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.