Sep 10, 2010

Archein: Broken Politics, Bubble Pricing, Environment, and Agriculture

Shed your fears and lose your guilt
Tonight we burn responsibility in the fire
We'll watch the flames grow higher
As I was standing by the edge
I could see the faces of those who led pissing theirselves laughing
Their mad eyes bulged and their flushed faces said,
"The weak get crushed and the strong grow stronger."
In the funeral pyre, we'll watch the flames grow higher
-- Paul Weller

However effective you think "markets" are at pricing, one thing you can say is bubbles completely distort pricing mechanisms to the point of being valueless. When you add into that a corrupt political process using government to further distort costs, you get a system that is completely dysfunctional and incapable of meeting the challenges of the times. Here's two good examples. The first is a piece in the Post about the establishment environmental groups lamenting the fate of climate legislation in DC. Any legislation to increase fossil fuels price was doomed with the financial crisis and resulting economic slowdown, though in return, the slowing economy gave you the greatest reduction in fossil fuel use in 30 years, certainly much greater than any proposed legislation at this point. Much, certainly not all, of the established environmental movement has propagated the notion that the mechanisms, culture, and practices that led us to environmental breakdown are going to be the same ones offering solutions. Let's look at one, the idea that a broken politics, without first being repaired, can get us needed change. The Post has a piece with one of the most ludicrous quotes I've seen in 30 years following politics:
"The oil industry has tremendous reach and control in the United States Senate," said David Di Martino, a spokesman for Clean Energy Works, a coalition of more than 60 groups that includes big names such as the Sierra Club, the Natural Resources Defense Council and the Environmental Defense Fund. "Our mistake was miscalculating . . . how far into the Senate it went."
Miscalculating? Really? The oil industry has power in DC? Don't misunderstand, this kind of political thinking is rampant in environmental circles. Many think they don't need to educate the public and can just pull the levers of a broken system. Try to get money from the big non-profit funders for public education on taxing oil. You can start with Pew founded by Sun Oil, then go to the Rockefeller Foundation, or if both of them don't work try the Ford Foundation. There's few funders who believe in public education, after all its expensive, and well, who wants to deal with the great unwashed. And don't worry, they won't react when the price of energy goes up, Al Gore has told them the world's ending.

Anyway, right now on energy there's two viable things to push, money for renewables and efficiency/conservation.

The environmental movement is simply about looking at the human impact on natural resources and natural systems. Energy of course is fundamental, but even more so is food, you can go without energy a lot longer than without food. Now, there's been a growing number of stories about potash(potassium) appearing in the news, since BHP is attempting to take over one of the world's largest producers. Mined potash is a necessary element to modern agriculture practices. Limited increasingly by area, that is Canada and Russia dwarf all other known reserves, the price of potash, like many other agriculture commodities went through a massive price spike before the financial crisis. Here's an interesting BBC discussion on the entire global agriculture issue(tx zerohedge). Pay attention to Hugh Hendry's quote near the end. He states,
"For thirty-years, the price of agriculture has collapsed, fallen 90% in real terms. So, we haven't invested in this sector. As a society, as a world society we acutely vulnerable to the business of feeding ourselves."
Agriculture prices have been falling for a couple hundred years. Modern agriculture practices developed in the last hundred years are totally tied to fossil fuels, and no doubt, the last three decades precipitous fall is also tied to the preceding great rise in commodity prices caused by the oil crisis of the 1970s. But Mr. Hendry's point is well taken, we haven't invested in agriculture, in large part because our bubble financial system of the past quarter-century has not accurately priced its importance. If you want to bet which of the great environmental threats will be the first to bite us, I'd put money on our completely unsustainable agriculture practices.

The most important point of both these stories is what got us here isn't going to get us out.

BOY! JOE COSTELLO is dead right on this post! ...Monte

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