Author: |Posted: 9:00 pm on 18/11/09
Category: Faisal Islam on Economics
It’s tough for a fourth child out of five to take seriously the idea that he should never have been born.
But the effect of society’s choices over family size is undoubtedly worth considering in terms of the effect on climate change.
Some close to the Copenhagen negotiations feel that its the elephant in the room.
Certainly population growth is a vital determinant of how much humanity consumes, but not on the official agenda for those urgent talks to limit global carbon emissions.
So a delicate issue, yet today, for the first time the United Nations issued a report linking demographic pressures to climate change.
Thoraya Ahmed Obaid, executive director of the UN Population Fund told me today that ‘this is the first time we are clearly speaking about the link between population growth and climate change’.
In 1994 in Cairo the UN did say that population was linked to environment, but this is the first time the body has linked it specifically to climate change.
The report quotes an intriguing study which says that putting the world into a low population growth path, leading to 8 billion rather than 9 billion people on the planet by 2050, would save 2 billion tonnes of carbon dioxide emissions.
But it’s not just that: there’s a huge wedge of the world’s population soon to come to child-bearing age … so is the answer for those rapidly growing countries to adopt coercive Chinese-style single child policies?
No, says the UN, this is not about forced population control, but enabling women to decide for themselves to have less children.
Education, empowerment of women, and contraception can all help mitigate climate change, says the report.
Of course almost all the likely growth in world population is happening in developing countries who emit far less Carbon than for example a child in Europe or America.
It’s the process of development that will see that population growth be increasingly carbon intensive.
The middle class in the world – earning at least $8000 a year stands at around 800 million now but is forecast to grow rapidly in the next two decades to 2 billion by 2030.
That’s two billion people who want to fly in planes, drive cars and eat lots of carbon intensive meat.
But that development will also naturally limit population growth as people become richer. so it’s a complex picture.
For now this is a new direction for the UN – the suggestion that condoms aswell as low carbon cars, can limit climate change. But it won’t be discussed in Copenhagen.
Author: |Posted: 7:33 pm on 17/11/09
Category: Faisal Islam on Economics
Today’s inflation number may contain a clue as to the next populist backlash initiated by desperate politicians.
Speculators must surely be next in line for the pre-election chopping block. Oil traders in particular can surely not be spared from growing public anger over petrol prices.
There is, I’m told, a glut of oil and petrol products in the markets. There is most definitely a glut in spare capacity from producers such as Opec. In fact Saudi Arabia alone has capacity of 4.3 million barrels per day lying idle. Spare capacity is at a peak. A glut should mean low prices, but in the strange world of oil futures and derivatives, it has not.
Today the motoring organisation the AA came out against speculators, telling Channel 4 News that there “absolutely” needs to be government action to rein in speculation. I have been told by one of the UK’s most senior oil executives that last year’s spike in the crude oil price to $147 (and subsequent crash to $34 by Christmas) was the result of speculation.
But what can be done about it, I hear you shout. Speculation increases liquidity in markets, doesn’t it? Helps them make markets more “efficient”, guv. As the FSA were recently quoted as saying, speculation is not manipulation of the markets.
Well next month the US regulator, the CFTC, is likely to adopt limits on the size of bets that any single commodities trader can make in oil and other markets. There had been some frustration in the US that much of the damaging speculation was routed through London, the so-called “London loophole”.
The FSA has denied this, but did sign an information-sharing agreement to share trading data between UK and US exchanges in August. And despite pressure from the G20 the FSA has so far played down the prospect of a US-style clampdown.
It’s worth noting that no one in the London has ever been prosecuted for manipulation or market abuse in the commodities markets. Perhaps it really doesn’t happen in London at all.
Author: |Posted: 1:36 pm on 11/11/09
Category: Faisal Islam on Economics
Just left the Bank of England, where Mervyn King called for ‘higher net exports’ and on my way to Kew Bridge to see how those exports work in action, at the Brompton folding bike company - a rare manufacturing success story in the depths of recession.
A decade ago, during the dotcom boom, then Science Minister Lord Sainsbury extolled the virtues of Lara Croft, the videogame character, as a symbol of Britain’s dominance in high value added ‘weightless’ industries.
It can be no coincidence that last month Lord Mandelson was spotted with his own trusty Brompton. read more
Author: |Posted: 4:31 pm on 07/11/09
Category: Faisal Islam on Economics
A windswept beach. A university town. And a few hundred protesters dressed as finance ministers symbolically burying their heads sand.
It’s a lot harder to protest against the G7 rich man’s club, now that it’s the G20.
The agenda is somewhat more murky when it is China refusing to discuss climate finance, rather than the UK or the US.
So you could pass such protests off as an irrelevance.
As it happens, within the real meeting, one of the main aims of these campaigners – the Tobin tax – was getting the biggest boost it has ever received.
The idea that global currencies trades, capital flows and other trades could be subject to a small percentage tax has been a longstanding pipedream for development campaigners. It has two purposes.
To throw sand in the wheels of speculative activities (the description of Nobel prize-winning US economist James Tobin in 1978), dampening down its worst excesses.
And also to raise around half a trillion dollars for something: global poverty, climate change, debt relief, AIDS, malaria: take your pick.
Gordon Brown’s espousal of it, among four long term responses to the credit crunch, was a shock.
It is a proposal that has long interested economists.
Lord Turner was slapped down after musing about it in the summer in an interview with Prospect.
But there was a reference to the policy at the Pittsburgh G20 leaders conference. And let’s not forget that these days with it being the G20 and not the G7, the likes of Brazil are already around the top table with policies such as a 2 per cent tax on capital flows.
Eight years ago I chanced upon an unlikely source of support for a tax on speculative activities: George Soros.
‘I’m in favour of the Tobin tax. It doesn’t happen to coincide with my personal interest, but it could be a very good source of funds for providing global [public] goods,’ he told me in 2001 when I was Economics Correspondent at The Observer.
The main critique has been that it was impractical, and impossible to enforce if not agreed by the whole world.
Well, that appears to be the Prime minister’s agenda.
Though it’s worth knowing that a previous French proposal to study a Tobin tax to fund the Millennium Development Goals was vetoed at a G7 meeting, while Gordon Brown was chancellor.
Of course this is a highly political move.
George Osborne has outflanked the government on being tough on bonuses. He is desperate not to be seen as friendlier to bankers that Mr Darling and the Prime minister.
In an election Labour will be keen to paint him as an banker- loving Tory.
So he will tread carefully around this policy issue. Of course the banking lobby is against it. But the international community is not as against some form of this idea as you might think.
Author: |Posted: 6:57 pm on 06/11/09
Category: Copenhagen: Deal or No Deal?, Faisal Islam on Economics
ST ANDREWS, SCOTLAND – In the grounds of St Andrews’ famous Fairmont hotel there are some acclaimed championship golf courses. I doubt very much that the G20 finance ministers and central bankers arriving here tonight will be teeing off.
Having “saved the world economy” in Act 1, Act 2 appears to be the no less thorny task of saving the world itself.
The Chancellor has forced climate finance to the top of the agenda at breakfast tomorrow. The UK/EU plan is for finance worth $100bn per year from 2020, half of which will be raised from the private sector through carbon market mechanisms. read more
Author: |Posted: 5:52 pm on 05/11/09
Category: Faisal Islam on Economics
It’s a cosmic game of pin the tail on the donkey. The tail is the amount of money creation that the Bank of England deliberates over. The donkey is the British economy.
The Bank has just voted to increase its money creation exercise to £200 billion. A £25 billion increase is a little less than had been expected.
The Monetary Policy Committee is marginally less worried than thought about last month’s shock news that the economy is still in recession. It may be marginally more worried about the prospective inflationary consequences of its epic money creation scheme than the City believed. read more
Author: |Posted: 1:14 pm on 03/11/09
Category: Faisal Islam on Economics
Just over a year ago we thought that the £37bn injection of equity by the government into Lloyds and RBS was the landmark, never-to-be-repeated event. Bailout 1.0 literally saved the banking system from collapse, and was copied around the world.
Then, in January, came Bailout 2.0, which we were told would be a bailout not of the banks, but of the economy. That bailout was to enable the banks to continue lending to prospective homeowners and to businesses.
Author: |Posted: 1:43 pm on 02/11/09
Category: Faisal Islam on Economics
The independent panel of scientists argues that various illegal drugs are less harmful than legal ones, or even horse riding. The chief gets sacked by the home secretary, and apparently the rest of the panel are considering their positions.
So why doesn’t the home secretary appoint a panel of independent economists to advise on drugs policy instead? At the moment drugs policy seems to be authored by a coalition of tabloid headline writers and frightened politicians.
An economic take would be a forensic and brutal assessment of some unpalatable trade-offs.
Author: |Posted: 2:59 pm on 29/10/09
Category: Faisal Islam on Economics
So the US is out of recession. Unlike last Friday’s spectacular misprediction, the economists got this one right. In fact the markets shot up because the US’s 3rd quarter GDP figure showed 3.5 per cent growth (annualised).
So on an internationally comparable definition of recession (multiple consecutive quarters of contraction) the US has exited recession. It’s worth noting that within the US itself the NBER defines recessions in a different way, and is yet to pass judgement on this matter. What we can definitively say is that growth has returned to America, in a way that it hasn’t returned, for example, to Britain. read more
Author: |Posted: 2:18 pm on 28/10/09
Category: Faisal Islam on Economics
There’s £8bn more loans from the government to Northern Rock to let them lend it to all of you. On top of that there’s another £4bn of liquidity arrangements.
This takes the loan that had gone down to £15bn back up to £27bn, which will take “around a decade to pay off”, says the Rock’s chief executive.
