Monday Message Board

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

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45 thoughts on “Monday Message Board

  1. I have been toying around with the idea of separate “half-lifes” for three items, namely money, goods and non-renewable resources. Each of these has a calculable or at least estimate-able half-life.

    Inflation measures the half-life of money. At an inflation rate of 2%, the half-life of money (when it is reduced to half of its original value) is about 35 years. Money is a notional quantity so only has a notional half-life.

    Commodities and goods have a real half-life and a notional half-life. The real-half life is when half of a commodity store is spoiled (half the apples in a barrel, half the tins of baked beans on a shelf etc.) or the useful remaining life of a good (a car tire say) is half what it was at manufacture. Standardly, this is half-life with use, although many products like car tires also deteriorate without use as most materials deteriorate with age. Commodities and goods tend to be assigned a notional half-life as well, known and measured as depreciation.

    Non-renewable resources have a half-life which indicates when they will be half used up at current rates, including any allowance for accelerating use (the standard case under conditions of growth). Normally, no accounting is done at all for the depletion of natural resources on a global scale.

    It seems we have set up a position now in the global economy where the money inflation rate is low (the half-life of money is extended), the deterioration rate (real) and depreciation rate (nominal) of commodities and goods is high (including issues of obsolescence and deliberate wastage) and the non-renewable resource destruction rate is unmeasured.

    The time treatments of these processes, relative to each other, are inconsistent to ignored. Given the future problems we face, money should be inflating (or be deliberately inflated) rather rapidly at the present time. I suspect instead that a lot of money will be destroyed by defaults. That’s the other way to destroy (debt) money.

    Or maybe, this doesn’t make any sense. Not sure.

  2. James Wimberley says:December 14, 2018 at 9:22 pm
    johnquiggin.com/2018/12/10/monday-message-board-401/#comment-200722

    “Annual growth in renewables (“ren”=56.2% & “ren”+hydro=65.8% of 6.6% total) covers about half the increase, so coal still normally has to keep rising (34.2% of 6.6% total growth).”

    James, you linked english.gov.cn/state_council/ministries/2018/01/22/content_281476022324040.htm which linked another article at the page bottom a month earlier and covering the same year:

    http://english.gov.cn/state_council/ministries/2017/12/27/content_281475991437268.htm

    “China’s energy production is expected to reach 3.6 billion tonnes of standard coal equivalent in 2017, among which non-fossil fuel output accounts for 17.6 percent” … or 63.36 million tonnes standard coal equivalent.

    Therefore China’s energy production other than from nuclear, wind, hydro, and solar was 3.6 billion less 63.36 million = 3.5 billion tonnes of standard coal equivalent in 2017 from fossil fuels. And that continues growing.

    There, Nur Bekri, head of the National Energy Administration said, “China is actively adapting to the green trend in the energy supply,”

    He’s gotta be joking. An increasing 82.4% fossil fuel slice of a growing total mess..

  3. The best way to view Svante’s “can’t do” attitude is through the lens of historical naysaying, which shows that every transition in energy use and technology has attracted Doubting Thomas’s like so many blowflies at a barbecue.

    – The idea of electricity in the private home was seen as barking mad by the naysayers, since everyone would dies ‘cos everyone would eventually inadvertently electrocute themselves or die in electrical fires or get cancer.

    – the idea that coal fired power stations could power cities via a vast infrastructure of billions of metres wiring, substations etc etc was unrealistic according to the naysayers.

    – etc etc etc

    Whingers gotta whinge, haters gotta hate and naysayers gotta say nay. Whatever floats your boat, I guess.

  4. Hugo,

    As a former fossil-doomster, I have to admit I was wrong about solar PV. Solar PV is now much cheaper and more efficient in financial, material and energetic terms. When the facts changed, I changed my mind on that issue. However, I have not been proved wrong (so far) in predicting that our production system (that of neoliberal capitalism) would fail to change in time to prevent dangerous climate change. It’s clear trajectory at this late stage is still towards widespread disaster.

    To date we have done too little, too late. The damage to climate and ecosystems is now severe and feedbacks are kicking in (like albedo effects and methane release from tundra) which are working against our (as yet feeble) efforts at emissions mitigation.

    It’s not whinging to point to inconvenient facts. But it is pollyanna-ish to cherry pick little cherries of hope and live on cherries while the tree is dying.

  5. Ikonclast:

    I don’t believe I am a Pollyanna. It is probably also a good thing to have a few doomsters in the public debate provided they are well informed. However the rate at which renewable technology is developing, reducing in cost and being implemented is a reason for cautious optimism.

    The developments in South Australia, especially what is happening in Whyalla in relation to the steelworks, thanks to the visionary Mr Gupta, is one of many reasons for cautious optimism.

    So much has already been done even though, as you say, mitigation efforts have been feeble. Imagine what will be achieved once we kick into high gear.

  6. Labor’s election campaign slogan is “A Fair Go for Australia” – a vacuously feeble slogan whose miniscule content is mainly a misleading populism. Andrew Leigh in an article in the AFR has sought to give content to this near vacuous slogan by addressing specific problems of (i) rising income inequality (inequality has, in fact, scarcely worsened in Australia for 30 years) and (ii) diminished competition in industries such as retailing and brewing (the latter are poor examples as competition in these latter areas has never been more intense).

    It is foolish to push a program based on non-existent problems. It would be far better to develop a policy agenda which focuses on substantive issues such as climate change or the stressed character of living in major urban areas because of excessively rapid population growth – real problems that can be readily addressed via straightforward policy changes.

    Why a populist campaign based on non-problems? The AFR makes some strong points in its editorial rebutting the claims of Andrew Leigh including the useful suggestion that Labor should address some of its own self-created monopoly problems:

    https://www.afr.com/opinion/editorials/labor-should-fix-the-monopolists-in-its-backyard-20181217-h196vb

  7. Hugo @ 2:43 AM: “The best way to view Svante’s “can’t do” attitude is through the lens of historical naysaying”

    The best way to view anything is to also note the effects of any elephants in the room. What is not historical is what could never have been.

    You’ve put me in mind of the brilliant first and impossible last sentence in “Daniel Martin” by John Fowles (1977), “Whole sight; or all the rest is desolation.”

    Hugo @ 11:16 AM: “However the rate at which renewable technology is developing, reducing in cost and being implemented is a reason for cautious optimism.”

    What, ostrich effects in here too? Renewable energy continues to merely add to fossil energy not replace it. Fossil sourced energy production/consumption continues to grow (not diminish) at record levels, and part of that growth is in continuing to fuel the major part in producing renewables. On current trends this situation doesn’t look like changeing sufficiently in time to avoid global climate related catastrophes continuing, and worsening.

    Incidentally more “Daniel Martin” of note, the remarkable epigraph Fowles chose to preceede that opening line:

    “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appears.” – Gramsci, “Prison Notebooks” (circa 1930).

  8. @ Harry Clarke:

    The rich hide their wealth in tax havens. The rich hire fancy lawyers and accountants to avoid paying tax. The rich executive class commit crimes against the public and their customers then give themselves a big fat bonus. They rarely go to jail.

    The not-so-rich have millions of dollars stolen from them in wage theft and superannuation theft. The not-so-rich are paid a pittance then ridiculed by the rich for not paying enough tax. The not-so-rich go to jail for crimes involving a few thousand dollars.

    A fair go sounds like a good idea to me.

  9. hc

    Like Sherlock Holmes’ dog that didn’t bark, what is more interesting is what the NSW Energy Minister didn’t say. He didn’t say that NSW would have renewable energy target, which is the one policy that a state government can use to reduce emissions – if they are serious.

    The only thing the NSW Liberals are serious about is trying to get re-elected next year, and putting out non-policy policies on climate is their way of attracting back Wentworth Liberals. The problem is that Wentworth Liberals are not easily fooled.

  10. Today’s “The Age” has a perfect example of how the rich are screwing workers and putting the proceeds of wage theft in tax havens.

    Chefs at the Australian restaurant fronted by Heston Blumenthal are being underpaid as much as $30,000 each per year, according to new estimates provided to the workplace watchdog.

    The international restaurant empire fronted by Blumenthal was revealed in an investigation by The Age and Sydney Morning Herald to be run through a series of notorious offshore tax havens while also substantially underpaying staff at its high-end Australian eatery.

    The Fair Work Ombudsman is investigating. Blumenthal might get a small fine but many of the ripped off workers will never get their money back because they will have no proof and the FWO only recovers money over a time period that they call an “audit period”. Most workers will not even report wage theft to the FWO because they fear being blacklisted and never working in their profession again.

    Even after a fine, Blumenthal will probably come out in front and go back to stealing wages when the hopelessly under-resourced FWO moves on to another target.

    There is no fair effing go in Oz. We don’t even get close.

  11. Ernestine, I read that article and was -no I wasn’t – astounded at the value of derivatives. Again! 
    “The notional value of the derivatives cleared worldwide is 4.4 times world GDP, up from 2.8 times in 2008. JP Morgan alone has a $US30 trillion book.”
    “In that case, a €114 million ($180 million) default by Norwegian trader Einar Aas – caught on the wrong side of a “convergence play” on electricity prices – burned through his collateral and then through two-thirds of a reserve fund from non-defaulting members.” (Has Morrison / treasury / Origin read this?)

    I won’t be able to  comment at your’s and our host’s level re “why I believe Keynesian macro-economic management no longer works, except in the very short run” I assume QE and our surplus are one of the main macro economics costs to be bourne or to effect us in the short term. By how much and when?  

    Your top 3 ( inequality, fin instability and enviro) are all being ‘played’ and ‘2’ is directly effected for real by “JP Morgan alone has a $US30 trillion book.” 
    “The solution (conceptually) is to limit debt generation via one form or another of quantity restrictions.” Sounds eminently sensible until we try to take on 4.4x world gdp. I have re-found my amazement due to 542tn outstanding on 12tn realisable assets.

    https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?start=2012 – gdp from 2012 to 17 and shows in world bank graph  the depth of gfc visually and world gdp at 88tn. So lets say $88tn x 4.4 = 374tn – too low? – and the derivatives have
    “According to the most recent data from the Bank for International Settlements (BIS), the total notional amounts outstanding for contracts in the derivatives market is an estimated $542.4 trillion. But the gross market value of all contracts to be significantly less: approximately $12.7trillion.” investopedia.com/ask/answers/052715/how-big-derivatives-market.asp

    I saw ine oundit suggest 10x wgdp! Can you or our host make sense of contracts worth $542tn but gross market value 12.7tn? 45x leverage? This is within the rules. Apply 5 or more ‘derivations’ … 45x asset value, a story + scenarios + solipy + 3rd order effective control? I truly am unsure as this seems like ‘surplus’ to me. An accounting method able to be removed at a stoke or is it a barrel used to control realizable value? NVR boring yet accountable. wikipedia.org/wiki/Net_realizable_value
    Dies liquidity need 45x depth?

    I will vote for such a debt quality mechanism as you suggest, but until governments treat a bank as a bunch of humans, make laws which effect them directly without recourse to a financial corporate instrument called “a bank”, do not think all the derivative play money will disappear or be re-systematised to assist the commons before doing more damage.

    Which leads to my ‘war’ story. An Australian army seconded a bright mathmatician-tactician to do battle analysis in Vietnam. Fell ill and was returned to Australia just before his post was caught in fire fight. Many casualties. Lucky. Recuperation for caught disease, 2 yrs. So he looked at money markets. Came up with a serious algorithm and went to work in markets. By 1990 he had ‘proved’ algorithm with insider data – patience plus. I provided system dynamics software 1991 for scenario generation. ‘No!. You can’t look at model.” (i was younger and could see a free ride) He stated: “I will have at most 2 years before futures and currency traders have incorporated my style into their models”, and, ” I could go to the pub any friday, get bar flies trained on currency swaps and the job pass test – trades positive 51%.”. I thought about trading, but as it seemed like play money and souless and I had my ‘best job ever’ I never did.

    If we could beat the market for more than 2 yrs and legislate quality debt we may then get your want. Labor are going to be – probably – in power and get the next down turn gfc meltdown and the cycle will repeat all with ruperts urging… rudd-says-murdoch-media-is-a-political-party-108992 ( the conversation today ).

    As the world stands, your worthy goals may take as long as gender pay parity -100-200yrs.

    Only by everyone knowing the above, regaining their amazement as I have mine, and acting on making only quality investments and demanding same,  will we reduce the 222 by a factor of 10 – a generation. 

    Depending in the weather I may or may not look at this: researchgate.net/publication/228422977_Microworlds_A_System_Dynamics_Application_in_Learning_Keynesian_Macroeconomics

    My search returned the old system dynamics terminology ‘microworld’ and the search seems to have ‘environmental ‘ in many titles. An encouraging sign for humanity.

    Hmmmm… now what was I going to do before my amazement returned?

    Ahhh, thanks Ernestine, Roy Radner;
    “The Roy Radner equilibrium (1968), is a model of financial markets”…
    wikipedia.org/wiki/Roy_Radner
    But,
    RR: …”Not so with incomplete market”… 
    Asymmetrical they replied. 

    “payoff has to be replicable by trading of available assets that are now part of the definition of the economy.”
    I’d like a go at redefining assests. 

    “is that budget sets do not fill the available space and are typically smaller than hyperplanes.”

    I am sure someone very inebriated said this to me once, and it made complete sense. Bifurcation (or in this case bi replaced with as many ‘n’ variables as to destabilize) sorts out the hyperplane. And prime ministers.
    “if the value of an asset or a contingent claim is affordable then it can be achieved.”

    IF… only… Merry Christmas.

  12. The coalition are doing a great job, of losing electoral support, and if the alp can hold it together long enough they just might fall over the line.

  13. On equality; HILMA disputes popular #memes on the rich/poor divide.

    Is HILMA a reliable source? On one level it has to be ie the media driven anecdotal analogy.

  14. From Der Spiegel in an article on the war in Yemen

    The United Arab Emirates bought themselves a war — they pay for the men, the weapons, the ammunition, the food and the medical care. But they aren’t waging the war themselves, instead having created a finely tuned system of military subcontractors: Yemeni militias that have been trained by Emirati elite units but who are under the leadership of a former Australian general.

    WTF?

  15. Is it wrong of me to delight in schadenfreude as the party with peace as one of its core principles, the Greens, turns into a squalid rabble of factions, plots, back stabbing, scandalous accusations and outright fear and loathing of fellow party members?

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