FHOG = FOG

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Renegade Economists Podcast 87

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As broadcast on the almighty www.3cr.org.au on Wed April 29th.

FHOG = FOG: John Poulter discusses Macquarie Bank, Postcode Swapping and the basic principles to a productive economy. Stop subsidising the wealthy with economic trickery!

Show Notes:

Anything in italics is an additional comment by us

End speculation on home buyers grant: HIA

HIA executive director Ron Silberberg has been lobbying the Government to at least retain the grant for newly-built homes.

“Our estimate is that if the Government retain the $21,000 grant for new housing and reverted to a $7,000 grant we would generate an extra 15,000 jobs in the housing industry and in manufacturing and service sectors.”

****this will push the value of new homes beyond the average first home owner, with well-to-do wage earners bidding up the price of new homes. This will push the rest of us to compete amongst the scarce old homes, forcing their prices higher too. The FHOG will be a wedge issue that will only serve to create short term jobs before the inevitable bust. The have’s and have-not’s will be on show yet again.

Landgrab deals: actually water grabs by Alex Evans

Over at ForeignPolicy.com, though, Nestle CEO Peter Brabeck-Letmathe has a different and interesting take on the issue:

The purchases weren’t about land, but water. For with the land comes the right to withdraw the water linked to it, in most countries essentially a freebie that increasingly could be the most valuable part of the deal. Estimated on the basis of one crop per year, the land purchased represents 55 to 65 cubic kilometers of embedded freshwater, an amount equal to roughly 1½ times the water held by the Hoover Dam. And, because this water has no price, the investors can take it over virtually free. It’s not quite a scenario from a James Bond movie, but the rush to lock up scarce water resources in agricultural belts is nonetheless disturbing. It suggests another food crisis might not be too far away.

In a sense, the great water grab is only prudent: Some 70 percent of all freshwater withdrawn for human use goes into agriculture, but underground aquifers are falling—in some regions by several meters per year—and rivers are running dry due to overuse. The worst problems are in some of the world’s most important agricultural areas: eastern Spain, the U.S. Great Plains, the Middle East and North Africa, and parts of Pakistan, northwest India, and northeast China. As the former head of the International Water Management Institute warned, “We could be facing annual losses equivalent to the entire grain crops of India and the U.S. combined” if current trends hold.

Music

DJ Food – Centre of the Earth
Son of a Bricklayer – Bloom
Carlos Nino – Lonely Joined by Happiness

Additional Material

Your land for my food
Well worth a listen

World’s Biggest Wind Turbine Maker Vestas Announces 1,900 Layoffs
by Michael Graham Richard, Gatineau, Canada on 04.28.09

Vestas will make a 9% cut in its work force, which is about 1,900 jobs, mostly in the UK and Denmark. Read on for more details.

In the UK, a turbine plant will close on the Isle of Wight. That’s 450 jobs.

The BBC reports:

The Danish firm blamed the headcount reduction, which represents 9% of its workforce, on market oversupply.

It came as Vestas reported a net profit of 56m euros ($73m; £50m) for the first three months of 2009, up from 33m euros for the same period last year. […]

DENMARK TO SPEND $16 BILLION TO GET PEOPLE OUT OF CARS

the Danish parliament has put all its economic stimulus eggs in one basket: transportation. $16 billion, by 2020 to improve transportation:
– high-speed intercity trains
– widen and lengthen city bike lanes.

Prospect of reaching poverty reduction targets ‘looking bleaker’

IMF warns Millennium Development Goals cactus by GFC.

It says the financial crisis will add up to 90 million to the number of people in extreme poverty and those numbers will rise further as the financial crisis deepens and developing economies weaken further.

Recent strong growth in the developing world, especially China and India, had put within reach the global target of halving the proportion of the population in extreme poverty by 2015.

But the report says that what it calls the triple punch of food, fuel and financial crises has created new risks.

Strike two for a stressed Tim Geithner – crikey
Glenn Dyer writes:

US Treasury Secretary Timothy Geithner stuffed-up the release of bank help plans in February and was then forced to hurriedly tidy up the mess and confusion.

Now the much anticipated results of the stress tests on the 19 biggest American banks, that were a key part of the help plans, has also been botched.

… the banks received their results last Friday, supposed to remain silent.

two biggest basket cases, Citigroup and Bank Of America, with reports this morning claiming BofA needs another $US70 billion in capital and Citi billions more as well.

Central banks around the world will be making sure that there’s enough liquidity around over the weekend and early next week to handle any shock.

On top of that there’s the chance of Chrysler going into bankruptcy on Thursday or Friday if its banks and other bondholders won’t agree to a debt for equity swap.

Democrats on the Waxman-Markey Fence Worried about RES, Allocations
by Stacy Morford – Apr 22nd, 2009

The usual court jesters shot off verbal fireworks as a week of hearings got underway on the Waxman-Markey climate bill, but the real attention on Capitol Hill was tuned to a few moderate Democrats who have the power to make or break the bill.

“Of course, the question of auction versus allocation still lies before us, and that is a very serious question. Some might say ‘deal breaker’ for many members.”

The auction details from the cap-and-trade portion of the bill have yet to hammered out, which has created an easy target for fiscal fear mongering among opponents. Without knowing how the money from cap-and-trade auctions would be distributed, the Congressional Budget Office can’t accurately gauge the bill’s financial impact.

However, the EPA’s analysis looked only at the cap-and-trade portion of the bill, and with so many details yet to be determined by the committee, the EPA had to make assumptions about the price of carbon ($13-17 per ton in 2015) and the percentage of revenue that would be returned to consumers (40 percent).

I.M.F. Planning to Sell Bonds to Finance New Loans

WASHINGTON — Hoping to raise money quickly for a new $500 billion emergency loan program, the International Monetary Fund is in the advanced stages of a plan to sell bonds for the first time in its history, officials for the group said Saturday.

China, for example, has only 3.78 percent of the voting power at the I.M.F. But the United States and other wealthy nations are hoping that it contributes $40 billion, or 8 percent, of the new emergency fund.

Poland, Mexico and Colombia have signed up to borrow from the program, and more countries are expected to do so as well.

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