When the bread runs out, and the circus clowns go home to take care of their families, we’ll once again see what man is really made of."
Monday, 27 April 2009
Monday, 20 April 2009
Sunday, 19 April 2009
Why we forgot how to grow food
from the Times Online
"As a food shortage looms, people are digging for Britain — and their dinner table. John-Paul Flintoff gets back to our roots"
Not long before Christmas, a man walked into the care home next door to his house and asked the manager if it would be possible for a group of neighbours to grow food in the vast gardens. The manager said he would be delighted. In the days that followed, the man casually asked various neighbours whether they would like to get involved. They all said yes. So he popped over to the care home with them, and each remarked how large the garden was, and what a lot of food could be grown there.
As well as beds for vegetables, there could be fruit trees trained to grow up the south-facing walls, a bed of herbs for the kitchens, and flowers to take inside. The group could perhaps even keep chickens, once the fruit and veg were up and running.
The man went home after each trip feeling tremendously pleased with himself. I know this, because the man was me. Now, it’s not as if I did anything special: I didn’t lift a spade. Many people have done considerably more, as part of a grass-roots movement spreading rapidly across the nation, to grow our own food. And fast. Because for the first time in decades, Britain faces the real prospect of severe food shortages.
About 40% of the food we eat is imported. That includes an astounding 95% of our fruit and most of the wheat in our bread. This reliance on goods from abroad is perilous. During the 2000 fuel strike, Sainsbury’s chief executive wrote to the prime minister to warn that food supplies would run out “in days rather than weeks”. Supermarkets rationed bread, sugar and milk. The situation is now arguably worse: world food reserves are at historically low levels, and last year several countries stopped exporting staples because their own populations were going hungry.
If the problems were only temporary, it would be bad enough. But they’re not. We have become dependent on fossil fuels that are starting to run out. Taking account of all the oil- and gas-derived fertilisers, pesticides, distribution and retail practices, our modern farming uses an incredibly wasteful 10 calories of energy to put a single calorie of food on your plate.
Reverting to old-fashioned farming will be hard because our soil is in poor shape. Fertility has come to rely on annual, chemical top-ups instead of the traditional long-term build-up using animal manure and crop rotation. Suddenly taking away all the artificial fertilisers will result in drastically lower yields. And if we’re to feed ourselves, we can’t afford lower yields — because the UK is more densely populated than China, Pakistan or any African country except Rwanda.
Meanwhile, levels of minerals such as phosphate, which plants need for healthy growth, are falling fast. Global supplies have peaked, and last year phosphate prices rose by 700%. Britain imports 80% of its phosphates. The only alter-native is to return all food waste and animal and human manure to the land, instead of flushing it to sea. And let’s not forget the extremes of weather that will result from global warming. Rising sea levels spell doom for the 57% of grade-1 arable land in east England already below sea level. In 2000, during the unprecedented heat wave, crop yields in Italy and France fell by a third.
Perhaps most importantly, we lack know-how. Most of us today have little experience of food- growing. The farmers we do have are mostly approaching retirement, and there are few of them: agricultural employment has fallen from 40% in 1900 to 2% today, and much of the work is done by casual workers brought in from abroad.
Modern governments have not regarded self-sufficiency in food as a desirable aim, according to Professor Tim Lang of City University in London; but last year that changed. A report from the Cabinet Office concluded that “existing patterns of food production are not fit for a low-carbon, more resource-constrained future”. In response, Colin Tudge, the author of the book Feeding People is Easy, called for “a global renaissance in agriculture”. This more or less agreed with the insights of a less well-known environmentalist, Jeremy Clarkson: “We are heading towards The End of Days, and you’d better get yourself an allotment.”
That’s what I did last year, just in time, because now dozens of others are on the waiting list.
All over the country, people are starting to think about producing food. Some because they fancy a bit of the River Cottage lifestyle, but many — including Hugh Fearnley-Whittingstall — have been inspired by the growing Transition Town movement. Transition Towns were started by an Englishman, Rob Hopkins, after a stint working as a teacher in Kinsale, Ireland. At the time, he never imagined that oil might one day run out. “But then I showed students a film, The End of Suburbia. I have to say it was as traumatic and shocking for me as it was for the students.” The film made it clear that no aspect of life will be the same after cheap oil runs out — which it suggested will happen very soon. “When we got over the shock, we set about looking at Kinsale,” says Hopkins. “We examined how the town might look in 20 years if it adapted instead of pretending it wasn’t happening. We came up with a vision, then backcast it to see how to get there, year by year.”
Unlike other environmental initiatives, this deliberately involved finding the “upside” rather than dwelling on doom. “I like to use the analogy of inviting a reluctant friend to join you on holiday,” Hopkins explains. “If you paint a picture of the beach, the pool and the candlelit taverna by the sea, they’re more likely to come.”
Returning to England, Hopkins helped to create a similar “energy descent” plan in Totnes, Devon — the first Transition Town. Others soon followed. Lewes, Glastonbury and Stroud are full of middle-class hippie types, but in Bristol it’s the poorer districts that have been most dynamic, and across Wales the impetus has largely come from the agricultural community. Today, there are more than 150 “official” groups (who have formally asked to join the network) and hundreds of others still preparing or mulling it over. There are TTs in New Zealand, the US, and on The Archers.
After first talking to Hopkins, two years ago, I registered my own corner of northwest London on the Transition Town website and hoped that someone would join me. Nothing happened. So I cycled to south London to meet Duncan Law, an actor and director who parked the day job many, many months ago to devote himself full time to launching Transition Town Brixton.
The cafe where we met, Honest Foods, had a policy of sourcing food locally. Law asked for a word with the chef, said he knew someone with a vast crop of pears in their garden, and asked if the chef would be interested in buying them? Without hesitation, the chef said yes. I was impressed.
Law took me on a tour of Brixton: him on his recumbent bike and me on my foldaway with tiny wheels. If we looked odd together, the effect was increased by Law stopping every so often to collect apples that had fallen from trees. He told me about an entrepreneur who made £4,000 in the early 1950s — more than Law’s headmaster father earned in a year — by commissioning children to gather blackberries for him. TT Brixton, he said, was about to start mapping fruit trees across south London. (They’ve since done that.)
Near Balham, we visited Sue Sheehan, a Transition Town supporter who recently started growing fruit and veg in boxes in the tiny space in front of her terraced house. I still hadn’t got the hang of how to be upbeat about peak oil and climate change and ungraciously told her that the crop, though plentiful, would not be enough to keep her alive when the trouble starts. But every lettuce you grow yourself, Law said, saves growing another one miles away and shipping it to you, and all the emissions associated with that.
A few days later, I watched The Power of Community: How Cuba survived Peak Oil, a documentary film about what happened to Cuba after Soviet oil supplies dried up. It shows how Cubans gradually turned away from a heavy reliance on carbon-intensive agriculture: in rural areas, they learnt to plough with oxen; in cities, all kinds of spaces were turned to horticulture, from window boxes to wasteland. The transition took more than two years, and Cubans had to forgo the equivalent of a meal a day — but by the end, even people in cities were producing half their annual fruit and vegetable needs.
I finally found like-minded people nearer my home, willing to launch a Transition Town. In Belsize library, we hosted a week of film screenings culminating with The Power of Community. It was clear from the question-and-answer session afterwards that the audience was gagging to start growing food. Strangely, they just seemed to want some kind of permission to get started. I improvised: “Just go for it! What can you lose?”
Transition Belsize was born and I found myself co-ordinating the 40-strong food group. The first thing the group did was visit my allotment. My new friends weeded, built a new raised bed, and took home some of my surplus apples. Since then, we have gathered names of people on the waiting list for allotments and put them in touch with householders who possess gardens but insufficient time, expertise, or ability to grow food themselves. We’ve set up a section in the local library with books and magazines devoted to food-growing, co-ordinated bulk purchasing of otherwise costly organic food so a wider portion of the population can access it, and got agreement from the local franchise of Budgens to sell produce grown by local people in gardens and allotments.
Another member, Councillor Alexis Rowell, rather brilliantly persuaded the council to allow residents on its estates to grow food there. Having done that, he went knocking on doors of one neighbouring estate to ask if people would like to grow food there. Over the course of a single weekend, members of the Transition group transformed the previously overgrown and unused gardens. Residents supplied hot soup and drinks, and joined in the work too. I travelled one cold January morning to Stroud, Gloucestershire, where members of another Transition group have done amazing things. Stroud has one of the country’s most successful farmers’ markets, and two Community Supported Agriculture (CSA) schemes, through which householders fund a farmer to supply food to them directly. The first was started in 2001, by four individuals renting an acre of land and employing a vegetable grower. After two years they had formally established a co-operative and rented 23 acres. Today two full-time growers provide veg and meat to 189 households, with enough profit to pay a bonus.
Meat production runs at a loss, and has to be subsidised by the veg, but the farmers see stock as essential to good stewardship of the land, providing plentiful manure. There’s another benefit: marketing. Animals can be very attractive parts of any membership project. For that reason, the CSA houses its pigs in a prominent position, beside notices explaining how the scheme works.
One of the hardest things for the CSA is getting people involved. Most members are happy to pay to receive veg — after all, it’s cheaper than buying from most supermarkets — and will turn up to occasional events on the farm, such as wassailing parties and apple pruning in January, blossom celebrations in May, haymaking in August, a bonfire-night party, and singing to cows in the barn at Christmas.
But schemes like this need a critical mass of members willing to help out more routinely, and might lose energy or collapse altogether if a small minority of volunteers find themselves always responsible for making it work. Wandering over weed-infested fields with two such volunteers, Helen Pitel and Caroline Denny, I see for myself how hard the work is. “But we can’t let this fail,” says Pitel cheerfully.
Among other setbacks, the CSAs have had meat stolen from their packing shed, and had to deal with unsupportive neighbours, such as one who complained about the appearance of polytunnels on the hillside and forced the CSA to secure retrospective planning approval. Even members can be difficult. As part of recent efforts to get them to share trips to the farm to collect food for each other, a list of names and addresses were sent out. Some complained that this breached data security and risked ID theft, reveals one member of the core group: “It sometimes feels like there is a long way to go in building the ‘community’ bit of Community Supported Agriculture!”
I’m not surprised to find that setting up and running large-scale projects of this sort can be difficult, and no less impressed for that reason.
One of the most significant achievements of Stroud’s food group did not involve growing anything. It’s a comprehensive analysis, conducted by members who happen both to be local councillors, into whether or not the district could feed itself. The report by Fi Macmillan and Dave Cockcroft was inspired by an article in The Land magazine, Can Britain Feed Itself?, written by Simon Fairlie, a journalist and campaigner who has a sideline selling scythes (to, among others, me). Fairlie lives in Somerset and has some connection to a local Transition group, but he’s been doing this kind of work for years. His article was itself inspired by a book published in 1975.
Using the same model, Macmillan and Cockcroft investigated whether 110,000 people living in Stroud district could be fed if they relied on the 37,000 hectares of available farmland. The initial finding was encouraging: the district does have enough land to feed itself, though only if people reduce their meat intake to a quarter of the current UK average of 80 kilograms per person per year, and significantly reduce their sugar intake. There would be some surplus with which to trade for staples such as citrus, tea and coffee.
Alas, the analysis doesn’t stop there. Macmillan and Cockcroft go on to examine whether Stroud can feed itself without inputs from fossil fuels, and with land set aside to produce the biofuels needed to replace them. (An additional pressure on land, which they only mention in passing, is the need for land-based textiles, whether from sheep or fibres from hemp and other crops.)
The conclusion, this time, is distressing: “We have nowhere near enough land to produce a significant proportion of our current level of transport and heating fuels.” Crikey. If that’s the dismal outlook for the district of Stroud, set among all those rolling fields, what hope is there for London? Is it time to get out?
Rob Hopkins thinks not. He used to believe the most responsible thing to do was to move to rural areas, build a house and grow your own food. “But when I found out about peak oil I came to question that. We had built our own house, and were growing our own food, but this was only going to be sustainable if I am prepared to sit at the gate with a shotgun. What do I do with my carrots if the village up the road is cold and hungry?
“We have to move towards collective solutions,” he says. “Peak oil is a call to those of us who have been out in the highlands to come back and help, because the skills are very much in demand now.” According to Simon Fairlie, supplying our needs in the future will also need considerable movement in the other direction: dispersal of both livestock and humans around the country, not least so that all that human manure can be put back on the land.
For now, the best thing I can do is to make a go of food-growing in London, as they did in Havana. So on my return from Stroud I throw myself with renewed energy into the Belsize group.
Over dinner, the core group wrestles with strategies for growing the group ever larger. We agree to work hard in our own streets, as individuals, then the next street, and so on. One attractive idea is to deliberately grow “too many” seedlings, giving ourselves a perfectly amiable pretext for knocking on doors and inoffensively getting neighbours started on food-growing.
Back home, inspired by the Guerrilla Gardening movement to grow beans on a patch of scrubby land beyond the end of my garden, I stare across at the vast gardens of the neighbouring care home, and notice — not for the first time — just how big and bare they are. Then I look down the road and notice that one of my neighbours, five doors down, has likewise been cultivating the wasteland. I knock on his door, we get chatting, and in no time he’s touring the gardens of the care home with me. A few days later, I ask a family with girls about the same age as my own daughter. They visit the site too.
I set up a neighbourhood project on an online food-growing network and soon my neighbours sign up. I decide to ask them over for drinks. We’ll watch the first episode of The Good Life, then The Power of Community. In a few weeks time we will have achieved nearly as much here as Belsize, down the road, achieved all last year. After that, who knows, we might set up our own veg-box scheme…
But I shouldn’t get carried away. In The Transition Handbook, published last year and already reprinted several times, Rob Hopkins offers what he calls a “cheerful disclaimer”: “Just in case you were under the impression that Transition is a process defined by people who have all the answers, you need to be aware of a key fact. We truly don’t know if this will work.
“Transition is a social experiment on a massive scale. What we are convinced of is this: (a) if we wait for the government, it’ll be too little, too late; (b) if we act as individuals, it’ll be too little; but (c) if we act as communities, it might just be enough, just in time.'
"As a food shortage looms, people are digging for Britain — and their dinner table. John-Paul Flintoff gets back to our roots"
Not long before Christmas, a man walked into the care home next door to his house and asked the manager if it would be possible for a group of neighbours to grow food in the vast gardens. The manager said he would be delighted. In the days that followed, the man casually asked various neighbours whether they would like to get involved. They all said yes. So he popped over to the care home with them, and each remarked how large the garden was, and what a lot of food could be grown there.
As well as beds for vegetables, there could be fruit trees trained to grow up the south-facing walls, a bed of herbs for the kitchens, and flowers to take inside. The group could perhaps even keep chickens, once the fruit and veg were up and running.
The man went home after each trip feeling tremendously pleased with himself. I know this, because the man was me. Now, it’s not as if I did anything special: I didn’t lift a spade. Many people have done considerably more, as part of a grass-roots movement spreading rapidly across the nation, to grow our own food. And fast. Because for the first time in decades, Britain faces the real prospect of severe food shortages.
About 40% of the food we eat is imported. That includes an astounding 95% of our fruit and most of the wheat in our bread. This reliance on goods from abroad is perilous. During the 2000 fuel strike, Sainsbury’s chief executive wrote to the prime minister to warn that food supplies would run out “in days rather than weeks”. Supermarkets rationed bread, sugar and milk. The situation is now arguably worse: world food reserves are at historically low levels, and last year several countries stopped exporting staples because their own populations were going hungry.
If the problems were only temporary, it would be bad enough. But they’re not. We have become dependent on fossil fuels that are starting to run out. Taking account of all the oil- and gas-derived fertilisers, pesticides, distribution and retail practices, our modern farming uses an incredibly wasteful 10 calories of energy to put a single calorie of food on your plate.
Reverting to old-fashioned farming will be hard because our soil is in poor shape. Fertility has come to rely on annual, chemical top-ups instead of the traditional long-term build-up using animal manure and crop rotation. Suddenly taking away all the artificial fertilisers will result in drastically lower yields. And if we’re to feed ourselves, we can’t afford lower yields — because the UK is more densely populated than China, Pakistan or any African country except Rwanda.
Meanwhile, levels of minerals such as phosphate, which plants need for healthy growth, are falling fast. Global supplies have peaked, and last year phosphate prices rose by 700%. Britain imports 80% of its phosphates. The only alter-native is to return all food waste and animal and human manure to the land, instead of flushing it to sea. And let’s not forget the extremes of weather that will result from global warming. Rising sea levels spell doom for the 57% of grade-1 arable land in east England already below sea level. In 2000, during the unprecedented heat wave, crop yields in Italy and France fell by a third.
Perhaps most importantly, we lack know-how. Most of us today have little experience of food- growing. The farmers we do have are mostly approaching retirement, and there are few of them: agricultural employment has fallen from 40% in 1900 to 2% today, and much of the work is done by casual workers brought in from abroad.
Modern governments have not regarded self-sufficiency in food as a desirable aim, according to Professor Tim Lang of City University in London; but last year that changed. A report from the Cabinet Office concluded that “existing patterns of food production are not fit for a low-carbon, more resource-constrained future”. In response, Colin Tudge, the author of the book Feeding People is Easy, called for “a global renaissance in agriculture”. This more or less agreed with the insights of a less well-known environmentalist, Jeremy Clarkson: “We are heading towards The End of Days, and you’d better get yourself an allotment.”
That’s what I did last year, just in time, because now dozens of others are on the waiting list.
All over the country, people are starting to think about producing food. Some because they fancy a bit of the River Cottage lifestyle, but many — including Hugh Fearnley-Whittingstall — have been inspired by the growing Transition Town movement. Transition Towns were started by an Englishman, Rob Hopkins, after a stint working as a teacher in Kinsale, Ireland. At the time, he never imagined that oil might one day run out. “But then I showed students a film, The End of Suburbia. I have to say it was as traumatic and shocking for me as it was for the students.” The film made it clear that no aspect of life will be the same after cheap oil runs out — which it suggested will happen very soon. “When we got over the shock, we set about looking at Kinsale,” says Hopkins. “We examined how the town might look in 20 years if it adapted instead of pretending it wasn’t happening. We came up with a vision, then backcast it to see how to get there, year by year.”
Unlike other environmental initiatives, this deliberately involved finding the “upside” rather than dwelling on doom. “I like to use the analogy of inviting a reluctant friend to join you on holiday,” Hopkins explains. “If you paint a picture of the beach, the pool and the candlelit taverna by the sea, they’re more likely to come.”
Returning to England, Hopkins helped to create a similar “energy descent” plan in Totnes, Devon — the first Transition Town. Others soon followed. Lewes, Glastonbury and Stroud are full of middle-class hippie types, but in Bristol it’s the poorer districts that have been most dynamic, and across Wales the impetus has largely come from the agricultural community. Today, there are more than 150 “official” groups (who have formally asked to join the network) and hundreds of others still preparing or mulling it over. There are TTs in New Zealand, the US, and on The Archers.
After first talking to Hopkins, two years ago, I registered my own corner of northwest London on the Transition Town website and hoped that someone would join me. Nothing happened. So I cycled to south London to meet Duncan Law, an actor and director who parked the day job many, many months ago to devote himself full time to launching Transition Town Brixton.
The cafe where we met, Honest Foods, had a policy of sourcing food locally. Law asked for a word with the chef, said he knew someone with a vast crop of pears in their garden, and asked if the chef would be interested in buying them? Without hesitation, the chef said yes. I was impressed.
Law took me on a tour of Brixton: him on his recumbent bike and me on my foldaway with tiny wheels. If we looked odd together, the effect was increased by Law stopping every so often to collect apples that had fallen from trees. He told me about an entrepreneur who made £4,000 in the early 1950s — more than Law’s headmaster father earned in a year — by commissioning children to gather blackberries for him. TT Brixton, he said, was about to start mapping fruit trees across south London. (They’ve since done that.)
Near Balham, we visited Sue Sheehan, a Transition Town supporter who recently started growing fruit and veg in boxes in the tiny space in front of her terraced house. I still hadn’t got the hang of how to be upbeat about peak oil and climate change and ungraciously told her that the crop, though plentiful, would not be enough to keep her alive when the trouble starts. But every lettuce you grow yourself, Law said, saves growing another one miles away and shipping it to you, and all the emissions associated with that.
A few days later, I watched The Power of Community: How Cuba survived Peak Oil, a documentary film about what happened to Cuba after Soviet oil supplies dried up. It shows how Cubans gradually turned away from a heavy reliance on carbon-intensive agriculture: in rural areas, they learnt to plough with oxen; in cities, all kinds of spaces were turned to horticulture, from window boxes to wasteland. The transition took more than two years, and Cubans had to forgo the equivalent of a meal a day — but by the end, even people in cities were producing half their annual fruit and vegetable needs.
I finally found like-minded people nearer my home, willing to launch a Transition Town. In Belsize library, we hosted a week of film screenings culminating with The Power of Community. It was clear from the question-and-answer session afterwards that the audience was gagging to start growing food. Strangely, they just seemed to want some kind of permission to get started. I improvised: “Just go for it! What can you lose?”
Transition Belsize was born and I found myself co-ordinating the 40-strong food group. The first thing the group did was visit my allotment. My new friends weeded, built a new raised bed, and took home some of my surplus apples. Since then, we have gathered names of people on the waiting list for allotments and put them in touch with householders who possess gardens but insufficient time, expertise, or ability to grow food themselves. We’ve set up a section in the local library with books and magazines devoted to food-growing, co-ordinated bulk purchasing of otherwise costly organic food so a wider portion of the population can access it, and got agreement from the local franchise of Budgens to sell produce grown by local people in gardens and allotments.
Another member, Councillor Alexis Rowell, rather brilliantly persuaded the council to allow residents on its estates to grow food there. Having done that, he went knocking on doors of one neighbouring estate to ask if people would like to grow food there. Over the course of a single weekend, members of the Transition group transformed the previously overgrown and unused gardens. Residents supplied hot soup and drinks, and joined in the work too. I travelled one cold January morning to Stroud, Gloucestershire, where members of another Transition group have done amazing things. Stroud has one of the country’s most successful farmers’ markets, and two Community Supported Agriculture (CSA) schemes, through which householders fund a farmer to supply food to them directly. The first was started in 2001, by four individuals renting an acre of land and employing a vegetable grower. After two years they had formally established a co-operative and rented 23 acres. Today two full-time growers provide veg and meat to 189 households, with enough profit to pay a bonus.
Meat production runs at a loss, and has to be subsidised by the veg, but the farmers see stock as essential to good stewardship of the land, providing plentiful manure. There’s another benefit: marketing. Animals can be very attractive parts of any membership project. For that reason, the CSA houses its pigs in a prominent position, beside notices explaining how the scheme works.
One of the hardest things for the CSA is getting people involved. Most members are happy to pay to receive veg — after all, it’s cheaper than buying from most supermarkets — and will turn up to occasional events on the farm, such as wassailing parties and apple pruning in January, blossom celebrations in May, haymaking in August, a bonfire-night party, and singing to cows in the barn at Christmas.
But schemes like this need a critical mass of members willing to help out more routinely, and might lose energy or collapse altogether if a small minority of volunteers find themselves always responsible for making it work. Wandering over weed-infested fields with two such volunteers, Helen Pitel and Caroline Denny, I see for myself how hard the work is. “But we can’t let this fail,” says Pitel cheerfully.
Among other setbacks, the CSAs have had meat stolen from their packing shed, and had to deal with unsupportive neighbours, such as one who complained about the appearance of polytunnels on the hillside and forced the CSA to secure retrospective planning approval. Even members can be difficult. As part of recent efforts to get them to share trips to the farm to collect food for each other, a list of names and addresses were sent out. Some complained that this breached data security and risked ID theft, reveals one member of the core group: “It sometimes feels like there is a long way to go in building the ‘community’ bit of Community Supported Agriculture!”
I’m not surprised to find that setting up and running large-scale projects of this sort can be difficult, and no less impressed for that reason.
One of the most significant achievements of Stroud’s food group did not involve growing anything. It’s a comprehensive analysis, conducted by members who happen both to be local councillors, into whether or not the district could feed itself. The report by Fi Macmillan and Dave Cockcroft was inspired by an article in The Land magazine, Can Britain Feed Itself?, written by Simon Fairlie, a journalist and campaigner who has a sideline selling scythes (to, among others, me). Fairlie lives in Somerset and has some connection to a local Transition group, but he’s been doing this kind of work for years. His article was itself inspired by a book published in 1975.
Using the same model, Macmillan and Cockcroft investigated whether 110,000 people living in Stroud district could be fed if they relied on the 37,000 hectares of available farmland. The initial finding was encouraging: the district does have enough land to feed itself, though only if people reduce their meat intake to a quarter of the current UK average of 80 kilograms per person per year, and significantly reduce their sugar intake. There would be some surplus with which to trade for staples such as citrus, tea and coffee.
Alas, the analysis doesn’t stop there. Macmillan and Cockcroft go on to examine whether Stroud can feed itself without inputs from fossil fuels, and with land set aside to produce the biofuels needed to replace them. (An additional pressure on land, which they only mention in passing, is the need for land-based textiles, whether from sheep or fibres from hemp and other crops.)
The conclusion, this time, is distressing: “We have nowhere near enough land to produce a significant proportion of our current level of transport and heating fuels.” Crikey. If that’s the dismal outlook for the district of Stroud, set among all those rolling fields, what hope is there for London? Is it time to get out?
Rob Hopkins thinks not. He used to believe the most responsible thing to do was to move to rural areas, build a house and grow your own food. “But when I found out about peak oil I came to question that. We had built our own house, and were growing our own food, but this was only going to be sustainable if I am prepared to sit at the gate with a shotgun. What do I do with my carrots if the village up the road is cold and hungry?
“We have to move towards collective solutions,” he says. “Peak oil is a call to those of us who have been out in the highlands to come back and help, because the skills are very much in demand now.” According to Simon Fairlie, supplying our needs in the future will also need considerable movement in the other direction: dispersal of both livestock and humans around the country, not least so that all that human manure can be put back on the land.
For now, the best thing I can do is to make a go of food-growing in London, as they did in Havana. So on my return from Stroud I throw myself with renewed energy into the Belsize group.
Over dinner, the core group wrestles with strategies for growing the group ever larger. We agree to work hard in our own streets, as individuals, then the next street, and so on. One attractive idea is to deliberately grow “too many” seedlings, giving ourselves a perfectly amiable pretext for knocking on doors and inoffensively getting neighbours started on food-growing.
Back home, inspired by the Guerrilla Gardening movement to grow beans on a patch of scrubby land beyond the end of my garden, I stare across at the vast gardens of the neighbouring care home, and notice — not for the first time — just how big and bare they are. Then I look down the road and notice that one of my neighbours, five doors down, has likewise been cultivating the wasteland. I knock on his door, we get chatting, and in no time he’s touring the gardens of the care home with me. A few days later, I ask a family with girls about the same age as my own daughter. They visit the site too.
I set up a neighbourhood project on an online food-growing network and soon my neighbours sign up. I decide to ask them over for drinks. We’ll watch the first episode of The Good Life, then The Power of Community. In a few weeks time we will have achieved nearly as much here as Belsize, down the road, achieved all last year. After that, who knows, we might set up our own veg-box scheme…
But I shouldn’t get carried away. In The Transition Handbook, published last year and already reprinted several times, Rob Hopkins offers what he calls a “cheerful disclaimer”: “Just in case you were under the impression that Transition is a process defined by people who have all the answers, you need to be aware of a key fact. We truly don’t know if this will work.
“Transition is a social experiment on a massive scale. What we are convinced of is this: (a) if we wait for the government, it’ll be too little, too late; (b) if we act as individuals, it’ll be too little; but (c) if we act as communities, it might just be enough, just in time.'
Saturday, 18 April 2009
Thursday, 16 April 2009
Tuesday, 14 April 2009
Mr. Soddy’s Ecological Economy
Mr. Soddy’s Ecological Economy
by Eric Zencey
INNOVATIVE and opaque instruments of debt; greedy bankers; lenders’ eagerness to take on risky loans; a lack of regulation; a shortage of bank liquidity: all have been nominated as the underlying cause of the largest economic downturn since the Great Depression. But a more perceptive, and more troubling, diagnosis is suggested by the work of a little-regarded British chemist-turned-economist who wrote before and during the Great Depression.
Frederick Soddy, born in 1877, was an individualist who bowed to few conventions, and who is described by one biographer as a difficult, obstinate man. A 1921 Nobel laureate in chemistry for his work on radioactive decay, he foresaw the energy potential of atomic fission as early as 1909. But his disquiet about that power’s potential wartime use, combined with his revulsion at his discipline’s complicity in the mass deaths of World War I, led him to set aside chemistry for the study of political economy — the world into which scientific progress introduces its gifts. In four books written from 1921 to 1934, Soddy carried on a quixotic campaign for a radical restructuring of global monetary relationships. He was roundly dismissed as a crank.
He offered a perspective on economics rooted in physics — the laws of thermodynamics, in particular. An economy is often likened to a machine, though few economists follow the parallel to its logical conclusion: like any machine the economy must draw energy from outside itself. The first and second laws of thermodynamics forbid perpetual motion, schemes in which machines create energy out of nothing or recycle it forever. Soddy criticized the prevailing belief of the economy as a perpetual motion machine, capable of generating infinite wealth — a criticism echoed by his intellectual heirs in the now emergent field of ecological economics.
A more apt analogy, said Nicholas Georgescu-Roegen (a Romanian-born economist whose work in the 1970s began to define this new approach), is to model the economy as a living system. Like all life, it draws from its environment valuable (or “low entropy”) matter and energy — for animate life, food; for an economy, energy, ores, the raw materials provided by plants and animals. And like all life, an economy emits a high-entropy wake — it spews degraded matter and energy: waste heat, waste gases, toxic byproducts, apple cores, the molecules of iron lost to rust and abrasion. Low entropy emissions include trash and pollution in all their forms, including yesterday’s newspaper, last year’s sneakers, last decade’s rusted automobile.
Matter taken up into the economy can be recycled, using energy; but energy, used once, is forever unavailable to us at that level again. The law of entropy commands a one-way flow downward from more to less useful forms. An animal can’t live perpetually on its own excreta. Neither can you fill the tank of your car by pushing it backwards. Thus, Georgescu-Roegen, paraphrasing the economist Alfred Marshall, said: “Biology, not mechanics, is our Mecca.”
Following Soddy, Georgescu-Roegen and other ecological economists argue that wealth is real and physical. It’s the stock of cars and computers and clothing, of furniture and French fries, that we buy with our dollars. The dollars aren’t real wealth, but only symbols that represent the bearer’s claim on an economy’s ability to generate wealth. Debt, for its part, is a claim on the economy’s ability to generate wealth in the future. “The ruling passion of the age,” Soddy said, “is to convert wealth into debt” — to exchange a thing with present-day real value (a thing that could be stolen, or broken, or rust or rot before you can manage to use it) for something immutable and unchanging, a claim on wealth that has yet to be made. Money facilitates the exchange; it is, he said, “the nothing you get for something before you can get anything.”
Problems arise when wealth and debt are not kept in proper relation. The amount of wealth that an economy can create is limited by the amount of low-entropy energy that it can sustainably suck from its environment — and by the amount of high-entropy effluent from an economy that the environment can sustainably absorb. Debt, being imaginary, has no such natural limit. It can grow infinitely, compounding at any rate we decide.
Whenever an economy allows debt to grow faster than wealth can be created, that economy has a need for debt repudiation. Inflation can do the job, decreasing debt gradually by eroding the purchasing power, the claim on future wealth, that each of your saved dollars represents. But when there is no inflation, an economy with overgrown claims on future wealth will experience regular crises of debt repudiation — stock market crashes, bankruptcies and foreclosures, defaults on bonds or loans or pension promises, the disappearance of paper assets.
It’s like musical chairs — in the wake of some shock (say, the run-up of the price of gas to $4 a gallon), holders of abstract debt suddenly want to hold money or real wealth instead. But not all of them can. One person’s loss causes another’s, and the whole system cascades into crisis. Each and every one of the crises that has beset the American economy in recent years has been, at heart, a crisis of debt repudiation. And we are unlikely to avoid more of them until we stop allowing claims on income to grow faster than income.
Soddy would not have been surprised at our current state of affairs. The problem isn’t simply greed, isn’t simply ignorance, isn’t a failure of regulatory diligence, but a systemic flaw in how our economy finances itself. As long as growth in claims on wealth outstrips the economy’s capacity to increase its wealth, market capitalism creates a niche for entrepreneurs who are all too willing to invent instruments of debt that will someday be repudiated. There will always be a Bernard Madoff or a subprime mortgage repackager willing to set us up for catastrophe. To stop them, we must balance claims on future wealth with the economy’s power to produce that wealth. How can that be done?
Soddy distilled his eccentric vision into five policy prescriptions, each of which was taken at the time as evidence that his theories were unworkable: The first four were to abandon the gold standard, let international exchange rates float, use federal surpluses and deficits as macroeconomic policy tools that could counter cyclical trends, and establish bureaus of economic statistics (including a consumer price index) in order to facilitate this effort. All of these are now conventional practice.
Soddy’s fifth proposal, the only one that remains outside the bounds of conventional wisdom, was to stop banks from creating money (and debt) out of nothing. Banks do this by lending out most of their depositors’ money at interest — making loans that the borrower soon puts in a demand deposit (checking) account, where it will soon be lent out again to create more debt and demand deposits, and so on, almost ad infinitum.
One way to stop this cycle, suggests Herman Daly, an ecological economist, would be to gradually institute a 100-percent reserve requirement on demand deposits. This would begin to shrink what Professor Daly calls “the enormous pyramid of debt that is precariously balanced atop the real economy, threatening to crash.”
Banks would support themselves by charging fees for safekeeping, check clearing and all the other legitimate financial services they provide. They would still make loans and still be able to lend at interest “the real money of real depositors,” in Professor Daly’s phrase, people who forgo consumption today by taking money out of their checking accounts and putting it in time deposits — CDs, passbook savings, 401(k)’s. In return, these savers receive a slightly larger claim on the real wealth of the community in the future.
In such a system, every increase in spending by borrowers would have to be matched by an act of saving or abstinence on the part of a depositor. This would re-establish a one-to-one correspondence between the real wealth of the community and the claims on that real wealth. (Of course, it would not solve the problem completely, not unless financial institutions were also forbidden to create subprime mortgage derivatives and other instruments of leveraged debt.)
If such a major structural renovation of our economy sounds hopelessly unrealistic, consider that so too did the abolition of the gold standard and the introduction of floating exchange rates back in the 1920s. If the laws of thermodynamics are sturdy, and if Soddy’s analysis of their relevance to economic life is correct, we’d better expand the realm of what we think is realistic.
Eric Zencey, a professor of historical and political studies at Empire State College, is the author of “Virgin Forest: Meditations on History, Ecology and Culture” and a novel, “Panama.”
by Eric Zencey
INNOVATIVE and opaque instruments of debt; greedy bankers; lenders’ eagerness to take on risky loans; a lack of regulation; a shortage of bank liquidity: all have been nominated as the underlying cause of the largest economic downturn since the Great Depression. But a more perceptive, and more troubling, diagnosis is suggested by the work of a little-regarded British chemist-turned-economist who wrote before and during the Great Depression.
Frederick Soddy, born in 1877, was an individualist who bowed to few conventions, and who is described by one biographer as a difficult, obstinate man. A 1921 Nobel laureate in chemistry for his work on radioactive decay, he foresaw the energy potential of atomic fission as early as 1909. But his disquiet about that power’s potential wartime use, combined with his revulsion at his discipline’s complicity in the mass deaths of World War I, led him to set aside chemistry for the study of political economy — the world into which scientific progress introduces its gifts. In four books written from 1921 to 1934, Soddy carried on a quixotic campaign for a radical restructuring of global monetary relationships. He was roundly dismissed as a crank.
He offered a perspective on economics rooted in physics — the laws of thermodynamics, in particular. An economy is often likened to a machine, though few economists follow the parallel to its logical conclusion: like any machine the economy must draw energy from outside itself. The first and second laws of thermodynamics forbid perpetual motion, schemes in which machines create energy out of nothing or recycle it forever. Soddy criticized the prevailing belief of the economy as a perpetual motion machine, capable of generating infinite wealth — a criticism echoed by his intellectual heirs in the now emergent field of ecological economics.
A more apt analogy, said Nicholas Georgescu-Roegen (a Romanian-born economist whose work in the 1970s began to define this new approach), is to model the economy as a living system. Like all life, it draws from its environment valuable (or “low entropy”) matter and energy — for animate life, food; for an economy, energy, ores, the raw materials provided by plants and animals. And like all life, an economy emits a high-entropy wake — it spews degraded matter and energy: waste heat, waste gases, toxic byproducts, apple cores, the molecules of iron lost to rust and abrasion. Low entropy emissions include trash and pollution in all their forms, including yesterday’s newspaper, last year’s sneakers, last decade’s rusted automobile.
Matter taken up into the economy can be recycled, using energy; but energy, used once, is forever unavailable to us at that level again. The law of entropy commands a one-way flow downward from more to less useful forms. An animal can’t live perpetually on its own excreta. Neither can you fill the tank of your car by pushing it backwards. Thus, Georgescu-Roegen, paraphrasing the economist Alfred Marshall, said: “Biology, not mechanics, is our Mecca.”
Following Soddy, Georgescu-Roegen and other ecological economists argue that wealth is real and physical. It’s the stock of cars and computers and clothing, of furniture and French fries, that we buy with our dollars. The dollars aren’t real wealth, but only symbols that represent the bearer’s claim on an economy’s ability to generate wealth. Debt, for its part, is a claim on the economy’s ability to generate wealth in the future. “The ruling passion of the age,” Soddy said, “is to convert wealth into debt” — to exchange a thing with present-day real value (a thing that could be stolen, or broken, or rust or rot before you can manage to use it) for something immutable and unchanging, a claim on wealth that has yet to be made. Money facilitates the exchange; it is, he said, “the nothing you get for something before you can get anything.”
Problems arise when wealth and debt are not kept in proper relation. The amount of wealth that an economy can create is limited by the amount of low-entropy energy that it can sustainably suck from its environment — and by the amount of high-entropy effluent from an economy that the environment can sustainably absorb. Debt, being imaginary, has no such natural limit. It can grow infinitely, compounding at any rate we decide.
Whenever an economy allows debt to grow faster than wealth can be created, that economy has a need for debt repudiation. Inflation can do the job, decreasing debt gradually by eroding the purchasing power, the claim on future wealth, that each of your saved dollars represents. But when there is no inflation, an economy with overgrown claims on future wealth will experience regular crises of debt repudiation — stock market crashes, bankruptcies and foreclosures, defaults on bonds or loans or pension promises, the disappearance of paper assets.
It’s like musical chairs — in the wake of some shock (say, the run-up of the price of gas to $4 a gallon), holders of abstract debt suddenly want to hold money or real wealth instead. But not all of them can. One person’s loss causes another’s, and the whole system cascades into crisis. Each and every one of the crises that has beset the American economy in recent years has been, at heart, a crisis of debt repudiation. And we are unlikely to avoid more of them until we stop allowing claims on income to grow faster than income.
Soddy would not have been surprised at our current state of affairs. The problem isn’t simply greed, isn’t simply ignorance, isn’t a failure of regulatory diligence, but a systemic flaw in how our economy finances itself. As long as growth in claims on wealth outstrips the economy’s capacity to increase its wealth, market capitalism creates a niche for entrepreneurs who are all too willing to invent instruments of debt that will someday be repudiated. There will always be a Bernard Madoff or a subprime mortgage repackager willing to set us up for catastrophe. To stop them, we must balance claims on future wealth with the economy’s power to produce that wealth. How can that be done?
Soddy distilled his eccentric vision into five policy prescriptions, each of which was taken at the time as evidence that his theories were unworkable: The first four were to abandon the gold standard, let international exchange rates float, use federal surpluses and deficits as macroeconomic policy tools that could counter cyclical trends, and establish bureaus of economic statistics (including a consumer price index) in order to facilitate this effort. All of these are now conventional practice.
Soddy’s fifth proposal, the only one that remains outside the bounds of conventional wisdom, was to stop banks from creating money (and debt) out of nothing. Banks do this by lending out most of their depositors’ money at interest — making loans that the borrower soon puts in a demand deposit (checking) account, where it will soon be lent out again to create more debt and demand deposits, and so on, almost ad infinitum.
One way to stop this cycle, suggests Herman Daly, an ecological economist, would be to gradually institute a 100-percent reserve requirement on demand deposits. This would begin to shrink what Professor Daly calls “the enormous pyramid of debt that is precariously balanced atop the real economy, threatening to crash.”
Banks would support themselves by charging fees for safekeeping, check clearing and all the other legitimate financial services they provide. They would still make loans and still be able to lend at interest “the real money of real depositors,” in Professor Daly’s phrase, people who forgo consumption today by taking money out of their checking accounts and putting it in time deposits — CDs, passbook savings, 401(k)’s. In return, these savers receive a slightly larger claim on the real wealth of the community in the future.
In such a system, every increase in spending by borrowers would have to be matched by an act of saving or abstinence on the part of a depositor. This would re-establish a one-to-one correspondence between the real wealth of the community and the claims on that real wealth. (Of course, it would not solve the problem completely, not unless financial institutions were also forbidden to create subprime mortgage derivatives and other instruments of leveraged debt.)
If such a major structural renovation of our economy sounds hopelessly unrealistic, consider that so too did the abolition of the gold standard and the introduction of floating exchange rates back in the 1920s. If the laws of thermodynamics are sturdy, and if Soddy’s analysis of their relevance to economic life is correct, we’d better expand the realm of what we think is realistic.
Eric Zencey, a professor of historical and political studies at Empire State College, is the author of “Virgin Forest: Meditations on History, Ecology and Culture” and a novel, “Panama.”
Monday, 13 April 2009
Cheap gas producer
monorator slip ring/ water channel
in place and sealed
shell in position
air inlet and stub for downtube
slip fit into airbox - plate on blower end
12v vapour lock wired to startup fan
part 1 is here
in place and sealed
shell in position
air inlet and stub for downtube
slip fit into airbox - plate on blower end
12v vapour lock wired to startup fan
part 1 is here
Sunday, 12 April 2009
Thursday, 9 April 2009
Producer gas and the Australian motorist
An excerpt from Producer Gas and the Australian Motorist by Don Bartlett
..."It is easy for the present generation of drivers, attuned to modern vehicles where electronic gadgets abound, to be ignorant of the simple facts about pre-war - and even many post-war vehicles.
Automatic transmissions were rare. Synchro-mesh gearboxes were not common either. When slowing down for an intersection or when stopping, it was usually necessary to manually adjust "the spark".
You were required by law to extend your right arm out the window and wave it up and down like a wounded albatross to warn other motorists of your intention to reduce speed.
Stop lights at the rear were optional but in effect, you were still required to signal your intention to stop, by holding your arm out the window with your elbow bent upwards to 90 degrees and the palm of your hand opened forward with the fingers, all of the fingers, pointing up.
A right-turn indication was also mandatory and was made with the unbent arm extended straight out of the window. The stop or turn signal had to be given continuously for at least 100 feet before the stop or turn.
I mention all of this, not in an attempt to be humorous but because many drivers on the road today would not have experienced that type of motoring. It needs to be understood in order to comprehend the conditions in which the gas producer system operated.
As the vehicle slowed down for the intersection, in addition to spark adjustments and hand signals, the driver had to use the left hand to make the gear shift – invariably, the gear lever was mounted on the floor.
With one hand out the window and the other on the gear shift, there was not much left to steer the vehicle – although the law said that you must have effective control of the vehicle at all times!
Meantime, your feet were moving rhythmically on the clutch and accelerator as gear changes required the now forgotten art of "double de-clutching".
Then there is the added complication of the producer gas controls. In Tibby's words, "you just played with all of the controls (choke, throttle, butterflies etc) at your disposal until you got things going OK". One contemporary report suggested that "bare feet, prehensile toes and experience at the Wurlitzer organ could be a distinct advantage".
Before entering the intersection, you had to ensure that the gas flow was adequate and, if on water injection, that the setting was appropriate for the load on the engine. Then of course, there were the other motorists going through the same ritual and approaching the same intersection.
If it was night-time and near the coast in 1942, there was the added hassle of the blackout. There were no street lights and your headlights (poor enough anyway by modern standards) had to be masked to allow only a narrow slit of light to the front.
..."It is easy for the present generation of drivers, attuned to modern vehicles where electronic gadgets abound, to be ignorant of the simple facts about pre-war - and even many post-war vehicles.
Automatic transmissions were rare. Synchro-mesh gearboxes were not common either. When slowing down for an intersection or when stopping, it was usually necessary to manually adjust "the spark".
You were required by law to extend your right arm out the window and wave it up and down like a wounded albatross to warn other motorists of your intention to reduce speed.
Stop lights at the rear were optional but in effect, you were still required to signal your intention to stop, by holding your arm out the window with your elbow bent upwards to 90 degrees and the palm of your hand opened forward with the fingers, all of the fingers, pointing up.
A right-turn indication was also mandatory and was made with the unbent arm extended straight out of the window. The stop or turn signal had to be given continuously for at least 100 feet before the stop or turn.
I mention all of this, not in an attempt to be humorous but because many drivers on the road today would not have experienced that type of motoring. It needs to be understood in order to comprehend the conditions in which the gas producer system operated.
As the vehicle slowed down for the intersection, in addition to spark adjustments and hand signals, the driver had to use the left hand to make the gear shift – invariably, the gear lever was mounted on the floor.
With one hand out the window and the other on the gear shift, there was not much left to steer the vehicle – although the law said that you must have effective control of the vehicle at all times!
Meantime, your feet were moving rhythmically on the clutch and accelerator as gear changes required the now forgotten art of "double de-clutching".
Then there is the added complication of the producer gas controls. In Tibby's words, "you just played with all of the controls (choke, throttle, butterflies etc) at your disposal until you got things going OK". One contemporary report suggested that "bare feet, prehensile toes and experience at the Wurlitzer organ could be a distinct advantage".
Before entering the intersection, you had to ensure that the gas flow was adequate and, if on water injection, that the setting was appropriate for the load on the engine. Then of course, there were the other motorists going through the same ritual and approaching the same intersection.
If it was night-time and near the coast in 1942, there was the added hassle of the blackout. There were no street lights and your headlights (poor enough anyway by modern standards) had to be masked to allow only a narrow slit of light to the front.
Tuesday, 7 April 2009
Notes on the housing market
Rent versus buy (click chart to embiggen)
A quick edit to add here - the above chart shows the price of rent V repayments in a range of 4 to 7%, the last time I "owned" a house the interest rate shot up to 18% - Consider yourself warned.
------------------------------------------------------
Some interesting thoughts from Dan Denning at The Daily Reckoning
..."Now, about the property market. There is a new claim that rising unemployment is a big threat not just to home owners, but also renters. "If unemployment rises to nine per cent next year, as many economists predict, the number of tenants facing eviction rises to 216,000 nationally," reports the Sunday Telegraph, citing a report by Fujitsu Consulting.
We have no idea who these guys at Fujitsu are. But they are definitely flying their housing crash/rental crisis flag on a regular basis. In this case, the logic of the argument seems sound. Rental vacancies are low. Landlords have to pay mortgages on properties and know there are plenty of other tenants around. The squeeze begins.
Over the weekend, the Federal government stepped in to try and relieve the squeeze, but only for mortgage owners. It amounts to the construction of a mortgage prison for the unemployed, if you ask us. And it's not exactly new. The Prime Minister has taken credit for a move announced by Commonwealth Bank chief Ralph Norris three weeks earlier. That move allows mortgage holders who've lost their job to defer payments on the mortgage for up to twelve months.
So what's the story? Well, the short story is that his move keeps Australian house prices high and more Australians in mortgage debt for longer.
Don't get us wrong. What the bank and its customers choose to agree to is between them. That's the spirit of capitalism! Voluntary exchange, enforceable contract, no compulsion or coercion. You signs your mortgage and you pays your money. But have you ever known a bank to do something out of the kindness of its heart?
Banks don't want to foreclose on a homeowner. It's expensive. And the bank doesn't want to own the home outright anyway. That's complicated. It has to then carry it on the balance sheet and value it while it tries to resell it.
The bank would rather keep you in the home, where you think you own it. And most importantly it wants to keep you paying on the mortgage. The longer you're in debt, slaving away at the mortgage, the more regular bank earnings will be (which isn't so bad if you're a shareholder collecting dividends.)
In its current form, the various banks' plans allow mortgage owners to either capitalise interest or choose an interest-only option. Capitalising the interest means the value of the monthly interest payment is added to the principal. The loan grows larger over time. This threatens to put the mortgage owner in negative equity.
The interest only option is more likely. Hmm. Interest-only mortgages. Sound familiar? The mortgage owner doesn't pay down the principal at all for up to twelve months. Blah blah blah. We could go on with the details. But you see the basic problem.
This is a move designed to keep people in their homes because it "feels" bad when people lose their homes. We're certainly not making light of it. It does feel bad. And once you get beyond how you feel about it, it IS bad. But policy made to make people feel better doesn't do anyone a real financial favour.
The problem is that there are already too many people in Australia who shouldn't, financially speaking, have mortgages at all. They have not prepared for rising interest rates or the possibility of a job loss, both of which can throw the worst-laid housing plans into complete disarray. Rates may be cut tomorrow by the RBA. But joblessness is definitely on the rise.
This is also the banks trying to prop up property prices to support their own loan books. By keeping marginal buyers in their homes during a recession, it prevents a flood of new inventory which might depress prices (especially since demand for housing finance should be expected to fall in a recession, although we'll know more about this later in the week when the numbers from the ABS come out).
The bottom line is that any effort by the bank or the government to keep the marginal buyer in a house he can't afford just keeps housing more expensive for everyone else. Property prices are already too high. Keeping people in homes with huge mortgages just keeps them in debt for longer.
What Australia needs is a good property price correction to correct the inflationary excess of the credit boom that pumped up prices so much in the first place. The two-decade credit boom and investment in residential property hasn't made the country wealthier if it's put hundreds of thousands of people into debt they can't repay. It's made the country poorer.
And don't forget the unintended consequences. So far, the mortgage moratorium applies only to the Big Four and their customers. Smaller banks, building societies, and credit unions aren't part of the plan yet. Will this cause an exodus of borrowers from these smaller firms? Will they refinance with the Big Four in order to have access to the leniency terms?
Who knows? But it certainly can't hurt business for the Big Four. They manage to grow their loan book at the expense of smaller non-traditional firms. This might not work out exactly the way they plan, though.
Many of these smaller firms are the ones extending credit to marginal first home buyers. So perhaps the banks will end up bringing on to their balance sheet the single riskiest mortgage assets in the Aussie market. Keep the subprime plague at bay from the front door, and open up the back door for a house warming party. Good plan!"
Dan Denning
for The Daily Reckoning Australia
-------------------------------------------
Steve Keen has a whole lot more to say on this in Lies, Damn lies and Housing Statistics
A quick edit to add here - the above chart shows the price of rent V repayments in a range of 4 to 7%, the last time I "owned" a house the interest rate shot up to 18% - Consider yourself warned.
------------------------------------------------------
Some interesting thoughts from Dan Denning at The Daily Reckoning
..."Now, about the property market. There is a new claim that rising unemployment is a big threat not just to home owners, but also renters. "If unemployment rises to nine per cent next year, as many economists predict, the number of tenants facing eviction rises to 216,000 nationally," reports the Sunday Telegraph, citing a report by Fujitsu Consulting.
We have no idea who these guys at Fujitsu are. But they are definitely flying their housing crash/rental crisis flag on a regular basis. In this case, the logic of the argument seems sound. Rental vacancies are low. Landlords have to pay mortgages on properties and know there are plenty of other tenants around. The squeeze begins.
Over the weekend, the Federal government stepped in to try and relieve the squeeze, but only for mortgage owners. It amounts to the construction of a mortgage prison for the unemployed, if you ask us. And it's not exactly new. The Prime Minister has taken credit for a move announced by Commonwealth Bank chief Ralph Norris three weeks earlier. That move allows mortgage holders who've lost their job to defer payments on the mortgage for up to twelve months.
So what's the story? Well, the short story is that his move keeps Australian house prices high and more Australians in mortgage debt for longer.
Don't get us wrong. What the bank and its customers choose to agree to is between them. That's the spirit of capitalism! Voluntary exchange, enforceable contract, no compulsion or coercion. You signs your mortgage and you pays your money. But have you ever known a bank to do something out of the kindness of its heart?
Banks don't want to foreclose on a homeowner. It's expensive. And the bank doesn't want to own the home outright anyway. That's complicated. It has to then carry it on the balance sheet and value it while it tries to resell it.
The bank would rather keep you in the home, where you think you own it. And most importantly it wants to keep you paying on the mortgage. The longer you're in debt, slaving away at the mortgage, the more regular bank earnings will be (which isn't so bad if you're a shareholder collecting dividends.)
In its current form, the various banks' plans allow mortgage owners to either capitalise interest or choose an interest-only option. Capitalising the interest means the value of the monthly interest payment is added to the principal. The loan grows larger over time. This threatens to put the mortgage owner in negative equity.
The interest only option is more likely. Hmm. Interest-only mortgages. Sound familiar? The mortgage owner doesn't pay down the principal at all for up to twelve months. Blah blah blah. We could go on with the details. But you see the basic problem.
This is a move designed to keep people in their homes because it "feels" bad when people lose their homes. We're certainly not making light of it. It does feel bad. And once you get beyond how you feel about it, it IS bad. But policy made to make people feel better doesn't do anyone a real financial favour.
The problem is that there are already too many people in Australia who shouldn't, financially speaking, have mortgages at all. They have not prepared for rising interest rates or the possibility of a job loss, both of which can throw the worst-laid housing plans into complete disarray. Rates may be cut tomorrow by the RBA. But joblessness is definitely on the rise.
This is also the banks trying to prop up property prices to support their own loan books. By keeping marginal buyers in their homes during a recession, it prevents a flood of new inventory which might depress prices (especially since demand for housing finance should be expected to fall in a recession, although we'll know more about this later in the week when the numbers from the ABS come out).
The bottom line is that any effort by the bank or the government to keep the marginal buyer in a house he can't afford just keeps housing more expensive for everyone else. Property prices are already too high. Keeping people in homes with huge mortgages just keeps them in debt for longer.
What Australia needs is a good property price correction to correct the inflationary excess of the credit boom that pumped up prices so much in the first place. The two-decade credit boom and investment in residential property hasn't made the country wealthier if it's put hundreds of thousands of people into debt they can't repay. It's made the country poorer.
And don't forget the unintended consequences. So far, the mortgage moratorium applies only to the Big Four and their customers. Smaller banks, building societies, and credit unions aren't part of the plan yet. Will this cause an exodus of borrowers from these smaller firms? Will they refinance with the Big Four in order to have access to the leniency terms?
Who knows? But it certainly can't hurt business for the Big Four. They manage to grow their loan book at the expense of smaller non-traditional firms. This might not work out exactly the way they plan, though.
Many of these smaller firms are the ones extending credit to marginal first home buyers. So perhaps the banks will end up bringing on to their balance sheet the single riskiest mortgage assets in the Aussie market. Keep the subprime plague at bay from the front door, and open up the back door for a house warming party. Good plan!"
Dan Denning
for The Daily Reckoning Australia
-------------------------------------------
Steve Keen has a whole lot more to say on this in Lies, Damn lies and Housing Statistics
Sunday, 5 April 2009
Australian gas producers - a pictorial history
Producer gas vehicles on display at the rear of Melbourne's Exhibition Building
Melbourne Butter Supply, powered by a Jackson gas producer
Bread delivery van with Jackson gas producer
Herald newspaper delivery van
Schweppes soft drink delivery truck 1940
Herbert Adams pie van showing Jackson gas producer
Melbourne Butter Supply, powered by a Jackson gas producer
Bread delivery van with Jackson gas producer
Herald newspaper delivery van
Schweppes soft drink delivery truck 1940
Herbert Adams pie van showing Jackson gas producer
Wednesday, 1 April 2009
Collapsing forward
Collapse Forward
by Alex Steffen at World Changing
It's reasonable to worry about collapse these days. From resource peaks to food scarcity, financial meltdowns to climate change, the news seems uniformly ominous.
We certainly could blow it badly enough to trigger irrecoverable collapse (for instance, by triggering climate tipping points), but I'm dubious that most of the collapses we fear will in fact occur, or, even if they occur, that they will last as long or be quite as catastrophic as we think.
That doesn't mean that big shake-ups aren't coming. They are. The question is, how do communities and regions prepare themselves to sail as gracefully through that turbulence as possible?
One possible answer: prepare to collapse forward (Jer prefers "collapsing upwards").
Collapsing forward means investing now in solutions that will aid the functioning of the current system of doing things, withstand its collapse and soften its impact, and provide constituent parts for a better replacement system. Our goal should always been to avoid collapses in general, but where we see them coming, our goal should be to collapse as intelligently as possible.
Industrial-age water supply and drainage systems, for instance, are already inclined to break, and climate change is going to quickly steepen that inclination. Water conservation, rainwater harvesting, graywater reuse, green infrastructure: all of these ease the burden on the present system, lessening the likelihood of catastrophic collapse, while also providing pieces of what might one day become a new, more sensible water system. Employing them could allow the water system to collapse forward when it goes, becoming a more sustainable version of itself.
by Alex Steffen at World Changing
It's reasonable to worry about collapse these days. From resource peaks to food scarcity, financial meltdowns to climate change, the news seems uniformly ominous.
We certainly could blow it badly enough to trigger irrecoverable collapse (for instance, by triggering climate tipping points), but I'm dubious that most of the collapses we fear will in fact occur, or, even if they occur, that they will last as long or be quite as catastrophic as we think.
That doesn't mean that big shake-ups aren't coming. They are. The question is, how do communities and regions prepare themselves to sail as gracefully through that turbulence as possible?
One possible answer: prepare to collapse forward (Jer prefers "collapsing upwards").
Collapsing forward means investing now in solutions that will aid the functioning of the current system of doing things, withstand its collapse and soften its impact, and provide constituent parts for a better replacement system. Our goal should always been to avoid collapses in general, but where we see them coming, our goal should be to collapse as intelligently as possible.
Industrial-age water supply and drainage systems, for instance, are already inclined to break, and climate change is going to quickly steepen that inclination. Water conservation, rainwater harvesting, graywater reuse, green infrastructure: all of these ease the burden on the present system, lessening the likelihood of catastrophic collapse, while also providing pieces of what might one day become a new, more sensible water system. Employing them could allow the water system to collapse forward when it goes, becoming a more sustainable version of itself.
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