Good News From Citigroup

I have a feeling that I might be in a minority here, possibly even a minority of one, but this looks to me to be good news:

Fears of more turmoil hitting global stock markets grew last night after it emerged that Citigroup, the world’s biggest bank, has called an emergency board meeting for this weekend amid fears of escalating bad debts.

There were concerns in New York that the Citigroup board meeting had been called to discuss the possibility of the bank writing off an increasing amount of bad debt. This could seriously hit its profits.

Citigroup’s shares have already slumped 25 per cent over the past three weeks after the bank wrote off $5·9 billion (£2·8 billion) worth of bad debts.

Much of this originally arose in the US sub-prime mortgage market, which is currently in crisis as a large number of borrowers with poor credit histories have defaulted on their repayments.

Just to lay out why I think it\’s good news. OK, so we\’ve got the sub-prime mess. It\’s not just that though, the extension of loans that are now turning sour. The way that they were sliced and diced meant that the risks were spread (good) but that no one really knows where the risk is now (bad). This has led to all sorts of attempts to cordon off such SIVs and so on from the regular markets: one was being proposed by Citigroup indeed. Throw it all into one huge fund (the Superconduit) and hope the problem goes away.

However, all of these attempts suffer from one basic problem. Someone, somewhere out there, has lost a tonne of money on investing in the tranches and slices of these sub-prime mortgages. Until that loss is crystallised, made known, we\’ll still have the fear and uncertainty in the markets. And it\’s that fear and uncertainty which we actually fear a great deal more than we do the losses.

So who is it that "should" lose the money? Well, it "should" be the shareholders in the banks that leant it actually. And if this is what Citigroup is going to do, write down the debt, take the loss, then that\’s actually what we want. The loss is crystalised, we know where it is, and we can get back to having functional credit markets again. The right people will have lost money as well.

It\’s almost as if the larger the write down the better it is in the larger scheme of things.

Ten People I\’d Like to Brick

As no one has asked me to do this particular little meme I\’ll simply have to pick it up and run with it myself. So, in ascending order of desirability of my being able to brick these people.

10. Umm

9. Well,

8. I

7. Think

6. This\’ll

5. Keep

4. Me

3. Busy.

2. The French.

1. All politicians.

Jeremy Leggett, The Cheerful Edition

I love this piece, I really do.

Take the member of the renewables/efficiency/conservation family, that I know best: solar. The manufacturing costs of solar photovoltaic cells are coming down at nearly 20% every time the global industry doubles in capacity, and that is happening every two years at present. Solar PV manufacturing costs are, in fact, cheaper today than retail electricity in some markets, and by 2010 will be cheaper than today\’s electricity in most developed country markets even if the price of retail electricity grows only slightly.

OK, great. Solar is getting cheaper quickly. An excellent thing too. So we should all wait until 2011 or so and then we\’ll all switch quite happily as it\’ll be cheaper. Great.

You\’ll want to note that one of the reasons that Bjorn Lomborg was so pilloried for his book The Skeptical Environmentalist was that apropos climate change he said, well, really, we don\’t need to do anything because by 2030, 2040, solar will be cheaper and we\’ll all go and use it. Here we\’re told that Lomborg\’s mistake was in being too pessimistic. Hey, go figure!

But much, much more amusing that that is this. In the SRES, those economic models which then feed through into the IPCC scenarios for emissions, a basic assumption is that solar becomes cheaper by 30% per decade. Here we\’re told it\’s 20% every two years. Or 250%* per decade. So things are vastly better than the IPCC says: we\’ll all be switching to solar in just a few years now, we don\’t need Kyoto, we don\’t need to restict anything. Just install the cheapest power systems from 2011 on and we\’ll be fine.

You know, we really ought to thank you Jeremy. You\’ve just told us the whole global warming thing is solved. So ta very much!

* yes, yes, I know it doesn\’t work this way. About an 80% or so reduction in price each decade.

50 Things to Save the Planet

Just a couple of them:

Tony Juniper says we should scrap environmentally destructive “free” trade agreements in favour of ‘a new sustainable trade agreement’.

Given that the case for free trade, when you take the nation state out of it, simply collapses to the case for market exchange, d\’ye think our Tony is hankering after something a little less than sensible?

Population growth – it’s environmentalists’ elephant in the room. But we ignore it at our peril, says Nick Reeves. ‘Global population is now six billion and is projected to be 11 billion by 2050. Scratch the surface of any environmental problem and it reveals population growth, and the way we live our lives, as the root cause. The need for a population policy has never been more urgent. While governments continue to see big populations as an indicator of economic strength, with a place at the top table of the UN guaranteed, the population problem will escalate and lead to environmental catastrophe.’

Err, that 11 billion and rising comes from projections of a world where we reduce trade, reduce globalisation. The peak at 9 billion then falling comes from a world in which we increase trade, increase wealth, increase globalisation. Nick and Tony appear to be arguing at cross purposes here, don\’t they?

And how about this for a novel idea from David Boyle – local, city and regional currencies. ‘They mean we use resources more efficiently,’ he says – something people have already started doing in Totnes.

Beg pardon? How does that work? If the currencies are exchangable, then it makes no difference (only the minor incovenience of the exchange itself) and if they\’re not exchangable then we\’ve just insisted that each locality is self-supporting: see above about trade and population.

Not, I think, the most convincing of proposals.

That Organic Food Thing

Something that\’s occured to me over this report on organic foods. As Peter Melchett tells us:

In addition, we now know that many chemicals that a plant produces to help it fight off insects and diseases are the same chemicals that nutritionists reckon are essential for good human health. Spraying a non-organic crop with chemicals to protect it from insects and disease means the plant doesn\’t need to activate its own self-defence mechanisms, and the chemicals which would naturally be present in the plant, and from which human health actually benefits, are not there.

Right, OK, that\’s what leads to the increase in flavinoids which we\’re all now told make us healthier. But as is said, these flavinoids are in fact the plants producing their own pesticides.

So the argument in favour of organic is now that it contains more pesticides than conventionally farmed produce?

Polly on the Electoral System

No, I don\’t agree with her but then that\’s nothing unusual. But it is disagreement, not that what she\’s saying is obviously wrong or inane.

Except for just one minor point:

But why so much hot indignation on Scottish MPs\’ votes or a referendum on insignificant issues in the EU treaty

Err, given that 80% of our law now comes from Brussels, don\’t you think that that actually is the most important question?

\”Town Faces Defeat To Tesco\”

This is an interesting little example of the different conceptions of freedom that are out there. On the one side we have democracy, the will of the majority as expressed through the political system (and for the moment we\’ll accept that the local council is indeed reflecting that). On the other we have the market conception of freedom, that people themselves should decide what they want to do. That is, that people should not be subject to the tyrrany of the majority:

An 11-year planning battle pitting Tesco against townspeople and featuring secret agreements, allegations of corruption and dramatic U-turns could end in victory today for the supermarket giant.

Twelve councillors will vote on whether to allow Tesco into the Norfolk town of Sheringham after the district council\’s planners urged them to accept Tesco\’s proposal for a 1,500sq metre store.

While anti-supermarket campaigners will make a final plea to councillors, the mood in the seaside town of 7,000 residents and more than 100 independent businesses – the only settlement of its size in Norfolk still without one of the big four supermarkets – was pessimistic yesterday.

On the democracy side we have people insisting that the choices of their fellow residents must be limited. In order to keep those 100 independent businesses, as they the vocal majority desire, others are not to be allowed to shop at a local Tesco\’s.

On the other side we have people moreorientated to an individual, or market, conception of freedom (like myself for example) who would look at it the other way around. Why should the desires of that majority stop the minority from expressing their own preferences? The only possible answer that I can see is that by expressing such desires, by shopping at Tesco\’s, they will be reducing th choices of the others by making those 100 independent businesses unviable.

Fine, so we have two groups each arguing for the thing that they desire and they are mutually conflicting. So a decision has to be made between the two, yes?

Well, not quite, and this is where the market vision of freedom comes into play. Instead of looking at what people say they want, or at the number of people willing to write to the council on the matter (about 8% or so of the population it seems) look at what people think that people will actually do in the future.

Will that democratic majority not shop at Tesco\’s? Tesco obviously doesn\’t think that will happen, otherwise why all this effort to build a store? But the thing is, nor do the opponents of the store. If they thought that people wouldn\’t shop there then they wouldn\’t give two figs whether Tesco wasted its money or not.

The very fact that they oppose the plan shows that they think people will shop there: they are thus using politics to deliberately limit the desires and freedoms of others. Which is why the store should be built, of course, so that individuals may make their own decisions, not be subject to such a tyranny of the majority.

One other matter: you know all these stories of the supermarket\’s land banks? If it takes 11 years just to get planning permission, don\’t you think it\’s actually entirely rational of them to have such?

The French Paradox


Yes, I\’m banking on the French Paradox, a phenomenon first noted by an Irish doctor in the early 19th century. It refers to the relatively low incidence of coronary heart disease among French adult males, even though their diet tends to be high in saturated fats.

It is suggested that the explanation lies in their regular consumption of red wine, one of the ingredients of which – resveratrol – is believed to help fight cancer, heart problems and degenerative nerve diseases.

Not entirely sure about that. I\’ve heard an alternative explanation. Spcifically about the Gascon diet. That people in that region have been eating a diet very high in animal fats for a couple of thousand years: those genetic markers for diseases caused by such a diet have been bred out of the population as those with them died before reproducing some 1500 or more years ago.

I\’d rather, of course, believe the red wine story (indulging as I do in a copa or three to wash down the churrasquera here) but I\’m not wholly convinced. Does anybody know whether studies have been done on immigrants to such high fat eating areas to tease out whether it is genetic or wine based?


Well, sorta. John Kampfner is generally pretty good in this piece about immigration. Distinguishing between asylum and economic migration and so on. Except, except:

In truth, nobody could have envisaged the scale of the influx. A decade or more of strong economic growth has been cause and the consequence of such a higher number of immigrants. It is the middle classes, and employers in general, who have benefited most from a ready source of eager, skilled and undemanding workers. They have driven down wages and business costs, thereby increasing profits.

No, the people who have benefitted the most are the immigrants themselves. That always gets left out of the calculations from people like MigrationWatch and it shouldn\’t be left out. We\’ve clearly and obviously had an increase in both human happiness and wealth as a result of this wave of immigration. Sure, ther are also problems associated with it: but when looking at any form of cost benefit analysis we do have to include all of the costs and all of the benefits.

Shock Horror!

A major drugs scandal hit tennis last night when Martina Hingis admitted that she had tested positive for cocaine during this summer\’s Wimbledon Championships. But the Swiss, a winner of five grand slam titles and the youngest world No 1 in history when she was 16, maintained her innocence, claiming she had never used the recreational drug.

Really? Rich young woman said to have taken cocaine and denies having done so? Bit of a shocker, innit?

Amanda Marcotte

That’s why I’m mostly unable to get on the train with the strange fascination with this woman. Yes, she’s horrendously wrong and pig-headed and possesses a shocking lack of self-awareness, but I’m a softie and I just end up embarrassed for her.

Sadly, no, not a moment of self-realization. She\’s talking about someone else.

Too Good To Be True?

Prof. Salter\’s cool yachts do have one major design flaw: They promise to save the planet for a pittance, and without making humans pay a dear price for their profligate ways. Fifty ships a year, built at a cost of some $400-million to $500-million, would remove the increased warming now attributed to all the fossil fuel burning.

That would never do now, would it? Stopping climate change without a radical change in our consumerist capitalism simply cannot be considered.