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A quick temperature check

Kevin Hassett, of the American Enterprise Institute, has a pretty good item over at Bloomberg about the good economic developments over the past 12 months, which inevitably get overlooked with so much understandable focus on the sub-prime mortgage snafu and the associated mega-buck losses sustained by some of the world’s top financial institutions, such as Citi and Merrill. But much of the economic news is good; when I punch some numbers on my Bloomberg machine, I am reminded that a goodly number of African stock markets are up strongly this year – that nicely upsets the usual cliches of Africa as a story of unmitigated woe, not that there are not serious problems there of course. China’s stock market looks like a bubble but the growth of the economy is real enough, whatever one thinks of government statistics; one of the best performing stock markets of 2007 has been Germany’s, up more than 20% this year, despite the high exchange rate of the euro. France may be starting to turn a corner, despite my doubts on how far Sarkozy will go in liberalising that country’s economy. A weak dollar should boost American exports and hence help the US economy close its trade deficit. Most Latin American economies are on an upward curve and Venezuela’s Chavez received an admirable rebuff in his attempt to seize permanent power late in the year. (Quick question: what are readers’ bets for most promising economy in 2008?). Russia is problematic: its status as an energy exporter means it is enjoying a bonanza of revenues, but this needs to be matched the emergence of a large, broad middle class able to sustain the sort of entrepreneurial economy for the long term; India is a bright spot; most of central Europe, Scandanavia is in decent shape. Italy is a permanent car accident and a possible quitter of the euro, but Italy seems to have incredible powers of survival.

All of these developments should be borne in mind when you look at how Britain’s economy has performed. On one level, the figures are poor: we have UK public deficits despite years of economic growth; tax burdens are rising and productivity is not what it could be; but from my admittedly biased vantage point in central London, I do not see a country in crisis (what I do see is a statist political culture in decline or at best, paralysis, which is not quite the same thing); the inventiveness and entrepreneurial gusto in this country is impressive, although one worries about the impact of an exodus of bright talents to foreign, sunnier climes. All in all though, I think it quite wrong to end 2007 on a whiny note, so I will not. As far as the cause of liberty is concerned, there is all to play for; the ID card venture is not a done deal and the Big Brother state received a mighty poke in the eye this year with the fiasco of the lost data on 25m people. I get more and more sense from the media that Britons are losing patience with this state of affairs. Let’s hope so.

Wishing my fellow contributors and our readers a very happy, prosperous and healthy 2008.

15 comments to A quick temperature check

  • Have a wonderful 2008 all.

  • I’d love to believe evefthing he says, but if you read Bob Zubrin’s new book, Energy Victory, you’ll see that Hassert gets his head handed to him for accepting the Pimental study that claimed that ethanol production uses more fuel than it creates.

    This has been disproven by numerous other and better studies cited by Zubrin.

    He also wrote a book called “Cow 36,000 : The New Strategy for Profiting from the coming rise in the stock market.”

    I hope he is correct, but his record as a prophet and as a scientific analyst has a few minor flaws.

  • Sorry that’s “Dow 36,000 …”

    May the Bovine Gods of the Swiss Alps forgive me.

  • tranio

    let me put in a good word for Canada in 2008. With the developing nations continuing to develop Canada’s commodities will do very well, copper, nickel, coal etc. Add in the Ags of wheat, barley , wheat over $10 a bushel wow. Canada is the largest exporter of oil to the US. Next election we will elect a majority conservative government under Stephen Harper. Our Liberal leader is a Kyoto fan, he even named his dog Kyoto. Also Canadians do not believe this, they keep looking to the US as our biggest trading partner, and stock markets climb walls of worry.

  • Paul Marks

    Sometimes things are complex.

    For example the main anti leftist party in Switzerland had the biggest vote of any party since 1919 – yet it is now in opposition. And the Social Democrats, who only got 20% of the vote, are still in the coalition – as they have been since 1959.

    In “Belguim” the voters punished the sell out Flemish Liberals – the people who used to boast how free market they were and then sold out to the endless subsidy demands of Wallonia, and sold out to the forces of Political Correctness, becomming pro censorship and so on.

    The voters kicked them out of office in the elections of June – but after six months supposedly out of office (he was still about to sign the E.U. Constitution) the “Flemish Liberal” Prime Minister is back again – in spite of losing the election.

    Still at least this discredits “Belguim” once and for all – there is no alternative to an independent Flanders now. And that might be an interesting country in 2008.

    Also in Switzerland the People’s Party could be a more dangerious foe for the left in opposition (and there plans to sell out Switzerland to the E.U. and the “world community) than it was in government – we shall have to see.

    Also the left lost in South Korea – the new President may not be ideal. But he is pro American and a Grand National Party man – so it is a win.

    And South Korean industry in growing even faster than industry in China (or so I am told).

    Lastly people can actually LEARN.

    For example, I had little hope of anything good from Alan Garcia when he was elected Presiden of Peru. I remembered him as a wild inflation creating leftist.

    However, he has been a very good President of Peru with a solid econonmic policy – and he shows nothing but contempt for Chevez and his “natural resources mean we can ignore economics” comrades in Latin America.

    People learning by experience – that makes me doubt my own despair.

  • guy herbert

    … showed that ethanol production uses more fuel than it creates …

    Not quite. It showed that ethanol production from subsidised US maize uses more fuel than it creates. That’s the real heresy. It would be as politically unacceptable to import ethanol made from Brazilian (or Cuban) sugar cane, which does have a positive energy balance, as it would their sugar.

  • Jacob

    … showed that ethanol production uses more fuel than it creates …

    Whether ethanol production uses a little more fuel that it creates or a little less isn’t that important.

    The mere idea that it is feasible and advisable to burn our food as fuel is totally crazy. People advocating it have not the slightest grasp of the quantities involved in the two processes – growing food and producing energy.

  • Not as crazy as paying the Arabs etc, to pay for their war against us. We are subsidizing the people who are killing us.

    Check out Zubrin’s book, the data is all there. In any case the main form of alchool fuel that he thinks we should use is methanol from coal or from natural gas which is currently wasted.

    If we were to go for an alchool based transportation economy we would be able to get rid of the corn to ethanol subsidy is fairly short order.

  • Jacob

    Not as crazy as paying the Arabs etc, to pay for their war against us. We are subsidizing the people who are killing us.

    It has got nothing to do with Arabs. Our globe is barely capable of producing enough food for a growing population. Burning that food is simply not an option, unless you are a “deep green” man hater, who advocates the culling of the pestilent human race. And even then, the quantities of ethanol you could obtain are minuscule compared to our consumption of fuel.

    Using non-food biomass, i.e. biomass that is currently discarded (not biomass specially grown for the purpose) might help somewhat as a fuel, trouble is – we don’t know how to convert it, therefore all speculations about it are, at the moment, idle speculations. To sum up: nonsense.

    As to Zubrin: instead of writing speculative books, why doesn’t he just produce fuel ? The paper tolerates everything.

  • Alice

    Back in the early 1970s, our old friends at British Petroleum were investing research money into a scheme to make food directly from oil, cutting out the middlemen (and middle-animals). Well, at the time, oil was cheap & available and there were a lot of starving people in poor countries.

    Fact is — we need energy, we need food, we need water, we need sanitation, we need shelter. Maslow’s hierarchy — after that, we can debate whether we have a more urgent desire for high-paid footballers or the BBC.

    Making transportation fuel out of food today is as dumb as making food out of oil was back in the day. We need them both.

    Bigger issue is the growing inability of us as a society to give outliers a decent hearing and then an equally decent bum’s rush. Ethanol, anthropogenic global warming, malaria-is-preferable-to-DDT (for African children, of course); so many of the liberal nostrums do not stand up to any level of serious scrutiny — yet they have been adopted as policy by supposedly intelligent educated leaders. How can we ever solve this problem of willful ignorance?

  • Jacob

    The world’s population is not growing anywhere near as fast as the greenies thought it would back in the 1970s. The human hating greens are against modern agriculture they are also the ones who are against ethanol or any other kind of effective use of technology.

    Food shortages today are mainly caused by the huge growth in the middle classes in China and India and the fact that all these newly semi wealthy people want to feed their families meat once a day instead of once a year as was previously the case.

    Switching to alchool fuels will allow the law of supply and demand to operate, instead of being stuck with the OPEC cartel making the rules. Sure the cartel will eventually break down, but we thought it would back in the 1990s but it has come roaring back. Time to get serious about using the marketplace and entreprenurialism to support our strategic goals.

  • Switching to alchool fuels will allow the law of supply and demand to operate, instead of being stuck with the OPEC cartel making the rules.

    Forget your obsession with OPEC, it’s irrelevant, never was. Just like the UN, empty talk.

    Food shortages today are mainly caused by the huge growth in the middle classes in China

    Food shortages will always be with us, for this reason or other ones…

    Well, let the law of demand and supply work, let the people find and adopt solutions as they emerge, let free markets alone.
    I wish there was a law against “gurus” like Zubrin pontificating about which mandates the government should impose on us.

    What Alice said above.

    As to ethanol, if Zubrin has bright ideas, let him go and implement them instead of filling books with empty and idiotic rants. If ethanol is technically and economically advantageous it will emerge, without ranting about OPEC, and without government mandates. I doubt it is.

  • Paul Marks

    The same with hydrogen fuel cells – if the technology can be made PROFITABLE (which the media and academia treat as if it were some sort of “boo word”) they will come into wide usage – and no dark plot by the oil companies could prevent this.

    Ditto with electic cars.

    Of course both need electricity – the hydrogen fuel cells to “split” sea water the get the hydrogen in the first place.

    And electricity can not just be produced by wind, wave and solar.

    If people are serious about reducing C02 emissions they are going to have to deregulate the nuclear power industry.

    But most “Greens” want it both ways – anti C02 emissions and anti nuclear power.

    Hence Jacob’s point about “deep Greens”.

    Sadly, most Greens are de facto deep Greens.

  • Sunfish

    Switching to alchool fuels will allow the law of supply and demand to operate, instead of being stuck with the OPEC cartel making the rules.

    Not in the US. Here, alcohol fuel necessarily does equal ethanol from corn for political reasons. Farmers are the biggest welfare queens in this country. Suggest that they may have to pay their own way, and we’ll have another Farm Aid, another Places in the Heart, another John Cougar Melonhead singing “Scarecrow.” There will be no imported EtOH. The only way to make sugarcane-based EtOH in the US market would be if Cuba magically became State #51.[1]

    As an aside, the price of beer is going to rise 10-25% over the next year. A small part of the increase is due to drought in hop-producing areas in Europe and on the US West Coast. A huge part of the increase is because barley farmers are replanting in corn in order to grab some of the government ethanol subsidy that George W. Numbnuts[2] is promising to hand out.

    I suppose we could go to rice-based beer…I don’t think I’ve sputtered violently about that in the course of taking a thread on SD off-topic in at least a week.

    Jacob sez:

    It has got nothing to do with Arabs. Our globe is barely capable of producing enough food for a growing population.

    You know better than that. You’re right that food supplies have nothing to do with Arabs, but the food-production capacity of this rock is not a zero-sum game either. Breed a better plant[3] and you get more food. Work out a better crop-rotation scheme and you get more food. Learn to farm fish, etc…it ain’t a perfect world. However there are six billion people out there, they all want to eat, and some of them are smart enough to work it out.

    [1] Let’s tell the left that deposing Castro is necessary to prevent Gorebull Wormening. Some of them are dumb enough to go for it.

    [2] I voted for the stupid bastard both times. Calling him rude names is my prerogative.

    [3] For highly-variable values of ‘better.’ One-size-fits-all solutions that force un-hardy pest-resistant strains on places with cold weather and no pests are stupid and wrong, whether they come from Archer-Daniels Midland or the Glorious People’s Tomato Planning Executive of the Trashcanistan Soviet Socialist Republic. Hence my point about six billion people who all have brains and all want to eat.

  • Jacob

    You’re right that food supplies have nothing to do with Arabs, but the food-production capacity of this rock is not a zero-sum game either.

    That’s why we maqnage somehow to feed 6 billion people. It would not have been possible, say, 3 decades ago.
    Still, population will increase (and the level of food intake too) to the point of consuming all the food that the earth produces, or most of it. It’s a race – the more we improve production, the more people there are to feed, with better food.

    Still, the idea that we can grow plants for fuel too, on this crowded planet is crazy. It shows no grasp of the quantities involved in both food and fuel consumption.

    Prices of grains, and hence all food, have already increased some 30-50% in the last year. It puts a big strain on the poorest people on the Earth (not on us, yet, thank god). As I said, maybe that’s the idea of the “deep greens” and the rest of nuts: less food means less people, and that, for them, is a feature, not a bug.