Sunday, February 6, 2011

Making things worse

Last night on NBC evening newscast, we 'learned' that many Egyptians with day jobs (who are barely making it anyway) are not at all happy with the serious economic disruption to their lives caused by the anti-Mubarak protests (no matter how much they may hate Mubarak and his ugly little police state.)  After all, if your job is to give camel rides to tourists at the pyramids and all the tourists have fled the country in terror because of a political uprising, someone else's political actions and agenda has impacted your ability to eat.

What do we know about the situation in Egypt?  We know that they are suffering from tremendous population pressures as more and more people scramble to divide up the economic pie.  Then there is the problem that the slice of the economy available to the growing mass of young Egyptians is not growing fast enough to keep up with population pressure--or is actually shrinking.  Their economic slice is shrinking in part because of corruption and economic stupidity at the top.  This is actually the easier problem to solve--a new government that rejects neoliberalism and is determined to root out corruption would go a long way towards fixing this.

The real dilemma facing the protesters in Tahrir Square is that even IF they were to get their dream government, their share of the economic pie will still shrink because the global economic pie has started to contract.  Oil has fueled global economic development for 150+ years now and that growth is coming to a halt.  If we haven't already passed Peak Oil (which I believe BTW), we will soon experience it.  Life on the downslope of global oil production will get VERY ugly as folks scramble to get their hands on a shrinking supply of this most valuable fuel.  But even worse for the poor Egyptians trying to survive on a dollar a day, Peak Oil means Peak Food.  Complicating things, food production is largely in the hands of the weather gods and climate change is making a dicy situation much worse.

But lest we get smug about the existential precariousness that makes the idealistic protests in Tahrir Square look so futile, just remember that their problems are everyone's problems.  Because the Egyptians have such a corrupt government, and because rising food costs are so much more painful for them, they are in the streets while we in USA are watching for our own amusement not understanding that we aren't any closer to solving the big problems than they are.

CLIMATE-CHANGE UPDATE: Bizarre Weather, Destroyed Crops, And No More Right Whales
Henry Blodget | Feb. 5, 2011, 3:36 PM 
An update on climate-change from an unusual source: Legendary fund manager Jeremy Grantham.
Jeremy starts with an overview of the bizarre weather the world is having, then moves on to right whales.
The latter is just an anecdote, obviously, with a theory attached. But interesting nonetheless.
Commodities, Weather, and Markets
Climate and weather are hard to separate. My recommendation is to ignore everything that is not off the charts and in the book of new records. The hottest days ever recorded were all over the place last year, with 2010 equaling 2005 as the warmest year globally on record. Russian heat and Pakistani floods, both records, were clearly related in the eyes of climatologists. Perhaps most remarkable, though, is what has been happening in Australia: after seven years of fierce drought, an area the size of Germany and France is several feet under water. This is so out of the range of experience that it has been described as “a flood of biblical proportions.” 
More to the investment point: Russian heat affects wheat prices and Australian floods interfere with both mining and crops. Weather-induced disappointment in crop yield seems to be becoming commonplace. This pattern of weather extremes is exactly what is predicted by the scientific establishment. Snow on Capitol Hill, although cannon fodder for some truly dopey and ill-informed Congressmen, is also perfectly compatible. Weather instability will always be the most immediately obvious side effect of global warming. more

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