Relying on the Chinese economic miracle? You’ll have to have another one shortly afterwards to keep you going

Our local economic geniuses, such as Senators Terry le Sueur, Philip Ozouf  Alan Maclean and Geoff Cook, seem to rate the joys of attracting finance industry business from China/Asia. Here’s an account from the BBC of their recent (June) £20,000 trip to China, which they seemed to think was a jolly good wheeze!

They were, as the road to hell is well known to be paved with, full of good intentions because the purpose of the trip was to proactively address local unemployment, declining tax receipts and economic slowdown. What’s not to love? Fat tail risk chance!! - that’s a clever economic joke, BTW. What Le Sueur and co have just done, all bright eyed, bushy tailed and full of yuppie over-confidence, was the equivalent of going to Wall Street looking to drum up new finance business. In 1929. Before October 24th…

If anyone promoting the joys of unending exponential growth (which anyone with their heads screwed on should realise is a sure recipe for disaster) directs you to look at the Chinese economic “miracle” to back up their ideology, consider that it is always brightest before the storm.

Perhaps the following might be the proverbial “cloud no bigger than a man’s hand” that foreshadows that storm.

A US hedge fund manager has just (November 2010) launched a fund (Corriente advisors) that bets on the imminent implosion of the Chinese economy - click for link to Telegraph article.

Most of the Chinese GDP is in fact spending on building infrastructure such as new cities, airports etc. This article from the New York Times (July 6th) lays the true nature of the “miracle” bare. With all the apparent success of someone with access to a huge credit line that enabled buying fast cars and foreign holidays, jewellery and mansions just before the bills came in and their house of cards collapsed, Chinese municipalities have taken out gigantic debt obligations, kept discretely off their balance sheets using arcane financial instruments.

As municipal projects play out across China, spending on so-called fixed-asset investment — a crucial measure of building that is heavily weighted toward government and real estate projects — is now equal to nearly 70% of the nation’s GDP. It is a ratio that no other large nation has approached in modern times. In absolute terms, it’s an Armageddon amount that, as far as I am aware, the world has never seen before.

How might things start to collapse? The collateral for many loans is local land valued at lofty prices that would collapse if China’s real estate bubble burst. As an example, in Wuhan - China’s ninth-largest city - land prices have tripled in the last decade. But the land is only highly valued because there is an expectation that there will always be new building projects to initiate. It is widely documented that there are shopping malls and even whole cities that are virtually empty, with no-one to live in them or use them. Click here for the ghost cities of China. Clearly one of the biggest bubbles ever blown. Probably the loudest bang is due.

According to businessinsider.com the following rather mixed messages will blow your minds…

China’s dominoes of destruction

15 factoids about China that will blow your mind

15 more factoids about China that will blow your mind

When China falls, probably Australia will be the first domino (scroll down the page about half way) in the rest of the world to directly collapse. Après moi le deluge, cobber.

But no, Nick, I hear you cry with all the yuppie uber-confidence shared by our glorious leaders, surely the glass must be half full – we’ve lived our lives – we’ve built our lives - quoting this – all our friends know this is the attitude to have because we live in Jersey – we have a charmed and cushy life – nothing can puncture our happy optimistic bubble? Can it?

Sorry to burst your bubbles. Reality is starting to intrude.

 

Halloween vs the Ugly bug ball

"Come on let's crawl (gotta crawl gotta crawl)
To the ugly bug ball (to the ball to the ball)
And a happy time we'll have there, one and all - at the ugly bug ball”

Today the walls of my house are covered in ladybirds. Initially, I was pleased about this because a good population of ladybirds in the garden is free pest control for next year’s growing season (because they eat prodigious quantities of aphids etc) but then I looked closer. They all appear to be Harlequins - the highly invasive Asian species that is rapidly spreading North on the UK mainland and “out-competing” our 46 native species. We could try to kill them but, like Jason in Friday the 13th, and Michael Myers in Halloween, they will probably keep coming back undaunted.

No doubt Senators Ozouf, Le Sueur and Maclean will be pleased at this development because, to their viewpoint, increased competition is always good but their ideas, and those of their advisers, really are about as far away from “sustainable” as it is possible to imagine.

The Harlequin ladybird is putting over 1,000 species in the UK in peril, scientists have warned. In the following snippet from Radio 4, Dr Helen Roy, of the Centre for Ecology and Hydrology, discusses the danger of the "dramatic and unprecedented spread of the top predator".

EDIT: Here was an extract from a radio programme but it played automatically, which was a nuisance for anyone looking at other posts so I have removed it today (15th November 2009). If you want to hear it, then follow this link to a bbc.co.uk article about Harlequins

As the image shows, they come in multiple colour forms (Harlequins, not politicians) which can be confusing but, if you know approximately how big common ladybirds are, these are quite a lot bigger and more “domed”.

The following three paragraphs are adapted from Wikipedia.

Although native species of ladybirds are pretty benign, in North America the multicolored Asian lady beetle (=Harlequin =Harmonia axyridis), was introduced in the twentieth century to control aphids on agricultural crops. It has now become a serious household pest in some regions owing to its habit of overwintering in structures (AKA houses). It is now acquiring a pest reputation in Europe.

The first H. axyridis to be found in Jersey was located in St Catherine’s Woods in February 2007 by Tim Ransome. It is presumed that it was blown over from the French coast.

The species was first spotted in Essex in 2004 and has since become the fastest spreading alien species on record. The species probably arrived in the UK via several routes: most likely, some flew across the English Channel from France; others have been imported from Europe on flowers and vegetables, and from Canada in packing cases. Large numbers discovered at Battersea, Clapham and Chelsea implicate the Channel Tunnel rail link (Eurostar) as a route of entry.

Click the following link to a recent story in the Telegraph headlined

Harlequin ladybirds spreading through British homes

The scare aspect of this Telegraph story (about noxious smells and biting) also applies to native ladybirds, but these invaders have higher concentrations of the “reflex bleeding” chemicals and tend to overwinter in large numbers inside houses – don’t disturb them!

This story is yet another example of how simplistic application of predatory species for pest control can often go wrong. Compare the similar stories of cane toads and prickly pear cactus in Australia and many other less well known examples of what “seemed like a good idea at the time”.

Forced competition, both ecologically and economically can have very serious and unforeseen (to many) consequences. Remember that, next time you hear Philip Ozouf or Chuck Webb waxing lyrical about the benefits to prices and consumer choice of gung-ho competition.

I have said that the end result of deliberate or forced competition, taken to the limit, is an unstable “rat and cockroach” economy. That’s a reference to what happens to native species on islands when invasive rats, goats etc are introduced. Some of the ecosystems and species that Durell protects are endangered precisely because of this problem. It’s not rocket science. In a similar way, the manufacturing industries of the world are suffering an overwhelming threat because of the invasive nature of cheaply produced Chinese goods that are “out-competing” more established manufacturing infrastructures in much of the world. Outsourcing of “back office work” to low wage areas also has the same effect. It’s no good if things get incredibly cheap if no-one has a wage paying job to buy “stuff” is it?

Successful ecosystems, bio-diversity and stable economic diversity all use the same fundamental mechanisms rooted in the basic physics and logic of the Universe. Fatally flawed ideologically driven creeds like neoclassical economics, yuppy’ism and Gecko’s “greed is good, greed works” will be the death of us, or at least the extreme uncomfortableness of us…

Sustainability is not just a meeting-speak buzz word – it is survival tactics for everybody’s future.

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Well, that was all a bit depressing, so cheer up! Here’s a clip, from a simpler time, of one of the cutest songs ever! "The Ugly Bug Ball" was sung by the legendary Burl Ives, in Walt Disney's film "Summer Magic" (1963).