Bernard's Top 10; How Greenland is melting; NZ among the OECD's worst on environment; The global savings glut and (real) investment drought; Why NZ monetary policy is actually tightening; Clarke and Dawe

Here’s my Top 10 items from around the Internet over the last week or so. As always, we welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz

See all previous Top 10s here.

My must read is #1 because of the beautiful pictures and video. Interactive journalism at its best.

Here’s this week’s best Dilbert.

1. Click on this – Seriously. This link takes you to a brilliant piece of interactive journalism by the New York Times on how a bunch of scientists are measuring the way Greenland’s porous ice sheet is melting.

The scientists are fighting a battle with climate-change-denying politicians in Washington who want to stop them measuring what’s happening to the ice sheets.

You couldn’t make this stuff up. The chairman of the US congressional science committee, a Republican from Texas, is a climate change denier. His committee has spent more time investigating aliens than climate change. Here’s more on Lamar Smith.

2. Not such a great record – This OECD report on the Environment in 2015 ranks OECD members on various measures on the environment, including on environment taxes and recycling. New Zealand is the biggest user of landfills and has the third lowest environment taxes.

3. Here come the Millenials – This chart below shows that millenials (those born from 1980 to 2004) are already the most populous cohort in America, even more so than the baby boomers. The problem is about half of them aren’t old enough to vote, or don’t vote. They could be quite a political force once they come of age and work out they have some power.

4. The global savings glut – This chart below showing how emerging markets are still growing their savings faster than they are investing just emphasises the scale of the capital flows washing around the globe, and in particular out of emerging markets such as China and into developed markets such as New Zealand.

The blue lines are emerging market savings and investment rates and the green lines are developed market rates of savings and investment. The red lines are the global average. The gaps between the dotted lines and the hard lines effectively represent the savings glut and expains the inexorable downward pressure on short and long term interest rates.

5. Low rates everywhere else – But not nearly as low in New Zealand. This chart below is worth republishing just to show how low official interest rates are in the rest of the world. By comparison our 2.75%, which looks set to be held on Thursday, is an outlier. It’s helping to drive our currency up again.

The New Zealand dollar now stands 7.5% higher on a Trade Weighted Index basis (73) than the Reserve Bank’s forecast for September quarter (67.9) after the currency’s surge from 63 USc and 88 Australian cents at the end of September to 68 USc and 94 Australian cents this morning.

This is driven partly by expectations of looser monetary policy in Europe and China, along with a further delay to the Fed’s long-awaited hike and the Reserve Bank’s expected pause in rate cutting on Thursday. Much of the move happened after Graeme Wheeler said in his October 14 speech that he was again taking Auckland’s housing boom into account when setting interest rates and that he wanted to keep some interest rate powder dry, which was interpreted as setting a harder floor for the OCR at 2.5%.

The combination of lower interest rates overseas and the currency’s rise through October has effectively tightened monetary policy in New Zealand over the last fortnight. Yet inflation is well below the Reserve Bank’s target and unemployment is rising.

6. Temperatures ‘intolerable to humans’ – The New York Times reports on a study showing that parts of the Persian Gulf could become so hot because of climate change that they would be uninhabitable by the end of the century.

The dangerously muggy summer conditions predicted for places near the warm waters of the gulf could overwhelm the ability of the human body to reduce its temperature through sweating and ventilation. That threatens anyone without air-conditioning, including the poor, but also those who work outdoors in professions like agriculture and construction.

The paper, published in the journal Nature Climate Change, was written by Jeremy S. Pal of the department of civil engineering and environmental science at Loyola Marymount University in Los Angeles and Elfatih A. B. Eltahir of the Massachusetts Institute of Technology. Previous studies had suggested that such conditions might be reached within 200 years. But the new research, which depends on climate models that focus on regional topography and conditions, foresees a shorter timeline.

7. ‘See it as an opportunity’  – Martin Wolf is also writing about climate change at the FT, pointing out the costs of addressing the problem are relatively low and could help the world beat poverty.

The evidence is ever greater that what Professor Stern calls an “energy industrial revolution” is within our grasp. If so, the long-run economic costs of addressing climate risk could be quite modest: maybe as little as the loss of one year’s growth of consumption by 2050.

Yet the path for emissions that is needed to deliver a 50 per cent chance of limiting the increase in temperature to 2C above pre-industrial levels is also radically different from that of the past.

Hitherto, global emissions of carbon dioxide per head have risen, not fallen — despite all the global conferences — as the rapid growth of emerging economies, notably China, has swamped feeble efforts to curb emissions elsewhere. On anything like our present path the necessary declines in emissions will not occur. Humanity will have made an irreversible gamble on the chance that sceptics are, in fact, right.

Fortunately, new technological opportunities are opening up. Potential exists for a revolution in energy generation and storage, in energy savings, in transport, and in carbon capture and storage.

 

8. Booms and busts – It turns out there was an Alpaca boom that went bust and here’s the in-depth story on it via Kunc.org.

Unless alpaca wool sweaters are the next hot Christmas item, there’s little demand for what the animals produce. And because of the aggressive breeding, there’s now an abundant supply of fiber. Some alpaca owners give it away to farmers to use as mulch or sell it in bulk for cheap. Plus, Peru already has a thriving alpaca fiber industry, where it’s produced on a much larger scale compared to the U.S.

“The fundamental fact is that in this country, an alpaca, as an asset, an income-producing asset, is worthless. It has no value at all,” Sexton says. “The product it produces, 6 to 8 pounds of alpaca fiber a year, is worth less than what it costs to feed, medicate, and house the animal.”

9. The Human cost of cheap chicken – Oxfam America has written a report documenting the extremely low wages and eight-hours-without-a-break shifts for migrants and other workers in America’s chicken industry. It means some wear adult nappies while working on the production lines because they’re not allowed to take toilet breaks. No more chicken McNuggets for me…

10. Totally Clarke and Dawe gives Australian Immigration Minister Peter Dutton a hard time, which is fair enough. And Scott Morrison.