This Top 5 comes from interest.co.nz's Gareth Vaughan.
As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz. And if you're interested in contributing the occasional Top 5 yourself, contact gareth.vaughan@interest.co.nz.
In today’s NZ Herald …. https://t.co/wNTLdVh1IX Rod Emmerson’s cartoons: Week of June 12 - 18 pic.twitter.com/1IZUcNKr7d
— Rod Emmerson (@rodemmerson) June 14, 2023
1) The Great Depression and energy transition.
On Friday Parliamentary Commissioner for the Environment Simon Upton issued a report he commissioned on the economics of four future electricity system pathways for New Zealand as we move to wean ourselves off fossil fuels.
The task and challenges are big with Upton noting; "The coming energy transition represents a once in a generation opportunity to establish a low carbon, affordable and secure electricity system for decades to come."
We live in interesting times.
History offers some interesting tales of previous energy transitions and the upheavals they can cause. For example, a new paper from Christopher Kennedy of the University of Victoria in Canada looks into the Great Depression from the perspective of it being "a painful episode in the socio-technological transition from a coal/railroad regime to one based on hydrocarbons, motor vehicles, and electricity."
Here's Kennedy's conclusion from an article in the Journal of Industrial Ecology.
This paper has presented a hypothesis that the Great Depression can be understood as a critical period in the energy transition from coal to hydrocarbons. The Depression was long and hard because it entailed breaking the deeply entrenched hegemony of railroads in the US economy.
The strength of railroads as an incumbent socio-technological regime in 1929 has been shown by several findings. The railroads accounted for almost a quarter of non-residential capital stock. They were responsible for supplying between 70% and 76% of US energy in 1929; and 69% of energy used for capital formation.
The decline of the railroads began with stagnating investment in the 1920s. This may have partially been due to the regulation by the ICC, but competition with new competing oil-based technologies was likely also a factor. The discovery of large quantities of oil in the US Southwest from 1927 onward, added further encouragement to investments in oil-based technologies, as we saw from data on motor vehicles and tractors.
The timing of the Great Crash of October 1929, corresponding with drastic cuts in oil prices and announcement of certainty in oil supplies—following discovery of huge oilfields—fits the overall hypothesis. There was potential for a transition in energy regime—and oil surpassed coal for ground transportation in 1931—but the coal/railroad regime was strongly entrenched. Close to half of refined petroleum still relied on railroads to get to market—and unlike natural gas, which was less developed, petroleum was only a minor energy source (∼7%) in the processes of capital formation.
This paper opens up many potential avenues for future research. Further biophysical economic analysis of other nations during the Great Depression, and the revival of US railroads during WWII is warranted. More broadly, as the world wrestles with transitioning from fossil fuels to renewable energy, we need far better ways of understanding the role of energy in economies. Further research in industrial ecology and ecological economics bridging from transition theory to macroeconomics is needed, building upon works such as: Fischer-Kowalski (2011), Foxon (2017), Hamilton (2003), and Kennedy (2022a), amongst others.
2) Is the Fed's inflation fight over?
In this article for The Conversation, Ryan Herzog, Associate Professor of Economics at Gonzaga University, suggests the Federal Reserve's fight against inflation could be over. Herzog argues that US inflation is lower than it appears to be.
While the data shows inflation remains well above the Fed’s target of around 2%, there’s good reason to believe that it will continue to fall regardless of what the Fed does.
Shelter, a measure of the cost of owning or renting a home, is the largest component of the consumer price index, accounting for more than one-third of the total. In its latest report, the Bureau of Labor Statistics reported shelter costs rose 8% from a year ago. After stripping that out, inflation was up just 2.1%.
The thing is, the data reported by the bureau doesn’t reflect the reality of what’s happening in the current housing market.
The Bureau of Labor Statistics relies on a survey that gauges rental prices from 50,000 leases, many of which were signed during the rental bubble in 2021 and 2022. A better measure of current market rents is the Zillow Observed Rent Index. That index suggests rates are declining – rents rose 4.8% year over year in May, aligning with pre-pandemic rates.
Comparing the two measures suggests the official consumer price index data lags behind the market by four to six months. Using current rents would put inflation much closer to where the Fed wants it to be. Jason Furman, former chair of the government’s Council of Economic Advisors, created a modified version of core inflation – which uses a market-based measure of shelter prices – at 2.6%.
3) US consumer watchdog's AI warning for the financial system & housing market.
You can't read, watch or listen to any media at the moment without seeing a story about AI, or artificial intelligence. In this one from Bloomberg, Rohit Chopra, Director of the US Consumer Financial Protection Bureau, expresses some concerns about how AI could impact finance and the housing market.
“It creates a situation where if we don’t use the laws we have on the books today effectively, we will see a faster uptick in fraud, we will see more exclusion and discrimination, and frankly, less accuracy in the system when it comes to home appraisals and so much more,” Chopra told the Senate Banking Committee. “We have to focus on how big tech and AI will transform banking.”
In Washington, regulators and lawmakers have yet to put out a comprehensive plan for how to deal with the disruptive capacity of AI tools. Backers say the technology has the power to improve efficiency and lives, while critics warn of unknown consequences.
4) Commuting to work by plane to avoid paying a high rent.
CNBC has a story about Sophia Celentano, a 21-year-old who commutes to her summer internship in New Jersey from her parent’s house in South Carolina by plane once a week. Apparently it's all about avoiding paying expensive New York rent.
“I didn’t think twice about it,” Celentano, a rising senior at the University of Virginia, tells CNBC Make It.
Super-commuting, which the Census Bureau loosely defines as traveling “long distances” by air, rail, car or bus to work — usually 90 minutes or more each way — has become more popular since the Covid-19 pandemic hit. Companies adopted hybrid work models, and people fled major cities.
Even some college students are on board. “I really wanted to prioritize my happiness and well-being this summer, and to do that, I wanted to mostly be in Charleston with my family,” says Celentano.
The intern’s super-commuting routine helps her save thousands of dollars, too.
Apparently she's saving about US$200 a week.
Celentano’s internship is 10 weeks long. She’ll spend about $2,250, saving at least $2,000 this summer — or $200 per week — she estimates.
There's no mention whether Celentano has any concerns about her carbon footprint. But she is able to use her time in the airport for her TikTok and YouTube posts...
5) The fall of Sam Bankman-Fried.
I heartily recommend the Bloomberg podcast; Spellcaster: The Fall of Sam Bankman-Fried. It's a cracking story well told.
Bankman-Fried was the founder of the now collapsed cryptocurrency exchange FTX, once valued at US$32 billion. He was arrested in the Bahamas last year and extradited to the US where Bankman-Fried faces Department of Justice charges alleging the likes of wire fraud, securities fraud, conspiracy to commit money laundering and conspiracy to violate campaign finance laws.
Here's the teaser for the podcast.
When nerdy gamer Sam Bankman-Fried rocketed to fame as the world’s richest 29-year-old, he pledged to donate his billions to good causes. But when Sam's crypto exchange FTX collapsed, billions of dollars went missing, and Sam was in handcuffs, those who knew him were left wondering — who was Sam really? A well-meaning billionaire who made a mistake? Or a calculated con man? From Wondery and Bloomberg, the makers of The Shrink Next Door, comes a new story of incredible wealth, betrayal, and what happens when “doing good” goes really, really, bad.
19 Comments
That other energy transition. "Last Energy, a U.S.-based micro modular nuclear technology firm and project developer, has secured power purchase agreements (PPAs) for 34 PWR-20 small modular reactor (SMR) units with four industrial partners in the UK and Poland."
https://www.powermag.com/last-energy-secures-ppas-for-34-smr-nuclear-po…
Although these might be a great way to combat climate change ;) there may be some issues with waste...
One crosses one's DNA with that of a salamander, and a touch of cockroach. Stir in a touch of photosynthetic ability, and stir. Cognisance, not so much. It seems to get a species into trouble.
Good to see #1; great piece. Our problem is morphing-time this time; we are orders of magnitude bigger than in the 1930's. We do indeed need to address the energy transition - and this time it will be down, not up. A first, for the modern world (not historically, many Empires have declined). It is entirely possible that some technologies we used on the way up, could be appropriate on the way down. Ex bitumen (its made from oil; nuclear won't do that) steel-on-steel may be our least-friction option.
On Newshub Nation this morning, Raf Manji said that TOP are developing an AI candidate. Should be a very interesting addition to the election.
Would be good. Incidentally, a complaint about misrepresentation of what AI is has been made to the Commerce Commission about NZ market research start-up Yabble.
No, it misses the point.
We are almost certainly into fee-back-loop territory; forcing the climate is non-linear. If the wildfires result in less forest which melts the tundra which melts the ice which reduced albedo which heats the atmosphere which induces more wildfires... then it's non-linear.
I think it's too late, already already.
And that besides the other existential threats.
Did you read Emmott's 10 billion yet?
There is an app for that false economics.
“Fundamentally, in light-water reactors, out of the uranium we dig out of the ground, we use a half a percent of the energy that’s in the uranium that’s dug out of the ground,” Gehin told CNBC in a phone interview. “You can get a large fraction of that energy if you were to recycle the fuel through fast reactors.”
https://www.cnbc.com/2022/06/02/nuclear-waste-us-could-power-the-us-for…
"Uranium can be used 60 times more efficiently in fast breeder reactors,
which burn up all the uranium – both the 238U and the 235U (in contrast to
the once-through reactors, which burn mainly 235U). As long as we don’t
chuck away the spent fuel that is spat out by once-through reactors, this
source of depleted uranium could be used too, so uranium that is put in
once-through reactors need not be wasted. "
You might be interested in this thread:
The American railroads were also beset with regulations and strong unions up until the 80's.They still had firemen and brakemen,after the demise of the caboose there were up to 5 men crowding into the loco cab, even to move a loco on its own.
The rates were set by regulation , and they were common carriers that had to get permission to stop any service or close a line.
Up until Amtrak's creation in 1971 , they were also running many empty passenger trains. Only 2 railroads stayed out of the "Amtrak " agreement , both in by the 90's
Nasty, especially if you're travelling overseas.
https://i.stuff.co.nz/business/132350388/tech-glitch-impacting-credit-c…
#5 OMG - what a horribly corrupt system.
$39.9 million. That’s how much Bankman-Fried gave to Democratic causes ahead of midterm elections, including at least $6 million to the Democrats’ House Majority political action committee. Bankman-Fried claims to have secretly donated millions more to Republicans.
And, as for the Republicans;
Sam Bankman-Fried says he's secretly the "third-biggest Republican donor" thanks to "dark money"
Too many multi-billionaires to keep track of who's who in terms of donations and where that money might have come from.
Their political funding, pork-barrel politics and abused (non)disclosure model is to my mind the biggest threat to democracy there. And such 'dark money' swindles extend to other branches beyond the executive (i.e., the Supreme Court).
They really are a nation on a moral precipice.
Yes. In the a recent congress meeting, when questioned if he had ever met with SBF in 2021, the SEC Chair Gary Gensler would not answer the question directly, even though it's clear that he did. Gensler was teaching at MIT and his boss was Glenn Ellison, the father of Caroline Ellison.
https://financialservices.house.gov/news/documentsingle.aspx?DocumentID…
I heartily recommend the Bloomberg podcast; Spellcaster: The Fall of Sam Bankman-Fried. It's a cracking story well told.
The better story surrounding FTX and SBF will unlikely be told by the likes of Bloomie. That is the relationship and machinations between SBF, the SEC (Gensler in particular), MIT, and the Democratic Party. Still in the realm of conspiracy theory is that SBF is the 'useful idiot' in an attempt to bring down the crypto industry.
We need more water storage for one. In a land of so much rain why can't we store more water. It's bound to come in handy one day. Water powers three quarters of our electricity needs already [that reads better than coal powering 75% of Aussies electricity] and hey, you can drink it as well. You can even water the crops with it. Handy thing water.
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