Is hope preventing us from glimpsing a brave new World?

I have been looking at relationships, not the personal kind, but those that can be found between social, economic and environmental theories. This is the stuff of which sustainability is made, in much the same way as sub atomic particles are the building blocks of our universe!

Scanning through my feeds recently, I read two different articles ;one about the failure of capitalism and the other about the perverse nature of hope. I enjoyed both of them, in their own right, it was only later that the connections between them dawned on me and their potential relevance to the raft of issues that face collectively! 

I will briefly summarise what each article was about, to provide background for my thinking. I will also provide links (for as long as they remain live), so that you can also enjoy them in their own right.

The article about the failure of capitalism is by Thomas Pikety a new left of centre economist, who has a book out entitled  Capital in the Twenty-First Century. It has found a wide audience at recent gatherings of economists around the World. In essence he is saying that using data from the last 200 years, he can clearly prove that wealth generation exceeds productive capacity and that this inevitably results in wider and wider inequality of wealth. He posits that this results in an unfair burden to the middle income taxpayers, which in turn leads to degradation of public services,  working conditions and well-being. Left unchecked this could escalate to protectionism and ultimately conflict. More on this can be read here.

The second topic that I wanted to mention was also published in the Economic Journal, but is more about behavioural trends. Following the sad disappearance of flight MH370, there was an awful lot of uncertainty around what happened and where. These voids were filled with messages of hope, both by the media and by the governments involved in the search. Twenty five years of German research suggest that the link between hope and expectation is one that delivers social pressure and that freedom from this repressive fear factor, brings about a release. Hope, if you like, is a major factor in maintaining the status quo or following a business as usual scenario! More on this can be seen here.

I kept coming back to the same point in my head, whichever problem that you look at, whether it be climate change, resource depletion or wealth disparity, hope appears to be the enemy of radical change!

Each issue taken in isolation, comes with its own profession, media perceptions and political baggage. Problems are analysed, debated and reports written , but the clock ticks on and in effect, nothing changes (the rich get richer, the climate warmer and finite resources, ever more stretched). The problem with this cycle of events is that hope is refreshed with each iteration, which in turn maintains the status quo!

The writing is on the wall for capitalism, the mathematics are suggesting that the sell by date is looming large! The political model is becoming ever more dysfunctional and arcane, bearing disproportionately more relevance to those with a vested interest in maintaining that status quo and accretion of wealth! The environment is becoming increasingly degraded and will serve to ramp up the existing social and economic pressures.

It is only when you take all of these things together and fire them at each other, do you realise they represent a perfect storm. I find it difficult to imagine that within in the confines of the current socio-political and economic environment, that we have any hope of finding a workable solution, or a means of transition to new more equitable and sustainable model.

The art of giving up hope here, is not to stop breathing, but instead to take a deep breath and to say OK what now? By giving up hope, you are giving up on continued support and trust for our failing systems and leaders. You will need to let go of concepts about the current norm. This can and will be both frightening and cathartic! Without  going through this barrier of perception however, I do not believe that any of us can find it within ourselves to innovate and be free enough to make the radical changes needed to design and implement a new model.

The evidence is mounting that the climate is warming and that the economic model is failing the vast majority. Beyond this lies a brave new World of connected localism, can we jump the hurdle of hope and land running on the other side?

2014 Are we out of the woods yet?

Over recent months we have heard a lot about our economic recovery and everyone seems to be talking up the rude health of our growth rate and future prospects. Now, I'm not someone who just likes to pour cold water on a god story, but I have to admit that I felt a bit sceptical about what I was seeing and hearing. Things don't seem be borne out by what I see around me, or by the words some economists have committed to print.

So I decided to see what I could find out and what it might tell me about what does or doesn't underpin our economic revolution. I'm no economist so I have borrowed from some friendly sites and used the graphic information available to try and build a coherent picture, allied to what I see and hear around me.

Rather than come to any clearly defined conclusion, I found that I wanted to know more. So as I travel through the graphs and the story they tell, I have highlighted what I think are some key questions that still need to be answered, if I am to be convinced that we are on the road to a sustainable recovery.



For me, this graph is all about the underlying trend (i.e. the blue line),which indicates that public sector debt is increasing steadily. This has continued to rise as a percentage of GDP, despite the fact that numerous cuts in the public sector budget have been made. So whilst it might be reasonable to say that we are paying down some of the debt due to the cost of intervening post 2008, this really only serves to mask the underlying trend.



What interested me here was the fact that our interest repayments on debt as a % of GDP, appear to be creeping back up again. Wouldn't you expect this to be decreasing when we are told that our economy is growing and interest rates (and hence bond yields etc.) remain low. And yet, there appears to be a steady move upwards!

I may be wrong here, but I would be very concerned if government borrowing rates returned to more normal levels (rates/yields of about 4 to 5%), as the graph above would be telling me, that this percentage would be likely to increase significantly without a proportionate increase in GDP.

The graph below demonstrates this even more graphically dealing only with the debt interest payments. Did you just say wow?!!! How much tax do we have to generate to pay all of this?



So, leaving the graphs behind, how do I now feel about the state of the UK economy? I think I can sum up these feelings under three simple headings; taxation, standard of living and personal debt.

On tax, the current government always wants to reduce levels of both personal and corporate tax, to encourage both individuals and business to grow and spend more as result of keeping more of the money that they earn. The flip side to this however, is that in order to lower taxes, public spending and borrowing have to be reduced. With borrowing still worryingly high, the balance has been at the expense of sizeable cuts to public services.

This has linked very much to the issue of standard of living and the perception of how wealthy we feel. Many jobs have been lost in the public sector, predominantly they have been well paid jobs that return good tax revenues and also encourage spending in the wider economy. The loss of these jobs must have a detrimental impact on tax receipts and spending. Many of these jobs have been replaced in the private sector, however a significant number of these jobs are much lower paid and do not have such a net positive benefit to the Exchequer! In fact many of them benefit off-shore share holders and pension funds through increased profits, rather than our own interests.

It does not help to bring taxes down, when welfare has to be paid to help low earners make ends meet, in fact it is likely that this is an intractable element as to why government borrowing continues to rise! These facts probably contribute to an underlying uncertainty about the overall improvement in the economy, allied to rising prices compared to earnings and personal borrowing.

Personal borrowing in the UK is huge, about £1.4Tr, and represents a significant risk to recovery. When interest rates are low, it is not uncommon to see increased borrowing. Because however, interest rates are low to savers. it is also common for a lot of debt to be paid down. If interest rates were to start moving upwards again, there would be a risk of a lot of bad debt, which could be dangerous to the banking system.

So whilst on the face of it, there does seem to be a recovery (certainly in terms of growth and jobs), it does not have the hallmarks of being a sustainable recovery. It appears to be based upon debt and potential bubbles forming in the economy, which is a high risk strategy in my eyes.

Only time will tell, but it will be good to revisit this at a later date.

Preview 2014 - Land use and food production

It is good to make some predictions for the year ahead, and then to track them and see how you do!

Some of course are frivolous (as they should be)!

Others are more serious however, and whilst I may not wish them to come true, they are nonetheless well evidenced.

Some of this evidence is captured in the articles linked to below and to save time rewriting what has already been done. I wanted to start by taking a look at food production and land use in the year ahead and the impacts of population growth and climate change.

http://www.care2.com/causes/10-reasons-why-the-meat-and-dairy-industry-is-unsustainable.html

http://www.huffingtonpost.com/2013/12/30/chinese-farmland-polluted_n_4517601.html?

ir=Green&utm_campaign=123013&utm_medium=email&utm_source=Alert-green&utm_content=Title

Taking the two  articles above as an exemplification, my first prediction for 2014 is that we will start to see spiralling pressure on land use as nutrient prices become higher, water shortages start to bite, pollutant load and degradation start to combine.

These pressures will impact the industry, consumers and the communities in which the produce is grown. They will manifest in higher prices to both producers and to the consumer. It is also likely that as costs rise and prices start to spiral, a squeeze will be placed on supplies, many of whom already receive a very poor and socially unjust price for their produce. 

The expanding middle class in India, China and other BRIC’s will be the major driver of these problems, however the consequences will be felt in poorer countries, where land and water grabs are likely to become more common as suppliers try to satisfy growing demand. This could result in a social backlash in countries with a strong democracy and will result in feuds and conflict, in those which are less stable (South Sudan being a current and relevant case in point).

Pollutant load from mineral extraction is also becoming more prevalent as the easiest wins in terms of extraction are mined out and exhausted. From here on in, the winning of raw materials will become more energy intensive, more remote (which multiplies the risk in transport) and more polluting. These pressures will again be reflected in prices for raw materials and will increase public opposition to these operations. 

As case in point is the extraction of tar sands in Alberta, Canada, extraction and processing has created a 7 300 mile halo (could I have used a worse term!) of Mercury pollution around the whole area! More information can be found here:

http://thinkprogress.org/climate/2013/12/30/3107761/tar-sands-mercury/

Here in the UK, it is important to look at both how we can reduce our impact and what the threats might be to our own land. One of the stark facts from the Chinese example is that good regulation is essential and that also, it is obvious that the clean up costs far outweigh the burden of regulation,, including putting land out of production for some time. 

A huge quantity of waste is sent to land for recovery in almost every country, including here, thus it is essential to maintain vigilance as pressures (mainly economic in the case of the UK) , start to mount! PAS standards for compost and AD are in place, it is important that these are strictly observed to maintain soil quality, to ensure benefit from the recovery of recovered wastes.

So in summary, the main predictions are that prices for meat and dairy products will be driven up steadily and it is also probable that there will be a number of new food scares and scandals this year! We can reduce our impact by cutting back our consumption of meat and dairy products, we could also buy a lot more seasonal produce, grown locally and organically.

On a more frivolous note; I'm going to steer well clear of  Noodles for a bit!!!

Fracking, is it really in our interest?

This is my most recent blog about fracking, the how's and why's laid out for people to see. I hope that it is a balanced appraisal and that it helps those who read it to better inform their opinions. I have published the version from the final edit from another blog, hence a few format changes.

How the Frack?

Recent events in the UK, Europe and the United States have propelled hydraulic fracturing (‘fracking’) up the public and political agenda. Amid the hullabaloo down in Balcombe, you could easily miss the arguments advanced by each side. Is the anti-fracking camp pitched on solid ground? Is the case for drilling full of holes?  In the first of two articles on this topic I will examine how fracking works and what the risks are, while the second will assess how much we need it.

Unconventional oil and gas exploitation uses what are now quite conventional drilling methods, developed through the long history of the oil and gas industry. These techniques use what are known as the ‘best available technologies’, which are well understood from the perspectives of costs, risks and safety. Well construction and design can and often does enable the safe extraction of fossil fuels from deep below the ground.

No sense of wellbeing

However, the oil and gas industry does not inspire huge public confidence, as attention focuses on major incidents like the Deepwater Horizon blowout, which have cost lives, caused huge environmental damage, and bolstered the arguments of green campaigners. Concerns about engineering methods and well integrity are more serious than any number of dubious YouTube clips showing people setting light to gas from their water taps.

Fracking is often carried out at considerable depth and involves pumping high pressure water into the rock. Deep wells and high pressures place strain on the engineered infrastructure and reduce the margins for error. However, at Balcombe, initial drilling is less than 1,500 metres. The average depth of a fracked well in the US is around 2,500 metres, while the Bowland Shale in Lancashire is at a depth of some 4,750 metres. North Sea reserves are typically 3-5km below the seabed, but all are shallow compared with Deepwater Horizon, the deepest oil well in the world, extending more than 10,600 metres down into the rock.

The Royal Society and Royal Academy of Engineers have produced a report on shale gas extraction, which highlights the need for good construction and well integrity. However, sustaining these standards may be challenging in a relatively new industry here in the UK, especially when there are calls for deregulation and a need for short term returns on investments.

Water mess

Engineering challenges are not the only risk to account for in an Environmental Impact Assessment – contamination, water impacts and even radiation need to be considered. The evidence to quantify them may not yet be available in all cases, but the absence of evidence is not evidence of absence, especially in a developing industry.

The fracking process requires a huge amount of water, some 2-5 million gallons per well – although this estimate may be somewhat low due to the way data is collected and the fact that some wells are fracked multiple times. An MIT researcher has calculated total water use for US wells in 2011 to be around 135 billion gallons, based on a 5 million gallon average. This represents just 0.3% of US water consumption, rather less than is used by golf courses. 

This is a small percentage, but water stress is high on the US agenda – it may become a focus in the UK, too, judging by most recent stress maps. Fracking’s additional demands are not trivial: the industry’s impact on aquifers in some Texan counties is starting to foment concerns amongst previously pro-fracking populations.

The process of pumping large quantities of high pressure water, sand and sundry drilling additives produces a lot of waste water, which also contains toxic material brought up from the shales. Common toxins include heavy metals (such as barium, strontium and arsenic) along with a number hydrocarbons and bromides.

Evidence being amassed in the US shows that fracking operations have polluted groundwater and released fluids and gas into drinking water aquifers. As early as 1984, the US Environmental Protection Agency (EPA) reported a case in West Virginia, which rendered an aquifer unusable. In 2011, the EPA also reported extensive contamination of groundwater in Wyoming, and similar events have been recorded in Canada. In each case, the causes have been identified as faulty well installation, with seepage back into the ground from inadequately engineered waste water storage. There are of course also reports of cases where no contamination has taken place, which may serve as case studies of good practice, but the evidence suggests a degree of inherent risk.

Ill treatment

A recent study by the University of Texas at Arlington found elevated levels of arsenic and other heavy metals in groundwater near fracking sites in Texas’ Barnett Shale. Whilst the study is not conclusive, elevated arsenic levels have also been detected by the EPA in domestic well water near a fracking site at Dimock, PA, necessitating additional treatment systems to be installed by householders.

In Pennsylvania, state authorities have responded to EPA concerns by requiring fracking waste water discharges to stop unless properly treated. Some had been discharged to  sewage works that were incapable of dealing with the pollutants and therefore affecting river quality. The UK might also struggle to treat substantial amounts of contaminated wastewater so as to meet discharge standards, and could find itself in breach of Water Framework Directive obligations.

Some US fracking wastewater is not treated: much is re-used and then stored, whether temporarily pending treatment, or long-term in deep wells. Above ground storage in open (and sometimes leaky) lagoons carries the highest risk of land being contaminated, but underground storage also holds risks.

Illegal discharges of polluted wastewater and reliance on storage in the US may be connected with the country’s immense size, and the distance water must be transported for treatment. In a country on the UK’s scale, treatment sites will be closer, but some wells will still have significant storage and transport needs. The lesson from the US appears to be that these will require strict controls.

Gas radiator?

There are two sources of radionuclides from fracking: those deliberately injected to trace and profile wells, and those occurring naturally in the shale that are brought to the surface. Around a dozen short half-life isotopes are used in controlled quantities for injection. Their use is of less concern than the naturally occurring radionuclides, such as Radium, Radon, Thorium and Uranium, which have a longer half-life. These materials require careful management to avoid environmental and health impacts.

The EPA has detected higher than permitted levels of these radionuclides in the outfall from wastewater treatment plant, and drilling industry studies have found that dilution in rivers may not be effective, meaning that radionuclides could enter drinking water inlets. Workers and local residents at drilling sites and wastewater treatment plants are exposed to health risks, most obviously cancers of the internal organs and the lungs, where Radon escaping as a gas, has the opportunity to evaporate from storage or at the well head.

Fluid situation

An extensive range of additives may be injected with the sand and water during the drilling and extraction processes in varying dilution and mixtures depending upon the geology of the fracked well. Most are quite widely used in industry, as operators are keen to point out, although they may have toxic characteristics: ammonium persulfate, hydrochloric acid and mineral oil being examples.

These additives constitute around 1% of the fluid, a significant quantity given the large amounts of water and sand being pumped. In the US the makeup of fracking fluids can remain unknown under commercial sensitivity laws, but UK rules include better disclosure on what chemicals are being used, allowing them to be vetted for toxicity and other hazardous properties.

Shaking shale

Fracking is thought to cause seismic activity, and operations at the Cuadrilla site in the north west of England were suspended after a minor earthquake hit the news last year. A DECC report co-authored with the British Geological Society concluded that “the risk from these earthquakes is low” in terms of structural damage, but I would have concerns about the risk posed to the integrity of the well lining itself.

A recent report in the journal Science concluded that a large earthquake many miles away may trigger a swarm of smaller earthquakes around a drilling site. The resulting destabilisation of the fracked area can later lead to a larger earthquake. Fracking wells might act like seismic lightning rods; but there’s no safe path to earth for an earthquake and they could pose a more serious threat to habitations and structures than previously thought.

None of the issues that I have raised is technically insurmountable or fatal to the fracking cause if carefully managed, but each risk needs to be controlled appropriately through regulation. The International Energy Agency (IEA) has published a set of ‘golden rules’ for fracking that include examples of best practice in policy and regulation, which would be a good starting point for the UK. If we are to safely extract gas instil confidence in the regulatory matrix as whole, regulation will need to be backed by close monitoring.

These controls will be costly to establish and maintain – the IEA estimates that implementing its rules would increase the costs of a well by around 7% – which may harm the business case for unconventional oil and gas. However, without such measures it is doubtful whether even residents of the desolate north will be induced to welcome fracking, whatever its economic benefits.

administrator posted: "By Mike Tregent All else being equal, is fracking something we should welcome? Advocates of fracking present it as ushering in a new age of cheap energy and increased self-sufficiency. But is it really going to be economically beneficial and will" Why the Frack? All else being equal, is fracking something we should welcome? Advocates of fracking present it as ushering in a new age of cheap energy and increased self-sufficiency. But is it really going to be economically beneficial and will it reduce our bills? Is it ethical and sustainable? In a previous article for Isonomia, I explained the fracking process and examined the risks inherent within it. Now let’s look at exactly what this means in terms of our energy mix, security of supply, and why it has been labelled as an extension of the dash for gas. Fracking cheap The large scale exploitation of shale gas in the US has defined a model that many in Europe are keen to follow. It has certainly had a profound effect on energy costs – the International Centre for Climate Governance reported that “in 2010 the average gas spot price at the Henry Hub in the US was only $4 per Million British Thermal Units (MBtu), while in 2008, the same price was for around $8-9 per MBtu.” Gas prices were also considerably lower than in other developed countries. However, Robin Miege, director of strategy at the European Commission’s DG Environment, recently poured cold water over prospects for unconventional hydrocarbons in Europe, pointing to important geographic and geological differences between the US and Europe. These differences mean that shale gas production costs could twice as much in the EU as in the US, limiting the scope for unconventional hydrocarbons to transform our gas market to any comparable extent. Indeed, even if shale gas were to be cheaper, a senior banker at Norddeutsche Landesbank has pointed out that it would be unlikely that the benefit would be felt by customers. A significant impact on the gas market would also depend on there being a substantial amount of gas to exploit. Establishing the true level of reserves is made more difficult by opposition to the grant of exploratory licences. Estimates of the reserves in the north west of the UK were recently revised upwards by a factor of twenty, although doubts remain regarding the proportion of this gas that can economically be extracted. Extraction challenges mean that the scale of accessible reserves are unlikely to be as great as current estimates suggest. The consensus view on unconventional gas seems to be that it will not arrest but merely slow the decline in UK conventional gas. It might allow the UK to negotiate better deals for imported gas by making us less heavily dependent on them, but this assumes that we continue our over-reliance on gas in our energy mix. Investing heavily in shale gas and in new gas power stations will divert resources from diversifying energy production, and simply kick the can down the road, leaving the next generation to address the real need for decarbonisation. Gas leaks Shale gas in Europe would do little to reduce greenhouse gas (GHG) emissions. Natural gas is a cleaner burning fuel with lower combustion emissions than coal. However, combustion is only part of story. In 2010 the EPA carried out an assessment on “fugitive” gas emissions at or around shale gas sites; the report suggested that losses from such emissions were much higher than for conventional natural gas. Based on this research, Cornell University examined the total lifecycle CO2 equivalent emissions of fracking compared with surface and deep coal, diesel oil and conventional gas, over a 20 year and 100 year time frame. Shale gas performed considerably worse than conventional gas and even somewhat worse than coal or diesel oil production over 20 years, although the 100 year picture was rather more complex. Ring of fire: should we allow our love for natural gas to be fuelled by fracking? Photo by James Riden, via Wikimedia Commons. Caution is therefore needed over claims that shale gas is an environmentally sustainable option. However, the EPA data on which the study is based is not uncontroversial, and a subsequent study by the Massachusetts Institute of Technology found fracking’s fugitive emissions to be much lower. In this field, all results seem to be contested. If the Cornell study is to be believed, only in countries such as Poland, which are heavily dependent on coal-fired power stations and have large reserves of shale gas, would a new dash for gas have a beneficial effect on GHGs. Given the urgent need to reduce our overall emissions, the risk that shale gas production could hinder progress on the installation of new renewable energy sources needs to be carefully considered. Gas bubble? Whether it is worth investing in shale gas depends heavily on how long the supply of gas might last. Independent think tank The Club of Rome recently produced a report on increasing scarcity of mineral resources, which highlighted the challenges of moving from the exploitation of higher grade minerals, which are recovered relatively easily, towards lower grade exploitation. Fracking is towards the low grade end of the spectrum, which is characterised by the need to for greater effort and investment, not to mention increased risk, to win an ever diminishing quantity of resources in harder conditions. Only if energy prices go up will fracking repay the investment required. Analysis of data supplied by the International Energy Agency suggests that the boom in the production of shale gas in the US may be relatively short lived; in fact production could already be at its peak. The average life of a well is only 3-5 years, and the number of new wells being sunk is in decline. The dash for shale gas in the US has lowered the price to a point where not all extraction is profitable. This may mean that some possible wells are being held back, but it even if prices rise so as to make these worthwhile investments, it is unlikely that these will result in production increasing. The unconventional gas market seems to be at risk of experiencing a bubble of a significant scale. Some economists are already suggesting that it could burst in a relatively short time frame, with serious consequences for economic stability. Pinning European hopes for lower energy costs and increased energy security to such an insecure mast seems rather a risk, especially with the US economy already wedded to unconventional gas. The attraction of shale gas as a means of boosting our struggling economy with cheap energy is understandable, especially given what we’ve seen happen in the US. However, the evidence suggests that Europe is a different case, and here shale gas has much less to contribute. If it proves to be a short-lived bubble, there also appears to be a real risk of wider damage to the economic system, and my preference would be to see continued investment in renewable alternative energy, which would be likely to provide more jobs and greater security. There also doubt regarding the GHG credentials of shale gas, even compared with other fossil fuels. Taking account of all the risks identified and discussed over the course of my two articles, I don’t think that any of them is individually fatal to the case for fracking. Most can be managed (at a cost) or mitigated by ensuring we do not overcommit to unconventional gas. However, taken together they make shale gas appear distinctly unpromising. If you were to ask me whether I’d back a new dash for gas, I’d have to say not on your fracking Nelly! Mike Tregent

Bubbles, dangerous beauty!

Everyone is captivated by them, children and adults alike!

They are used also to describe and be analogous to, complex features of our lives. Bubble formation or nucleation is used to describe the formation of our universe and the period of expansion in the short time after the Big Bang. For most of us, I guess it is comforting to think that we live in a bubble universe......but bubbles burst!

Much as I love the debate on astro-physics and quantum theory, I'm really more than happy to leave that to the experts! Instead I want to focus this blog on another use of bubble theory, that which deals with economic models relating to inflation and the formation of bubbles that can harm our economies.

With the globalisation of trade and the advent of World wide corporations, so the management of trade and individual economies has become larger and more complex.Governments are competing in a race to the bottom in attempts to keep the value of their currencies down, to keep export prices competitive. Normalisation of interest rates could unleash strong inflationary pressure.

Currently the most dangerous bubbles forming, and lurking almost unseen by the vast majority of us,  are asset bubbles. These bubbles form when there is over inflation of an asset price (demand pull), as an investment vehicle. The bubble is thus formed by rapid price rises over a short period, but this is not supported by demand (over a longer period) or by an underlying inherent lower value.

Inflation of the bubble (see this as an aggravation of the situation) serves to make it less stable. In the aftermath of the recent global recession and in major asset classes there have been some serious contributory factors to bubble inflation, that have been deployed to stimulate economic growth.

These have been prolonged low interest rates and over inflation of the money supply (quantitative easing). Because of these actions there are potentially inflated bubbles in Carbon (oil and fossil fuel industry), property, Gold (rare metals generally), agricultural land and property. The scale of the bubble may vary in priority from country to country, but in effect they are all linked due to the globalisation of the banking system. Most of these economic instruments, as politicians like to call them have been deployed in all of the major economies, I might wonder how capable they are at playing these instruments as opposed to their voters?!!

Let's take property as a case study, partly because we have already seen a fairly major collapse of just such a bubble in the US, which has led to many of the current problems! A derivative is a loan or financial product that is secured against an asset, in this case a mortgage, which provides the underlying security. Because of a housing shortage in the US (not exclusive to US,  UK and Japan are vulnerable too), leading to a spike in property prices. Hedge fund managers saw this as an opportunity with minimal risk and created a huge demand. This had to be underpinned by the creation of more mortgages, which in turn led to riskier lending and created a demand for more housing (over inflation of the price, underlying loss of asset value and increased risk). As house builders caught up with demand, so house prices began to level off and even fall. This created negative equity and exposed the risk of the over inflated asset price. The sub-prime lending (as it came to be known) had started and had too much momentum to be restrained, the bubble collapsed.

Unfortunately these tell tale signs can be seen in other assets/commodities, it might even be reasonable to expect that hedge funds would look for an alternative support mechanism for the derivatives market (although you might hope with the benefit of property hindsight!). There is great concern that oil, coal and gas investment has formed a bubble whereby the value is over inflated in relation to the amount that can be extracted and used, if we are to meet emission targets for Carbon Dioxide. Given that this bubble is large in comparison to the property bubble and that fossil investments underpin so many pension funds, it is difficult to see how the current economic system could recover were (or should that be when!), the bubble to collapse.

Other bubbles are also worth consideration: agricultural land values and food commodities have seen huge increases in investment over the last few years. Although the US first saw these increases at such a scale, in the last couple of years, there has been a global land grab going on. Such investments are now threatened by climate change induced (or exacerbated) water scarcity, crop pests and disease. Forecasts have put potential losses on investment as high as 5 trillion pounds (£5trn).

Thinking of things at a more human level, some recent research has suggested the formation of a productivity bubble! Companies have looked solely at the bottom line, with employees seen merely as another asset to be sweated! The hours worked have got longer and the holidays taken have been less as workers have been made redundant, or not replaced, leaving the rest to pick up the additional workload.

Productivity increased globally, however this is now starting to flatten off as chronic stress and illness in the workplace manifest themselves. In fact it is likely that productivity could start to fall again, if global temperatures continue to rise and more virulent disease affect the population. It is not sustainable to continue to inflate executive pay and the asset register on the grounds of infinite improvements in productivity!

The only real way to avoid several catastrophic collapses, is to live within our means and not to print money against future productivity that can't be met because it makes a false assumption of infinite resources and continuous improvements in productivity.

Addendum.

I have added the link below to an article in the International Debt Observatory, looking into the potential problems surrounding unconventional fossil fuels. It was recently published (post my blog), but serves to underline the problems emerging.

http://www.oid-ido.org/article.php3?id_article=1396

Future perfect with good waste planning.

Having returned to work after a couple of weeks off, I have been piling through the backlog of e-mails, trying to pick up the threads where I left off and see what is new!

Amongst the rubble that is my inbox, were a couple of requests for input to consultation responses, always with short turn around periods. I did however, don my thinking cap and provide some words containing the sum of my nuggets of wisdom.

I found this to be a useful exercise, it got me thinking and helped me to tie together some issues that had been floating around in the backwaters of my consciousness. In writing out my thoughts, it helped to distil some ideas about what the problems facing us are and how we might begin to respond.

The consultations in question are on waste planning guidance and waste prevention, both closely linked and essential parts of planning and developing our service infrastructure.  The problems are many; lack of accurate data, a need to change behaviours and mixed messages to name but a few.

Amongst these problems, one that I feel hasn't been properly explored, is how planning links to historic data and fails to meet needs for future proofing. In terms of infrastructure and investment in the right technologies, this might in part be due to the lack of investment that is currently available or that the policy incentives that are in place don't offer the correct balance.

If you plan your infrastructure needs based upon data collected during an economic downturn, can it be a reliable benchmark for future provision. Can it also be sufficient to drive the changes needed to meet targets, social and economic aspirations?

What I think needs to be addressed, is how will we deal with a rapidly growing population and and an economic recovery (even a weak one). In my estimation, waste prevention and resource efficiency measures will struggle to off-set these drivers for growth in waste generation. If that is the case, then planning for nil growth in waste generation over the next 20 years could leave us with a significant capacity shortfall.

I hope to deliberate on some of these issues more in future blogs, but at least for now, the seed has been sown!

Happiness is it all it's hyped to be?

I have reposted below an extract from the Huff Post Green.

Arianna Huffington: Why I'm Unhappy With Happiness Surveys

"UK population's happiness is on the up," trumpeted a headline in The Guardian. What the headline was referring to are the results of a survey conducted by the Office for National Statistics meant to measure Britain's national well-being. The program was announced in 2010 by David Cameron, with the first report coming in 2012 and the second this past week. While the idea of measuring a country's well-being by something other than just its GDP is certainly important and can lead to a really worthwhile conversation, the question is how the alternative index is compiled and how it correlates with other data on health and well-being. I'm solidly behind any effort to show that we're more than just our marginal contribution to our bank account, the bottom line of our employer or the gross national product of our country. But it's important to look at the whole picture.

It would be really good if instead of just creating a a set of statistical indicators, that these indicators were used actively and progressively, to decouple our well being from GDP, accretion of wealth (at least the material bit) and reliance on fossil fuels. If these indicators provided the basis for measuring progress against these objectives as part of a cyclical programme for improvement, then this could have real and practical benefits.