Saturday, November 29, 2008

Newspapers, the Web and IBM Syndrome

In early October, some attendees at the American Magazine Conference, in San Francisco, took a side trip to the offices of a significant media player and were told that if the great brands of journalism — the trusted news sources readers have relied on — were to vanish, then the web itself would quickly become a “cesspool” of useless information.

The broadcast media has had a dependency on newspapers that long predates the arrival of the Internet. For example, much of the material for daily talk radio shows, is garnered from newspapers. It is for example interesting to observe how often Wall Street Journal stories, set the agenda for the CNBC business television service in its morning programming hours, while later in the day, the On-Air Editor Charlie Gasparino claims credit for breaking stories and presenters are primed to coo about a story that "Charlie broke." Picking up a tidbit or two over the phone from contact and writing a detailed analysis article with content from multiple sources, is a different kettle of fish, of course.

New York Times columnist David Carr recently wrote that newspapers and magazines do not have an audience problem — newspaper web sites are a vital source of news, and growing — but they do have a consumer problem.

Carr wrote that more than 90 percent of the newspaper industry’s revenue still derives from the print product, a legacy technology that attracts fewer consumers and advertisers every single day. A single newspaper ad might cost many thousands of dollars while an online ad might only bring in $20 for each 1,000 customers who see it.

The difference between print dollars and digital dimes — or sometimes pennies — is being taken out of the newsrooms that supply both, he said.

In the US, advertising from the car industry, retail business and financial services — for years, the three sturdy legs of a stool that print once rested comfortably on — are in steep decline.
As the younger users of the web who rely on it for news, get older, the audience for the printed media is likely to continue shrinking.

The New York Times recently reported that as America’s newspapers shrink and shed staff, and broadcast news outlets sink in the ratings, a new kind of web-based news operation has arisen in several cities, forcing the papers to follow the stories they uncover.

The Times said that, offering a brand of serious, original reporting by professional journalists — the province of the traditional media, but at a much lower cost of doing business. Since it began in 2005, similar operations have cropped up in New Haven, the Twin Cities, Seattle, St. Louis and Chicago. More are on the way.

Their news coverage and hard-digging investigative reporting stand out in an Internet landscape long dominated by partisan commentary, gossip, vitriol and citizen journalism posted by unpaid amateurs.

The fledgling movement has reached a sufficient critical mass, its founders think, so they plan to form an association, angling for national advertising and foundation grants that they could not compete for singly. And hardly a week goes by without a call from journalists around the country seeking advice about starting their own online news outlets.

“Voice is doing really significant work, driving the agenda on redevelopment and some other areas, putting local politicians and businesses on the hot seat,” said Dean Nelson, director of the journalism program at Point Loma Nazarene University in San Diego. “I have them come into my classes, and I introduce them as, ‘This is the future of journalism.’ ”

While publishing online means operating at half the cost of a comparable printed paper, online advertising is not robust enough to sustain a newsroom.

The Times says financially, VoiceofSan Diego and its peers mimic public broadcasting, not newspapers. They are nonprofit corporations supported by foundations, wealthy donors, audience contributions and a little advertising.

New nonprofits without a specific geographic focus also have sprung up to fill other niches, like ProPublica, devoted to investigative journalism, and the Pulitzer Center on Crisis Reporting, which looks into problems around the world. A similar group, the Center for Investigative Reporting, dates back three decades.

But some experts question whether a large part of the news business can survive on what is essentially charity, and whether it is wise to lean too heavily on the whims of a few moneyed benefactors.

“These are some of the big questions about the future of the business,” said Robert H. Giles, curator of the Nieman Foundation for Journalism at Harvard. Nonprofit news online “has to be explored and experimented with, but it has to overcome the hurdle of proving it can support a big news staff. Even the most well-funded of these sites are a far cry in resources from a city newspaper.”

The New York Times says that the people who run the local news sites see themselves as one future among many, and they have a complex relationship with traditional media. The say that the deterioration of those media has created an opening for new sources of news, as well as a surplus of unemployed journalists for them to hire.

“No one here welcomes the decline of newspapers,” said Andrew Donohue, one of two executive editors at VoiceofSanDiego. “We can’t be the main news source for this city, not for the foreseeable future. We only have 11 people.”

Ireland and IBM Syndrome

In the US during this presidential year, there was evidence that the IBM Syndrome attitude to the new media was changing and representatives from online political sites, were not uncommon on mainstream broadcast programs and quoted in newspaper reports.

Ireland being conservative, has yet to change and the cronyism on the political side, is mirrored in the media, in particular at the State broadcaster RTE.

Last week in the Sunday Independent, Senator Eoghan Harris commented: "But my effective exclusion from the News at One for 18 years, followed by exclusion from the Week in Politics -- which has never once asked me onto its weekly panel -- was not in the public interest. My absence made it easier for RTE to avoid awkward issues."

Harris should know more than most how cronyism works in an organisation like RTE , as he worked there for years.

Journalists use the web for sources and it has in effect become a two-way street but mainstream journalists seldom acknowledge this.

On one occasion, an Irish Times columnist used six references from a Finfacts story, in his article without attribution.

There is of course a huge amount of publicly available information on any topic easily accessible at any one time but paid journalists who find useful and free, uncommon information and generally hard-to-find facts conveniently, should have the grace to acknowledge the source.
In an article on Nov 21st, I referred to a 1933 letter that British economist John Maynard Keynes wrote to President Roosevelt in 1933 and I linked to a copy of the letter.

Two days later, a Sunday Independent article by journalist Jody Corcoran on Bertie Ahern began: "There is a recrudescence of wise head-wagging by those who believe that the nose is a nobler organ than the brain."

When he wrote that to President Roosevelt in 1933, the economist John Maynard Keynes was referring to "the average City man" who believed the New Deal was a hare-brained expedition in the face of competent advice.

Coincidence maybe or maybe not!

And finally....

It was Eric Schmidt, the chief executive of Google who warned that the web would quickly become a “cesspool” of useless information, without the big brand print media.
But like so much else in the world, it's increasingly becoming a two-way street.

Friday, October 17, 2008

"Independent" TD Finian McGrath took his "eye off the ball"

Non-party TD Finian McGrath who calls himself an "independent," sold his vote to Fianna Fáil after the last election in return for five years of job security.

Having voted for the Budget, he told the Irish Times that he took his "eye off the ball" in advance of the Budget. He said he would be lobbying the Government on medical cards for the over 70s and the imposition of the 1 per cent levy on persons who are not in the tax net.

How pathetic, fatuous and self-serving!

McGrath says the following about himself on his website: "Anyone who meets Finian McGrath gets an immediate sense that he genuinely cares about people.

Shortly after that they perceive his strong sense of community spirit and appreciate he is a man of integrity. Anyone who knows his history knows how deeply ingrained in his personality these characteristics are."

My father used to say self-praise is no praise.!

So McGrath got his Faustian bargain and didn't bargain for the downside. He may well be a better teacher than politician and he should be returned to his old job at the next general election.

The following is an excellent letter on McGrath's associates, from the Irish Times on Oct 16, 2008:

Madam, - Truly we are a very docile people. The dominant political party has behaved in a profligate manner with our resources and has used our unaccustomed wealth in craven attempts to bolster its political position and its chances of re-election — vide its gross favouring of developers, its ridiculous decentralisation proposals, the quangos, the consultants, the advisers and the costly Dáil committee talk-shops. That party's offhand carelessness and lack of application also precipitated the Lisbon Treaty referendum defeat, still lurking off-stage to batter us still further.

Were our rebel spirit still alive, were we to give justifiable expression to a well-grounded rage at how we have been abused and betrayed, we would opt for one of two traditional options. The real choice should be to hang them now or to give them a fair trial and then hang them. I support the more straightforward option.

The brazen, arrogant ones say they are not to blame. The schoolyard excuses abound - it wasn't me, it was the banks, it was the American subprime market, etc, etc. The craven morons should stand up and take the hit. Instead, we are now taking their hit. - Yours, etc,

COLM MULLEN, The Warren, Malahide, Co Dublin.

Saturday, September 27, 2008

Cowen's Trip to China- Marketing Spin has already Begun

The Opening Ceremonies of the XXIX Olympiad, Beijing, China, August 8, 2008 -- Fireworks light the sky above the latticed steel National Stadium known as the "Bird's Nest" where an estimated 91,000 spectators, athletes, executives and world leaders were gathered - - Photo: Xinhua

Taoiseach Brian Cowen is to lead a trade mission to China in October, in an effort to boost trade with the region and to encourage inward investment.The trade mission, which is being organised by Enterprise Ireland (EI), will take place from October 19 to 24, with a planned business events in Shanghai and Beijing.

Enterprise Ireland is no doubt feverishly working on planned announcements and deal "signings" as the fiction that the presence of a politician on a trade mission is like a magic wand conjuring up business, is easily sold to the media.

The Sunday Business Post said last month that previous trade missions, have resulted in a dramatic increase in trade between Ireland and the countries visited - more than €100 million worth of deals were struck during a mission to the Middle East last year.

Impressive indeed for gullible!

If it was true, the 4 ministers in the Department of Enterprise, Trade and Employment could have real jobs to do, for a change.

EI is likely currently engaged in trawling for business deals over the past year, that it can tie into the China trade mission.

This in itself is harmless spoof.

What is however a serious issue, is how State agencies like Enterprise Ireland, allow themselves to be used to feed the delusions of politicians who after almost 12 years of power, believe their own propaganda.

For example on Thursday, Health Minister Mary Harney said: “There are huge markets internationally for us to compete in and win: the pharmaceutical industry, medical devices, the high-end agri and food sector, information technology, communications, financial services, biotechnology, education services.”

“None of these real markets have disappeared… [So] let the message go out: ‘Brand Ireland is not broken,’” she added.

How convenient to ignore a pertinent fact. American companies dominate exports in most of these sectors!

Harney as minister for over a decade, has about 6 "helpers" on the public payroll doing constituency donkey-work; she hasn't had to drive herself anywhere in the same period and in addition, she has advisers and other gofors attending to her needs. Should it be a surprise that she would be somewhat divorced from reality?

The Sunday Business Post reported in August that "Irish exports to China are continuing to grow, according to EI figures, which show Irish companies had exports of €1.95 billion to the region last year, a 30 per cent increase on the previous year."

According to the CSO, these are the total merchandise exports to China in 2007.

As for sales by Irish companies i.e ones that are not foreign-owned, the amount may be as low as €150 million.

The job of Enterprise Ireland shouldn't be to feed the delusions of their political masters.

The result of the spoof is an absolute misreading of the challenges for Irish-owned companies, in doing business in China and Asia.

Even decisions on the destination of the exports from the likes of Intel and Microsoft, are not made in Ireland, never mind the fakery that they are "Irish companies," beyond the legal status of their Irish units.

Irish Economy: IBEC and understanding the world East of Suez

Saturday, September 06, 2008

Irish Economy - End of the Celtic Tiger and Credit where it's Due

Dan McLaughlin, Bank of Ireland economist with Health Minister Mary Harney T.D. at a Women In Banking and Finance (WIBF) Ireland forum in 2006 - - In February 2004, The Sunday Independent reported that Dan McLaughlin was the toast of the Society of Chartered Surveyors annual dinner at the Burlington Hotel: In a virtuoso performance, he declared that this country is currently enjoying an unprecedented "Golden Age of Construction" and - to thunderous applause - announced that "the Celtic Tiger is Back".

If the definition of an optimist is one who sees the bottle half full and a pessimist says it's half empty, the BofI economic guru left his audience of 1,300 property professionals in no doubt where he stands. "The economy in general has emerged from a period of sub-trend growth in remarkably rude health and is poised to enjoy a much more favourable global backdrop, which will propel Irish growth towards the potential of 6% over the next eighteen months," Dr McLaughlin opined.

Harney and her Progressive Democrats' colleagues became cheerleaders of tax cuts during the boom but were ineffective barnacles when at the pinnacle of power.

There is much attention these days to credit, given the impact on the international financial system of the US subprime loan crisis. There is also another form of credit that is often unearned.

The abrupt ending of the construction-fuelled boom in Ireland, has also highlighted how politicians and business folk alike, so ashamedly used the boom as a confirmation of their own business or political genius.

Now, the turn of events in recent times, can be attributed to international events.

The economists cum spin doctors who tried to provide an intellectual underpinning, to an economy built on quicksand, because their brief was to be artists who painted for the approval of their benefactors, should in a just world be on the dole, like the 73,178 additions to the Irish Live Register in the past year. Alas, there will always be a market for soundbite one-liners and who has ever called account on the forecasts of pundits? The simple truth is that a brass neck, is much more important than prescience.

Michael McDowell, a former leading light in the pre-defunct Progressive Democrats, during the heyday of its position as a powerless barnacle at the pinnacle of Irish political power, onetime made the bold claim that it was "credited with major responsibility for Ireland's economic boom by pioneering tax reform, deregulation and competition to end mass unemployment and emigration."

In 1997, Mary Harney and the Progressive Democrats tied themselves up in knots about public service reform because they were peddling soundbites about cutting 25,000 public service jobs, an approach that cost it seats. Since Dec 1997, the number on the civil service payroll increased by 80,000 according to the Central Statistics Office and there has been no public service reform.

In the Dáil debate on the appointment of the Cabinet in 1997, Alan Dukes said: "The Tánaiste said something very interesting to me on the last day of the previous Dáil. She commented: “I know Minister Dukes does not like soundbites, but if it can't be said in a soundbite it is not worth saying”. She should reflect on that because the electorate told her that in spades during the election. She was clobbered by soundbites and she is now a very junior partner in Government because of soundbites. People decided they did not want to fire 25,000 public servants, or oppress single mothers whose families are too numerous for them to live at home with their parents with another baby they did not expect, and so on. I hope for the sake of good government, if not for the sake of the parties in government, and for the kind of politics the Progressive Democrats is supposed to stand for — the party is supposed to be policy driven — that the Tánaiste has learned the lesson that soundbites are inimical to good politics. Life is more complicated than a soundbite and I hope she has found that out."

The PD's alas thought that cheerleading for tax cuts during a boom was radicalism and its legacy is basically akin to that of a person who walks across a field of snow and leaves no footprints.

It's said that a statesman is a dead politician and Dukes had provided essential support to Charles Haughey's Damascus Road conversion to fiscal responsibility, following the 1987 election.

Dukes was dumped by his own Fine Gael Party and Fianna Fáil took full credit for the benefit of its Fine Gael supported fiscal rectitude. The brave new Progressive Democrats refused to support Haughey until it joined him in government in 1989.

As for the public, it was a matter of appreciating Dukes' patriotism by some while a member of his own party dismissed him with the old canard that if it was raining soup, Dukes would be the one with a fork.

Stephen Collins in the Irish Times this week, said that 1987/89 government was underpinned by a Fine Gael Opposition under Alan Dukes that supported a strict clampdown on public spending in the so-called "Tallaght Strategy".

Minister for Justice Dermot Ahern suggested that the current Opposition should act responsibly and offer his Government similar support now.

The same suggestion has been made in recent months by other Fianna Fáil figures but the chances of it being adopted are zero, according to Collins. He says for a start Fine Gael and Labour roundly criticised Cowen's budgetary approach over the past four years but lost an election on the basis that Fianna Fáil was better able to deal with the economy.

Some joke indeed!

Green Party Minister Eamon Ryan wants an all-party consensus on climate change policy i.e. we cowards in government, cannot make tough decisions.

Statesman Alan Dukes lost his seat in the 2002 general election.

So why would any Opposition politician provide the current incompetents in government with a life raft while the same people would claim 100% credit for any positive results?

This is where the issue reverts to where the ultimate responsibility lies - the electorate.

If a significant section of the public is willing to put up with a system of limited accountability dominated by incompetent former schoolteachers, small-town solicitors and auctioneers, who deserves blame?

The most recent significant public demonstration against public policy was in 2003 when 100,000 took to the streets in Dublin. It was a protest against the planned invasion of Iraq by the United States.

We have to go back to 1979 for evidence of significant public protest against Irish policy, when an estimated 200,000 workers marched through the centre of Dublin in protest against an unfair tax system in March of that year.

In the interval, farmers have been effective in their public demands for cash and protections. Workers in the private sector, with more than 1 million without an occupational pension, are the ones who are now at the mercy of government incompetence and the most exposed to the economic downturn.

Isn't it time for public outrage on the death of the Celtic Tiger and the lamentable failure of the Government to prepare for the end of an unsustainable construction boom?

Sunday, August 24, 2008

Putin and his Irish admirers

Tom McGurk

It's no big surprise that the harshest critics of American foreign policy and many more, show indifference to other conflicts in the world or to the foreign policy of say China or Russia.

This past two weeks, the war in Georgia is a case in point and there have been some reactions from the Anti-American element only because they see a US hand in emboldening the Georgian President Mikheil Saakashvili.

It's a tangled tale with Vladimir Putin, the de facto ruler of Russia, who came to prominence by waging a brutal battle against Russian citizens who supported independence for their province Chechnya, claiming that the Russian invasion of Georgia was a response to protect separatists who were given Russian passports in recent times.

Saakashvili is viewed as having acted impulsively in attacking the breakaway South Ossetia region.

The Economist said last week that with the smoke of battle still in the air, it is impossible to say who actually started it. But, given the scale and promptness of Russia’s response, the script must have been written in Moscow.

Meanwhile, Irish journalist Tom McGurk who is a Northern Irish nationalist, wrote in the Sunday Business Post: "After all, it was Georgia who invaded South Ossetia and then the Russians, having quickly established military superiority, accepted a ceasefire, while Moscow went to enormous lengths using all its English-speaking government officials to mount a media offensive explaining its actions."

Confusing surely? Georgia invaded part of its own territory. It is not yet recognised as part of Russia.

McGurk wrote: "Seemingly there is nothing Russia can do to satisfy some in the West; Vladimir Putin’s clean-up of the mafia-dominated mess he inherited from Boris Yeltsin is merely characterised as ex-KGB man authoritarianism. Ironically, as Russia has become more and more stable and economically prosperous under his hand, the level of criticism aimed at him has only increased."

This benign armchair view of Putin is a reflection of what the blindspot of anti-Americanism can do to one's judgment. Earlier this year, penned a pean to Fidel Castro.

The Economist says: "South Ossetia is a tiny patchwork of villages—Georgian and South Ossetian—which was much easier to drag into a war. It is headed by a thuggish former Soviet official, Eduard Kokoity, and run by the Russian security services. It lives off smuggling and Russian money. As Yulia Latynina, a Russian journalist, puts it, “South Ossetia is a joint venture between KGB generals and an Ossetian gangster, who jointly utilise the money disbursed by Moscow for fighting with Georgia.”"

Monday, July 28, 2008

Irish Media: Top earning journalists promote anti-EU position; Some question the benefits of being in the Eurozone

It's interesting that most of the top earning Irish journalists have taken an anti-EU position and some are also against the Euro - - Browne, Myers, Arnold, Dunphy, McGurk and Cooper.

An example of being divorced from reality as they will continue to do well in a recession or boom! How many have ever been on a factory floor or understand what it is to work in international tradable goods and services sector?

In the Sunday Times on July 27th, Matt Cooper, the former editor of the Sunday Tribune suggests that Ireland made a mistake in joining the Euro.

"The first problem with the euro is that it is overvalued. The second problem is that the interest rate we are charged for borrowing money is way too high. This is costing us jobs and destroying our wealth. Worse, we are powerless to deal with these problems because we have signed away control of our monetary policy to the European Central Bank (ECB). As part of that process, we are also restricted in terms of how much the state can borrow," Cooper wrote. "The strength of the euro against the dollar and sterling in recent years has destroyed the competitiveness of our exports in vital international markets, reducing or eliminating their profitability. The cost of doing business in this country doesn’t help, of course, but our weakened position is bound up with the problems caused by our currency as its value has soared in recent years. Despite our euro membership we continue to do more trade with Britain and the US than any other country in the eurozone: about 60% of our exports go to these two areas, making us unique among EMU members in our dependence on countries trading in other currencies."

For starters, the ECB rate at 4.25% remains at a historically low level.

Outside the Eurozone, Switzerland is the only country in Western Europe with a lower rate.

The UK benchmark rate is 5%; Norway's is 5.75%; Sweden's rate is 4.5%; Denmark's 4.25%; Switzerland's at 2.75%.

Iceland, the open economy that is comparable with Ireland, has a benchmark rate of 15.5%.

Bizarrely, Cooper in his article doesn't suggest what rate he would expect an Irish punt to have against the backdrop of the current crisis.

As for the argument that Ireland has surrendered the flexibility to cut rates below the ECB rate, apart from the threat of an exodus from our own currency comparable with that of the majority owners of our public companies - in 2007 for example, 65% of AIB's shares were held by foreign investors - the Euro and the ECB shouldn't be blamed for a reckless Irish fiscal policy when current spending was allowed grow at double-digit rates and oil was thrown on the property fire with a bonanza of unnecessary tax incentives.

The argument about trade flows is also misplaced. It reflects a lack of understanding of the multinational sector, which overwhelmingly dominates Irish exports.

Raw trade statistics have been used to bolster the case of Sinn Fein and the expert scribblers that the Irish economy would be better in an Anglo-centric world.

Ireland's principal economic function is as a base for US multinationals. Our top home-grown tech company Iona is in the process of being sold and Xsil, the fastest growing Irish tech company of this decade transferred most of its operations to Asia last spring.

Foreign firms, mainly American, are responsible for over 90% of our exports. Even though the statistics show a high level of exports to the US, it is wrong to assume that US firms would see merit in returning to the punt or that it would serve an economy so dependent on foreign investment.

Some US exports to Europe have an Irish content and US companies can keep their profits abroad for many years for example for investment in the Eurozone. Ireland also provides US companies with the facility of parking patents here and the profits from other overseas operations, become Irish exports to the US. Besides, US companies are responsible for most of our direct exports to other Eurozone countries.

As for the potential of investment from the rising multinationals of the Emerging Economies, Ireland is the fourth most expensive economy in the world according to the World Bank. Anyone who would think that having our own currency would enhance our prospects compared with the sense of the security of the world's second reserve currency, should not be taken seriously.

Cooper writes: "...imagine how the usual suspects would respond if the issue (of leaving the Eurozone) ever became a live one. The soul-searching that has taken place in the wake of our rejection of the Lisbon treaty would have nothing on it."

Giving a second PFO to the EU, would please some but most of them would be found in the sheltered sectors of the Irish economy. It would of course be part of a national suicide pact.

And finally, the politicians who blew the boom would effectively get control of interest rates. Wouldn't 15% mortgage rates be something to worry us?

Sunday, July 20, 2008

Well-fed John Gormley: Anti-Science on GM Foods - Pro-Science on Climate Change

The Greenpeace flagship, Rainbow Warrior, arrives in Sydney in April 2004, to promote a future free from genetically engineered (GE) food.

In early July, Green Party leader and Minister for the Environment John Gormley gave support to a French plan that could enable member states such as Ireland to establish themselves as GMO (Genetically Modified Organisms) free zones in the EU.

This move would be as much of a fraud as sham neutrality and the opportunity to breast-beat about Ireland being a nuclear-free zone while importing electricity from the UK that may be nuclear generated.

At a meeting of environment ministers in Paris, Gormley was reported to have told his fellow EU ministers that the union needed to respond to citizens concerns in the area of GMOs - i.e pander to the misinformed. Brave politics indeed and no big surprise as Green Party politicians are well practiced at jumping on passing bandwagons, some powered by the extremism of environmental activists.

Gormley said the rejection of the Lisbon Treaty in Ireland had demonstrated there was a real need for the union to take action to address a disconnect between the EU and citizens, and signalled that GMOs were a prime example.

“I heard some of my colleagues talk about the disconnect between the people of Europe and the European project in the context of the Irish No vote,” he said.

Gormley told The Irish Times after the meeting. “When you have a situation and the perception exists that the majority of people in Europe and the majority of member states oppose GMOs, and are then overruled by the Commission, this is undoubtedly contributing to that problem.”

Gormley acknowledged that Irish farmers currently use GMO animal feed for their cattle and he said there were no immediate plans to change that policy. But he said he felt it was essential that the Government kept its options open in relation to the issue.

“We are conscious of the strength of consumer demand for GM-free products. We are also conscious of labelling initiatives being introduced, including those in other member states, which will facilitate consumer identification of food products derived from animals fed a GM-free diet,” he said.

So this well-fed European politician wants to follow the misinformed Europeans and prevent development of the next generation of GM seeds that will provide greater tolerance for salt and drought prone lands in regions of the world, beyond Europe.

Anti-multinational sentiment has been a big factor in the scaremongering about GM food. Of course, the US firm Monsanto shouldn't have the potential of a monopoly on global seed production but in Europe, the anti-science environmentalists have politicians on the run and public research institutes are subject to threats of violence to prevent them from engaging in research.

In fact, these people are more dangerous than the anti-science climate change deniers.

Despite the scaremongering and the violence to prevent scientific experimentation - in June for example, 35 masked intruders destroyed genetically modified wheat being tested by researchers near Zurich and threatened staff with harm - there is no evidence that GM foods have had any negative impact on human health.

The Irish Government's Chief Scientific Adviser Prof Patrick Cunningham, who issued a formal report to the Government on GM foods last summer, which looked at safety, benefits and risks, this week told an Oireachtas Committee that he believed GM was of value to Ireland: "The answer has to be yes," he said.

"[ GM] is not going to go away and it is advancing at a hell of a rate," he said. Countries around the world were growing about 100 million hectares of GM corn, cotton, soyabean and rice.

Genetic modifications impart resistance to herbicides and insect attack, providing cost and yield improvement for the farmer, he said. "This has given a tremendous competitive advantage to those using [ GM]."

Speaking in the wake of food giant Nestlé's call for the European Union to review its opposition to GM, Sir David King, former UK Chief Scientific Adviser told the Financial Times in early July: "There is only one technology likely to deliver [the yield increases needed] and that is GM."

A comprehensive feature report in the Financial Times this month, noted that herbicide tolerance still dominates the GM market. The biggest brand is Monsanto’s Round­up Ready. This enables the farmer to eliminate weeds by spraying with Roundup, an inexpensive broad-acting herbicide, without harming the crop.

The second trait in widespread use is insect resistance. A gene from a microbe called Bacillus thuringiensis (Bt) is transferred into the crop, which produces a toxin that kills voracious pests such as corn borers and bollworms. A study released last month by PG Economics, a UK-based agricultural consultancy, concludes: “Biotech crop commercialisation has resulted in significant global economic and environmental benefits and is making important contributions to global food security.”

The FT report says that while today’s GM crops are designed to resist what scientists call “biotic stress” – pests and weeds – the second generation, currently under development, will focus on “abiotic stress”. This encompasses non-biological factors such as drought and floods, heat and cold, salinity and acidity. The biggest research effort is to make plants use water more efficiently.

“Abiotic stress reduces yield in major crops by 65-80 per cent,” says Michael Metzlaff, head of crop productivity for Bayer of Germany. His company’s experiments show that “gene silencing” technology can reduce the production of a key enzyme called Parp, which controls plants’ response to stress. As a result the plant grows better under adverse conditions. Companies plan to launch drought-resistant maize varieties between 2012 and 2015. Chris Zinselmeier, head of water optimisation research for Syngenta of Switzerland, says the aim is to produce a strain that yields better than conventional maize in drought years but “carries no yield penalty when water is plentiful”.

In addition to drought resistance, the industry is working on several other traits. One product, Syngenta’s Corn Amylase, shows how GM could help the biofuels industry. It is maize genetically modified to produce high levels of an enzyme, alpha amylase, that is a critical ingredient in the production of bio-ethanol. John Atkin, Syngenta’s head of crop protection, says Corn Amylase will improve the efficiency of bio-ethanol manufacturing from maize by 5-10 per cent.

Monsanto is meanwhile working on adding genes that enable crops to use nitrogen more efficiently. Nitrogen fertilisers represent one of the largest input costs in agriculture: in the US alone, farmers spend more than $3bn a year applying nitrogen fertilisers to maize fields and at least half of the nitrogen is wasted because it is not taken up by the crop.

Well-fed anti-GM campaigners in Europe are unlikely to be impressed by the latest developments. Extremists can always google to find some argument to support their prejudices and their familiarity with tropical countries may only extend to packaged or backpacker holidays.

So to the people in countries that are most exposed to the risk of climate change, it's a simple message: Let them eat cake!

As for the craven Minister Gormley, at the climate change conference in Bali, Indonesia in December 2007, he said that he had difficulty getting used to the humidity. It's a fair bet that he knows little or nothing about the challenges for agriculture beyond his world of Ringsend, South Dublin.

The renowned father of the Green Revolution, Dr. Norman Borlaug does not see GM as a panacea but one very important tool for increasing food production.

France, which holds the six month presidency of the union, is aiming to reform the process of GM food approval in the EU and has proposed allowing some member states to become GM free zones.

“We want to make rapid progress, because citizens expect it, and our demands are high,” French junior minister for the environment Nathalie Kosciusko-Morizet said in a statement after the July meeting.

EU environment ministers agreed to establish a committee to study the issue. A final decision on a new EU policy on GMOs is to be taken at the summit meeting of EU environment ministers in December, she said.

So finally back to John Gormley the politician. To the public, he is simply anti-science on GM foods and pro-science on climate change.

Comment - Lisbon Treaty Aftermath: The case of European politicians confusing concerns of "people" with the anti-science opponents of Genetically Modified (GM) food

Global Food Crisis: Malthus, Food Price Surge, Climate Change and a 42% rise in World Population by 2050 - includes information on the contribution of Dr. Norman Borlaug. Professor M.S.Swaminathan, President, National Academy of Agricultural Sciences of India, said at a Congressional Medal of Honor award ceremony in July 2007: "The impact of the Borlaug-led Green Revolution symphony will be clear from the fact that during 1964-68, Indian farmers increased wheat production in four years by an order greater than that achieved during the preceding 4000 years."

Wednesday, July 02, 2008

US foreclosures and the hard times towards the top of the pyramid

Last month it was reported that more than one million American homes were in in foreclosure - the process that more often than not ends up in people losing their homes. It was the highest rate ever recorded, according to a trade group which warned that the number will continue to climb.

The Mortgage Bankers Association's first quarter report showed that a record 2.5% of all loans being serviced by its members are now in foreclosure, which works out to about 1.1 million homes. That's up from the 2% of loans, or about 938,000 homes, that were in foreclosure at the end of 2007.

The New York Times has provided many reports on the plight of the losers including one on the auctions of the personal effects of people who have lost their homes and are then unable to pay rentals for storage.

In June, the NYT had an article on the plight of the still well-off but who are not as rich as they were.

The article said that interviews with the people who actually see the bank statements, like divorce lawyers and lenders, say their clients are definitely living on less than they did a year ago, regardless of how expansive the definition of “less” may be. Hairstylists and private jet rental companies say the wealthy are cutting back on luxuries like $350 highlights and $10,000-an-hour jet rentals. Even nutritionists and personal trainers notice a problem. The wealthy are eating more and gaining weight because of the stress.

The New York Times said that these financial problems — if they can be called that — will hardly elicit tears from the rest of us. But in those gilded living rooms, there is a quiet nervousness about keeping up appearances.

“Even if they’re not in danger of not paying their mortgage, there’s still a psychological change,” said Chris Del Gatto, chief executive of Circa, which has watched its business jump by 50 percent in the last year as wealthy clients sell their spare diamonds and Rolexes. “The economy is an issue even for people who don’t need the money.”

Their spouses could leave them when they discover that their net worth has collapsed to eight figures from nine. Friends and business associates could avoid them as they pass their lunchtime tables at Barney’s or the Four Seasons. And these snubs could trickle down to their children.

“They fear their kids won’t get invited to the right birthday parties,” said Michele Kleier, an Upper East Side-based real estate broker. “If they have to give up things that are invisible, they’re O.K. as long as they don’t have give up things visible to the outside world.”

So New York’s very wealthy are addressing their distress in discreet and often awkward ways. They try to move their $165 sessions with personal trainers to a time slot that they know is already taken. They agree to tour multimillion-dollar apartments and then say the spaces don’t match their specifications. They apply for a line of credit before art auctions, supposedly to buy a painting or a sculpture, but use that borrowed money to pay other debts.

It's a tough life indeed and it just again illustrates that there are a lot more people with education than educated.

Today, the NYT reported that Leona Helmsley who became super rich by marrying a New York real estate magnate, and became infamous for her comment that "only the little people pay taxes," left $12 million in her will to her dog, Trouble. But that, it turns out, is nothing much compared with what other dogs may receive from the charitable trust of Helmsley, who died last August.

Her instructions, specified in a two-page “mission statement,” are that the entire trust, valued at $5 billion to $8 billion and amounting to virtually all her estate, be used for the care and welfare of dogs, according to two people who have seen the document and who described it on condition of anonymity.

Two people who described the statement said Helmsley signed it in 2003 to establish goals for the multibillion-dollar trust that would disburse assets after her death.

The first goal was to help indigent people, the second to provide for the care and welfare of dogs. A year later, they said, she deleted the first goal.

It would indeed be nice to think that there is such a place as hell for folks like her but on second thoughts she would probably enjoy even that.

Sunday, June 22, 2008

Democracy and the grip on the Public Megaphone

In the aftermath of the Irish defeat of the Lisbon Treaty ratification proposal in a referendum, it has been suggested that European politicians should respond to citizens' concerns and every other country of the EU27, should emulate Ireland and hold a referendum.

This would be democracy in action, it is argued, but interestingly it is not proposed that the votes be counted as one. If Malta was the only country to reject the Treaty, that would be the end of it. So what the best form of democracy may be, is sometimes what suits a particular agenda or argument.

Should the original Six have sought public approval for the admission of poor Ireland in 1973 and related commitment of German and Dutch taxpayers to supporting us?

If our admission had been approved, how would Ireland have voted on subsequent enlargements from 9 in 1973 to 27 today?

I have said before that it's bizarre that some of us get excited about a "democratic deficit" in Brussels, when our own "messenger boy" political system where the buck stops nowhere, is hardly something to hold up as a great template.

In Ireland, farmers and public sector unions have a firm grip on the public megaphone while the construction industry uses its money power to but influence.

As for the individual, there is always the local TD, who begins a daisy-chain of letters to get a response to what maybe a simple tax query. Government ministers have 120 people supporting this Citizens' Bureau type work but it's the collective power that matters.

As the Irish economy teeters on the brink of a recession, the Oireachtas members will be soon off on a 3-month break. The New Zealand parliament set for about 90 days annually, similar to Ireland's but it is only shuttered for one complete month in the year.

As regards connecting to citizens at a European level, the case of genetically modified (GM) food, illustrates what happens when well-fed but ignorant activists who reject science, are confused with the public interest.

So we have the well-fed in Europe with no understanding of the challenges facing agriculture beyond the rich world and in Ireland, during the Lisbon Treaty campaign, wealthy media commentators led the opposition to the Lisbon Treaty.

So responding to citizen concerns is not easy.

Gallup discovered years ago that income generally determines voter choice. It also is the prism through which people view the world.

In Ireland, people who don't have any exposure to the world of selling tradable goods and services but have comfortable incomes/levels of wealth such as politicians, may not understand the concerns citizens in other sectors of life.

Lisbon Treaty: In Perilous post-Celtic Tiger times, Ireland opts for Impotence in Europe's greatest success of past thousand years

Comment - Lisbon Treaty Aftermath: The case of European politicians confusing concerns of "people" with the anti-science opponents of Genetically Modified (GM) food

Lisbon Treaty: Thousands of Irish private sector workers will face bleak employment prospects in 2009 as No campaign leaders fight for jobs at the heart of Europe - in the European Parliament

Sunday, June 01, 2008

The useless [Expletive Deleted] at the Irish National Consumer Agency

President McAleese presents Taoiseach Brian Cowen TD with the Seal of Office of Taoiseach at Áras an Uachtaráin

Last month the new Taoiseach Brian Cowen made waves when the Dáil microphones picked up a brief conversation with Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan.

Fine Gael had earlier raised a report in the Sunday Business Post on the big disparity between what big British retail stores charge for the same items in Ireland and the UK.

“Bring in those people and get a handle on it,” Cowen instructed Coughlan. “You know all those fuckers.”

Coughlan soon after, met representatives of the National Consumer Agency.

The earthy language used by Cowen, may have surprised mother superior types but visitors to Ireland are often surprised by the Irish love of swear words and the common use of "Jesus Christ," not exactly in anything that might resemble a religious incantation.

When extensive transcripts of US President Richard Nixon's taped conversations in the White House Oval office were released, during the Watergate Congressional hearings, many passages, contained the term [Expletive Deleted].

One gem from 1971 when the US dollar's link with gold was broken, riled the Italians.

"Whatever about the pound," Nixon said. "I don't give a shit about the lira."

"Impeach the [Expletive Deleted]" became a popular slogan on protest posters.

Back to our own [Expletive Deleted]...

The National Consumer Agency had its genesis in the establishment of the Consumer Strategy Group in March 2004 under the chairmanship of Ann Fitzgerald who was Chief Executive of the Irish Association of Investment Managers.

It was a time when the issue of "rip-off Ireland" was getting a lot of attention.

More than four years later, the National Consumer Agency is run by Ann Fitzgerald and like many of the quangos, that have been spawned in the past decade, it has a questionable impact.

It appears to get involved in issues only after they have raised publicly elsewhere.

Its biggest failure is that it has failed to see the web as an effective tool in providing consumers with comparitive price information on key goods and services.

Finfacts said in its submission to the Consumer Strategy Group in 2004 that: The one dramatic measure to both empower the consumer and promote competition would be to set up a national web service providing consumers with comparative prices of key products and services in principal urban centres.

Dramatic measure is right. Wouldn't that be the day!!

Submission to Consumer Strategy Group July 2004: Public policy has failed consumers in two areas in recent years. Progress in deregulation has been glacial while thinking on consumer information is stuck in the mindset of the 1970’s when the display of price lists was first mandated.

Where market deregulation has been dependent on our own Government’s initiative, the preferred option has been to defer decisions, usually by using the Competition Authority to carry out a study. The deregulation of the taxi trade did not simply pose the same challenges as radical change in the legal or pharmacy sectors. Simply put, taxi drivers are not an economically powerful interest.

There has been some recent reform in the insurance sector, which has had an impact on prices and it is an illustration of what can be achieved. The Government is belatedly addressing the issue of tribunal lawyers’ fees and that may have an impact on charges generally. However, this is just a start. Reform of the system of designating development land is still awaited, three decades after the publication of the Kenny Report. There isn’t a political appetite to change the corrupt system where agricultural land can increase twenty-fold in value when zoned for development. The impact of land prices coupled with lack of effective competition in the service sector sustains high prices while global competition in manufacturing maintains a downward pressure on product prices. It’s a ridiculous situation that Dublin prime office rents are among the highest in the world (see:

Where Brussels mandated deregulation has occurred e.g. air travel and telecoms, or new entrants have entered existing cartelised markets- Bank of Scotland entry to the mortgage market and German retail groups Lidl and Aldi entry to the food retailing sector, consumers have significantly benefited.

Consumer Information
Since the mid 1970’s publicans have been required to display prices in their premises. Even if such lists were positioned to be legible, which most of them are not, they are of limited value in large urban areas. Recently in Dáil Éireann, there was a discussion on requiring dentists to display prices of various procedures in their surgeries. Why not have these lists displayed so that they would be visible from the exterior of a premises or bring the issue into the modern age and use the web where practical?

The EU measure requiring pricing to be placed on products, which was introduced last year, is also of limited benefit as consumers have lost the price benchmarks for many products. This is particularly the situation in large urban areas where it is not uncommon for prices of standard items to vary in the range of 15%-30% in similar type business establishments, even on the same street. When the practice of printing recommended retail prices (RRP’s) on products ended, retailers in areas with large transient populations were giving the opportunity to profiteer.

The one dramatic measure to both empower the consumer and promote competition would be to set up a national web service providing consumers with comparative prices of key products and services in principal urban centres.

Through requiring business operators in designated areas to provide the prices of stipulated consumer products and services and having these prices updated bi-annually on an online searchable database, the consumer would be able to conveniently check for price ranking by street and area. It should also be possible to compare prices with the manufacturer/distributor’s recommended price level, which could differ for central Dublin than for example Kiltimagh.

The goal would be to establish a nationally recognised service that with the support of a significant budget (including marketing) would become a key part of the process of setting prices. The practice of increased prices for late drinking should also be highlighted as should the application of cover charges. Business operators would be reluctant to head the price league and be significantly out-of-line with comparable competitors. A separate category of the website could provide comparison of prices of a basket of products at the main multiple retail outlets.

The online system does not have to be a big bureaucratic operation as price lists could be updated online.

The online service would also be of benefit to tourists. We are deluding ourselves if we believe that our expensive brand tag will not have an impact on our travel business.

There should also be a requirement that the prices of certain products and services be visible from the exterior of premises similar to restaurants e.g. the services at a hairdressing salon.

Irish Trade Missions and Manufacturing Good News

Given the apparent success of Irish trade missions, we should surely have lots more of them in these difficult times.

Until recently, we had the Minister for Enterprise, Trade and Employment Micheál Martin, dishing out superlatives at "signing ceremonies" for business deals that appeared to materialise when the former Cork schoolteacher dropped off at some foreign outpost.

Well that is what the great unwashed believed at home and who would blame them when the media accepted the spin without question.

This past week, it has been reported that an Enterprise Ireland backed trade mission to Latin America has seen Irish firms secure a total of €9.1 million in contracts.

Participating businesses secured €3.6 million in the latter half of the week in Mexico, having already scooped up €5.5 million worth of deals in Brazil.

Businesses from all over Ireland were reported to have enjoyed success on the trade mission. Galway group Fintrax opened a new office in Mexico and announced its selection by the Mexican Tax Authorities to implement a nationwide value-added tax refund programme for tourists.
It's a fair bet that none of the business deals that were announced had anything to do with the trade mission to Brazil and Mexico.

A trade mission needs to have "good news" and the press releases are already prepared before the leading minister leaves Dublin.

So Enterprise Ireland compiles details on past business and then the minister claims bragging rights for the spin or spoof "good news."

Sunday, May 18, 2008

Economics Forecasting and the Irish Economy as oil price heads for $200 a barrel

Economics and financial forecasts have a dubious reputation for a reason.

In both finance and economics, just consider the record of the pundits from Fed Chairman Ben Bernanke and ex-Goldman Sachs head Hank Paulson, currently US Treasury Secretary to the legion of "experts" presented on CNBC, the US business television network, in the months following the news of subprime troubles in February 2007. Some were foolish in proclaiming "containment" when they should have known better. Most were involved in self-interested wishful thinking.

Goldman Sachs made money from subprime on the way up and down as it did not follow the consensus on the way down.

When its partytime, economists who are dependent wage slaves, have to play the game of optimism and forecasts tend to revolve around a consensus figure and it can take several adjustments to a more realistic forecast.

In the UK, during the tech boom, fund manager Tony Dye who was known as "Dr Doom," was well known for many years as the successful chief investment officer of the fund managers Phillips and Drew. However, he refused to follow investor fashion by buying shares in companies, fearing a slump in the markets was imminent. He lost his job and both he and legendary US investor Warren Buffett were proved right.

In Ireland, bank economists tend to be the optimists as retail products such as mortgages have to be supported. Stockbrokers such as Davy and Goodbody have a more credible track record. Although Alan McQuaid, Chief Economist of Bloxham Stockbrokers held out the prospect of an ECB rate cut in September 2007 and wrote in the Irish Times: "I'm sick to death of people writing off the Irish economy and next year could easily see the "Celtic Tiger" roaring more loudly than many pessimists think."

This was just months after then Taoiseach Bertie Ahern, told people who were engaged in "cribbing" from the sidelines, to "commit suicide."

It was also a time, when the new Minister for Education Batt O'Keeffe, then Minister for Housing, said that it was a good time for intending first-time house buyers, to purchase.

It should be remembered that the "sky is falling" pundits were easily outranked by the cheerleaders peddling snake oil.

The Economic and Social Research Institute (ESRI), which as an independent institute on public funding, was the inspiration of the architect of the modern Irish economy T.K. Whikaker, was regarded as too pessimistic last year about the prospects of the Irish economy in 2008.

This week, the ESRI issued its biennial Medium Term Economic Review and in contrast with the European Central Bank (ECB) which provides a forecast range, one figure was published for the forecast and provided a good headline for the Irish Government, but the spin ran-ahead of the story.

The Irish Independent reported that : Taoiseach Brian Cowen got unexpected good news on the economy last night when a major report predicted it would bounce back in time for the next general election.

Forecasting a major comeback in growth by 2010, the country's leading economic think-tank said the economy will grow by an average of 3.75pc annually between now and 2015.

The Economic and Social Research Institute (ESRI) medium-term review, published every two years, is optimistic about the country's economic prospects and predicts a return to full employment within a few years.

Throwing down the gauntlet to Brian Cowen and new Finance Minister Brian Lenihan, the report says that when the current slowdown ends, the economy should recover rapidly -- but only if proper policies are put in place.

New Minister for Finance Brian Lenihan commented: “It is encouraging to see that the ESRI’s view that the medium term prospects for the Irish economy are generally positive. Based on their analysis, real growth in GDP of 3¾ per cent per annum is sustainable over the medium term. This rate of growth is much higher than elsewhere in the euro area. In contrast to the prevailing mood of pessimism, the ESRI shares my view in that we should see a return to trend growth from 2010 onwards. I share the view that economic conditions in 2008 and 2009 will remain weak and that sensible policies be pursued. The Government remains determined to press ahead with our Infrastructural Development programme. Discipline on current expenditures under all headings will be critical over the next few years given the changed resources available.

The key message that we can take from the Review is that Ireland’s economy is flexible and resilient. Because of our sound economic and fiscal fundamental factors, our economy has the ability to absorb shocks in an efficient manner; to limit the economic fall-out and to return to its trend rate of growth fairly rapidly.”

There was no mention of the downside scenario in the report.

Assumptions on energy prices are derived from the International Energy Agency’s (IEA) forecasts. However, it raises a key issue on the reliability of the outlook as the IEA forecasts are not recent ones.

The oil price is forecast at $73.9 in 2012.

Earlier this month, the US Energy Department said that the US oil benchmark WTI (West Texas Intermediate) which averaged $72 per barrel in 2007, is projected to average $110 per barrel in 2008 and $103 per barrel in 2009.

The IEA said in its market report last July, that despite four years of high oil prices, it expected increasing market tightness beyond 2010, with OPEC spare capacity declining to minimal levels by 2012. A stronger demand outlook, together with project slippage and geopolitical problems has led to downward revisions of OPEC spare capacity by 2 mb/d in 2009. Despite an increase in biofuels production and a bunching of supply projects over the next few years, OPEC spare capacity is expected to remain relatively constrained before 2009 when slowing upstream capacity growth and accelerating non-OECD demand once more pull it down to uncomfortably low levels.

As to the oil price being $90.5 in 2020 according to the ESRI, the projection appears to be very much out of date.

Assumptions on energy prices are derived from the International Energy Agency’s (IEA) forecasts. However, it raises a key issue on the reliability of the outlook as the IEA forecasts are not recent ones. ESRI Medium-Term Review 2008-2015: Irish economy to grow at 3.75% annual rate; Business services exports very sensitive to Ireland’s competitiveness

Last November, in the Finfacts report on the World Energy Outlook 2007 (Check links in Related), we said: With the price of crude oil heading for the $100 a barrel benchmark, having risen in dollar terms by 61% and 45% in euro terms since January 2007, the International Energy Agency (IEA), the adviser to 26 industrialised countries including Ireland, said today that the world's primary energy needs are projected to grow by 55% between 2005 and 2030, at an average annual rate of 1.8% per year. Chinese and Indian crude oil imports will almost quadruple by 2030, creating a supply ``crunch'' as soon as 2015.

Before returning to the oil issue, the forecast that business service exports will rise to 70% of total exports, also raises an issue that is not covered in the report.

Companies with a small number of staff, could book huge amounts as Irish sales. One of the biggest companies operating in Ireland is Microsoft's Round Island One and it has no staff. It operates from the offices of a Dublin Law firm.

New York Times columnist Paul Krugman, who has another job as a professor of economics at Princeton University, wrote in early May: "The Oil Bubble: Set to Burst?” That was the headline of an October 2004 article in National Review, which argued that oil prices, then $50 a barrel, would soon collapse.

Ten months later, oil was selling for $70 a barrel. “It’s a huge bubble,” declared Steve Forbes, the publisher, who warned that the coming crash in oil prices would make the popping of the technology bubble “look like a picnic.”

Krugman wrote that all through oil’s five-year price surge, which has taken it from $25 a barrel to last week’s close above $125, there have been many voices declaring that it’s all a bubble, unsupported by the fundamentals of supply and demand.

So here are two questions: Are speculators mainly, or even largely, responsible for high oil prices? And if they aren’t, why have so many commentators insisted, year after year, that there’s an oil bubble?

Krugman says that the only way speculation can have a persistent effect on oil prices, then, is if it leads to physical hoarding — an increase in private inventories of black gunk. This actually happened in the late 1970s, when the effects of disrupted Iranian supply were amplified by widespread panic stockpiling.

But it hasn’t happened this time: all through the period of the alleged bubble, inventories have remained at more or less normal levels. This tells us that the rise in oil prices isn’t the result of runaway speculation; it’s the result of fundamental factors, mainly the growing difficulty of finding oil and the rapid growth of emerging economies like China. The rise in oil prices these past few years had to happen to keep demand growth from exceeding supply growth....Saying that high-priced oil isn’t a bubble doesn’t mean that oil prices will never decline. I wouldn’t be shocked if a pullback in demand, driven by delayed effects of high prices, sends the price of crude back below $100 for a while. But it does mean that speculators aren’t at the heart of the story.

The consequences of that scarcity probably won’t be apocalyptic: France consumes only half as much oil per capita as America, yet the last time I looked, Paris wasn’t a howling wasteland. But the odds are that we’re looking at a future in which energy conservation becomes increasingly important, in which many people may even — gasp — take public transit to work.

I don’t find that vision particularly abhorrent, but a lot of people, especially on the right, do. And so they want to believe that if only Goldman Sachs would stop having such a negative attitude, we’d quickly return to the good old days of abundant oil.

Again, I wouldn’t be shocked if oil prices dip in the near future — although I also take seriously Goldman’s recent warning that the price could go to $200. But let’s drop all the talk about an oil bubble.

Financial Times columnist Gideon Rachman wrote this week: Competition for the world’s oil supplies is intensifying. Chinese oil consumption doubled between 1994 and 2003 and will have doubled again by 2010. China’s foray into Africa is largely driven by its own search for “energy security”. The International Energy Agency predicts that in 2010 China will become the world’s largest consumer of energy. The IEA also thinks that the world’s energy needs will be 50 per cent higher in 2030 than they are today – and that we are going to become more, not less, reliant on fossil fuels.

This seems all too plausible. At present there are about 10 cars in China for every 1,000 people; there are 480 cars per 1,000 people in the US. But by 2015, China could be the world’s largest market for new cars.

Here are three facts about oil: it is a finite resource; it drives the global transport system; and if emerging economies consumed oil as Europeans do, world consumption would jump by 150 per cent. What is happening today is an early warning of this stark reality. It is tempting to blame the prices on speculators and big bad oil companies. The reality is different.

FT economics columnist Martin Wolf wrote: Demand for oil grows steadily, as the vehicle fleets of the world expand. Today, the US has 250m vehicles and China just 37m. It takes no imagination to see where the Chinese fleet is headed. Other emerging countries will follow China’s example.

Meanwhile, spare capacity in members of the Organisation of the Petroleum Exporting Countries is currently at exceptionally low levels, while non-OPEC production has equally consistently disappointed expectations.

It looks increasingly hard to expand supply by the annual amount of about 1.4m barrels a day needed to meet demand. This means an extra Saudi Arabia every seven years. According to the International Energy Agency, almost two-thirds of additional capacity needed over the next eight years is required to replace declining output from existing fields.

The oil price will provide the response to climate change not filling a laundry list with feeble initiatives.

In the meantime, what about a forecast with a more realistic average oil price - say in the range $150-$200?

Wednesday, May 07, 2008

Irish EU Sceptics and the Lisbon Treaty

José Manuel Barroso, President of the European Commission, speaking in Ireland in on April 17, 2008

The purpose of the European Union's Lisbon Treaty signed by the Heads of State or Government of the 27 Member States in Lisbon on 13 December 2007 is to streamline decision making following the enlargement to encompass most European countries.

The development of the European Union and the Euro currency have been remarkable achievements and in both 1957 on the signing of the Treaty of Rome and on January 1, 1999, the sceptics were not in short supply.

There was another development in Europe that merits superlatives and it is linked to the Lisbon Treaty.

For most of the period since the end of the Second World War, the people of Eastern Europe lived under the jackboot of communism. People were shot dead if they tried to leave their countries without official authorisation.

Eaten bread is soon forgotten and in the years that German taxpayers in particular provided funding for Irish agriculture and infrastructure investment, it was inconceivable that for example Poland would in the not too distant future, become a member of what was then known as the European Economic Community.

There can be no agreement by 27 countries that is akin to a utopia.

If there is a heaven, then there may be perfection but human progress involves compromise unless it's the old law of the jungle that applies.

Some saw the value of compromise in Ireland in 1921; others saw bloodshed as worth trading for more sovereignty - but what small nation ever had absolute sovereignty? In the North, thousands had to die in recent decades, before a compromise could be reached.

There is a polygot group opposed to the European Union's Lisbon Treaty. There are those at one end of the spectrum, who have always been opposed to the European Community/EU e,g the Green Party and its hierarchy until last June.

Sovereignty is often one of the issues that is raised as a concern, usually by individuals who are in protected jobs as distinct from the international tradable goods and services sector.

Recently, independent Iceland raised its benchmark interest rate to 15.5% and asked other Nordic central banks for support. So is Ireland better off in the Eurozone?

More than 90% of our exports are made by foreign-owned firms - so much for nit-picking on the issue of sovereignty.

Neutrality is another issue that gets some people worked up as if we were ever really neutral.

At the other end of the spectrum, is the Irish Farmers' Association, which is seeking to protect what is a very generous welfare system - the Common Agricultural Policy.

In 2013, Ireland will become a net contributor to the EU Budget after 40 years of membership.

"I want to remind the British commissioner that there is a strong link between his WTO concessions and the Lisbon Treaty," IFA President Padraig Walshe said. About 70% of Walshe's income comes directly from European treasuries.

The "British" commissioner Peter Mandelson is up to some nefarious plot but Walshe has no problem with handouts from British, German and Dutch taxpayers.

Walshe accused the commissioner of displaying "breath-taking arrogance" in demanding people vote for the Lisbon Treaty, when the "undeniable fact" was the WTO deal would wipe out 50,000 farmers and cost the economy €4bn.

There are about 40,000 full time Irish farmers and whatever about the "undeniable fact," you will never hear Walshe complaining about the land rezoning system that makes multimillionaires of farmers with land that has development potential.

Some of the wealthiest farmers are getting cash payments of €10,000 each week and the IFA has no problem with a system where the richer get the lion's share.

It's a pity that we in Ireland cannot modernise our governance systems that have been largely unchanged since the 1930's. We have a "messenger-boy" system of local clientism that makes it difficult for women to participate in elective politics. Our parliament is shuttered for five months each year.

So rather than worrying about democratic deficits in Brussels, we should reform our own systems first and then the finger-pointing could have more legitimacy.

Remarkable Decades of Change in World but Irish System of Governance Immutable to Reform

Ireland's 40-year bonanza of foreign aid from the European Union will amount to €41 billion by the time we become a net contributor in 2013

Friday, April 25, 2008

European land prices hit record on food price boom; Irish land 10 times value of land in Scotland ; Six times that of similar farmland in England

Just a week after thousands of Irish farmers protested in Dublin, during the visit of European Commission President José Manuel Barroso, against the perceived threat to the welfare system known as the Common Agricultural Policy (CAP), posed by the current round of global trade talks, the Financial Times reports that with prices of commercial and residential property falling, investors are increasingly turning to a more traditional asset: farmland. Long seen as a declining industry, farming has received a fillip in the last few months as global demand for food has increased. As a result, the cost of agricultural holdings across the European Union has risen to record levels.

I had observed last week that the Irish Farmers' Association (IFA) is good with the poor-mouth and the little perks such as the land rezoning system that makes multimillionires of farmers who sell land for development and the roadbuilding deal that has resulted in land cost as a proportion of total project cost, to be double the European average, is conveniently ignored.

Irish farmers on strike to maintain welfare and trade protections as global agriculture booms

It was reported in May 2007 that the value of Irish farmland is heading for €60,000 per hectare (€24,281 per acre), the highest in Europe. That's 10 times the value of land in Scotland and six times that of similar farmland in England. According to estate agents Savills Hamilton Osborne King, prices will rise further in 2007, having increased by 40% on average in 2006.

Irish farmland prices set to be highest in Europe with emergence of lifestyle farmers supported by EU's CAP welfare system

Irish farmers have been the main foreign buyers of UK land in recent times and rich farmers are the biggest beneficiaries of the the CAP and have most to lose. Beef baron Larry Goodman gets a payment of more than €10,000 each week that helps to defray expenses at at 1,600 acre estate even though he needn't have any output from it.

UK land prices jumped 25% in 2007; Irish dominant among foreign buyers; Average land cost in Ireland almost four-times higher than in Britain and the highest in Europe

The FT reports that Andrew Shirley, head of rural research at Knight Frank, said land prices were rising across Europe.

“It is not only UK land values that are increasing sharply, the global commodities boom means investment funds are looking further afield for cheap land and this is helping to drive prices up, particularly in eastern Europe and the former Soviet bloc where there are vast tracts of underutilised and potentially very productive land,” he said.

In Lithuania a hectare of agricultural land cost €734 ($1,167, £589) in 2006 compared with €164,340 in Luxembourg, the most expensive country.

In Poland the US embassy reports that average prices rose 60 per cent between 2003 and 2006.

In neighbouring Ukraine – not an EU member – prices for the best land are forecast to double from $3,500 per hectare this year as investment funds pile in, Shirley said.

Even Serbia, another non-EU country, has seen a steep increase. Real estate analysts estimate arable land prices this year in Serbia’s agriculturally rich northern region, Vojvodina, at roughly €7,000-€8,000 per hectare this year, up sharply from €5,000 last year.

Countries with sales restrictions, such as France, are cheapest. Land is about €6,000 a hectare there because it must be offered first to young local farmers. However, land prices are still 50% up on 2003.

Saturday, April 12, 2008

Ireland - A One Party State Propped up by "Dependents"?

Ireland has a modern economy run by the icons of American business from high tech, big pharma and finance. In parallel, is a political system that was developed in the era of the donkey and cart and has not undergone any significant change in the interval.

Ireland has 35 ministers and 23 parliamentary committees but the buck stops nowhere in the system.

In recent decades, as the dominant political party Fianna Fáil has been unable to get a working majority in the Dáil, it has relied on so-called "Independents" and small parties such as the Progressive Democrats and the Green Party.

The one-issue or no-issue Independents sell their touted independence for the security of a hoped for long parliamentary term coupled with pork-barrel patronage for their constituents.

As the American comedian said: Those are my principles, and if you don’t like them…. well, I have others.

It's simply a joke that the likes of Finian McGrath who represents a constituency in North Dublin, calls himself an "independent" when his deal with Fianna Fáil is principally to ensure that he will not have to face another election before 2012.

The Labour Party had significant influence in coalition governments but today, the small parties operate in the manner of the "dependents."

The small Green Party has its environment agenda and any significant moves on climate change will not be led by Ireland. The EU will mandate required change and even on the issue of a carbon tax, a commission is to report on the issue. Beyond, its narrow agenda, in the compartmentalized system of government, they have simply no influence.

The unravelling of the Progressive Democrats began in 1997 when it entangled itself in soundbites on reform of the public service.

It proposed cutting public service jobs by 25,000 and presided over a growth of 90,000 but as it lost half its seats in the 1997 general election, it also lost the appetite for reform.

It simply became a cheerleader for tax cuts provided by the funds reaped from a raging housing boom.

The Progressive Democrats await the respirator to be unplugged and it is evident that the party had much more impact in Opposition than in government.

After 11 years in office without power, where are the footprints?

So all Fianna Fáil has to do, is to copperfasten its hold on power by buying off "dependents" and small one issue parties like the Greens.

The result is bad for democracy and as the incoming Taoiseach Brian Cowen contemplates his choices for 35 ministerial positions, largely from a group of second-raters, it says a lot that former schoolteacher Micheál Martin, T.D., currently Minister for Enterprise, Trade and Employment, is being touted as a choice for the Department of Finance.

In Martin's current job, his main task is to make job announcements for American firms. In these dangerous times for the Irish economy, the Corkman's repertoire of superlatives for the most mundane, is hardly what is needed.

Saturday, March 22, 2008

John Gormley - the Irish Minister for Climate Change has nothing of substance to say on the issue

Irish Environment Minister John Gormley meets the Irish NGOs (representatives of Non-Governmental Organisations) at the UN Climate Change Conference in Bali, Indonesia, in December 2007. Pictured, from left to right: Declan Murphy (Ecology Foundation), Mark Ruttledge (Feasta), Niamh Garvey (Trocaire), Minister John Gormley, Pat Finnegan (Grian), Fr Sean McDonagh (Columban Missionaries).

In another decade, most of Ireland's current Cabinet will be like old nags, grazing on fertile pasture - a pension system linked in perpetuity to current payment levels of politicians. Individually, they will be remembered for nothing while collectively, they will be reviled for abject lack of vision and political courage to bring about enduring change during a period of unprecedented prosperity, known as the Celtic Tiger period. Taoiseach Bertie Ahern will be forever linked with the corrupt era of Irish politics and his supporting role in the Northern Ireland peace process - - credit where it's due but without the unprecedented commitment of a British Prime Minister, Tony Blair, to the Irish issue, it could have taken years post Ian Paisley, to reach a political settlement.

Some readers may think it unfair to lump John Gormley, Minister for the Environment and Green Party leader, with other mediocrities in the Cabinet but the public raison d'être for serving under a man - Bertie Ahern and his Party - whom Gormley and his colleagues had repeatedly criticised as corrupt, up until May 24th 2007, the date of the last General Election, was that the urgency of the melting polar ice caps, eclipsed all else.

Anyone who believes that Gormley's own personal ambition and the other Green Party negotiator Dan Boyle's dependence on Bertie Ahern's patronage of appointment to the Senate, had nothing to do with the decision to enter government, is a fool.

Gormley's Faustian bargain came at a heavy price. Beyond climate change, the Green Party got a ragbag of promises from Fianna Fáil. There would be no fundamental change in the Irish system of governance. The London model of an elected mayor was agreed for Dublin but beyond, this essentially cosmetic plan, it would be business as usual.

On the issue of climate change, it is striking how little of substance John Gormley, the Minister for Climate Change, has to say on the issue.

Gormley said in February 2008 at an European Commission seminar : Climate change is the biggest challenge facing humanity. It is the challenge that will define this generation, and most likely the generation after this. And we will be remembered and judged on how we respond to this challenge.

Last December, he presented a much spinned "Carbon Budget," which was devoid of any references to costs and also in December, Economist and Social Research Institute economist Richard Tol said in a paper that the Irish government plans to reduce greenhouse gas emissions by 3% per year, which can only be achieved by drastic measures on the demand side, such as a rapid reduction in the number of cattle or people. The Irish government also plans to introduce a carbon tax. A tax that applies to emissions that are not covered by the EU emissions trading system, and that roughly equals the expected permit price, would achieve emission reduction at almost the lowest possible cost. Tol said that a carbon tax that is levied on emissions covered by the EU ETS, would not reduce emissions, but would cost Ireland and the rest of the EU money.

Gormley said nothing in response.

Biofuels have been shown to be a fool's panacea but again, Gormley has nothing to say.

As regards a carbon tax, again Gormley has nothing to say.

Last month, the Tánaiste and Minister for Finance, Brian Cowen, announced the establishment of a Commission on Taxation, which is to look at how a "carbon levy" could be introduced.

Gormley said at the European Commission seminar: For too long I believe Ireland has been content to play a back seat role on the environmental agenda at European level. We have been too slow in the past to implement environmental directives that Ireland itself negotiated and agreed on. As a small island with a clean, green image, I believe there is a much greater and meaningful role for us to play in environmental and climate change policy at EU level.

We need to define what that role is, but I believe that already we are beginning to show leadership on aspects of the climate change agenda. We now have a very ambitious target to reduce Ireland’s emissions by 3% on average over the lifetime of the Government. The 3% target is ambitious because it needs to be – it is very much in line with the scale of reductions recommended by the Intergovernmental Panel on Climate Change. The Government is also committed to putting in place a long-term target for Ireland, but we do need to achieve a broad consensus on the scale of effort that is required; this is why the Government has proposed to work towards an all-Party Oireachtas agreement on the necessary long-term targets.

There's the cat out of the bag!

Gormley and his ministerial colleagues haven't the cojones to take tough decisions. It wants all political parties to agree and provide the Government political cover. Fat chance as in the Irish system, the politicians in power take ALL the credit for good news and no responsibility for anything else.

Gormey's Green Party ministerial colleague Eamon Ryan has called for "a national debate" on nuclear power. How should such a national blatherfest be conducted?

Again, like his leader, Ryan wants to pass the buck.

As for blather, Gormley's comment on having a "much greater and meaningful role for us to play in environmental and climate change policy at EU level," while failing to articulate a credible position on climate change, nine months after taking up office, shows that like his ministerial colleagues, he lacks both vision and leadership.

The notion of taking a leading role in Europe on climate change while acting as political jellyfish at home, is simply a joke.

Finfacts Climate Change Reports