Fengrrl

We mustn't let a slump lead to war

2009-02-02T01:59:00.000-08:00

I found the headlines on the front page of Saturday's Guardian pretty scary. They were about strikes across the country in response to an Italian company using Italian and Portuguese workers on a building contract at an oil refinery in Lincolnshire. Because it's an EU company using workers from an EU member state on a short term contract this is perfectly legal under EU rules. When most of the UK building industry is out of work it caused outrage.

Over the last few months, a number of commentators in the FT have pointed out that it was the financial slumps at the beginning of the 20th century that led to the two world wars. I found that a pretty scary idea to start with and now that Gideon Rachman (this may not be a public link) has spelt out the mechanism I find it even more scary.

In a nutshell: economic slumps lead to lots of unhappy people with no jobs so they start to agitate for work to stay in the country, resulting in pressure to cut back on globalisation. Their unhappiness provides an opportunity for nationalist parties to build support. Nationalist parties come to power; resources like oil, water and food are no longer shared and freely traded. Cutbacks in cross-border investment mean less to lose by attacking other nations so war becomes a more attractive way to acquire or defend those resources.

The initial stages of this process have been only too evident in the media recently. The strikes in the UK look menacing with angry men waving placards and police in riot gear. According to today's Guardian the strikes are expected to escalate. In comparison, calls for the UK to reduce it's food imports, as in yesterday's Observer, look benign, there is the green aspect of reducing food miles, the nice cosy idea of promoting British farmers. Surely it's just common sense? But it's another aspect of the growing protectionism that leads us to weaken our dependence on each other and create the conditions that lead to war.

As Rachman's article points out "At the Group of 20 leading countries’ summit in November, all 20 governments solemnly promised to avoid protectionism, which is widely believed to have worsened the crisis of the 1930s. Yet within days of returning from Washington, India and Russia had pushed through new tariffs"

We desperately need leaders with the vision and commitment to resist the pressure to cut economic ties to the rest of the world. I don't hold out much hope for Gordon Brown's ability to focus on anything other than winning the next election. The US is the most important player in this globalisation game and Barack Obama's pre-election pronouncements showed a worrying tendency to want to protect US jobs and US farmers.

I'm scared.

Jamie’s Ministry needs to tackle a lot more than just recipes

2008-10-06T04:01:00.000-07:00

I got very wound up watching the first episode of Jamie’s ministry of food on Channel 4, in which he attempts to teach the inhabitants of Rotherham to cook. I watched this poor girl whose introduction to cooking was grating an onion and making meatballs. I cook from scratch every day with local organic produce and I would never grate an onion – it’s a thoroughly unpleasant task that leaves me with streaming eyes and bleeding knuckles. Neither would I make meatballs – it’s far too fiddly. If I cook mince I just make a comforting tomatoey slop similar to Ragu Bolognese and pour it over cabbage and potatoes - it’s one of our favourite meals and it’s very simple to do. Why on earth is Jamie trying to get these poor folks to cook River Café recipes? They would be much better off learning the basic steps to make a decent meal out of whatever is cheap in the market: to fry a bit of meat or fish, steam some veggies, make a stew. Bangers and mash. Soups made for next to nothing with a beef bone from the butcher.

Even then, he’s trying to change the whole fabric of society. Food is deeply embedded in our way of life, there’s far more to contend with than just learning to cook. People who are struggling to feed their families often live on council estates where the parade of shops now houses: a paper shop with sweets and booze and lottery tickets and a few tins of beans if you’re lucky, a bookies and a kebab shop – and often there’s just a kebab van. The architects may have planned for the greengrocer, the baker and the butcher but the fact is that these can’t survive if they don’t make a profit. The supermarkets haven’t opened their shiny new sheds on the council estates – they’ve sucked the trade away from the corner shops and have been closing smaller local branches for years. The poor girl who feeds her children from foil takeaway trays was shown in tears at the end saying that she was having debt hassles and couldn’t afford the bus fare to go and buy fresh fish. Is he going to start a community co-op to bring the food into the area for them to cook in the first place? I doubt it.

There’s a patronising middle class attitude that they know better how to manage on no money than the feckless poor. It’s just not true. Most people aren’t stupid. They are making the best they can of difficult circumstances and impossible choices. That’s not to say that their diet can’t be improved but it requires a great deal of time and thought and discipline to provide a family with a good diet when you’re living on benefits. River Café recipes are not the answer. He would do better to get How to feed your Family for Five Pounds a Day back into print, even if it is a bit hippy-ish.

We have to stop fighting a losing battle to lure jobs to the North

2008-08-18T02:21:00.001-07:00

The report from Policy Exchange suggesting that we stop trying to move jobs to the North and allow cities like Oxford and Cambridge to expand instead has been met with derision by the liberal press with articles such as this one. Even the Tories are trying to distance themselves from this report.

I think it is stating some unpalatable truths. We have spent 50 years trying to move jobs to the north without success. Meanwhile cities like Cambridge wrestle with the problems of overwhelming growth and job creation. As someone who started life in Sunderland and has lived for 30 years in or near Cambridge I feel very well qualified to talk about this.

As a child I grew up with the bomb sites and unemployment of Sunderland in the 60s and watched as the last of the grand public buildings were demolished to make way for a horrible modern town centre of concrete wind tunnels. I moved away to go to University with a sigh of relief as most bright young people have done since the war, and we don’t go back, we build our lives where the jobs are, in the South. Meanwhile the government has poured millions into upgrading the roads – dual carriageways everywhere – subsidising factories and regenerating city centres. There are lots of public sector jobs in the North East, lots of call centres, and an industrial sector that continues to surprise with new ways to exploit niche markets –the ship breaking yard in Hartlepool is the most famous example. What we don’t have is a mass influx of professionals in IT, finance, the media or the arts creating jobs in new sectors. The latest theory is that investing in the arts will attract the middle classes back, but Sunderland has had a highly regarded art school for decades without it driving regeneration. I think we have to accept that trying to lure jobs back with subsidies and infrastructure investment hasn’t worked. I don’t think that means writing off the North by any means, but we can’t go on throwing resources at fighting economic realities.

Meanwhile, in my adopted home town of Cambridge, we have seen the growth of Silicon Fen and the creation of large numbers of high tech jobs. House prices in Cambridge are ridiculous, because people will pay a huge premium to live close enough to walk or cycle to work and avoid the horrendous traffic jams created by the thousands of commuters who are attempting to drive into the city at rush hour. A city that does not have the transport infrastructure it needs to cope. Companies are starting to find that their expansion is limited by the fact that potential recruits can’t afford to live in the area, and of course there is the usual problem that nurses and policemen and ambulance drivers can’t afford to live there either. It’s not just buying houses that is expensive, rents are shockingly high as well.

I think some of those regeneration funds should be diverted to building a new centre for Cambridge. Investing in a team of architects with vision to design a centre with plenty of green space, trees and cycle routes and good public transport. Creating a city where the historic buildings form part of a university quarter alongside a modern centre. We have to be careful not to repeat the mistakes of the 60s but the university has shown itself adept in commissioning impressive modern architecture and some of that expertise could be applied to the project. And this model should be followed for Oxford and for some of the towns in the M4 corridor that are bursting at the seams. If it is done well it can enhance the cities in question rather than allowing a sprawl of ugly private development to grow up on a piecemeal basis as the planners keep finding corners in which to cram a few more houses.

Such an approach would support the ways in which we are managing to create jobs and wealth in the UK and we need to do that as much as we possibly can or we will find that the whole country suffers from the problems currently seen in the North East as China and India become the new wealth creators and leave us behind.

Will house prices in the UK ever come down to sensible levels?

2008-07-30T02:32:00.001-07:00

There have been a number of articles in the press lately saying that house prices may be falling but it' s not going to do first time buyers much good. There are also people suggesting that prices might start to recover next year. I'm inclined to think that this downturn will be at least as bad as the one twenty years ago and that it could take ten years for prices to recover. I know there are some economists who think it could be worse than last time. But even if nothing changes, inflation will mean that nominal prices return to their previous levels at some point. Wolfgang Munchau wrote an article in the FT, before most people had noticed the downturn, in which he said that prices would continue to fall for eight years, but that if inflation was allowed to rise beyond its target band the duration of falling prices could be shorter.

We definitely just experienced a bubble fuelled by irresponsible lending and low taxation. Irresponsible lending has been cut off (for now) but low taxation is too much of a political hot potato for any government to tackle. This is a point that recent media coverage of the house price bubble has tended to overlook. If you invest in your home, you don't have to pay capital gains tax on the profits. This leads people to buy the biggest house they can afford, whether they need the space or not. If you buy-to-let you get tax relief on your mortgage payments. If you live in the house yourself at some point you can take advantage of both reliefs.

All in all, houses will continue to look like a more attractive place to stash your pension fund than an official pension. You get some tax relief, you can see what you own, and you don't have an investment manager creaming off the top. Besides which, we Brits seem to have an obsession with owning rather than renting that isn't dented by economic arguments. These forces, combined with our restrictive planning laws, will continue to drive prices up.

It would be great if prices came down to some sensible multiple of earnings, but I can't see it happening. What I find quite interesting is the way the distribution of house prices has shifted relative to earnings; so that there aren't enough cheap houses and there are way too many above average price houses that just sit on the market for ever. That might re-adjust but I don't think it will get back to the sane levels of house prices relative to income that we saw before the 1980s in my lifetime.

Gordon Brown has forfeited my trust and he can’t buy it back

2008-05-20T03:39:00.000-07:00

I had been fooled into believing the story about Gordon Brown being a principled son of the manse who was doing his best to help the poor within the limitations imposed on any government by the pressures of globalisation. The tax changes since he became Prime Minister have exposed him as a man whose main priority is winning the battle for headlines and who is happy to reverse all his previous decisions for the sake of short term political expediency.

In his early days as chancellor he made two tax changes, no doubt long planned, that accorded with Labour’s principles and brought social benefits. He has scrapped them hurriedly, without thinking things through, purely to counter Tory pledges.

He introduced taper relief for capital gains tax in his early years as chancellor, as a way of encouraging long-term investment in the British economy. He scrapped it with only a few days consideration, purely to counter the Tory promise to raise the inheritance tax threshold to £1m by levying a charge on non-doms. This has annoyed business and is one of the reasons for the current exodus of multi-national companies, but it didn’t annoy me nearly as much as the second one.

He introduced the 10p tax rate to help the poor in one of his first budgets. He scrapped it so that he could make his headline grabbing 2p reduction in the main rate of income tax and pre-empt Tory tax cutting promises. It doesn’t affect me much (at least not at the moment) but I approved of his efforts at redistribution and concern for the poor seemed a valid reason for voting Labour.

Now that he’s generated lots of bad headlines because of the impact on the poor, he’s taken a very expensive way out and increased personal allowances in an attempt to salvage the Crewe by-election.

For me, these reversals have made me feel that I was a fool to ever think he was a man of principle who could be trusted. The fact that I once believed in his probity makes me doubly keen to see him lose his job. I don’t particularly relish the idea of being governed by an old-Etonian cabal but I certainly don’t want to watch Gordon Brown destroying all new Labour’s achievements (and there were a few) in his quest for a good headline.

Are Agas worth it?

2008-05-06T04:28:00.000-07:00

In an Observer a few weeks ago a self-styled “rock chick” boasted about the four-oven black Aga in her country cottage. An Aga is seen as the symbol of an aspirational middle-class domestic lifestyle despite being expensive to run, tricky to cook on and taking up huge amounts of space in the kitchen. How did this come about?

This is a subject very close to my heart. Until I was three years old we lived in the country in a house that used a solid-fuel Rayburn for all its cooking and hot water and background heating. When we moved into a new house in town my mother had an Aga installed (my father refused to have gas in the house) which she considered to be infinitely superior to the Rayburn. My mother wasn’t a great one for cuddles, and when I was feeling miserable and unloved I used to slide down the gap between the Aga and the tiled walls of its alcove and press my tummy against its comforting warmth. For me, an Aga is a powerful symbol of home and security.

This doesn’t really explain their iconic status, or the fact that people are still installing them when they are so ridiculously inefficient compared with other modern means of heating and cooking. The house I live in now has a solid fuel Rayburn and when I moved in I considered replacing it with a gas fired one. The continued creep of health and safety legislation over the last thirty years means that it would be illegal to replace it with a second hand gas fired model, or to convert it to gas. I could have converted it to oil, but that didn’t seem like much of a step forward when it meant finding space in the garden for an oil tank and remembering to arrange oil deliveries before supplies ran out. A new gas fired Rayburn would have cost more than a gas central heating system for the whole house, complete with condensing boiler.

I opted for the gas central heating system, but kept the old Rayburn because there is plenty of space in the kitchen. I light it at Christmas, when the boiler breaks down, or when the weather is really cold and I expect to be at home a lot. It feels as though I am engaged in practical archaeology as I wrench my back swinging the coal scuttle twice a day and carry the red hot ashes out through the conservatory every morning. I worry about whether I have left it untended too long for the fire to stay lit and whether I have filled it at the right time to be able to cook when we want to eat – it as at its hottest four hours or so after stoking which means lunchtime and the middle of the night, and not at the time we normally eat our main meal. I try to think of things to cook that will take advantage of its continuous heat – slow roast pork, steak and kidney pudding, baked beetroot. I have lots of baths to use the gallons of hot water – and remember how my Mother complained that she sometimes woke to hear the water boiling in the pipes because the wind had changed in the night and she had set the dampers open too wide.

Agas had the big advantage over Rayburns that the dampers operated automatically – I assume using bimetallic strips. A solid fuel Aga has to be refuelled twice a day but doesn’t need anyone to stand over it opening and shutting the dampers as the fire takes hold, and to wring that last bit of heat out of the hot plate to cook breakfast before refuelling, as a Rayburn does. An Aga is the apotheosis of sold fuel cooker technology –insulated with powdered sea shells from a coral island – able to maintain a fairly constant temperature without needing continual oversight to adjust the dampers. It was an enormous step forward from the open ranges that had previously been the norm in England.

Wonderfully efficient as it is compared with the sold fuel alternatives, an Aga is a ridiculous way to use modern responsive heat sources such as oil and gas and electricity. These are able to provide heat when and where it is wanted and heating the huge weight of cast iron 24 hours a day is now just a waste. Either you run the thing continuously and waste huge amounts of heat, but at least keep the cooker ready for use, or you let it shut down when not in use and then have to make sure it is fired up well in advance of needing to actually cook anything because you have to heat up all that cast iron before you can use it. So why are people still installing them?
There's the aspirational thing. In my fifties childhood, Agas were found in big posh farmhouses and Rayburns in ordinary farm workers cottages. Presumably this is the origin of the aspirational glamour of the Aga, but doesn’t really explain why nowadays Rayburns seem to share it. There is the conspicuous consumption aspect – everyone knows that they are expensive to buy and the cognoscenti know that they cost about three times as much in fuel as modern heating and cooking methods.
There’s the retro comfort for those for whom they evoke memories of granny’s house, and the association with the decaying grandeur of stately home kitchens.
There’s the simple animal comfort of having a continuously warm object that you can hug – as I did as a child.
Some celebrity cooks endorse them, but others hate them. They do provide some unique cooking effects, akin to those you can obtain with a brick oven - particularly if they are solid fuel, but relying on them for all your cooking requires a completely different approach that only those who grew up with them seem able to accept. Newcomers get frustrated by the hotplates cooling down as they are used, with not being able to fry an onion to make a casserole because they didn’t start to heat the thing up early enough, with not being able to get that moderate oven temperature range to bake a cake.

On balance, I’m still not sure why people buy them. When I made my decision, I concluded that they relied for their appeal on the primitive notion of cooking on the fire. That a gas or oil or electric version would be travesty of the real thing. So I kept my old solid fuel Rayburn for special occasions and installed gas central heating. Replacing the Rayburn was less cost-effective than I expected – I calculate that the fuel savings will take about six to eight years to pay me back – but it did liberate me from the necessity of manhandling coal scuttles and hot ashes on a daily basis, provide controllable automatic heating, and reduce my carbon footprint.

In praise of broth

2008-05-01T08:30:00.000-07:00

As someone who originally learnt vegetarian cooking I have spent years making soups without meat stock and couldn’t understand why anyone would want to use it. With advancing years, however, I have started to have creaky joints, and have been encouraged to take glucosamine. I didn’t like the big pills or the high prices, and I’ve generally been trying to cut out the supplements and eat properly. I looked up natural sources of glucosamine and discovered that they are bones and connective tissue and the shells of crustaceans. These aren’t things that we tend to crunch on, but the way we have traditionally eaten them is in soups and stews, broth and beef tea and jelly. In the 19th century the first patent foods included products such as Dr Radcliffe’s restorative pork jelly. I’ve always thought of these as endearingly old fashioned but I’ve now realised that there was a very good reason why our ancestors regarded bone broths and jellies as health foods. It’s starting to look as though glucosamine is important for many more bodily functions than just joints. I’ve seen it linked to brain function and preventing multiple sclerosis and type 1 diabetes as discussed here, although I think this is pretty controversial.

The beauty of it is that glucosamine in stock is pretty near free! I now make a point of boiling up any poultry or game carcases and freezing the broth in half litre cartons. I’ve also started buying cheap cuts of meat such as neck of lamb and shin of beef more often, which I make into stews in the pressure cooker. This produces some very tasty stews and I save the liquid as soup. I’ve discovered that I’m quite happy to drink pretty much any broth with a generous shake of soy sauce added and sometimes some ginger and spring onions and seaweed flakes for an oriental touch - and added minerals.

I used to make vegetable soups the vegetarian way with water, but now I regard them as ways to vary my broth consumption. My current tomato soup: sautė an onion with some oregano and garlic, add a tin of tomatoes and a half litre of chicken stock, boil for ten minutes and liquidise. You can use pretty much any vegetables you have to hand, this week I used leek and cauliflower (omitting the oregano).

So save yourself some money, do your body some good, and get in the habit of making broth.

Is Compostable Packaging really a scandal?

2008-04-28T05:05:00.000-07:00

I was a bit shocked to see that the Guardian ran a story about compostable packaging not necessarily being good for the environment as a front page lead on Saturday.

The article asserts that a particular type of compostable plastic packaging, PLA, made from corn, and used by M&S among others, only composts at high temperatures and is mistakenly added to the plastic recycling. There are a number of issues of concern in that statement, but nothing that, to my mind, justifies a front page lead.

Anything compostable sent to landfill will generate methane, a significantly worse greenhouse gas than carbon dioxide, as it decomposes. This is true of paper and cardboard and chicken carcasses too. A compost heap has enough oxygen for the carbon to become carbon dioxide, but in the conditions in landfill, the absence of oxygen causes methane to be produced instead (anaerobic rather than aerobic decay). If PLA is so difficult to break down that it can’t be done in a home compost heap, the chances are that it will happen pretty slowly in landfill, and therefore produce methane a lot more slowly than food scraps do. Hardly a scandal.

Making plastic from corn is questionable when we are starting to have food shortages but, on the other hand, oil based plastics are going to linger for hundreds of years and cause harm to wildlife as Rebecca Hosking the Modbury campaigner has highlighted. The very fact that oil-based plastics don’t break down means that they won’t add greenhouse gases to the atmosphere and contribute to climate change. There are some difficult choices we have to make as we attempt to preserve the planet and whether we should prioritise greenhouse gases over harm to wildlife is one that occurs regularly – wind farms and the RSPB spring to mind.

Educating people about how to sort their recycling is tricky, particularly their plastic recycling, but it’s a challenge we all have to embrace, and PLA is far from being the only offender. A friend had been putting juice cartons in her cardboard for years before she realised that was wrong – the layers of cardboard, plastic and foil in a tetrapak means they have to be recycled separately. That’s not front page news either.

We are attempting to shift the whole structure of our economy as the menace of global warming becomes better understood. There are many new technologies being developed and most of them are controversial. No-one is in a position to predict which will turn out to be the best solutions, we have to keep trying things out and figuring out what works. PLA sounds to me to be in a very similar position to pellet stoves (see post of January 21st) – which are currently riding a tide of positive publicity - both require a change in the wider economic infrastructure for their effects to be positive, and it hasn’t happened yet.

It is important that both positive and negative aspects of new technologies are aired and discussed so that we collectively arrive at sensible choices. Hysterically whipping up scandals is not helpful and I thought better of the Guardian – home of the Bad Science column.

What exactly do we mean by a housing shortage?

2008-04-18T07:43:00.000-07:00

I spend a lot of time thinking about what is really going on in the housing market. How can we have a housing shortage when the population is barely increasing and we are building thousands of houses?

The thing that seems to me to be driving it all isn’t so much the “rate of household formation”, most often cited by the government, but the fact that in the UK we are getting richer and want more space.

When I started researching how much space a person needs, I was surprised by the consistent results I got from sites across the globe.

In Kazakhstan new flats are being planned that will provide “on average, 27 square metres of residential space per person, … apartments will be comfortable and spacious: 35 square metres per person. According to the China State Council Development Research Center, demand for residential construction area per person is increasing: In 2004, the average was 25 square metres per person, while in 2010, the average is expected to be increase to 35.66 square metres per person. Although Shanghai regards overcrowding as having less than 4 square metres per person. In Tower Hamlets, in London, the guidelines on minimum space per person vary by size of house but range from 14 square metres per person for a 6 person house to 30 square metres per person for a single person flat or house.

The house I live in is 92 sq metres and at the moment I am living in it on my own and taking up 3 times as much space as the projects cited above would allow (although when my partner moves in we will be down to 46 square metres per person which is a bit less shocking by comparison). It doesn’t seem enormous by any means, I have a large kitchen, a small sitting room, two double bedrooms, a tiny office and a generous bathroom. There were five people living in it before I bought it, roughly the space per person that Tower Hamlets would approve.

The two-bed Victorian terrace that I used to live in – the kind in which the front door opens into the living room - was a total of 56 square metres. When occupied by two people that is about the average for new build in Kazakhstan, but for one person it is generous. Yet a visitor from the US once told me that “No-one in America lives in a house this small.”.

The houses I hope to build will be 86sq metres for a two bedroom house, Tower hamlets would consider that enough for five or six people, but they are not huge. They have an open plan living area similar in size to that in the average two-bed terrace, two double bedrooms and one bathroom.

Our ideas about how much space we need have changed a lot. In the 1950s a three bedroom house was enough for most families. One bedroom for the boys, one for the girls and one for the parents. Nowadays, we want our children to have a bedroom each in which to have their own TVs and computers. Somewhere for teenagers to flounce off to when they are being difficult.

Another factor is the rise of working from home. Many of us have both a home office and an office space in town. It is because my partner and I both work from home that we have chosen a three bedroom house with a large brick outbuilding – the outbuilding is not currently up to residential standard but provides another 30 square metres in addition to the 92 square metres in the house. Working from home is currently regarded as good for the planet – you eliminate the carbon cost of commuting. The fact that this drives demand for bigger houses, and that more buildings are heated during the day – often there is office space being heated as well as the home – seems to be left out of the equation. I suspect that for those who commute by train or bike, working from home increases their carbon impact.

And of course, there is that interesting statistic “the rate of household formation” which the government regularly quotes in connection with house building targets. What this means is that more of us live alone because of divorce, and more young people are setting up house for themselves in proper houses and flats with their own kitchens and bathrooms rather than poky bedsits.

Kate Barker, in the UK government’s Review of Housing Supply , also noted that old people are staying longer in their homes thanks to care in the community. Not only that, but they live longer when they stay at home. This is a really positive development for old people, I hope I get to stay at home until I die, but it is delaying their houses coming onto the market for young families.

So – we are getting richer, we all want more space, we want to use our houses for more things including work and entertainment, we want our own kitchens and bathrooms and we want to stay in our homes when we get old.

What is going to prevent us from keeping building? Using more land and more resources? Heating more space? The answer would seem to be oil prices. One of the reasons we are so keen on space is that we can easily afford to heat it. If you are scraping together the price of fuel then you are better off with a small cosy space. With oil prices spiraling ever upward, and the cost of climate change being transferred to us through carbon credits (if they ever start working properly) there will start to be an incentive to occupy smaller spaces and insulate them better.

As the song says “you don’t always get what you want” and we might have to make do with less space as the costs of climate change make themselves felt.

Fat bonuses cause new Wall Street Crash

2008-03-17T09:39:00.000-07:00

The Wall Street Crash is still remembered as the worst financial disaster in living memory and the trigger for the great depression that affected the whole of the Western World. My grandfather had nothing to do with Wall Street, but he had to close his tailor’s shop in a County Durham pit village because he had no customers. The financial crisis that is currently unfolding in the US could be as bad.

Evan Davis, the BBC economics correspondent, said on Sunday morning that it wouldn’t get as bad as that because the Fed has said it will do “whatever it takes” to ensure financial stability. But will they be able to? And what will it cost? Nouriel Roubini of New York University's Stern School of Business has estimated that US financial sector losses could reach $3,000bn (three trillion dollars) and that other losses in the values of property and shares in the US could be as high as the value of total US GDP at $13,000bn. (I’d like to give you a link but I have failed to find a free access article) Three trillion dollars is an awful lot of money to raise, even for a country as credit worthy as the US. At the moment, most of the money that is available to bail out the banks is in “sovereign wealth funds” – cash saved by governments of oil producing or manufacturing countries in the Middle East, China and Singapore. But the estimated total available in these funds is only (only?) $2,000bn to $3,000bn. Not as much as the potential losses.

Will there be enough buyers for an issue of government bonds that massive? It will be our pension funds that will have to take the strain. They are likely to have enough funds to do this – estimated at about $23,000bn in 2007, but $3,000bn is still a big chunk (13%) of their assets and there will be European banks to bail out as well. There will be less money to invest in other things, whether schools or hospitals or new companies, or our consumer spending. The US is already in recession, with house price falls expected to reach 30%. The lack of funds for mortgages and consumer credit is likely to mean that the UK will follow. The implications are going to be far reaching and we will see plenty of business failures - echoing my grandfather’s experience.

What really annoys me is that we got into this mess the way we always get into financial crashes, through people borrowing money to invest in dodgy assets. And this particular set of dodgy assets was well known to be dodgy by the people who were using our money to buy them. Jon Moulton’s excellent programme for channel 4 in the UK points out that the bankers were joking about selling mortgages to NINJAs –people with no income, no job and no assets – who hadn’t a hope of keeping up the payments. But the brokers were keeping selling the mortgages to get their commission and the bankers were keeping funding them to get their big bonuses and now it’s tax-payers money that has to plug the gaps and prevent financial meltdown.

I don’t like bankers' indecently large bonuses but I have been willing to tolerate them as the price of a healthy financial sector that keeps the economy growing. Now that these bonuses are exposed as a mechanism driving financial bubbles I think they are not just offensive but dangerous. The banks are hurriedly starting to discuss voluntary controls on bonuses to pre-empt pressure for regulation. I think governments throughout the world should start regulating them as soon as possible.

Why did we fail to save the planet?

2008-03-03T02:06:00.000-08:00

It’s already too late to save the planet with bicycles and insulation (and pressure cookers see blog January 14th). James Lovelock was quoted in Saturday’s Guardian as saying “It’s just too late for it. If we’d gone along routes like this in 1967 it might have helped. All these standard green things like sustainable development, I think there are just words that mean nothing.”

He’s confirming something I’d suspected for a while. When someone joked that a book called “10,000 days to save the planet” was more published than 10,000 days ago I replied that it was already too late. The icecaps are melting – and melting faster than most scientists expected – and that means that the process has started and will only accelerate. The sea levels will rise and drown Holland, and Beijing and the fens in which I live – as well as the coral islands that are already disappearing. Large parts of Europe will become as arid as the sahara.

Lovelock argues that it’s too late to prevent that happening and that we have to learn to live with the consequences. We are doomed to a high-tech world of nuclear power and synthesised food and as many people as survive crammed onto a very much smaller area of dry land.

So how did we get here? The simple answer is that the global economy is a supertanker so big that it takes 40 years for visionary scientists to turn it around – Lovelock first made his predictions about the environment in 1965. I don’t suppose we will learn from the experience, because it takes a very long time to persuade a large enough proportion of the population that action is needed – especially when it involves major changes to the way they live.

I feel guilty that we forgot about it all in the 80s. In the 70s, when the oil crisis made us all start to think about the cost of our lifestyles, and The Limits to Growth and Blueprint for Survival and Diet for a Small Planet were published, we started recycling and bicycling and eating beans – all things that I went on doing. On the other hand, in the 80s we embraced bottled water and air travel and supermarket shopping and seemed to think that more efficient boilers would be enough to solve the problem.

Even our attempts to do something about it are often misguided. I know that I got the mistaken idea that working from home – as envisaged in Blueprint for Survival – would be a big benefit both for individuals and the planet. I devoted much of the 90s to jetting to meetings of telecoms professionals in an effort to make sure that we all got broadband. Now that I’m sitting at home working over my broadband link I discover that the ICT (information and communications technology) industry has a carbon footprint as big as the airline industry. I may not see the fuel being burned to let me do my job, in the same way as I did when I got on a plane, but there are dedicated power stations ensuring that data centres keep running day and night so that I can do my research using Google and email the results to my clients.
Lovelock’s advice is just to enjoy the next twenty years or so that we have until the shit hits the fan. That’s OK for me, as I will have had a good innings by then, but what about my friends’ children? He seems to think that, once the crisis is visible to all, we will pull together to find solutions as our parents did in the Blitz. I hope he’s right.

The plain woman's guide to global financial crisis

2008-02-14T07:55:00.000-08:00

Ever since I went freelance, I have been reading the Financial Times as a way of keeping up with the Telecoms industry – since I could no longer rely on colleagues to relay things I should know. It has some pretty arcane articles, sometimes I don’t understand a word. I am beginning to recognise terms like spreads and derivatives and basis points, but I still don’t understand why banks seem to employ people purely to gamble with huge sums of money on their behalf - like Jérôme Kerviel who could apparently lose so much because his bet was thousands of Euros per hundredth of percent variation from the number he had picked.

I am now going to try to use the insight I have gained to explain the current global financial crisis in terms that normal people understand. I’ll start with the US sub-prime mortgages: greedy financial advisers have persuaded poor people to buy their own homes on special introductory mortgage deals where they could afford the special offer payments and then got into trouble when the loan went back to the normal monthly price. And this at a time when the special offers were amazingly cheap because interest rates were unusually low everywhere. For a while, when these suckers got into trouble, they could borrow more money because their house had gone up in value, and extend their mortgage to cover the payments on which they had fallen behind. A practice that would have made my Mum have a fit. Then the bubble burst and house prices started to fall, so they weren’t able to borrow to cover their missed payments any more, and now they are all having their houses repossessed.

Once upon a time, this would have been bad news for the US, but not such a big deal for the rest of us. Nowadays, however, banks don’t follow that old-fashioned approach of taking money from depositors to lend out to home buyers. Now, they borrow money on the global financial markets to issue those mortgages, so the money has come from savings all over the world. Banks in Europe as well as the US have handed over money to buy overpriced houses in America. To stay in business, banks have to be able to tell the local financial authorities that they have more than enough money to pay depositors whenever they want to take their money out. At the start, they could claim these mortgage loans as a sound investment but, when the repossessions started going through the roof, they had to restate the value of these investments – and this process is still going on - complicated by the fact that no-one will buy them so it’s hard to decide what they’re worth. Banks stopped trusting each other, because they didn’t know how much of the other guy’s investments were dodgy and the global credit markets dried up. No more mortgages or business loans for any but a very select few with impeccable credit ratings and lots of collateral.

Meanwhile, throughout the West, we had been using easy credit not just to buy houses but to buy furniture for those houses, as well as clothes and toys and a host of consumer goods that were made in China. At the same time we were enthusiastically burning masses of petrol and heating oil and gas that came largely from the Middle East (and Russia). We were able to keep inflation down here in the West because of the low prices brought about by poor working conditions in huge factories in China. This, in turn, let us keep interest rates low and keep borrowing. As a result of this, the oil producers and the Chinese government (and others) were able to accumulate large amounts of cash.

Now the banks have to find new investments to keep their cash reserves up to the level required to stay in business. The people with the money are oil producers and the Chinese government. So big banks in the US and Europe are selling chunks of themselves to government investment funds from China (and other Asian countries including Singapore) and the Middle East.

One niggling worry is whether the US can tolerate having its banks owned by the Chinese government. Only this week, two US private equity firms specialising in the financial sector have set up funds in which these governments can invest and thus buy US and European banks without it being too obvious to the person on the street.

Meanwhile, we watch the UK housing market teetering on the brink. The chancellor tries to tell us that the UK lenders haven’t made dodgy loans like they did in the US. My suspicion is that they have made just as many – lots of people have been happily lying about their income to obtain mortgages, or had greedy financial advisers do it for them. On every measure that the US looked bad on before the crash, such as proportion of lending to national income, or ratio of house prices to income levels, the UK figures look worse than they did in the US.

The chancellor is also trying to tell us that the economy is in fundamentally better shape this time. In fact only a few days ago he assured us that the UK housing market wouldn’t crash. The only way he can prevent that is if the government starts to provide the funds for mortgage lending, since the banks don’t have enough. This would be a pretty radical move, and it’s one that the governor of the Bank of England said today that he wouldn’t support.

The ramifications don’t stop there. It starts to get a bit technical, but when your local council has to raise money to do something big like build new schools it issues bonds – banks and pension funds buy them and they come with various guarantees about interest paid and redemption value. These are the sort of investments that the banks can point to as being super-safe when they are telling the regulators that they have plenty of money. To ensure that their bonds are reliably seen as super-safe, the people issuing them have taken out insurance from specialist companies who would pay up if your council went bankrupt. This was a fairly remote contingency, so the insurance wasn’t too expensive, and it made certain that the bonds counted as super-safe investments. The only trouble is that the insurance companies decided to branch out and start insuring bonds that were issued to raise money for – you guessed it - sub-prime mortgages. Now the insurance companies are making big payouts because the sub-prime mortgage bonds are not paying back as they promised, and may get into trouble themselves. If that happens, all these council bonds start to look a bit dodgy, so the banks have to find more money to be able to assure the regulators that they’ve got enough. And so they will have to go back to the Chinese government and the oil-rich multi-billionaires to ask for more money.

This sort of problem, along with falling house prices, could make the whole thing spiral out of control – as the banks investments continue to look like they are worth less so they have to keep raising more capital and supplies get harder to find. I’m told that this is what the gamblers in the city appear to be expecting.

Nowadays, the Western governments attempt to keep their economies on an even keel by controlling interest rates, rather than by trying to legally fix prices or wages. Supposedly, if they lower interest rates, we will all borrow more money and spend it and give the economy a boost. They try not to do too much of this because it risks raising inflation, and spend long hours agonising about the level at which interest rates should be set. But when no-one has any money to lend, lowering central bank rates doesn’t lower rates for ordinary mortals at all – the laws of supply and demand mean that we still can’t get our hands on credit – so we don’t do the spending they relied on. That leaves them with no means of controlling the economy at all – except the very blunt instrument of taxation.

We may be entering a period of “stagflation” where no-one has the money to spend on extras, and businesses can’t borrow, so the economy doesn’t pick up. But, on the other hand, rising prices of oil and food and goods from China mean that inflation becomes problematic. If this happens the central banks are hamstrung because, if they try to control inflation by raising interest rates, they will make the downturn worse and, in any event, it's quite likely that the interest rates they set will have no effect at all.

Time to batten down the hatches and hang on for a bumpy ride.

Scientists have mostly themselves to blame for lack of public trust

2008-02-06T08:28:00.000-08:00

It is becoming something of a problem that the public don’t trust scientists to tell them the truth. They persist in believing that MMR jabs cause autism, that homeopathy works and that mobile phone masts are a health hazard despite the assurances of scientists that extensive testing has shown that there is no impact on health from any of these.

A big factor in this lack of public trust has been the fact that scientist are only too willing to appear on TV looking down their noses and saying dismissively that there is no evidence for some assertion as if that was the end of the matter and the assertion was clearly wrong. I’ve seen this done fairly recently for the health benefits of organic vegetables, for example.

The trouble with this approach, as any scientist will tell you, is that all that “no evidence” means is that no-one has managed to get the funding to examine the assertion properly. Often there is “no evidence” for something that most of us find intuitively likely because no-one has looked. Designing experiments that are sufficiently robust is tricky and often expensive and funding gets prioritised to topics where someone has a hope of making money from the results. To go back to that example, organic vegetables have finally been subjected to significant tests and the results are starting to suggest that in fact there are health benefits from eating them, as their aficionados have long believed despite the negative response from the scientific establishment.

The fact that tests are tricky to design and complicated to evaluate is a problem when it comes to trying to communicate with the press. But scientists trying to give the impression that they know everything when there isn’t any evidence to back them up isn’t helpful. Their unwillingness to admit they are wrong when new evidence comes in is another problem, one that I referred to in my first blog about weight loss advice. We need a bit more honesty and clarity about what is and isn’t supported by evidence, and where the evidence is in dispute, when scientists talk to the media.

Otherwise people will continue to refuse to accept results that have extremely solid evidence to support them. They will risk the spread of measles by avoiding immunisation for their children. They will waste time and money on consulting homeopaths. And the one I find the barmiest of all - refuse to have mobile phone masts near their schools even when they are willing to give mobile phones to their children.

Middle class angst has got a lot more dangerous lately

2008-01-29T03:18:00.001-08:00

I read a very detailed analysis by Jason Burke of the origins of Al Quaeda suicide bombers in the Observer a week ago. I was struck by how similar their origins were to those of the radical idealists high I used to hang out with as a young woman.

For young people who are feeling chafed by the code of behaviour they have been brought up to follow, there is tremendous glamour attached to those who have had the courage to cast it off and damn the consequences. Being brought up in a comfortable home with a path mapped out for you that looks boring and restrictive engenders a very natural urge to break out and seek new challenges. When that is accompanied by a feeling of unreality and dislocation from the real world there is a parallel urge to find some authentic reality to get to grips with. It’s not a problem that affects those with tough backgrounds – they already have had too big a dose of reality and have a very real understanding of its dangers. My baby-boomer generation had parents who lived through the war and afterwards wanted to wrap themselves in a cocoon of comfort and order that proved irksome to their children. I suspect that muslims whose parents were immigrants are finding themselves in a parallel situation with parents who are clinging to strict codes of behaviour and working hard to keep their children safe in a way that feels restrictive to young people itching to make their mark on the world.

For my generation of middle class white Europeans it was the Angry Brigade, the Red Brigades, the Baader Meinhof gang and the Symbionese Liberation Army who were the heroes. They offered a political analysis of the military-industrial complex to explain why the stuffy middle class world that we disliked was corrupt and evil. Those who had a prospect of career before them felt that following it would lead to their becoming part of this evil.

Our radicalism led to squatters’ movements, reclaim the night marches and Greenham common. The forces of law and order often perceived a sinister conspiracy behind all this when in fact most people were simply reacting sincerely to their experiences and seeking out like minded friends. This strikes me as another similarity to Al Quaeda – that it bubbles up from ideas that are everywhere, without needing an emissary from central command to make something happen. It’s a fact that young people look to someone a little older and with a dusting of glamour to help them acquire worldly wisdom. For us this glamour attached to genuine squatters, radical bookshop co-ops and self-sufficient small-holders – as well as Che Guevara, Astrid Proll and the angry brigade. For Islamic youth it looks as though it is the graduates of Afghan training camps and radical madrasas.

Adding religion to the mix is the final twist that allows the disaffected youth to aspire to be martyrs instead of just heroes of the revolution, and brings the added danger of activists willing to die as part of their plan. We were imbibing a rhetoric of peace and love that made it unacceptable to propose violent solutions to the social ills that we perceived. Muslim suicide bombers may be reacting to a similar feeling that the established order is evil and dangerous to people like them but they are expressing it in a way that is much more dangerous for the rest of us, because they are being fed a rhetoric of war and martyrdom that leads them to look for their reward in the next life rather than this one.

Our radicalism ran out of steam somewhere around the arrival of Mrs Thatcher with the rise of the idea that greed was good and when money was once again seen as the basis of glamour. The ideas that excited the radicals became less attractive to the mainstream and the radicals moved on to different issues – road building, animal rights, climate change. Secret files and police surveillance may have largely existed in our paranoia but obviously some of them were real – the Angry Brigade were jailed after all – but they didn’t have much impact on our behaviour. If anything they added to the glamour. Suicide bombers will only go away when the culture that they spring from evolves into something new.

Do pellet stoves really reduce carbon emissions?

2008-01-21T02:26:00.000-08:00

Many environmentalists favour pellet stoves as a means of reducing carbon emissions from domestic heating and this is enshrined in the government environmental rating system for new homes in the UK, developed by the Buildings Research Establishment, which gives you a much better rating for installing a pellet stove. The rationale seems to be that burning wood releases less carbon than burning fossil fuels, and the Green building bible rates wood burning at 0.03kg of CO2 released per kWh compared with 0.19 for gas and 0.42 for electricity. But there are an awful lot of assumptions behind this calculation, relating to the source of the timber and the efficiency of the stove in which it is burnt.

The article states that this 0.03kg relates to wood that comes from sustainably managed forests, where trees are growing and absorbing carbon in proportion to the amount being used for fuel. Pellet stoves use pellets made from sawdust or waste timber - waste products from other timber processes. It's good to use waste products, and the trees haven't been cut down specifically for firewood, but this doesn't necessarily reduce CO2 emissions. If the sawdust wasn't burnt it could be used in making chipboard or other processed timber products and the carbon would stay locked up for the forseeable future. Even if the sawdust is left to rot, it will release its carbon a lot more slowly than it does by burning. Once demand for pellets exceeds the supply of waste sawdust, trees have to be cut down specifically to make enough pellets. There's no guarantee that trees are being planted in sustainably managed forests to compensate for the wood volume being burnt - which is what is required to make this carbon neutral - and cutting down trees is actually reducing the number of trees absorbing carbon on the planet.

The other factor in getting to that 0.03kg is efficiency. Pellet stoves are more efficient than ordinary wood burners because the pellets are very dry - typically rated at 80% efficiency compared with 70% for an ordinary wood stove. They are also can be more efficient overall - depending how erratic the demand for heat is - because they have automatic controls that allow them to be fired up when needed like a gas boiler, instead of having to be kept burning like an ordinary stove. On the other hand a condensing gas boiler can achieve efficiencies of 97% - a considerable improvement on a pellet stove - so the CO2 released directly from your home because of your heating will be at least 17% less from a condensing gas boiler than it will be from a pellet stove. You will also release a lot less of the other pollutants that burning wood creates, the fine particles in wood smoke are a significant health risk.

There are other disadvantages to pellet stoves as some american suppliers have realised, they need electricity so don't keep you warm during power cuts, and they create noise and dust in use.

It's true that gas is a fossil fuel and burning it releases CO2 that has been locked up for millenia. In the short term, however, we urgently need to reduce the overall amount of CO2 that we are producing now, before we melt the ice caps. Burning wood pellets isn't really much help if we are releasing more CO2 than gas burning does. Reducing requirements for heating is the top priority, improved insulation and heating only the space being occupied at any time are the best ways to do that. As far as fuel goes, burning your own coppiced willow is a pretty good option, but not available to many of us. A heat pump run from a wind turbine is another good choice, but equally restricted in its availability. For most of us, super-efficient gas boilers are also a pretty good choice, and it's questionable whether pellet stoves are an improvement.

Save the Planet with a Pressure Cooker

2008-01-14T02:26:00.000-08:00

One of the ways in which we can reduce our energy consumption and CO2 emissions is by reducing the amount of energy we use to prepare our food. Many environmentalists recommend using microwaves but I have resisted this advice ever since I discovered that microwaves destroy the anti-oxidant vitamins in our food - a study published in the Journal of the Science of Food and Agriculture found that microwaved broccoli lost 97% of flavonoids, compared with 66% for boiling and that other nutrients suffered a similar fate.

A much better way to reduce energy used and time spent on cooking is to use the good old-fashioned pressure cooker. You can come in from work, spend 10 minutes throwing raw meat and vegetables into the pressure cooker, sit back for half an hour, and then serve a meal that tastes like it spent all afternoon in the oven. A soup can take only ten minutes - you may have seen Jamie Oliver use one to make pumpkin soup. You've reduced the cooking time by about two-thirds and thus reduced the energy consumption.

This approach brings lots of other benefits as well - you don't have to do much chopping because chopped vegetables will disintegrate under pressure - you can use cheap and nutritious cuts of meat like shin of beef instead of splashing out on fillet - you get lots of broth that makes a tasty soup for tomorrow's lunch with a splash of soy sauce added - and leftover stews freeze brilliantly to make ready meals for another day. If you do use cheap cuts with lots of bones and connective tissue that broth will be a natural source of glucosamine and chondroitin and save you a fortune on supplements.

Good quality pressure cookers are fairly expensive (although no more than a microwave) but you can often pick them up at car boot sales. If they don't work the chances are that a new rubber gasket is all that is required and those only cost a few pounds.

Here's an example recipe: heat some oil in a pressure cooker and brown half a kilo of diced shin of beef. Roughly chop an onion and add that along with a crushed clove of garlic. Continue to brown gently while you cut two or three carrots into thirds. Add these to the pot with a bay leaf, some thyme, salt and pepper and water to cover. Bring up to pressure and cook for 25 minutes. Serve with steamed cabbage (and mashed potato if you aren't on a low-carb diet like me). Baby beetroot topped and tailed make a great substitute for the carrots. I like to add seaweed - either flakes or sea salad - which makes the broth more tasty and nutritious. If you don't want a fatty broth, let it go cold and the fat will set on the top and you can lift it off.

So: save the planet, save money, improve your diet and all in a way that fits with a busy modern lifestyle. What more could you ask?

Weight Loss Advice Needs to go into Reverse

2008-01-04T03:12:00.000-08:00

There's another raft of depressing articles in the papers about obesity levels rising and the need to do something about it. Unfortunately, the official advice on how to do something about it is designed to make things worse. Until the government advisers can catch up with the science and stop advising everyone to eat more bread and pasta another generation is doomed to an early grave.

The two most widely accepted messages are that to prevent obesity we have to exercise more and eat less fat. There is little credible science behind either of them.

Exercise is very good for you, it prevents heart problems, diabetes, depression and brings a host of other health benefits. What it doesn't do is make you lose weight. Exercise stimulates the appetite so that the more you exercise the more you eat. The few calories you burn by exercising don't make a big difference in the overall energy balance.

The thing that makes you put on fat is eating carbohydrates - including the bread and pasta the official dietary advisers are so keen for us to eat. If your blood sugar rises - as it does when you eat carbohydrate - you produce insulin. Insulin controls the removal of the sugar from your bloodstream, first by filling the glycogen (short-term energy) stores in your muscles and then by storing the rest as fat.

In order to burn our energy stores, and use our fat, we have to produce another hormone called Glucagon which is only produced when there is no insulin in the bloodstream. So eating carbohydrate prevents us from burning fat.

In addition, carbohydrate produces serotonin, a feel-good chemical, in the brain. This is the driver for comfort eating. We can literally become addicted to carbohydrate. We have become like the geese that are forcibly fed grain to produce foie gras - farmers assure us that it isn't cruel because the geese come running to have grain poured down their throats - and we are doing the same thing as we flock to Starbucks or Pizza Hut for our carbohydrate fix. And just like the geese we are giving ourselves enlarged livers and thus enlarging our waistlines.

What we need to burn fat is the essential fatty acids (EFAs, fish oils, omega-3,6 and 9) and protein. The perfect slimmers meal is oily fish and greens - poached salmon and broccoli for example. What we need to cut out is the bread, pasta, potatoes, and grains that we are being encouraged to eat as well as the pizzas, cakes and biscuits that everyone agrees we should avoid.

It would be possible to try to follow all the healthy living advice that is out there and live entirely on oily fish, lean meat, walnuts and vegetables, but it wouldn't be very pleasant. If the mass of the population is to be encouraged to give up carbohydrates we have to accept that fat isn't bad for us after all. In my own experience, the way to give up the cakes is to replace them with much more appetising treats like berries and cream. It was big statistical studies (epidemiological is the technical term) back in the 70s that showed correlations between a high fat diet and overweight, but such studies can't prove anything, just indicate possibilities. The link between fat and heart problems and weight gain has not stood up to further analysis. The only fats we need to worry about are the trans-fats produced in artificially hardened oils used in some margarines.

So if we are to do anything about the obesity crisis we have to reverse the official advice - and tell the public to avoid carbohydrate and stop worrying about most fats. The trouble is that, if the government has the courage to believe the science and do this, it is going to destroy any remaining credibility its advice has. People already think they are receiving inconsistent and conflicting advice - and it's true.