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It is All Going to Get Better from Here...
After the year that was 2022, and the lost years of the pandemic before that, it is easy to be gloomy: the grinding conflict in Ukraine, volatile politics, climate and pollution challenges, extreme weather events, strikes, riots, cost-of-living pressures, economic uncertainty and the persistence of Covid. Oh, and the hugely over-publicized mental breakdown of some rich guy called Harry Sussex. It is all fueled by a constant negative stream of woe and selective complaining through the mainstream and social media. However, if one looks closer at the reality of what is happening, I would argue we should all be feeling a bit more positive about 2023. Inflation is Coming Down In December the US Consumer Price Index (CPI) inflation fell for a sixth consecutive month to 6.5% - that is the CPI basket is 6.5% higher than it was 12 months ago. So yes, the price of a lot of the things we all use and need are more expensive than they were, but that is down from an annualized rate of 9.1% in June 2022. The Fed is likely to need more data (unfortunately higher unemployment) before it takes its foot off the policy breaks, but markets have been cautiously cheered by the direction, regaining some of the ground lost in recent months. To have the World’s largest economy showing signs of getting inflation under control has to be good news for everyone, everywhere. Investment Assets are Undervalued And the practical side-effect of this haze of gloom that seems to have taken hold of the markets is that a lot of them look undervalued when compared with their historic multiples. The chart below, complied by my colleague Hasnain Malik , shows that some of the largest emerging economies, which were hardest hit by a strong US Dollar, supply shocks and inflation, look to be discounted compared with the multiples of previous years. Even the US, with its falling inflation and overpriced currency is negative on some metrics: Another great observation from my friend and former colleague Ashwani Mathur , is the striking similarity of current policy and market events to those of 1994 and 1995. In 1994 the Fed also felt it necessary to raise rates to stem inflation, which had started again in the wake of the recession of 1992/93 and was melting the bond markets. For a year stock markets bounced along on a mainly negative pattern, until they tilted back up as inflation fell. This is Ashwani’s analysis of the market correction of 1994 and the recovery of 1995, noting the negative coverage in the media, even in the midst of the upturn: Now compare it with the current pattern of Fed tightening and stock prices in 2022: So it would be hard to say that a recovery is definitely around the corner, but it is an interesting comparison isn’t it? For all of us it is worth discounting high level media nonsense - theirs is an entertainment business - and trying to find some credible sources of perspective to inform our thinking instead: it is out there if you look. Ukraine could be the 21st Century’s Korean War Despite the ongoing destruction, horror, and lack of a clear end-game in Ukraine, it may not actually lead to a third world war. There are striking similarities between the situation in Ukraine and the Soviet-sponsored invasion of South Korea by the communist North in 1950. At the start of Russia’s invasion of Ukraine NATO was divided and purposeless, the EU at odds with itself and US international leadership seemed frail; nearly a year on, NATO has regained its raison d’etre and will imminently be bolstered by two new members (Sweden and Finland), relationships in the EU are better than they have been for some time, the relationship between the EU and UK has improved because of the British support to Ukraine, and Japan has embraced rearmament and is working with her Western allies in the face of an increasingly assertive China. If anything the potential is for the conflict in Ukraine to create a period of international stability in its wake; very much as the Korean War did in the 1950’s. That era of stability led to a period of unrivaled economic growth, albeit also a period of global re-armament. Renewable Energy has Wind in its Sails One of the ironies of the the conflict in Ukraine is that it has accelerated the adoption of, and investment in, renewable energy in a way that 27 meetings of COP couldn’t. It is said that necessity is the mother of all invention, and certainly that is the case for much of Europe, which is scrambling to reduce its dependency on Russian natural gas. The UK was actually ahead of the game, having built some of the world’s largest offshore windfarms in the shallow and perennially windswept waters of the North Sea (the shallowest and youngest sea on Earth, only formed by flooding after the last ice age). As of the time of writing (Saturday 14th January 2023), this is the energy mix in the UK: But…. The UK has some post-Brexit challenges The fuller impacts of Brexit are now starting to be felt. As the rest of the major economies start to show at least tentative signs of recovery, the UK lags in growth and productivity and has exchanged “freedom of movement” immigration from the EU - mainly of people coming to the UK to work - for uncontrolled immigration of refugees from Africa, the Middle East and Emerging Europe (nearly 46,000 people crossed the Channel from France to the UK in small boats in 2022, the largest single component being young men from Albania) and Ukrainian refugees (of which approximately 200,000 have been given asylum in the UK). In 2022 net migration to the UK exceeded 500,000 for the first time. To put that in context, in 2015, the year before the Brexit vote, the high point of net migration was 370,000, mainly driven by an increase in immigration from the EU. Such are the shortages of qualified workers and professionals in the UK, the British Medical Association has called on the UK Government to loosen immigration rules to allow foreign doctors to work in the UK more easily: at present 48% of all trainee GP doctors in the UK require an immigration visa. Such is the mess the National Health Service is in, there have even been examples of Ukrainian refugees going back to Ukraine to avoid a wait for a doctor in the UK . With strikes across the public sector, inflation, lower growth than any other country in the G7, creaking infrastructure, higher taxes, badly run and expensive public services (in the UK we aren’t allowed to say how dreadful the NHS is, because it is immediately regarded as a criticism of our medical professionals, which it isn’t - they deserve our support - but the NHS is hugely expensive, not one thing, and has many serious organisational defects), an aging population with a disinclination or inability to work beyond 50 , and uninspiring politicians on all sides….. any recovery may feel a little slower in arriving to the UK. Be good, Everyone. Duncan We hope you find the thoughts in the Perspective Pool interesting and entertaining but please don't treat them as advice.
Jan 14, 2023 · 7 min read
Top 10 Shocking Moments of 2022
After 2 years of COVID lock-downs we were all feeling more optimistic about 2022. These are my list of most shocking moments in what turned out to be a shocking year. Wishing you all the Season’s best. Be good. Duncan 1. Russia’s Invasion of Ukraine On 24 February Russian troops mounted a full scale assault on Ukraine from multiple points on the Russian and Belorussian borders. It triggered the biggest conflict in Europe since 1945, with the most troops and territory involved, and tragically already the most causalities. With the US and NATO backing Ukraine, and Iran and (sometimes) China backing Russia, nearly a year later the destruction is still grinding on. I say the invasion was shocking, but the Western powers knew it was coming: President Putin is nothing if not consistent. Russian troops fought bloody battles in Grozny to prevent Chechnya seceding from the Russian Federation in 1999/2000; in 2008 Russia invaded Georgia and annexed South Ossetia and Abkhazia; Russia annexed Crimea in 2014, and destroyed Aleppo and other towns in Northern Syria in order to prop-up the Al Assad regime in 2016. Russia has been at war for much of President Putin’s time. 2. Europe’s Hottest Summer, Ever In the snow, wind and rain it is easy to forget that London and large parts of Western Europe had some 45c+ days in the Summer, which broke all records. Bushfires ran out of control, thousands of vulnerable people died, and crops were destroyed. One Sunday in July I was helping out at a summer fair, de-rigging a commercial stand in a field for a friend: the grass was turned to dust, and a hot wind blew great swirls in to our faces and dulled the green of the surrounding trees. We poured sweat as we worked and we were grimed in filth. It made the beautiful British countryside, which is usually so temperate and green, unpleasant to be in. We wished we were in energy-sapping and eco-unfriendly air-conditioning. Rather more significantly it damaged grain crops in Ukraine and Russia and added yet more pressure to global inflation, and once again led to destructive floods in Pakistan as glaciers melted. Another uncomfortable reminder of climate change and its multiple consequences. 3. FTX and the Crypto Implosion In some ways is is a surprise that it took so long for crypto to have a good old fashioned banking-style scandal. In November one of the two largest crypto exchanges in the world, FTX, which had been valued at $32bn not long before, imploded in a huge corporate ball of insolvent flame. The 30 year old founder and former CEO Sam Bankman-Fried, is accused of using clients funds to fuel his own trading firm, Alameda. If proved, this is the oldest trick in the book: get people to deposit or invest with you and use the money to trade on your own behalf at their cost and risk. Mr Bankman-Fried, some of his fellow executives and FTX itself also donated an extraordinary $70m to various US politicians, and Bankman-Fried was second only to George Soros in donations made to the Democratic party. It is no surprise that he swiftly became the poster boy for crypto in Washington DC, appearing as an expert in a number of Congressional hearings, typically advocating light-touch regulation for crypto. It is a sign of maturity that crypto has suffered this type of disaster; if anything bringing structured regulation to crypto - which may take time but now seems inevitable - will make it more viable to the mainstream. 4. The Reversal of Roe vs Wade by the US Supreme Court Whatever one’s belief about the rights and wrongs of the case, it was still a surprise that the US Supreme Court reversed a decision in favor of women’s rights made more than 50 years before (in 1969). In that seminal case a 25 year old single woman in Texas (anonymized at the time as “Jane Roe”, the feminine equivalent of “John Doe” which had been used in British legal actions where the defendants name was not known from as early as the 18th Century: Wade was the DA for Dallas) claimed that she should be allowed to terminate her pregnancy on the grounds that she had been raped. The original Supreme Court judgement came too late to prevent the birth of the unwanted child, but effectively gave women in the US the absolute right to abortion in the first trimester of their pregnancies; very much in line with the rest of the world’s developed economies. The recent reversal of that right in Federal law has left the US at odds with most other modernized nations and with a patchwork of different laws in different US States, and underscores the polarization of US politics and society in recent decades. 5. The Death of Queen Elizabeth II It wasn’t a shock - the late Queen was a great age - but the ending of the Elizabethan Age, with all its triumphs and tragedies felt like a real moment in history: a pivot in to a new world that will be very different from what came before. The late Queen’s husband, HRH The Duke of Edinburgh, fought with distinction in WWII, she served herself, two of her uncles were killed while serving (one in each war), and another uncle was murdered by the Provisional IRA (there are many IRA’s, as is often the case with extremists they fall out with each other regularly and easily). The Queen’s work schedule was relentless and she had limited right of reply to criticism. She died in Scotland, which seemed like an elegant reminder of the unique and positive characteristics of the United Kingdom that she vowed to defend. The 20th Century was a very different place, and HM The Queen displayed the best qualities of its inhabitants: selflessness, care for others, stoicism, physical and moral bravery, aversion to showing off or self-obsession and a sense of humor. None of these qualities are in fashion at the moment. 6. The Assassination of Shinzo Abe Japan’s former Prime Minster, the great modernizer Shinzo Abe, was assassinated on 8 July. Abe was credited with kick-starting Japan out of stagflation with reflationary policies combined with greater government spending and economic competitiveness (the so-called “Abenomics”). He was also wary of a resurgent China and urged Japan’s rearmament as a priority, in a rejection of constitutionally imposed post-War pacifism. His policies led to Japan having its first operational aircraft carrier since the end of the Second World War, JS Izumo, which earlier this year conducted exercises with US F-35B’s roaring on and off its deck. With China in the ascendancy history will likely see him as a leader of vision and master of grand strategy. 7. Liz Truss Becomes UK Prime Minister Yes, a truly WTF moment for anyone who had ever seen or met hapless Liz Truss, or heard her speaking about cheese markets. We are now all used to seeing politicians thrown in to jobs they are wholly unqualified to do (that’s how democracy works for career politicians), but Ms Truss was an Olympian example of unsuitability for high public office. A senior civil servant contact of mine described her - before she was even a candidate for PM - as having the reputation within Whitehall of being an “unguided missile”: how true that proved to be. Thankfully Ms Truss - who created economic chaos within weeks - lasted less time in office than the duration of a wet lettuce; literally. 8. Inflation: Central Banks Asleep at the Wheel A year ago the US Federal Reserve, the European Central Bank and the Bank of England were all telling us that inflation was a brief and transitory side effect of two years of Covid lockdowns. They raised interest rates from their historically low levels gingerly and slowly as a result, confident that it would all be over soon. Accelerated by the conflict in Ukraine inflation rapidly rose across nearly all economies in to double digits for the first time in decades. The central bankers still didn’t react. Eventually panic set in as central bankers realized that they had to do something more radical in May 2022: the Fed started raising 0.75% each month until December, where the rate was raised by only 0.5% to 4.5% (up from 0.25% a year ago). My amateur prediction is that the Fed - which everyone else has to follow - will only really stop raising interest rates when it sees a painful and significant increase in unemployment. 2023 could be rough. 9. The Soviet Union’s Last General Secretary Those of us who lived through any part of the Cold War era will remember the world changing impact of the last Soviet leader, Mikhail Gorbachev, who died at the age of 91. Before his premiership the USSR was hostile and fearsome nuclear power, able to destroy the World, from the other side of the Iron Curtain and engaged in dangerous espionage and wars via proxies. By the end of Gorbachev’s time the Soviet Union and its communism-in-one-country experiment was ended, the Cold War was over and such was the sense of the significance that American thinker Francis Fukuyama predicted that liberal, enlightened capitalism was now accepted as the only really fair way to run society - what he described as the “end of history”. We all felt that Armageddon had been averted. Although much of what Gorbachev achieved has now been undone by the chaos of the USSR’s collapse in the 1990’s and the actions of President Putin, he still ranks as a great man to me. and finally 10. Nuclear Fusion Works! Sort of. Albert Einstein originally predicted that mass can be converted in to energy (the famous equation E=mc2); either by the division of atomic particles (nuclear fission: think nuclear powerstations and bombs) or the combination of two particles (nuclear fusion: the creation of a new element: think the power that runs the sun and stars). We know the former has been possible on Earth, for good and ill, but nobody has successfully managed the latter. That is until last week: scientists at the California based National Ignition Facility (NIF) claimed that they have generated more energy by combining atomic nuclei than the energy used to power the process. It does sound exciting and a potential near-limitless and pollution-free solution to the world’s energy problems. However, as I understand it the NIF team had to heat up two hydrogen isotopes (deuterium and tritium) to a temperature of 3 million degrees Kelvin with 192 massive lasers to encourage them to meld in to a single atom of helium, thereby releasing one neutron and an some new energy. 3 million Kelvin is nearly 3 million degrees Centigrade, which is hotter than the surface of the sun (in fact it is like the warmer parts of the sun, but not the maximum high pressure center which could be as much as 27 million C). Anyway, it is quite hot, and most things on earth (like potential fusion power stations) tend to melt or vaporize if you subject them to that sort of heat. And, if you include the energy needed to heat up the 192 lasers, the whole equation then becomes energy negative. It is an interesting breakthrough but given some of the obvious practical issues fusion power seems some way off. We should stick to wind, wave and solar for the time being, perhaps.
Dec 20, 2022 · 10 min read
Football, the US Defends Europe, and Emerging Markets comeback
An Epic Struggle Between Nations No, not the conflict in Ukraine, the FIFA World Cup: even those trying to avoid the soccer will have noticed that the tournament is on, and that it has been riven by scandal and dissent. FIFA the world soccer governing body has a (shall we say) “patchy” record when it comes to corruption allegations: in 2015 the US Department of Justice charged nine of its officials and five of its corporate directors with “racketeering, conspiracy and corruption”, resulting in a number of bans, fines and in one case a 9 year prison sentence. It is perhaps no wonder that skepticism has surrounded FIFA’s choice of Qatar, which is not a famous footballing nation, has limited infrastructure for visiting fans, unplayable temperatures for most of the year, and imposes strict legal constraints on what most societies regard as human rights and personal liberties (homosexuality, alcohol and adultery are all illegal: even displays of empathy with human diversity, such as rainbow symbols, have been banned by the event organizers). Although official numbers are hard to find the UK’s Guardian newspaper claimed as long as a year ago that 6,500 foreign laborers had died during the construction of venues for the 2022 World Cup in Qatar, including many from heat related injuries. This was hotly contested by Hassan Al Thawadi, the secretary general of Qatar's Supreme Committee for Delivery and Legacy. In a recent interview with controversial British journalist Piers Morgan , Mr Al Thawadi said only between “400 and 500” workers had actually died. That is around one immigrant worker each week for ten years. Oh, that is OK then; I was beginning to worry that the whole event was a cesspit of corruption, hypocrisy and exploitation. European Defense is Subsidized by the USA Finnish Prime Minister Sanna Marin this week pointed out the obvious to attendees of an event at Sydney based think-tank Lowy Institute - that Europe is still reliant on the US for its collective defense. At the start of the year the US European Command (EUCOM) had approximately 65,000 troops in Europe; chiefly in Germany, the UK, Italy and Poland. In March EUCOM said US forces had surged to 100,000 in the region, in response to Russia’s invasion of Ukraine. To put that in to context, the whole regular British Army that is fully trained to do its job numbered 77,000 as at January this year. Not all of those troops would be deployable due to injuries, training duties and standing obligations, so the US deploying 100,000 of its people to Europe is a lot: more even than the US has stationed in Japan and South Korea . The US is by far and a way the largest financial and military donor to Ukraine in its existential conflict with Russia, having so far pledged more than $30bn in support . Anyone in Europe that does not realize that their freedom since 1945 has been broadly underwritten by the US (and to a lesser extent the UK because of its extant “at sea” nuclear deterrent), is - as Prime Minister Marin pointed out - thinking about the issue incorrectly. Emerging Markets Come Back Another thing that has happened since 1945 is that the economic and demographic power of countries outside Europe and North America has risen enormously. I have written before about this shift in power politics and economics, with the West ruling for now, but only just . Over recent decades many countries have started to borrow from international investors by issuing bonds in hard currency (in most cases US Dollars). The effects of global inflation, rising US interest rates, supply shocks, the strong Dollar (and therefore weak local currencies) has made much of the last year very negative for the developing economies. However, speaking with people in the market it seems that the smart money has made money in “EM” debt this year: lending to the right countries and companies has proved to be a success for all involved, and even the hard-pressed sovereign bond market showed a strong return to positive territory in November. I am an optimist, and despite the gloomy news cycle, I would like to think that not many things need to go right for the global economy to get back in a positive mode: US inflation coming down, China abandoning the excessive harshness of its Zero Covid policy, and even the start of serious attempts to stop the conflict in Ukraine. Let’s all hope. Be good, everybody. Duncan Subscribe to The Perspective Pool by entering your email at https://the-perspective-pool.scriber.to/ , to receive alerts and bonus content!
Dec 6, 2022 · 4 min read
The Chess Pieces are Moving
Risks and Opportunities for Russia and Ukraine As the weather in Ukraine deteriorates the options for significant military maneuver reduce. The first full winter of the conflict will give both sides an opportunity to regroup, and create a lull in the good news/bad news cycle from the battlefield, and chance to train and equip troops, organize supply lines and prepare defensive positions. It is also likely to bring a grim winter of power-cuts to large swathes of the Ukrainian population, as Russia continues to destroy Ukraine’s infrastructure. It will also be grim for the troops dug in and under bombardment. These military realities will have political effects: The winter lull may therefore open an opportunity for the geopolitical forces behind the main protagonists to encourage some sort of route to a ceasefire, or at least start the process. Economic recovery in the US and China - early sings of which are visible - will only increase that pressure. Once that opportunity is gone, and Spring allows a big upswing in offensive military action, the game will change again and resolution will once again be harder. Zelensky makes his first mistake The first signs of strain became visible between the “collective West”, which is funding and arming Ukraine, and Ukraine’s President Zelensky last week, with the Ukrainian President insisting that the missiles that fell in Poland, killing two people on 16 November were Russian, and that Articles 4 and 5 of the NATO charter should be invoked (i.e.for NATO to collectively defend Poland, one of its members, and implicitly to go on to declare war on Russia). When the news of the missile strike broke, it caused a flurry of action among world leaders who had just arrived at the G20 in Bali, Indonesia. It seems that after a few early hours calls the leaders of the largest military powers - including President Biden and Prime Minister Sunak - became much more relaxed and a crisis seemed to have been averted. NATO, the US and Poland had quickly investigated and concluded that the missiles were very likely Ukrainian, and the event a horrible accident. President Zelensky, however, carried on with his insistence that it was a deliberately targeted strike by Russia, much to the frustration of Ukraine’s foreign allies, and was consequently met with an unofficial rebuke from the various powers that be. This comes as a reminder that President Zelensky is an an inexperienced politician, who’s government was incredibly unpopular before Russia’s invasion. Before that invasion there was a civil war bubbling for 8 years in the Dombas, with Ukrainian forces engaged against pro-Russian separatists (and allegedly Russian special forces), which Zelensky did not or could not stop. Ukraine’s President is a great orator, but exhorts to Ukraine’s international supporters over Zoom rather than in person; for a number of reasons he obviously believes it would be unwise for him to leave Ukraine. This is unusual for a wartime leader in the West (think of the extensive wartime travels of British Prime Minister Winston Churchill when he was seeking international support for the war against Germany in the early 1940’s). It tells us something about Ukraine’s internal politics. Ukraine is a complex polity, with a number of powerful factions within it. As someone said to me recently, President Zelensky is “an actor, turned actor”. Either way, he has just made his first diplomatic mistake by irritating his allies as a degree of Ukraine-fatigue sets in. Biden and Xi go dating On 14 November President Biden met President Xi in Bali, at the G20, for what appeared to be a positive discussion: the official White House “read out” of the meeting said that President Biden had made it clear to President Xi that: “The United States will continue to compete vigorously with the PRC” ……but that “ this competition should not veer in to conflict ”, maintaining that both sides have a “ responsibility” to prevent such a conflict occurring. The other main area of agreement was that Russia’s implicit threat to use nuclear weapons was unacceptable. By all accounts this was a much friendlier entente than could have been expected earlier in the year. President Xi, now anointed in his unique third term as leader of the Communist Party has clearly decided that the partnership “without limits” between Russia and China declared in February - mere days before the invasion of Ukraine - does in fact have some limits, particularly if Russia makes an embarrassing hash of its attempts to recover its former empire. Global economy, growing Chinese power, a longer term plan being required to reunify China (i.e. PRC to re-absorb Taiwan) are all more important. Before meeting President Biden, President Xi received a visit from German Chancellor Olaf Sholz, who is clearly an economic pragmatist keen to expand economic ties with China. As recently as the summer President Putin intended to be at the G20 in Bali, but such has been the military and associated PR failure of Russia’s “special military operation” that he is both in risk of being ostracized by his erstwhile friends and (in public at least), and is perhaps nervous of leaving the Kremlin for too long. Politics for Russian and Ukrainian leaders has always been a dangerous sport; the longer this goes on the more one would think it could end badly for at least one of the current incumbents. Be good, everybody. Duncan If you enjoyed The Perspective Pool please share it! It is free to subscribe.
Nov 22, 2022 · 6 min read
Permacrisis, Climate and Political Risk
Permacrisis - not a 1980’s hairstyle gone wrong “Permacrisis” has entered the Collins English Dictionary as the word of 2022, defined as: Certainly 2022 so far has had its moments: Russia’s invasion of Ukraine, the revitalized NATO engaged in a proxy war, a European energy crisis, global inflation, market turmoil, threats by Russia to use battlefield nuclear weapons, the end of Finnish and Swedish military neutrality, China rattling its sabre at Taiwan, the re-militarization of Japan, the resurgence of radical politics with the re-election of Hungary’s Victor Orban, the strong run of Marine Le Pen in the French presidential election, the rise of Italy’s Northern League and Brothers of Italy, and the return of former prisoner Lula da Silva in Brazil. That is before one thinks on the political chaos in the UK, and entrenched and increasingly toxic political and social conflicts within the US. This is what we would euphemistically call “political risk”; the risk that unsuitable people end up in leadership positions doing the wrong things. And there is a lot of it about. Politicians are now back in control of economics, unfortunately What marks the current era apart from what came before, and what most of us spent our lives experiencing hitherto, is that economics and investing - the value of our pensions, houses and jobs - has changed from being driven by fundamentals to being driven by politics; I hate to say it, but rather as it was in the 1930’s. Central banks are entirely distracted by fighting inflation, and have ceased providing endless liquidity via QE; as they shrink back to more limited monetary policy roles, the politicians are taking over the fiscal (tax and spend) side of the economic equation. The theory of political economy - and the various “isms” that go with it - has returned with a vengeance. All of our personal assets, wealth and future prospects are not going to be dictated by growth, efficiency, technology, saving the planet, or basic economics, but by ideologically driven politicians engaging their various personal biases: for the last 40 or 50 years politicians in the larger economies had to be regarded as broadly economically competent to be - or stay - elected. Now politicians are elected if they are going to expand the state, punish the rich, liberate business, fight authoritarianism, promote authoritarianism, end wokism, promote wokism, get Brexit done or make America Great Again. If Marx, Grotius, Hobbes, or even Keynes were still around they would each be saying “I told you so”; particularly, Marx, as he was that sort of guy. Not much COP-27 The COP-27 climate summit is being held in Egypt this week, among its key aims is the much debated 1.5c temperature limit (ie the obligation of countries to collectively limit the global average temperature rise to no more than 1.5c above pre-industrial levels). There are a few things wrong with this: first, although there is a surprising amount of consensus among scientists and official bodies who measure land and sea temperatures (including NASA, The UK’s Met Office, and the US National Oceanic and Atmospheric Administration) it is hard to obtain very accurate data from before 1850; indicative data can be gleaned through sources as diverse as farming records, soil samples, tree growth rings, wildlife records and sea levels; long-term accuracy may be hard but it is clear the planet is warming up after a cooler period between the 14th and 18th Centuries, but by exactly how much compared with before 1850 is not clear. This makes some of the debates about reparations (in COP speak “Loss and Damage”) for who caused what pollution when, spurious, albeit it may not change the outcome: there are very valid reasons to financially support populations in the Global South from the consequences of pollution caused by the Global North (which includes China of course). The second thing that isn’t much discussed is that an average global increase of what sounds like a modest 1.5c actually equates to very extreme increases in some places, notably the Arctic, which has seen average temperatures increase by 6c in recent decades (as a result of the so-called “Arctic Amplification” where carbon dioxide concentrates at higher latitudes). Even notoriously predictable London (where, as an American friend once said to me, the temperature never goes lower than 4c or higher than 23c, and if it does there is a crisis) had temperatures in excess of 42c this year. The planet may warm up and cool down at fairly regular intervals, but it is usually the result of volcanic activity and solar radiation. Generally speaking if solar radiation drops and volcanic activity goes up, the planet gets cooler; and vice versa (sulphur dioxide from volcanoes reflects solar radiation). This time global warming is driven not by those processes but by human produced carbon dioxide and other greenhouse gasses, which work like a pane of glass, letting sunlight in but preventing heat from escaping. The great physicist Carl Sagan pointed this out in the 1980’s . Let’s hope the sun doesn’t have a long spell of increased solar radiation any time soon. COP-27 will be fraught with politics; the US and China, as the world’s biggest economies and largest polluters in absolute terms are still not in compliance with their targets: in fact China is doing better in some respects than the US, generating 8.75mt of greenhouse gasses per capita, compared with the US 18.43mt (2018 data), albeit China’s total emissions keep going up while the US is falling. It is rather alarming to think that the original UN climate change treaty was signed in 1992 ; it has taken 30 years - and 27 conferences - for it to be taken more seriously by politicians and the public at large. US Mid-terms; Divisions and Lame Ducks As I write the US goes to the polls in the mid-term elections; mainly for the House of Representatives, although some Senate seats are also being contested. It is predicted that the Democrats will lose control of the House, to a resurgent Republican party, which would make it hard for President Biden to get any more legislation through in the remainder of his term. A Republican dominated Congress may also seek to impeach President Biden; some senior Republicans feel it is the wrong thing to do, but the fact it is even being suggested as a possibility is a sign of the political times. The Republicans have also indicated that their support for Ukraine would be more limited than that provided so far; President Biden may also have some difficult times with questions about his son Hunter Biden and his very well paid role with the Ukrainian gas company Burisma (which ended in 2019), as well as his well publicized struggle with drug addiction . The US economy is the World’s most powerful, and with a slight increase in unemployment reported on Friday, markets flickered upwards slightly, cautiously wanting to believe that the Fed’s rate hikes are having their desired counter-inflationary effect; although a lot more data will be needed to reassure everyone that inflation is indeed under control. All else being equal the US seems destined to sail out of the economic doldrums first, and as it does so it will drag the rest of the planet’s economies with it. The only real threat to that global recovery is US political turmoil. We should all hope for benign politicians with boring and sensible views, that can be changed by new information. Wishful thinking. Be good, everybody. Duncan If you enjoyed The Perspective Pool please share it! It is free to subscribe.
Nov 8, 2022 · 7 min read