Climate Change Update

There have been several developments on the climate change front.

First, the Department of Climate Change and Energy in the UK has been named as having the worst CO2 emissions for a UK government building. As part of a general review, which observed that the government cannot even meet its own targets for buildings it controls, the Department responsible for moralizing and preaching cant even follow its own strictures. “Do as I say, not as I do” seems to be the government mantra.

Second, the good news. The Antarctic ice shelf is getting thicker. The sea ice around the continent is far above average. Also, note the colder than average sea surface temperatures around Antarctic (according to NOAA). If the media is going to discuss the Wilkens Ice Shelf, they should also discuss these other data. The expansion of the sea ice coverage implies a significant cooling.

Third, more good news. The Rector of the University dedicated to climatology in Russia (St. Petersburg Hydrometeorological University, a regional educational hub of the World Meteorological Organization / WMO) has concluded that the period of cooling we are now experiencing will return the pattern of climate change to its more normal seventy year cycle. He said that in "three or four years, all these factors have subsided after a few years the trend of global warming on its way to a gradual cooling. There is every reason to assume that the projections of future warming are not justified: in the next decade, we go to the climatic norm, which was 70-years", - assured Professor Lev Karlin , the Rector of the University of Hydrometeorology.

Fourth, the current global cooling is now in its 8th year. The declining ocean heat content is at least in its 5th year. Sea level rises have slowed or stopped. Record rising Antarctic ice extent and rapidly recovering arctic ice since the 2007 cycle minimum indicates that, while changes are taking place at the poles, both are cooling. The sun is in a deep slumber. All of this despite increases in CO2 emissions. You would think that the emperor has no clothes argument would started to be heard, but instead we have legislators and UN officials, spurred on by gallant and increasingly chthonic and vociferous NGO’s, hell bent on destructive legislation aimed at increasing energy poverty, disrupting industry and causing job loss. Go figure. Time for a really cool look (sorry for the pun) at actual data rather than models. Even James Lovelock is concerned about models shaping policy when there is evidence to be had.

The Age of Thrift is Upon Us

One of the ways we can look into the future is by understand the indebtedness of a country. It is simple really. If a country owes more than it generates in income from producing goods and services, then that country relies on lenders to support it and will have to reduce its government services while at the same time increasing taxation. At some point, cuts to services and tax rises become a condition of people continuing to lend them money – like the IMF or China buying US government bonds. On the other hand, a country that owes nothing but produces significant income from goods and services can expand government services without significantly raising taxes. The way in which we normally look at the future in this way is by looking at government debt as a percentage of GDP.

When we look at this number for 2008, we get some interesting idea of the state of things when the recession was just getting going. Remember: zero percent would be remarkable, but very good. The US had 75% debt to GDP, Canada at 63% and the UK at 47%. In fact, Government debt in the UK was at £697.5 billion ($1232 billion) as compared to just 30% of GDP in 2002 – a steep rise. The April 22nd budget forecast was for debt, by 2013, to reach 75% of GDP. Not at all good.

If this isn’t bad, it gets worse. Many analysts point out that the official government debt figures exclude certain liabilities – for example, the government’s pension commitment to its employees and to citizens, its bail out of the banks which, though may be paid back, may not, and so on. The Centre for Policy Studies argues that the real national debt is already £1,340 billion ($2,370) – worse than not at all good – it is 103.5 per cent of GDP.

But this pales into significance when we turn to the US. As of April 7, 2009, the total U.S. federal debt was $11 trillion ($13 trillion Canadian) - about $36,676 per capita. After Obama’s budget is passed, this will rise to $15 trillion – 75% of estimated GDP by 2013, assuming an economic recovery and significant growth from 2010. Like Britain, the US has unfunded liabilities for health care, pensions and bailouts. As of the beginning of April, when these are added to accepted national debt, the total indebtedness of the US is $53 trillion ($63 trillion Canadian) – very not good. Most of the official debt is held by China and Japan.

Canada has a national debt of app. $461 billion - $13,771 per capita – half the per capita debt burden of the US. Though this represents 53% of GDP, we have a long way to get to get to the major debt leagues. Even the worse case scenario forecasts for post 2009 budget debt, takes us to the top of the first division – well below other G7 members.

So we look in the mirror as Canadian’s and see generally strong position. But our British friends are nor braced for much higher taxes (especially if they earn £150,000 a year or more – the so called “rich”) and deep cuts in services. Our southern cousins are looking at the temporary expansion of government activity – car dealerships, intrusions into health, more spending on education – followed by tax hikes and budget cuts. Lenders will start to get particular about the extent and cost of state services – watch for the lending market getting tighter as more and more governments both print more money (called “quantitative easing” in Britain, isn’t that nice) and seek to borrow more at the same time. Someone is going to call “time” on this brand new government sponsored Ponzi scheme. Thirft will be the name of the next decade.

Don't Panic - People Were Dying from Flu Before Mexican Flu Broke Out!

There is nothing like a few cases of serious flu to stop the world in its tracks and get everyone showing just how foolish they can really be, given a chance.

The Mexican Flu (I call it this out of respect to my former employer. Art Price, who is also part of a major hog farming family) is a scare which is helping to sell newspapers, support ailing TV news and fills an obvious void in our need for a sense of crisis to spur us into action. A very small number of people are suffering flu symptoms and an even smaller number have died. In fact, there have been 93 confirmed cases in the US, 19 in Canada, 13 in New Zealand, five in Britain, four in Germany, 10 in Spain, two in Israel, and one in Austria. In Mexico, where the outbreak is serious, there are currently 2,500 cases of suspected Mexican Flu (only 36 are actually confirmed) and 199 deaths. Total deaths globally stands (according to The Guardian and the BBC) at 207.

In the 2008-9 flu season (which we are still in) there have been 25,952 reported cases of flu in the US. Of these 66.5% were Type A (which includes the H1 strain) and the balance were Type B. In the US so far this year, excluding Mexican Flu, fifty five children have died. In the UK in 2008-9 prior to the Mexican Flu scare, there have been 1,925 reported influenza cases (85% Type A) and some 1,266 deaths due to respiratory illness have occurred, some of which may be associated with flu. In Canada in the 2007-8 season, Canada had 12,256 cases of flu (57% Type A). In 2008-9 so far the number of cases appears similar to previous years - 5,283 Type A cases and 8,767 Type B cases for a total of 14,050 cases.

In 2007 the H5N1 bird flu killed 59 people worldwide, making it a small problem compared to other death causes. However, this was the flu that the WHO claimed was the sign of a coming pandemic that would kill up to 150 million people. A case of chicken little.

So should we be in pandemic mode. No. The situation, according to the UK Medical Officer of Health, Professor Sir Liam Donaldson, is concerning but not yet alarming. He pointed out that death from flu is not usual, but not uncommon and that most people have dealt with flu and recovered, as have the first two Scottish cases – the honeymooners who went to Mexico to return to an isolation ward in a Scottish hospital are now home and well.

Cancelling vacations, ruining the carefully laid plans of school children, walking about Heathrow in face masks en route to Canada (which I saw on Tuesday) are all out of proportion. Even if the WHO moves to a full pandemic flu statement later today, it simply signifies the need they have for attention. The less we panic and the more we stay in good health, wash our hands and don’t sneeze all over people the better.

Top Ten Observations from a Trip To Europe

London - Edinburgh - Amsterdam - Utrecht - London - Filey - London and this is a collage of images:

1. Girls wearing very short skirts who constantly pulled at them to try make them longer - why not just buy a longer skirt?
2. Pink - and I mean very pink - hair.
3. Skirts on top of jeans on top of leggins..
4. Drinking in the street - London, Amsterdam and Edinburgh - wasn't that warm either.
5. A preoccupation with being seen to do the right thing - buying organic, buying fair trade, offsetting CO2, worrying about the carbon footprint - the media have done a good job selling righteousness.
6. Insightful newspapers - thank goodness for the Guardian and Telegraph. No idea what The Times is anymore.
7. Growing presence of the lisp.
8. Men with very very close cropped hair and a new celebration of baldness.
9. Sport. Everywhere. All the time. Sick.
10. Extremes.

Will be back in September, this time France and possibly Italy..

The End of New Labour

Several days after the budget of debt, as the UK’s 2009-10 budget statement is being characterized, the analysis is in and it is not good.

The budget made clear that by 2013, net government debt in Britain would be 75% of GDP – more would be spent on debt servicing than nursing. In the coming year alone, the UK Government will need to raise £175billion in loans from the market to fund commitments made to provide government services. However, the independent analysis of the budget suggests that even this is probably a low estimate – it is based on a model for recovery from recession which no one seriously believes. Should the growth forecast be wrong (1.5% in 2010 and 3.5% in 2011), then both taxes need to rise for all considerably and significant and substantive cuts will need to be made in public services. The budget itself sees £15billion in “efficiencies” in the pubkic services next year – coming mainly from health and education.

In its analysis, the left-leaning Guardian newspapers, sees the situation in stark terms – rolling back the state and ending state intrusion in many aspects of life. In 2010, government spending will be equivalent to 46% of GDP. By 2018, this will be reduced to 37.5% - lower than when “New Labour” first came to power in 1998. The Financial Times, who derides the economic growth model on which the budget is based, suggests that there will be a pre-election massaging of the situation with all of the “tough” work to be done after June 2010, probably by a Conservative government.

The cynical analysts suggests that the budget was a trap set to devastate an incoming Conservative government who will be faced by a fiscal crisis and the need to dramatically cut spending across the board, which will make them quickly unpopular – returning Labour to power after a short five year period of recuperation and rebuilding. Only by being honest, clear and very direct about what the problem is and how they will tackle it will the Conservatives win the support of the people for the challenging work ahead of remaking the State – the real challenge of the fiscal debacle.

All agree that Gordon Brown is finished. At the height of his international power at the end of the G20 summit at the beginning of April, he ends the month as a failing leader fiscally and the head of a party which is morally bankrupt - surrounded by sleaze and corruption. No one is openly jockeying for position within the Labour Party, but there are few voices loudly supporting either the party or its leader.

All eyes are on David Cameron and the front bench of the Conservative Party, who do not yet appear like a Government in waiting – not like Blair and Brown did a year before the election they won so convincingly in 1998. They have a lot to do – solidifying their approach to the fiscal maelstrom that awaits them, rethinking the role of the State in every aspect of daily life and considering the future of its relationship with Unions, lobby groups (especially the very powerful environmental lobby, which has convinced people that only governments can save them by stopping natural cycles) and the growing army of (rightly) concerned pensioners. There is a lot at stake. Cameron spoke yesterday of a new era of austerity in which every aspect of life which involves government would have to change so that Britain can again be proud, safe and secure – no specifics. He will need to get very explicit for people to trust him.

New Labour has always been about rhetoric – its name alone is an example. What is “new” about Labour is that it is not Labour as we knew it at all – rather than pale pink socialism, it is pragmatism, idolatry and deceit. Its time is at an end, and this budget was its death knell.

Last Roar of the Celtic Tiger ?

Two weeks ago the Government of Ireland increased income tax, cut spending, offered early retirement to public servants in key areas who were aged fifty or older, cut the expense allowances for MP’s by 10%, cut unemployment payments in half for some categories of recipients and cancelled the traditional Christmas bonus for seniors. Forecasting that debt serving will take close to 12% of tax revenues, the Government accepts that it is in trouble.

There are signs of trouble everywhere. Shops boarded up, “last chance” sales, tensions on pay day in pubs – the day pink slips are more common than pink gins. But the biggest sign is that Dell, once the major employer with its activities connected to one in six jobs in Ireland, is leaving to move to Poland to focus on Russia and emerging economies and spend more of its resources in Asia. The closure of its manufacture plant in Limmerick took 1,900 jobs. While it is leaving some activities in Limmerick, the work that supported the core economy of the region is gone.

Ireland is not the worst case in the Europe in terms of being challenged by the recession – that honour goes to the Ukraine, which is struggling to meet requirements for an IMF bailout, though a loan has now been agreed. Iceland, dramatically affected by the sub-prime collapse of credit, is a close second. But Ireland is the most symbolic. The Celtic Tiger, as it was known, had a reputation for outstanding economic performance. In 2005 it could boast being amongst the world's wealthiest countries since its economy grew nearly five-fold since 1973. It boasted one of the world's highest levels of GDP per capita, some 20 percent above the European average—while 30 years before it was 35 percent poorer than the average. It was a role model for focused innovation and structural supports for industry development – policy tourists loved going to Ireland and then using it as a case study of how to run an economy.

How the mighty fall. Some residents of Dublin think that this challenges now faced by this small country of just over two and a half million people is retribution for not supporting the EU constitution in a referendum in 2008. Others think that it is due to the caprices of corporations, like Dell, who will move an entire factory to save a few million here and there – this after eighteen years of claiming that Ireland was by far the best place it could be. Those who work at the forefront of economic policy and understand these dynamics claim that they are victims of the irresponsibility of US financial institutions.

But it doesn’t matter. People are hurting, families and struggling. Citizens are confused by how quickly a truly vibrant economy could go sour. The government is caught between a rock and a hard place – it has to be fiscally responsible, otherwise the economy is at risk, but it also has to help its people.

One serious concern is that many of the young unemployed will be lured to a life of crime, linked to the work of the “real IRA” – the body insistent on unification of Ireland, but who funds its activities through drugs and protection rackets. Recent shootings north of the border are seen by some as a resurrection of old struggles.

A tough budget, with strong signals of stringency and belt-tightening, coupled with a focused innovation strategy may be the way to proceed – it is certainly what is happening – but it will be a long haul. On the road to recovery, many will be injured and much will need to be repaired. It will be tough.

What is impressive is that the Irish politicians from the Prime Minister down are confronting the issues head on. Promoting austerity is seen as responsible economics. Downplaying rhetoric and not engaging in the blame game is creating a social context where there is a reluctant acceptance that what has to be done has to be done. There is anger – just discussing these issues near the Guinness brewery brought out passion and fear – but there is also understanding.

For now, the Celtic Tiger is not roaring and Ireland may no longer be “king of the jungle” of economic policy and innovation strategy. But it will be back. The Irish are very resilient and they know what it took to build one of Europe’s most vibrant economies. They will dust off their wounds and start again. The tiger may be quiet, but it is not dead.

Après le Deluge: The Future of Gordon Brown

There are different ways to look at Britain. If you are a tourist right now, there are good bargains to be had – low cost hotel rooms, special deals of restaurant meals and travel incentives, though I wouldn’t say it was cheap. If you are a green campaigner, then Britain is taking climate change seriously and will announce major initiatives this week on top of the $9,000 incentive to buy an electric car and the encouragement to home improvements using government grants.

British politicians, however, look at the country and their situation within it and think that things are about to change. New Labour, which has been in power since 1998, is clearly coming to the end of its period of Government. An economy with very high unemployment, massive debts equivalent to 12% of its GDP and growing quickly, sleaze everywhere from Ministers charging the public so that their husbands can watch blue movies to 10 Downing Street running a smear campaign with untruths and lies about the opposition – it does not look good for New Labour. They have until June 2010 to “fix it”, but miracles don’t come to order.

If you are a Conservative right now, there are two things that need to be remembered. Don’t do anything stupid and the Government continue to get it wrong while you suggest policies and actions that sound less menacing, stupid or downright daft. If you are a New Labour member right now, then your main task is to position yourself to be a survivor after what many are predicting will be the biggest defeat of a government party since Kim Campbell reduced the Canadian Tories to being able to meet in a local phone booth. Apres le deluge is what one newspaper in Britain called it and on various talks shows and radio interviews one can hear Labour politicians positioning themselves for the future and trying to make it clear that they were not there when all the really bad decisions were made.

A lot of emphasis is being placed on Wednesday’s budget and many within the New Labour party are looking to Alistair Darling to save the day. But he can’t. He will have to tax more, cut spending and explain how the current anticipating debt level - £315 billion - £360 billion – will be reduced and paid down. It will not be pretty.

Gordon Brown had a triumphant week as a European statesman during the G20 summit, despite its modest outcomes. It all turned sour shortly thereafter when leaked memo’s and emails revealed the dirty tricks campaign mounted by Brown’s communications team which, though he denies knowledge of and claims no Ministers were involved, is been seen as a symbolic statement of the desperation felt by Labour’s leader. Lord Mandelson, still known in Britain as The Prince of Darkness for his mastery of the black arts of media manipulation, wishes it would all go away and we can get back to business – but the business has become survival.

Brown will not survive the post election house cleaning next year, but will not step down before the election to give new hope to Labour. Not only is he too proud to do so, it is in his nature to accept leadership responsibility for the party, if not for his actions when, as Chancellor, he created the conditions that have made Britain’s position in this recession amongst the worst in the EU. He also would like to claim the “green” legacy – which he may be entitled to.

All eyes here are on David Cameron, leader of the British Conservative party and a Blair-like communicator. If he doesn’t do anything stupid, stays with a strong focus on the economy, health, education and social order and doesn’t have to respond to sleaze within his own party for the next year, he will likely be the next British Prime Minister. But he is not yet behaving like one – not yet having the command of the issues and respect amongst the electorate as Prime Minister in waiting.

I haven’t mentioned the Liberals. There is no need to. I haven’t mentioned the Greens. No one else does either. I also have not mentioned the Monster Raving Loony Party – a remnant of the 1960’s which occasionally fields candidates – but then it wouldn’t be polite to. It really is a David and Gordon battle and Gordon already looks like the loser.

Green Socialism in Britain

Britain’s green plan will be unveiled on Wednesday as a cornerstone of its economic strategy. In addition to renewing its commitment to ensuring that 10% of fuel for transportation is from renewable sources – almost all of which will be bought from other countries and shipped into Britain – the budget will set targets for emissions. Strong hints are coming from Whitehall that the target will be to reduce CO2 emissions to 35% of 1990 levels by 2020.

Most rational commentators think achieving such a target is impossible, so Britain will be forced to buy “offsets” by sending money to countries to support their low carbon economies. However, both the Chancellor or the Exchequer, Alistair Darling, and the Climate Change and Energy Secretary, Ed Milliband, have signaled that the budget will set a cap on offsets, thereby forcing real and substantial change in Britain’s energy use. Britain is about to get very aggressive about becoming a low carbon economy. Rather than offsets, emitters with have to use the European Trading Scheme for carbon (ETS) and trade carbon credits or change their ways of working to achieve progressively aggressive targets – by 2050 Britain has committed to an 80% reduction in CO2 emissions.

Central to the strategy will be a focus on renewable energy, especially offshore wind power. Britain claims that it has the largest installed offshore wind power capacity of any country in the world. However, wind power generation currently produces less than 1% of Britain’s energy requirements and wind farming employs just 700 people. To achieve a shift in energy sourcing of a scale needed to achieve the 2020 target, it is estimated that an investment of close to £650 million a year and subsidies associated with the creation of 70,000 jobs would be needed.

Also on the table is a significant investment in carbon capture and storage for gas and coal fired power plants – a so far promising, but unproven technology – which will cost something in the order of £1.5 billion per power plant. Britain urgently needs to build new power capacity to replace ageing plants and to support wind-power systems, which need back up conventional power to cover periods when the wind is low and demand is high. A total of eight large power plants are needed between now and 2020 to meet Britain’s energy needs – only three new gas powered plants have received approval. Climate alarmists are urging Britain not to build any new coal powered plants and to bulldoze all existing plants by 2050.

Britain will also build nuclear power plants, despite strong opposition. Britain’s nineteen nuclear plants, which generate 19% of Britain’s energy needs, will be phased out and replaced by ten new nuclear plants using contemporary technology. These are urgently needed to avoid rolling blackouts from 2015 onwards. This concern – that supply will not meet demand – is also why new coal and gas power stations will also be built, provided that they use carbon capture. Three gas fired plants were approved earlier this year.

These measures will lead to higher energy prices for consumers and industry. So as to pay for carbon capture and the added costs of other aspects of emissions management, power companies will impose a carbon levy on all users. There are currently some six million people in Britain who are deemed to be experiencing energy poverty – where energy costs occupy over 30% of a family budget. This number is likely to rise to eight million as a result of the forthcoming budget, poverty campaigners claim.

Other issues will also be dealt with in the budget – incentives for energy efficient homes and appliances, financial rewards for trading in a car for less polluting or electric vehicle, encouragement for homes and workplaces to make use of solar and wind power. Unlikely to be announced, but seriously discussed, is the issuing or personal carbon credit cards to manage and permit trading carbon by individuals. Also unlikely is carbon labeling of food and other products to help consumers chose products with a low carbon footprint over those which are deemed to be carbon rich.

With this budget Britain wants to demonstrate, as it approaches the UN sponsored Copenhagen summit in December on climate change, that it has the greenest strategy linked to economic growth of any developed nation. It also looks as if the economy will take a beating from green alarmists who now have captured the minds of several cabinet ministers. As Vaclav Klaus, current EU President and President of the Czech Republic, has pointed out socialist planning is alive and well in the EU – and the cure is worse than the disease. Britain has the green plan disease something rotten.