You Can Ignore Economics

But economics won\’t ignore you:

But of milk, eggs, sugar and cooking oil there was no sign. Where were they? The question yesterday prompted a puzzled look from the manager. "There isn\’t any. Everybody knows that. Pasta is probably the next to go," he shrugged.

Welcome to Venezuela, a booming economy with a difference. Food shortages are plaguing the country at the same time that oil revenues are driving a spending splurge on imported luxury goods, prompting criticism of President Hugo Chávez\’s socialist policies.

Milk has all but vanished from shops. Distraught mothers ask how they are supposed to feed their infants. Many cafes and restaurants serve only black coffee.

Families say eggs and sugar are also a memory. "The last time I had them was September," said Marisol Perez, 51, a housewife in Petare, a sprawling barrio in eastern Caracas.

When supplies do arrive long queues form instantly. Purchases are rationed and hands are stamped to prevent cheating. The sight of a milk truck reportedly prompted a near-riot last week.

This isn\’t actually a surprise. When you set the price of an item below its cost of production then people won\’t produce the good.

Government price controls on staple foods are so low that producers cannot make a profit, they say, and farms and businesses hesitate to invest in crops or machinery, or stockpile inventories, for fear of expropriations.

"We\’ve warned about this from the beginning – all of these price controls in the long run end up producing shortages," Ismael Perez, of the industry group Conindustria, told Reuters.

You can even fight economics but economics will win.

English Football

Errm, excuse me?

The Premier League is in discussions with Downing Street over ways in which it can increase the number of home-grown players appearing regularly for England\’s leading clubs.

Why is anyone talking to a Scot about this? Further, will the same rules appply to the Scottish Leagues? The Welsh (in so far as they have one)? NI? Well then, bugger off.

Discussions have begun with senior advisers to the prime minister and James Purnell, the culture secretary, to try to develop a consensual "British solution" to the apparent decline in the number of British and Irish players in the nation\’s top sides.

Err, look, that really does give the ball game away, doesn\’t it? The Premiership is England\’s football competition. If it is to be bent to creating a national team, it would be logical for it to be bent to the creation of an English one, correct? So they can bugger off again.

But vastly more important than this is the point that football clubs are in fact private businesses. Within the strictures of general immigration law (you know, EU workers can work anywhere etc.) Government has no damn business telling a private company who it may or may not employ (assuming that we\’re talking about consentinig adults, of course).

So they can bugger off a third time.

Watch Out For Your Wallets!

Now who would have guessed it?

Potential bidders for Northern Rock are pressing the government to waive a £2bn* interest bill on the stricken bank\’s outstanding £20bn loan. Their representations to the Treasury mark the opening skirmish of what could prove to be a politically damaging battle for control of the bank.

Bidders are arguing for more lenient lending conditions to Northern Rock in return for safeguarding valuable jobs in the north-east of England. One bidder has already highlighted the benefits of its bid for the job prospects of the bank\’s 5,500 workers in Newcastle and Sunderland.

Note that currently Northern Rock isn\’t actually paying interest on  that loan, although it is accumulating. So what hte bidders are asking is that the accumulated bill not be called in. Nice work if you can get it, certainly, and I certainly would blame anyone for trying it on. However, I would hope that the Government tells them to bugger off.

Either Northern Rock has a value while accruing that interest or it doesn\’t. If it does then someone will buy it. If it doesn\’t then no one will and it should be gradually shut down. By writing off the interest the Govt (or Bank, or Treasury, to taste) is simply moving money to the current shareholders, increasing the value of NR to their benefit.

As it\’s the shareholders who should be losing money in this affair this isn\’t in fact what we ought to be doing.

But pressure is likely to fall on the chancellor Alistair Darling, who is well aware that Labour has a majority of seats in the north- east and needs to protect them ahead of a general election. Accusations that the government, far from losing money on lending to Northern Rock, was guilty of profiteering are unlikely to play well with MPs in affected constituencies.

Unions in the region, already agitated at delays in the bidding process, could also exert pressure on the government to relax lending rules to allow a bid to go through.

But if the interest is foregone, it\’ll be for that reason. Politics. For, as we know, politicians do things that benefit politicians, not things that benefit you and me.

* One question though. How does borrowing £20 billion for three months at 7% give you a £2 billion interest bill? £350 million, surely?

Climate Change and Cod

Now yes, OK, co are indeed sensitive to water temperature, most especially at spawning time.

The prospect of cod returning to levels where it is can once again be the staple of fish and chips looks gloomier than ever in the wake of a study of the impact of climate change.

The world\’s cod fisheries are disappearing fast, with a global catch that declined from 3.1 million tons in 1970 to 950,000 in 2000. If such a trend continued, the world\’s cod stocks would disappear in 15 years, by some estimates.

Today a study suggests that it is going to be hard for stocks of the fish to recover quickly. As the favourable areas for the fish move north as a result of warming, then the species could be in trouble.

So yes, I would expect climate change to have an effect on the cod populations.

However, that\’s as nothing compared to the idiocies of our current fisheries policies. It\’s rather a mote and beam problem: we still run fisheries as a hunter gatherer industry, still insist that the Commons problem remains unsolved. For example, I\’ve seen figures which insist that we throw back, dead, into the ocean, more cod from the North Sea than we land, as a result of the Common Fisheries Policy. The first thing we have to do is solvethat, in the way that Norway, Iceland and the Faroes have done, by making the right to the fish an asset, one owned by the fishermen.

Only after we\’ve dealt with that major part of the problem should we start to worry about what more minor effect climate change might have.

That Reform Treaty

Referendums on the new European Union Treaty were "dangerous" and would be lost in France, Britain and other countries, Nicolas Sarkozy has admitted.

Well, of course. That\’s why we\’re not getting such a vote, isn\’t it? Can\’t let the proles make the wrong decision now, can we?

That\’s Nice

For some at least.

The Pentagon is spending billions of dollars on new forms of space warfare to counter the growing risk of missile attack from rogue states and the "satellite killer" capabilities of China.

Congress has allocated funds to develop futuristic weapons and intelligence systems that operate beyond the Earth\’s atmosphere as America looks past Iraq and Afghanistan to the wars of the future.

There will be those who gorge on the contracts sent out on an emergency basis.

The most ambitious project in a new $459 billion (£221.5 billion) defence spending Bill is the Falcon, a reusable "hypersonic vehicle" that could fly at six times the speed of sound and deliver 12,000lb of bombs anywhere in the world within minutes.

Unfortunately we\’ve already been involved in that one and I don\’t think we passed the required standards. Hafnium carbide is a) the most refractory (ie, highest melting point known) material and b) bloody hard to make.

This though looks much more interesting:

Darpa is also developing a small unmanned launch vehicle that would provide "responsive and affordable" access to space, for less than $5 million per launch. The first test flight was made in March.

Getting into orbit for that sort of price is an order of magnitude improvement. Only one more order of magnitude needed and we\’ll be "there". "There" being just about anywhere, for as has been pointed out, once you\’re in orbit, you\’re not half way to the Moon, you\’re half way to anywhere.

Mainstream Minerals Corporation

Just a minor point for Mr. Google and anyone who might have received the press release from Mainstream Minerals Corporation:

New 40 ft intersection with a grade of 13.54 g/t Gallium (Ga), 21.50 g/t Scandium (Sc), 12.98 g/t Rubidium (Rb), 20.27 g/t Cerium (Ce), 8.25 g/t Lanthanum (La), 12.03 g/t Yttrium (Y), 1.83 g/t Ytterbium (Yb), 3.23 g/t Selenium (Se), 6.76 g/t Lithium (Li), 3.58 g/t Cadmium (Cd), 4.28 g/t Niobium (Nb), 2.25 g/t Hafnium (Hf), 38.57 g/t Cobalt (Co), 79.29 g/t Vanadium (V), 83.61 g/t Strontium (Sr), and 96.53 g/t Zirconium (Zr).

Those concentrations of rare earths are what is commonly known as "dirt".

All these metals have significant economic and strategic value and depending on purity and lot size, individual powders refined into metal may range in price from US$15.00 per kilogram for lanthanum metal, to US$30,000 per kilogram (US$30.00 per gram) for scandium metal. Some of these metals like Rubidium, which is not actively traded, have sold for as much as US$58.20 per gram.

Worth noting that scandium metal is also not "actively traded". I would be astonished if more than 10 kg a year was sold annually, globally.


Seumas on Castro

For some, Cuba\’s resistance to multi-party elections, its clampdown on those who work with the US against the regime, its shortages and bureaucracy mark Castro down as a failed dictator,

I wonder why anyone would think that?

But for millions across the world, Cuba\’s resistance to US domination, its internationalist record in Africa and Latin America, its achievements in health and education and its pursuit of an indepen-dent, anti-capitalist course remain an inspirational point of reference

Doesn\’t matter if you\’re a failed dictator then, as long as you\’re anti-US and anti-capitalist?


A competition in Australia:

The Australian Fabians are running a young writers’ competition, for those aged 18-28. First prize is a trip to London, to work in the think tank Demos for a month. Second prize is two months working for Demos in London.

Seriously though:

Spend a month with the UK’s leading think tank

Demos? Leading? Think tank even? Aren\’t these the people that fired Madeleine Bunting because she was too sane?

Such a Lovely Place

Homosexuals deserve to be executed or tortured and possibly both, an Iranian leader told British MPs during a private meeting at a peace conference, The Times has learnt.

Mohsen Yahyavi is the highest-ranked politician to admit that Iran believes in the death penalty for homosexuality after a spate of reports that gay youths were being hanged.

Bombing\’s too good for them, of couse.

Polly on Savings

Not quite sure where to start today, the logic running through this piece is so tangled.

The subprime savers are the wretched Farepak people who were not even borrowing money, only saving for zero interest. How can a company fail when all it did was take in poor people\’s money for a whole year, pay them no interest, in exchange for an above-high street-priced catalogue of goods at Christmas time? There was no credit or interest offered, only a "safe" place for cash. Families living on the edge want to put Christmas money out of reach. Why ordinary banks aren\’t offering the same fixed-date deal, with no or low interest, is a mystery.

I\’m pretty sure that you can in fact deposit money in a bank account at no interest you know. Not 100% sure, but pretty certain.

No government will give a blank cheque against every failed enterprise, but the difference was in the instant reaction to Northern Rock. Overnight all bank savers got a cast-iron £35,000 guaranteed – a sum unimaginable to Farepak or First Solution savers.

Wasn\’t actually much of a change though. £32,000 or so was already guaranteed .

In the 10 years since Labour came to power promising to start a people\’s bank to give modest access to credit to those in most need, nothing has been done. Basic bank accounts now receive benefits, pensions and wages, but they offer no credit, not the smallest overdraft facility.

See, Polly agrees, you can deposit money at no interest in a bank account.

People on low incomes need ordinary bank accounts with easy access via cash machines, and a credit facility at a fair interest, like everyone else.

Ah, now we\’ve morphed to offering credit, rather than a safe place fo savings. Something a little different, isn\’t it?

Poverty is their problem: most are relatively prudent, or else they\’d starve (benefits for a family of four total only £200 a week).

I beg your pardon? Is that really the number? Including housing benefit? Seriously, I don\’t actually know and would like to.

That\’s where this always returns. People on subprime pay and benefits are just too poor to save – and yet they have to borrow when minor mishaps cause financial catastrophe. So loan companies can charge what they like – check out the Provident\’s site for loans at 183% APR – often with worse rates door to door.

Mhmmm. 183% APR eh? Wonder how they\’re making money on that. There are in fact non-profit lenders in the US who offer this sort of credit to the poor:

But alternative payday loans have also drawn criticism from some consumer advocates, who say the programs are too similar to for-profit payday loans, especially when they call for the principal to be repaid in two weeks. At GoodMoney, for example, borrowers pay $9.90 for every $100 they borrow, which translates to an annual rate of 252 percent.

Sounds like Provident is offering a good deal really.

Err, No.

While new forms of community localism are necessary in England, this is no substitute for making accountable, via election, the existing intermediate tier of regional government. At the same time this tier needs to be given at least those regional powers over transport, regeneration and planning enjoyed in Greater London.

Let\’s start with England getting those powers shall we? Then we\’ll work out what we want to do next ourselves, thank you very much.

Most Odd

Dean Baker:

Of course the idea of Medicare beneficiaries flying around the world for healthcare is ridiculous. The rational solution is to fix the US healthcare system.

I\’m not sure I remember the last time I saw an economist arguing against trade.

Wintering about Homeopathy

Right now, though, a fierce debate is raging between those, like me, who trust homeopathy because it works for them, and those who call it shamanistic claptrap, without clinical proof or any scientific base.

Err, Jeanette, it\’s possible for both to be true. That it is shamanistic claptrap andthat it works for you. Because you are gullible to shamanistic claptrap.

Changing the Rape Law

One solution would be for specialist jurors to be brought in to try rape cases – people who won\’t assume that rape only happens between strangers.

Ouch! No, no, no!

For who would actually become these specialists? Sadly, only those with an axe to grind on one side or another of the argument. It would, by definition, no longer be an impartial jury.

Ghost Planes

So BA is running ghost flights, empty planes, so that it can keep its slots at the London airports:

Some of the aircraft are thought to be Boeing 747s, which when full carry between 500 and 600 passengers. Every return flight from London to New York generates about 1.3 tonnes of CO2.

That would be 1.3 tonnes per passenger they\’re not carrying actually.

A spokesman from Greenpeace said: "It\’s pretty outrageous that BA are flying these empty flights half way across the world whilst saying they’re trying to cut down on CO2 emissions.

"They should be setting a leading example. Thousands of tonnes of carbon dioxide are being leaked out needlessly just so they can keep their slots."

"Just so they can keep their slots" is not "needlessly". It might be a need you don\’t understand, it might be a need you don\’t approve of, but it\’s not "no need".