen talks on climate change are under-way. They come on the heels of hacked emails out of East Anglia, the announcement that Barack Obama will attend after all, and Stephen Harper being compelled to attend (in all fairness to Harper, there is no upside for him; as a climate-change denier, he views the whole thing as a waste of his time. As the Prime Minister of a petro-state that is an international pariah all he can hope for is abuse internationally, and no help to his reputation at home. He's much more comfortable in Korea, talking neo-con bullshit economics to a country that knows better than most how full of crap he is). SO what happens? Someone freaks out and leaks the "Danish Text," not a Rosetta Stone, but an agreement between the US, UK, and Denmark (and clearly some others, still unidentified)to apply the global system of Third World exploitation to the climate change crisis.
Briefly put, the Danish Test suggests that the developing world be restricted to emissions of 1.44 tonnes per person, while the First World be restricted to 2.67 tonnes per person. In exchange, the World Bank will pay out funds for climate change adjustments (from purchasing ameliorating technologies to paying the boat fares to allow your citizens to flee while their county and homes disappear under the waves of an advancing ocean) as long as the countries affected follow rules set down by the World Bank and the First World governments footing the bill.

"A confidential analysis of the text by developing countries [...] seen by the Guardian shows deep unease over details of the text. In particular, it is understood to:

• Force developing countries to agree to specific emission cuts and measures that were not part of the original UN agreement;

• Divide poor countries further by creating a new category of developing countries called "the most vulnerable";

• Weaken the UN's role in handling climate finance" (The Guardian)

As usual, the First World is finding democracy--even the sad and crippled version typified by the U.N.--to be an impediment to their own desires. So, as usual, the goal is to take any constraints on the developed nations off the table, and to screw those who are trying to have better lives--not lives as good as the developed world, just lives that are better than the hell they currently live in.

James Hansen, "[t]he scientist who convinced the world to take notice of the looming danger of global warming says it would be better for the planet and for future generations if next week's Copenhagen climate change summit ended in collapse." He figures the direction of the developed world at Copenhagen is so wrong that it would set us on the wrong path for decades, condemning us all to the hell of +6°C warming.

The Deniers are so clearly on the wrong side that they've been reduced into hacking email accounts and mis-representing the results, and, here in Canada, breaking into the office of a UVic climate scientist. Is it any wonder that I think we're alll doomed?

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Peak Oil

According to The Guardian:

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

Listen to an audio clip with Terry Macalister here.

A report by the UK Energy Research Council (UKERC) said worldwide production of conventionally extracted oil could "peak" and go into terminal decline before 2020.

The world has used less than half of the planet's conventionally extracted oil, but the remaining resources will be more difficult and expensive to get out of the ground, slowing production and increasing prices of crude.

With exploitation of the world's reserves running at more than 80m barrels a day, even major new discoveries such as the oil fields recently found in the Gulf of Mexico by BP would only delay a peak by a few days or weeks, the report said as reported by The Guardian.

The risk to the UK from falling oil production in coming years is greater than the threat posed by terrorism, according to an industry taskforce report published today.

The report, from the Peak Oil group, warns that the problem of declining availability of oil will hit the UK earlier than generally expected - possibly within the next five years and as early as 2011. [Also reported in The Guardian]

We don't have any plans in place to deal with peak oil: in Canada, we import the oil we use, and export the oil we produce (leaving most of us feeling WTF?). We peak out, everything falls apart. Our government is in denial, our corporate heads seem to be suffering a complete meltdown,and the general public just doesn't want to know. Any wonder why I'm a bit despairing of our future?

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Canada and the World

Even 20 months ago, no one knew what 350 meant, nor why it mattered. That's less than 2 years back. Then 10,000 year old ice sheets disappeared in the Arctic, Stephen Harper got a north of 60 hard-on, the IPCC released a report based on data that was already out of date (some of it a decade out of date), and a book detailing how James Hansen's work was censored came out. We shook our collective head, and some of us began to realize that we had entered what James Kunstler has called The Long Emergency.
It didn't take long to realize that 350 was the upper limit of atmospheric CO2 that could be considered "safe" (meaning that we might be able to keep global warming to 2°C and we might be able to live with the consequences of that rise), and here we are today looking at 390 ppm of carbon dioxide, no significant efforts being made to reduce carbon emissions, and a future that's looking at a minimum of 4°C warming and 6 metres of sea level rise--meanwhile emissions continue to increase and atmospheric CO2 rises at about 2ppm/year.
Here in Canada, we've got a Conservative government that is lead by a Prime Minister who still yet to convince anyone that he actually believes global warming may be a problem. Stephen "American Corporate Lackey" Harper is busy fiddling while the globe--including the nation of which he is nominally a member--burns. All our divorced-from-reality leader can see is the NorthWest Passage opening up and all that lovely ocean open to commercial exploitation.
Last week, the British Meteorological Office released a map of what we can expect to happen when we hit 4°C. The equatorial countries will get hotter, true, but the further you get from the equator, the more extreme the changes. But even now, Environment Minister Jim Prentice wants special treatment for Canada, allowing us--well, really just Alberta and the oil sands--to continue increasing our GHG emissions, while insisting that developing nations like China and India agree to hard caps that we ourselves will not accept. And the Canadian Government still refuses to release specifics of its plan to reduce our GHG emissions by 20% from our 2006 levels--which is light-years from our commitment under Kyoto.
Today comes the release of a new report. Quite unlike anything released in Canada before, it was financed by the Toronto Dominion Bank, produced by the Pembina Institute and the David Suzuki Foundation, with economic modeling by the well-respected economic consultants, M.K. Jaccard and Associates Inc. As John Ibbitson writes in the Globe and Mail; "A major bank has paid two environmental organizations to produce a groundbreaking report that, for the first time, calculates the costs of both the Harper government's modest plans to reduce greenhouse-gas emissions and the much more ambitious targets set by the environmental community, nationally and regionally."
The report offers a regional breakdown of economic impacts based on both the Harper government's vague commitment to 20% by 2020 (from 2006 levels) and  the impact from the deeper and harder cuts that environmentalists are calling for and that would put Canada in line with our international obligations. And guess what? Neither scenario would kill us!
According to the report,"The Conservative government's goal of reducing greenhouse-gas emissions by 20 per cent by 2020 can be achieved, but only by limiting growth in Alberta and Saskatchewan." Alberta's growth would be 8.5% less in 2020 than it would be under a BAU (Business As Usual) approach, the report concludes. Under the  same scenario, Saskatchewan would lose 2.8% of its projected growth. Central Canada, on the other hand, might well see some additional growth added to its projection. To quote Shawn McCarthy's article in the G&M; "Despite the steep costs involved in meeting targets, the analysis concludes the Canadian economy would continue to grow, albeit at a slower pace, and that investment in renewable energy and efficiency measures would result in an overall increase in employment compared to a “business-as-usual” scenario.
And even with the significant reduction in Alberta's potential growth and employment prospects, the province would still lead the country economically over the next 10 years."
So our economy would continue to grow AND there would probably be an increase in employment as well. And the cost? A reduction in projected growth an Alberta and Saskatchewan, and a significant out-migration from both provinces back to central Canada.
To further quote Shawn McCarthy's article: "TD's chief economist, Don Drummond, said the bank has not endorsed any targets, though it has supported a policy of a national emissions cap. He said the bank's interest was to shed light on an area where there has been little informed debate: the likely cost of imposing regulations."
I'm actually not seeing any real downside here. The Globe and Mail editorial board does though. In today's editorial, we read: "[T]he study acknowledges that what is proposed is no less than an economic upheaval: “There is a migration of capital and labour out of carbon and trade exposed sectors (e.g., fossil fuels) to sectors that are less carbon and trade exposed (e.g., manufacturing, services and renewable electricity).”
Canada cannot take its national unity for granted and must not, in the service of international obligations, allow itself to be immolated by a government policy of such wrenching dislocation." And the editorial concludes: "[T]he target [of carbon dioxide emission reduction] may be unreachable without unacceptable damage to Canada's economy and national unity. In which case, it is time for new targets, and new policies."
I can't help but think that no-one raised much of a stink about the "wrenching dislocation" caused by the development of the oil sands on the communities of Atlantic Canada. And even Jeffrey Simpson concludes that the Harper government's targets are just so much smoke being blown up our collective asses.
And so we have serious economic modelling of the potential and problems with trying to meet our international obligations regarding global warming and CO2 emissions. And we can now point to the report and say, "Tough, yes. But it won't kill us, and will probably make us stronger." And what of the complaints sure to come from the political and ruling classes of Alberta and Saskatchewan? Well, both provinces have had a great decade, with both provinces posting significant surpluses in their budgets, and neither has done a damn thing to prepare for the inevitable crash (particularly Alberta under Ralph Klein). For Alberta, that's two oil-based booms they've pissed away under Conservative governments. So honestly, I have no great sympathy for the Alberta government. And regardless of any future whining, we can look at the economic model contained in the M.K. Jaccard and Associates Inc. report, and read again the conclusion that "even with the significant reduction in Alberta's potential growth and employment prospects, the province would still lead the country economically over the next 10 years." And the planet (well, the human part of it) would thank us for facing up to our responsibilities.

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Copenhagen, Canada, and the End of the World

The Globe and Mail is reporting on an interview with Environment Minister Jim Prentice, saying that the chance of an agreement on climate change in Copenhagen is pretty much non-existent.
The world wants a climate change agreement in Copenhagen. The US is even onside, with President Obama actually understanding both the science and political realities of global warming. The EU wants an agreement, with Germany busy poaching Canadian alternative energy companies and the Brits launching the 10-10 campaign. China is even pursuing lower carbon emissions. So what's the problem?
The problem is the Canadian government. Canada has become the biggest roadblock to an international agreement to lower carbon emissions. According the the G&M article (23 October 2009, p A1 Ottawa dashes hope for treaty in Copenhagen) Canada is continuing to "insist that it should have a less aggressive target for emission reductions[...] because of its faster-growing population and energy-intensive industrial structure". The Harper government is also going to insist that any cap on industrial emissions will not be applied uniformly across the country, but will allow the Alberta oil sands to continue expanding. To quote the Environment Minister; "The Canadian approach has to reflect the diversity of the country and the sheer size of the country, and the very different economic characteristics and industrial structure across the country." The Harper government has also demanded that emerging economies (like China and India) agree to binding caps on carbon emissions, and has refused to release its own plan for carbon reduction until there is clarity on what the Americans are planning to do.
The New Democratic Party has a bill currently in committee that would commit Canada to an emission reduction of 25% from 1990 levels by 2020--a target that would meet our commitment under Kyoto and would be consistent with the EU's approach in the next round of negotiations. Ottawa has proposed a reduction of 20% from 2006 levels of emissions by 2020--our obligation under Kyoto was a cut of 6% from 1990 levels by 2012. The plan proposed by the Harper government would result in a 3% reduction from 1990 levels by 2020. Chief climate negotiator Michael Martin said to the committee considering the NDP bill that the Harper government's targets are "comparable" because they will be just as costly to achieve as the more aggressive NDP targets.
What becomes clear, as we follow the progress towards significant carbon emission reductions, is that the Harper government has no intention of ever reducing carbon emissions. Harper simply does not consider carbon emissions to be a problem (how can I say that? By simply looking at his record).
And our Prime Minister is dragging a lot of sceptics along with him. World-wide, temperatures maxed out in 1998, leading deniers to claim that temperatures have levelled off or are even declining. But new research to be published in Geophysical Research Letters, was carried out by Judith Lean, of the US Naval Research Laboratory, and David Rind, of Nasa's Goddard Institute for Space Studies. The research, "is the first to assess the combined impact on global temperature of four factors: human influences such as CO₂ and aerosol emissions; heating from the sun; volcanic activity and the El Niño southern oscillation, the phenomenon by which the Pacific Ocean flips between warmer and cooler states every few years.

The analysis shows the relative stability in global temperatures in the last seven years is explained primarily by the decline in incoming sunlight associated with the downward phase of the 11-year solar cycle, together with a lack of strong El Niño events. These trends have masked the warming caused by CO₂ and other greenhouse gases.

As solar activity picks up again in the coming years, the research suggests, temperatures will shoot up at 150% of the rate predicted by the UN's Intergovernmental Panel on Climate Change. Lean and Rind's research also sheds light on the extreme average temperature in 1998. The paper confirms that the temperature spike that year was caused primarily by a very strong El Niño episode. A future episode could be expected to create a spike of equivalent magnitude on top of an even higher baseline, thus shattering the 1998 record.

The study comes within days of announcements from climatologists that the world is entering a new El Niño warm spell. This suggests that temperature rises in the next year could be even more marked than Lean and Rind's paper suggests." (The Guardian Online).

The British Meteorological Office released a new map of the world (below) showing the current thinking on what the world will look like with a 4°C rise in the average global temperature. The 4°C rise mostly happens at the equator--the further you move away from the equator, the greater the changes. Here on Vancouver Island, we may only see an average 5°C rise, but up in Hudson's Bay, its looking more like 16°C. What this doesn't indicate is just how this will affect global weather patterns. If it was just going to get warmer, that wouldn't be the end of the world.But all that extra energy is going to change things in ways we can't imagine yet, much less model.

The Met Office says that climate researchers have discovered that:

• levels of CO2 have risen 40% since the Industrial Revolution
• Global sea levels have risen 10cm in the last 50 years [and that's a hell of a lot of water]
• temperatures in the Arctic have risen at twice the global average [which suits our Prime Minister just fine]
• snow cover in the northern hemisphere has dropped 5% in the last 2 decades

And researchers figure that extreme temperatures will affect eastern North America, with Toronto and Ottawa seeing the temperatures of their hottest days jumping by up to 10°C to 12°C. Anyone having suffered through a GTA summer will be white with fear about now....

A Buzzing In My Ears

Earlier this year Dawa Steven Sherpa was resting at Everest base camp when he and his companions heard something buzzing. "What the heck is that?" asked the young Nepali climber. They searched and found a big black house fly, something unimaginable just a few years ago when no insect could have survived at 5,360 metres.

So begins this story in the Guardian. It's becoming depressingly familiar at this point; insects where they don't belong, glaciers retreating at an appalling pace, and (in this case) glofs, or glacial lake outburst floods.
So have a read, then pop over to the review of Superfreakonomics and have a read of this:

A large chunk of Superfreakonomics is given over to what Levitt and Dubner present as a simple, cheap alternative to all this depressing futility. They profile Nathan Myhrvold, the former chief technology officer of Microsoft, whose company, Intellectual Ventures, is exploring the possibility of pumping large quantities of sulphur dioxide into the Earth's stratosphere through an 18-mile-long hose, held up by helium balloons, at an initial cost of around $20m. The chemical would reflect some of the sun's rays back into space, cooling the planet, exactly as happened following the massive 1991 eruption of Mount Pinatubo, in the Philippines. The primary objection to this plan, as with other "geoengineering" schemes, is that there's no predicting the unknown negative effects of meddling in such a complex natural system. And it's strange, given how much is made in both Freakonomics books of the law of unintended consequences, that they don't mention this in the context of Myhrvold's plan.

This is where we wait and wait and wait and then begin grasping at straws and stupid ideas, looking for the quick fix. The problem is not sunlight falling on the Earth, its the CO2 in the atmosphere. The sulphur dioxide "fix" does nothing but to help buy a little time. The ocean is still gong acidic (as one example), crashing what few food stocks are left. That will not be slowed by altering the amount of sunlight getting through the atmosphere. (Freakonomics; a bunch of untested and unproven correlations and ideas masquerading as breakthrough carved-in-stone facts. Mediocre speculative mutton dressed up as scientific lamb).

So What's the Big Whoop about Deflation?

So Canada has registered it first “technical deflation” in 15 years in June 2009. More than a few people are having a very quiet freakout about this. A few, like Ken Rogoff (former research director at the IMF, now Harvard economics professor), John Makin (economist with the American Enterprise Institute, a hard-right conservative outfit) and Paul McCulley (portfolio manager at Pimco—who run the world's largest bond mutual fund) suggesting that this might be the time to bring back inflation—perhaps as high as 6% for a couple of years.
The spark behind this is the release of the consumer price index for the last couple of months, showing that in May and June, prices for consumers fell for the first time in years. While you and I might think this is good news, economists and businesses think differently about this. If the CPI is dropping, it begins to make sense, as a consumer, to put off spending money on anything. Why buy now, if in a month the price will have dropped? Does it make sense to spend 20K on a car if, by waiting a year, you can save $1100 (assuming an annual 6% deflation rate)? Of course not, particularly when not buying accelerates the deflation rate.
Again, as a consumer, this sounds great. Prices falling, money worth more instead of less (inflation eats away at the value of the dollar, making it worth less. Deflation reverses that), it sounds like good times for all. But with everyone sitting on their money, businesses find no reason to stay in business, or if they do, they certainly don't need to be as big. So as consumer spending falls, unemployment rises and the economy contracts. And if nothing kicks this pattern apart, it stabilizes into a long-term nation-crippling problem. Just ask the Japanese, who have been grappling with a structural deflation problem for over a decade now, since the collapse of the commercial real estate bubble.
We're not necessarily in that position here in Canada, as the major reason for our fall in the CPI is primarily the result of a 19% fall in gasoline prices. Although, nationally, prices increased at the pump 6.8% from May to June, prices have dropped 24.3% since this time last year. It should be noted that natural gas, car, and house carrying costs have all fallen over the last year as well, helping drive the CPI into negative territory. Phillip Verleger, a U of C professor and energy economist, is now forecasting a drop in the price of oil to $20/barrel (as predicted by peak oil theory, which forecasts a series of spikes and slumps in oil prices), which will hammer Oilberta—not so much in resource revenues, but in cancelled oil sands projects, unemployment, and concurrent collapse in consumer spending which will ripple out through the economy—and will continue to push the CPI into negative numbers. But, if you strip out the effect of oil/energy pricing from the current numbers, inflation is still tripping along at 2.1%, which is why this period is referred to as “technical deflation.”
So this is why our governments are all Keynesian now. The possibility of structural deflation is scaring the hell out of all of them and the corporate community. The system we live under is predicated on continual growth, and stabilizing that growth (removing the bubbles and crashes, inflationary and deflationary cycles) has been made job one for governments. Both corporations and the public dislike uncertainty, so uncertainty must go.
From an environmental point of view, a sustained period of deflation might be just the thing we need. But a deflating economy will have more trouble making the shift to a green(er) future than one that is growing. An expectation of profit is essential for businesses in order to get them to make changes in their business models.

Someone's Paying Attention

Just not in the way you might hope. When it comes to issues of food security, countries around the world are buying up huge tracts of farmland in the Third World in order to ensure their own food security. As global food production suffers, these investments in offshore land stand to become very profitable, and then essential. Just not to the country where the food is grown.
There's a new website dedicated to tracking this trend; http://farmlandgrab.org/

Reuters | Wednesday June 3 2009

By Bate Felix

BRUSSELS, June 3 (Reuters) - The European Union is concerned by the trend of foreign investors and countries acquiring large tracts of farmland in developing countries to guarantee their own food security, a senior EU official said on Wednesday.

[...]

“The poorest countries are selling commodities, they are exporting migrants and now they are selling their land from which they will not take any kind of benefit in terms of food or whatever,” Manservisi added.

Countries such as Saudi Arabia, Abu Dhabi, the United Arab Emirates, China and South Korea are looking to buy farmland beyond their borders after sharp food price hikes in 2008 highlighted a need for greater food security.

Gulf Daily News | Wednesday, June 03, 2009

...

After suffering losses on investments in firms such as Citigroup, Gulf sovereign wealth funds are pumping billions of dollars into local industries such as banks and governments are boosting spending to avert an economic slowdown.

Gulf countries, mainly reliant on food imports, have also increased efforts over the last year to buy land in developing nations from Pakistan to the Philippines and Ethiopia, to help cater for a growing population.

The idea makes sense--after all, food security is one of the more important issues in a nation's life. No government is, after all, more than three days away from a revolution--just stop the food from getting to the people. But this idea of doing it on the backs of other countries is the logical outgrowth of neo-liberal globalization. It assumes, for a start, that contracts will remain valid in a worsening environment, that shipping will remain possible in a post-peak oil world, and that there will always be loads of money to pay for it all and generate the needed increases in capital. Oh, and that starving people won't just kill and eat the rich.

Food security isn't that hard, really. We just can't live the way we do now and expect it to magically appear. All things being equal, the average family of four can obtain food security on about 2 hectares or 5 acres (the classic book on the subject is called Five Acres and Independence by Maurice Grenville Kains), but I realize that not everyone wants to be responsible for their own food security and all things are not equal. I'm of the opinion that in order to boost Canadian food security, all farming income derived from 65 hectares (160 acres ~½ mile square) should be tax-free as long as you are living on the farm. This would make small farms much more economic to operate and, I suspect, would put a lot of people onto farms in order to take advantage of the tax break.

But the current practice of hydrocarbon-intensive production and increasingly non-secure transportation of food around the world in clearly unsustainable. I suspect that before much longer, we''ll be back to Clemantine or Mandarin oranges only at Winter Soslstice and not the year 'round fruit they seem to be currently. And this will be true for a lot of foods. After all, food security is about eating, not about eating anything you want when you want it.

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Stewart/Cramer--The Brit Reaction

For the past 10 days the US has been gripped. Even President Obama tuned in as the country's foremost TV comic, Jon Stewart, unleashed an extraordinary broadside against TV's top financial commentators for their part in the unfolding economic crisis.


Jon Stewart recording an episode of The Daily Show. Photograph: Evan Agostini/AP

The review of Stewart/Cramer from The Guardian.

Nice Quote

Gwyn Morgan (retired founding CEO of Encana Corp) has a regular column in the Globe and Mail ROB. I'm not a big fan, but he is better than some of the G&M's other columnists (not mentioning Marcus Gee by name). Well, today (16 March 2009) reads:

Well,as the saying goes, "In theory, practice and theory should be the same thing, but in practice they're not."

Doesn't that just sum up the world? (Particularly business?)

Bailing out the Big Three

There's a lot of grief about bailing out the Big Three automakers in North America. Some of it centres on the fact that they've been making vehicles no one wants anymore (think about the Hummer and the F-series (200 and up) trucks. But most of the rage is based on the deals that the UAW have extracted from the Big Three; vacation time, overtime, and base-rates all seem to be freaking people out.

The problem with this rage is that it's seriously misplaced. Yes, there is a cost associated with building automobiles, and the numbers I've seen range from $65-$80/hr. Now that's all the labour associated costs related to auto manufacturing, although the people doing the screaming seem to think that this is $/hr in the worker's own pockets. It's not. And while the hour costs of car assembly are high, they are not really that far out of line.
Margret Wente in her Globe and Mail column of 12 March 2009 (p. A15), actually acknowledges her bias against the autoworkers--as well as health workers and municipal workers with the GTA--its that they get more than she does, that their union has extracted significant gains for their workers and hers hasn't. This seems to be common to most of the people doing the yelling about what autoworkers get paid--"they're just assembly plant workers and they get paid way more than me, get better pensions than me, get more vacation time than me, and I deserve better than them!"
Maybe they do. But from the quality of their analysis, I doubt it.

We acknowledge that manufacturing has been the way out of the working class and into the lower middle class for millions of working people--we just hate to acknowledge that a great deal of that social mobility has been because of a strong union movement. One of the most significant engines of Canadian prosperity has been the gains made by the UAW--because they spill over into the rest of the workforce. The Postal workers did the same, as well as the rest of the union movement in North America. Envy of these gains, as in Margret Wente's column, is an ugly thing, but its still easier than actually doing something to improve your own lot--like organizing, taking the beatings and killings from the owner-hired Pinkertons, and fighting for tomorrow even more than fighting for yourself. That's what the union movement has done, and all workers are the beneficiaries of their work.

Are cars more expensive than they need to be? Yes. And are the Big Three in trouble? Yes. But is it the fault of the unions? Not really. Assembly line workers build cars, they don't get the chance to design them, decide on profit margins, or decide which models will go into production. And let's be frank, for every stupid thing the UAW has done, the Big Three have made a couple of hundred stupid decisions--usually driven by short-term ROI needs rather than long-term sense.

Because it hasn't been the Detroit automakers that have driven the general rising level of prosperity in North America, its been the guys and gals making the damn cars, earning a decent buck, that have gone on to spend those dollars on other things like houses, furniture, food, vacations, and the like, that have spread the money around. Decently paid workers can afford to pay other workers decently.

Many of the Big Three's problems stem from other sources. For example, Saturn showed that it was going to be nearly impossible to rebuild car manufacturing in North America under the current financial/trade/political regime. Setting up a new line was simply too expensive compared to what could be done in other parts of the world under an aggressive free trade structure. So the assembly lines have aged, become less efficient, and are too expensive to upgrade at his point. Big capital doesn't see the return on investment (ROI) necessary to fix the problem--particularly with a global free trade environment. This parallels the problems faced by the British Empire at the end of its globe-spanning life. The wealth-generating heart of the empire had aged and become less productive and with free trade, the investment paid better if made overseas rather than at home. So big money made the sensible decision and Britain watched its trade deficit increase yearly and the country collapsed on on itself, hollowed out and emptied of wealth. The logic was unassailable--and unavoidable.