by frog
SolveClimate.com is asking why the American government will step to in to nationalise failing companies like AIG, but it won’t buy profitable companies before they go belly up? And it’s got a suggestion. Why not buy ExxonMobil? (After all it worked for Hugo Chavez!)
In the current crisis in the financial markets, even free market enthusiasts have had to recognize the string of bailouts and interventions in the financial sector for what it is, “Wall Street socialism.” We’re already in for a really, really big dime, let us taxpayers make some windfall money for a change.
And then what should we do with one of the world’ worst polluters, once we own it:
Once the company is nationalized, what do we do with it? By referendum or after debate by elected representatives we could liquidate its assets, sell off its chemical division, and its real estate and top off our strategic petroleum reserve, which has a capacity of 727 million barrels. Exxon Mobil’s own worldwide reserves total 1.6 billion. At least, we’d be taking on usable oil, not bad debt.
I can’t see the present US administration taking this course of action, or even the next one, whichever party it may be. So maybe that leaves the door open for New Zealand to buy ExxonMobil. Could we afford it? Does anyone want to donate some pocket money?
Image credit: Mister Bisson
Published in Economy, Work, & Welfare | Environment & Resource Management by frog on Wed, September 24th, 2008
Tags: AIG, ExxonMobil, frogblog, green party, nationalise, new zealand, socialism, USA
on the trolls and those who are unable to keep on topic
Free markets and capitalism are NOT the Real Culprits In This Meltdown.
Without the housing bubble there would have been no financial bubble – or it would have been much more niche specific and would have done far less damage.
Every product bubble (from Tulipmania on) has been closely followed by a financial bubble to finance the traders in the tulips, or dot.coms or houses.
So if you want to blame the real bubble-makers blame the Smart Growth planners – and of course Al Gore who made the attack on urban sprawl a major plank of his Presidential campaign.
Al seems to be attracted to “disasters?.
And the next financial bubble will be financing investments in carbon trading, tidal power, and renewables etc.
Al will have much to answer for.
(read my essays and NBR columns on the “Double Bubble? at the Centre web page http://www.rmastudies.org.nz/).
We have to remember that the double-bubble has struck in places far from the peculiar circumstances of Bill Clinton’s multiculturalism and “housing the poor” which drove some of the sub-prime lending. The common thread, linking inflated housing markets and financial collapses in markets all over the world, is the planning fad called Smart Growth, and the associated over-regulation of supply of land.
This is not the collapse of capitalism or an example of market-failure.
It is yet another catastrophic outcome of central planning.
Unfortunately, heavy handed government interventions in markets create a demand for further interventions – witness the Muldoon years when an artificially high fixed dollar forced government to introduce all manner of export subsidies etc.
How does Exxon actually affect the satellites which show no warming since 1998. Their executives must be smarter than I thought.
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Dear Owen. Ever the apologist.
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Has anybody noticed how idealogues sound exactly the same regardless of their ideologies?
When capitalism goes wrong, we get all sorts of devotees saying how the problem was it wasn’t capitalist enough, when the Soviet Union got into trouble, Marxists went on about how it because it wasn’t Marxist enough. Religous prophets blame the failure of their prohecies on their devotees not being devoted enough…
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Its not “Wall Street socialism” – its American Communism. All that stuff that Big Bro reminds us that Helen shouldn’t do – George W went out and actually did it!
Its a good job McCarthy is well dead.
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But hyperbole is alive and well at least.
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Who can remember 1974? The death of Norman Kirk, the Watergate impeachment hearings, the resignation of President Nixon, and the Wall Street Shuffle.
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I would argue that it is more a case of American Fascism. The corporation is the state and the state is the corporation. Hell would freeze over before the
US would veer left, but fascism has been well along the way for some time now…
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Good point, astarte.
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dbuckley Says:
September 24th, 2008 at 11:39 am
> Its not “Wall Street socialism? – its American Communism.
It’s not communism. Communism gives to everyone ‘according to their needs’. The US system only gives to large corporations ‘according to their needs’.
One could consistently bail out bankrupt families and bankrupt corporations, or let both crash and burn. But the US government has been bailing out the bankrupt corporations but not the bankrupt families.
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“the planning fad called Smart Growth, and the associated over-regulation of supply of land”
There’s something to be said for rejecting regulation over private land. In a deregulated environment, we can spike just about every large scale development, such as new motorways, by quietly buying a few strategically placed blocks of land (they only need to be a square metre or so) and then refusing to sell at any price.
This has two effects – first, by requiring the motorway or whatever, to be routed around our silly little blocks of land, construction costs vastly increase and benefits decrease. Secondly, once news gets out that a few greenies have paid thousands of dollars for a square metre of land, landowners’ price expectations will increase, making purchases of land by developers almost impossible.
If development does go ahead we can sue the pants of the developer for any impacts on our land and lifestyle.
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Look as I have said so many times the US isn’t or hasn’t been a capitialist country for a very very long time. The US is a Fascist State, I mean come on look at all the Fascist things it has done. Note the likes of GWB would actually like the US to have an economic collapse, so they can pick the mexican illegal immigrants as a scape goat, round them all up and put them in internment camps, then all the out of work poor can be put into the army and they can march around the globe taking what ever they want.
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Very smart thinking Sam on using private property rights to stop a motorway. Of course thanks to the other greens who favour a powerful central government your plan doesn’t work, but if you want someone to blame then Toad’s your man.
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Owen McShane Said:
It does depend on how you define “Free Markets” and “Capitalism”.
But it is very hard to argue that the current melt down was not the result of under regulation of financial markets, investment banks and hedge funds.
The contribution of the housing bubble (how was that not caused by free market activities?) was to under write the creation of a huge industry in CDOs built from mortgages.
To cut a long story short the unregulated nature of the investment banking industry led to huge amounts of leveraged being used to magnify the small profits available to the writers of CDOs. It only took a tiny drop in profit, (less than 1% of the mortgages were “sub-prime”) to turn that small profit into a small loss. The leverage that was used to make the small profits into fat bonus earning profits made the small losses catastrophic.
The quid pro quo for rescuing the Wall St. bankers must be greater regulation and over site.
On the good side it does expose National and ACT’s economic policies for the stupid madness they are. Every body with any brains at all can read the writing on the wall and are decreasing leverage. National would have us increase leverage and partner with just the sort of private sector firms that have been shown to be so unable to accurately asses risk.
peace
W
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Bliss the housing bubble was caused by the US Federal reserve lower interest rates to 1% NOT THE BLOODY FREE MARKET.
And everything you say in your post is utter rubbish and complete lies.
Please do us all a favour and stop lying.
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Seems to me that this is a direct result of de-regulation and the resultant inability of regulators to enforce transparent financial accounting. The result being that no-one trusts anyone, because EVERYONE is cooking the books and could go broke or be forcibly nationalized at any second. The scary reality is that even 700B is a drop in the bucket, it will not stop the unravelling- there is just too much bad debt, and the underlying reasons for the present situation have not changed.
The awesome irony is that the US public, after 25 years of indoctrination of “creative destruction” and “personal responsibility” and other such crap is reciting these same phrases back at the politicians! Hoist by their own petard?
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OK lets start with some education.
Show of hands
What is the Federal Reserve?
We need to start any by understanding what exactly this beast is and what it does and how it effects the US economy.
I would suggest before posting in this thread that you have at least read
“The Creature from Jekyll island”
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I do not know how the frog reads an “apologist” into what I wrote.
I was simply challenging the notion that the recent double bubble in the housing and house financing market was caused by free markets – both have been the subject of massive state interventions and where those have been lightest there has been less damage and vice versa.
And I agree the behaviour of late has been much more fascist than socialists as I have been documenting in such essays as “The Rise of the Urban Romantics”.
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turnip28 spluttered
So those people pushing up the value of housing were forced by the evil Fed. Hmmm….
The 1% federal target rate did underpin the bubble, but it was the action of the herd that created it. Dispute the blustering and swearing it does come down to definitions. If housing were regulated (I do not advocate strict regulation of housing) there would be no free market in housing (which there is) and no bubble.
Really? How? Do you think the leverage used by investment banks (and hedge funds) was prudent?
Do you think that 2009 is going to be a good year for debt driven projects?
Do you think that keen PPP partners (like Macquarrie Bank, who have a 5% spread on their credit default swaps currently according to Bloomberg) are good managers of risk?
I would be interested in your analysis, not interested in your invective!
peace
W
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The 1% federal target rate was a greenspan put.
He took the fed rate to 1% in order to stop the US from sliding into a recesion after the dot.com bubble exploded. This sent the housing market into a frenzy
The federal reserve expands and contracts the money supply which creates the boom and bust economy of the US.
for the last 20 years EVERYONE has known that there is no risk in the market because the FED will always bail you out. That is the problem people will gamble if they know there is no risk involved. How do you get good risk management back into the fold. Its pretty simple really remove the FED, remove the backstop which is holding the whole thing up, you don’t need more regulation all you need is to STOP BAILING companies out. The FED has been doing it for the last 25 years. Most wall street guys don’t know what its like to trade in a market where you actually have to do good risk management.
2009 is going to be a bad year as is 2010, hell if the bailouts go forward in their present form they will kill the US dollar send OIL & Gold through the roof and pretty much end the US & world economy. Inflation is running very very high here in the states and if the fed prints all that extra money then its going to be even higher.
This idea that prices must not decline is absurd, nobody is buying houses in the US because they are overpriced, well then let the free market take its course, nobody is going to be out on the street, ever heard of a little thing called renting. Price fixing and proping up home owners will equal inflation, since you will need to print a lot of money to do it.
Throughout this entire situation the ONLY time the Fed as acted correctly was when they let Lehman brothers collapse. The correct thing to do is to let all the banks fail and to let the house price’s collapse. It will not be another great depression, the FDIC will make sure of that, yeah some people will loose money, but that is THEIR FAULT for not practising RISK MANAGEMENT.
The free market works only as long as you keep the government and the private bank(FED) out of it.
I rent why because owning a house is a stupid investment. The best it does is protect you against inflation, of course their are other inflation hedges out there besides housing. I myself moved my 401K into TIPS 18 months ago and ended up with a 15% return on my investment during a bear market. I wouldn’t advice anyone to buy TIPS now since they have been heavly brought as have all US Treasuries. GOLD is still a good buy, but it could be volitile since a lot of hedge funds brought in the 400’s and they may need to liquidate.
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Bliss asks “The contribution of the housing bubble (how was that not caused by free market activities?)”
The simple answer is that Freddie Mac (Federal Home Loan Mortgage Corporation) and Fannie Mae (Federal National Mortgage Association) are partially privatised Federal government agencies established by Roosevelt and Johnston for the same purpose that Dick Seddon created the Mortgage Guarantee Corp, renamed State Advances Corp by Mickey Savage’s government. Freddie Mac and Fanny Mae are provided with lines of Federal credit, are exempt from SEC oversight and the Clinton administration placed them under HUD oversight. HUD’s remit is to increase America’s rate of home ownership, perticulalrly poor people and/or minorities. HUD pushed Freddie Mac and Fannie Mae to buy the majority of sub-prime mortgages as a means of achieving HUD’s remit. This Federal government distortion of the housing market helped fuel the housing bubble.
Because Freddie Mac and Fannie Mae’s loans were gauranteed by the Federal government the Federal government had no option about rescueing these two companies. I suspect the Fed bailed out AIG because AIG’s collapse would have lifted the lid on a fraudulent conspiracy involving all three corps and HUD.
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Nice one turnip28. I agree with most of what you say.
It does seem that the fed has bailed out broken financial companies too many times. Long Term Capital Management was scandalous. Not only did they get bailed out (which made a lot of money for the bank that got LTCM’s positions) but the partners were not made personally bankrupt.
Except faced with the situation now, in 2008, the Fed had no choice with Bear Sterns, Fannie & Freddy, AIG and, now the money market.
Lehman brothers and Meryl Lynch could go, they were not as important and they could fail with out effecting the real economy. Much.
But those others got them selves integrated into the financial system to such an extent that to let them fail would derail the whole financial system. That would have serious consequences. You probably would not be able to use your credit card today. Mass unemployment.
The solution is proper regulation. The problem with no regulation is that the managers in investment banks essentially have a call option. If they do well they get their fantastic pay and fantastic bonuses. If they do badly they just get the fantastic salary. They are incentivised to extend leverage to expand their profits, which as I said above, turns small loses into catastrophic losses. (LTCM was leveraged 100 to 1 when they collapsed)
If you do not regulate then they will make fantastic profits and use them to concentrate assets and then they will have a short period of fantastic losses that will threaten the whole system (like now). And to save the real economy they need to be bailed out. Again and again and again.
We used to think that financial markets were efficient, but now we realise that herd mentality, and other poorly understood psychological factors, cause markets to oscillate around some efficient value. But occasionally (and more often than any widely accepted theory can explain) they have huge oscillations.
So: Moaning and groaning about privatised gains and socialised losses is entirely appropriate. But the solution is not freer markets, but more regulated ones. And, I think, that is what will happen, in the USA. It is happening in New Zealand.
peace
W
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Pedantically, Kevyn
There was no actual guarantee.
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Bliss, I stand corrected. The guarantee was implicit rather than explicit…(from Wikipedia) “In fact, GSE securities carry no explicit government guarantee.[1]. The then-director of the Congressional Budget Office, Dan L. Crippen, testifed before Congress in 2001, that the “debt and mortgage-backed securities of GSEs are more valuable to investors than similar private securities because of the perception of a government guarantee. . . .”[2].
That belief led the markets to behave entirely contrary to the most basic assumptions of economists of both the left and right. Exactly what you said so well in your reply to turnip28.
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Pretty good Wall Street Journal summary of the mess.
http://online.wsj.com/article/SB122212948811465427.html
Politicians, eh?
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turnip28, if we agree with what you say about not bailing out the lenders who make the bad investments, what about bailing out the people with the mortgages? Is helping the little guy in this situation ok in your view? It would seem to cushion the blow on the economy of having large banks fail if individual taxpayers were protected.
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Couple of points, firstly with regard to regulation, I like regulation and think that you need it however I don’t like people saying we need regulation just to have regulation.
We have lots of regulation right now, for example FAS133 and Sarbanes Oxley. What we need is regulation that works and any regulation needs to start with sound accounting standards.
Why isn’t the Green party calling for NZ to adopt a SAS(sound accounting standards) bill. For starters the bill should dis-allow level 3 asset pricing, in fact the bill should force firms to mark their assets to market, it should also force them to report these assets on their balance sheets.
Why would we want to do all that, so as to create an even playing field in which a free market economy can then flourish. A free market economy requires open information, if i am going to place my money with a particular company i need to know that thier balance sheet is real, their cashflow statements are true and their profit and loss statement is true. What we have right now is an accounting standard that allows companies to hide what they have done and what they are doing.
My second point is to the idea of bailing out people with mortgage’s. On this point i would have to say very sternly that the government needs to avoid interferring in the market aka price fixing.
If the government bails out people it is effectively trying to price fix the cost of housing, this isn’t a good thing since when has price fixing ever been good for an economy.
I am a renter with the money to buy a house, I will step into the market along with all the other people like me when house prices become affordable. The problem with a deflationary asset is that sellers tend to be very sticky with their prices so it can take much longer to unwind back to normal levels. The price always shoots up fast but takes a long time to unwind.
There is absolutely nothing the government can do to make houses affordable, I know this sounds harsh to all the statists that read this blog but anything the government does will either kick off the bubble again or maintain it at its current level. If the government steps in and offers people money to pay for their mortgage’s. The government is printing that money or its draining it from some other part of the economy by raising taxes or cutting spending.
Now to the person being foreclosed on, there is nothing wrong with being foreclosed on neither is there anything wrong with going bankrupt, in fact if the government wants or the green party wants to do anything to help people, propose legislation that makes it easier for people to declare themselves bankrupt.
Trust me nothing would clean up the banks risk management quicker than if the NZ government/greens decided to make it easier for people to declare themselves bankrupt.
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How on earth can anyone claim there is a free market in housing land and even in housing itself?
ARe you saying that you can buy a section wherever you like, that you can freely subdivide your land to provide a housing lot and that you can build a house where you like and however you like?
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Turnip28 opined:
Yes they can. Expand state housing. Good quality houses supplied at affordable rents.
Good town planning helps, too. In NZ town planning has traditionally been viewed as a communist plot.
Yes. It is harder than it sounds. That is why markets, when they work, are so good. They are self organising.
But when markets fail we get the consequences we are seeing.
I agree about accounting standards. NZ has recently shifted to some standard or another, I am not an accountant, I do not know the details, but it has created a lot of moaning as telling detailed truth is always harder than glib generalisations and can be very unpleasant!
peace
W
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bliss,
Theoritically any government can provide more state housing, but will it be cheap.
First it has to buy land. Now unless you get state owned land to build on (DOC?) you are having to buy at market rate.
Next material. Unless you do a bulk deal, the material cost are not going to be any cheaper than the market rate.
Next labour. Unless you do factory kitset manufacture using unskilled labour, the labour cost for qualified builders, electricians, plumbers, painters, etc. is at market rate.
Next morgages. Unless you lend 100% (sub prime) you will not get the needy into their own homes. Risk assessment? Allready banks wont lent on appartments at anything over 50% (?) of value. Until the state (using tax payers money) underwrites these sub prime morgages, the banks wont touch them with a barge pole.
Bit like a perfect storm, The local councils will not free up more land for building outwards, wont install the service infastructure (transport, sewerage, water, electricity, etc.) to build upwards, exisiting home owners who can afford the morgages are not selling.
I suggest that a state house, fullycompliant with the latest insulation, solar water heating, double glazing requirments and on a plot of land in a naked subdivision will still set the government back close to $300,000.
Taking into account that the government has to develop the subdivision first (capital up front costs) plus meet local body restrictions on land use.
And will the rate payers in the local body let a parcel of land go to the government a a cheaper rate then they could get that from a private land developer? Why should local rate payers shoulder the double burden of local plus national taxation increases just becasue the government want a plot of land over a private developer?
Mind you around the back of places like Tokoroa, Kawarau, etc. may be plenty of land available, but will people want to live (and work if available) there?
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“nobody is going to be out on the street, ever heard of a little thing called renting.”
Ever heard of a little thing called homelessness? I’ve been reading commentators saying rents are expected to rise as declines in house asset values mean owners are looking for profits elsewhere. Sure I can find a cheap house in Levin or Tokoroa, just as long as the taxpayer’s happy to have me on the dole for years.
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>>taxpayer’s happy to have me on the dole for years
What a strange way of thinking.
Create your own job. You don’t need someone handing it to you. Are you suggesting there aren’t problems that need solving in Levin and Tokoroa?
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I think you mis-understand what i am talking about I was referring to the price of the house not the price to rent.
I think Sarbanes Oxley is the accounting standard you are refering too. Also NZ doesn’t really set its own standards we use US or UK standards, we are sheep remember.
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Sam please explain to us how rents are going to rise, I am confused.
A landlord can’t just decide tomorrow to increase the rent, if he does people will not rent from him.
Your argument just doesn’t make sense, yeah the owner of the house would love to raise the rent to recoup his costs, the problem is the market sets the rent not the owner.
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If governments can do nothing to make housing more affordable please explain why housing in Houston and in Texas generally is affordable (ie median house price is less than 3 times median household income) while in California and in San Jose and other cities in particular) it is extremely unaffordable (the ration is six or more.) California bubble prices have collapsed by 40% over the last twelve months, while they have remained stable in Houston and many other cities because there was no bubble to start with.
Both states and their cities occupy the same banking and finance systems. I recommend the following essay from my friend and colleague Wendell Cox – and there is another NZ connection as you will see.
http://www.newgeography.com/content/00275-the-smart-growth-bailout
THE SMART GROWTH BAILOUT? by Wendell Cox 09/23/2008
One way to see the federal rescue of the home mortgage market is to call it “the smart growth bailout.” True, the proximate cause lay with profligate lending practices. The flood of mortgage money covered the entire country, irrespective of state, regional or local land use regulations. That’s where the similarity stopped.
During this decade there has been an unprecedented divergence of housing prices among U.S. metropolitan areas. Generally, the difference has been associated with strong land use regulations. Where restrictions are greater, house prices rose strongly relative to incomes. Where more traditional regulation remained, house prices also rose, but only modestly.
This is illustrated by the change in the Median Multiple (median house price divided by median household income). In the more regulated metropolitan markets, it rose from 3.5 to 6.0, a 70 percent increase. In the more traditionally regulated markets, the Median Multiple rose from 2.7 to 3.0, remaining within historic norms.
Economics teaches that scarcity or rationing leads to higher prices. Smart growth policies ration land for development through the use of urban growth boundaries and prohibitions or restrictions on building on vacant land. In such an environment, higher house prices can be expected.
“The affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land,” said Donald Brash, governor of the Reserve Bank of New Zealand (the national central bank) for nearly 15 years.
America has become two nations with respect to housing costs and housing cost increases. Princeton economist and New York Times columnist Paul Krugman put his finger on the cause of the difference more than three years ago. Others have made similar findings, such as Edward Glaeser at Harvard, Theo Eicher at the University of Washington and Kate Barker of the Bank of England. House prices have exploded in highly regulated markets, while they have changed little where traditional land use regulations still apply.
The predictable economic effects have occurred with a vengeance in more regulated (smart growth) metropolitan markets. From 2000 to 2007, the median house price rose an average of $174,000 in the more regulated metropolitan markets with more than 1,000,000 population. In the less regulated markets, the average increase was $12,500. (More at Link above)
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“If governments can do nothing to make housing more affordable please explain why housing in Houston and in Texas generally is affordable (ie median house price is less than 3 times median household income) while in California and in San Jose and other cities in particular) it is extremely unaffordable (the ration is six or more.)”
More land in Texas, lower population than California, and more trailer parks.
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There’s discussion on the position Owen takes at Planetizen here:
http://www.planetizen.com/node/34208
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Owen’s position doesn’t hold up when you apply it to more markets, sure go ahead and compare Texas and California, but how do you explain Nevada, Colorado, Arizona.
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“Create your own job. You don’t need someone handing it to you. Are you suggesting there aren’t problems that need solving in Levin and Tokoroa?”
Sure there are, there just aren’t people who want to pay me to solve them. I could probably bullshit some government agency into funding some lamebrained social improvement scheme, but it would stick in my craw to do that. Frankly I’d rather be on the dole and do useful things with my time – at least that’s cheaper for taxpayers.
“Your argument just doesn’t make sense, yeah the owner of the house would love to raise the rent to recoup his costs, the problem is the market sets the rent not the owner.”
It does as long as there’s lots of people willing to be homeless rather than pay an exorbitant rent. Markets are reasonably good at setting prices for things you can do without. Of course, you always have that option of Tokoroa and the dole.
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California Home Prices Drop Record 41% Amid Defaults (Update1)
By Dan Levy
Sept. 25 (Bloomberg) — California home prices tumbled a record 41 percent in August from a year earlier as foreclosure sales pushed down values in the most populous U.S. state.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aE6gHmeYAxcg&refer =us
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Obama may have just lost the election.
If he continues to support the $700,000,000,000 and Mcain is pushing for the republican house bill, which calls for the corporation’s to pay for the bail out. The American tax payer’s will not stand for it come Nov, they will make the democrats pay. Remember the democrats could pass this they have the numbers, but they don’t want to do it with out the republican’s.
The republicans will use it as some serious amunition during the election. This means that the democrats will give the republican’s everything they want to get them on board, guess who comes out looking like he orchestrated and saved the US taxpayer from spending 700,000,000,000,
you guessed it John Mcain, Obama looks lost and missed his chance.
Come the debate’s Mcain can also hammer Obama on this, its a sledge hammer.
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Opinion: Why the credit crunch was ‘Made by Government’
By NZ Business Roundtable executive director Roger Kerr
http://www.interest.co.nz/ratesblog/index.php/2008/09/26/opinion-why-t he-credit-crunch-was-made-by-government/#more-1704
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The un-affordability of housing here is based on a whole raft of negative activities and policies that the government undertakes and the opposition applauds.
People who own houses vote, and there are more of them than people who don’t own houses. They LIKE the idea that their house is worth more than it used to be.
The ideal of being able to buy a house in a decent school district with fair access to mass transit gets lip service. The reality is money getting shipped to Australian banks.
When I examine the market as it stands I am appalled by the quality of the new houses I see, the number of houses built for less than a half million dollars I don’t see, the TOTAL unwillingness of government to correct the problem and the placid assurances of so many that it is perfectly normal.
It is NOT normal. This place has the least affordable, least desirable houses on the fncking planet.
The only bright side is that we may get some electric cars.
That makes it possible to drive to train stations from somewhat farther away. With the buses costing more per ride than the petrol to go the same distance three times we aren’t exactly preparing very well for the changes that are coming our way in the future.
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>>It is NOT normal. This place has the least affordable, least desirable houses on the fncking planet.
Agreed. Too much government meddling in the free market…..
>>The only bright side is that we may get some electric cars.
Hopefully, but we lack any party with the vision to see it and act on it. They’re too bust buying redundant train sets, and the party that should be pushing the electric car is anti-car/roading.
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BP
The “redundant train sets” that you speak of will, become the precursors of/to our transport mode of the not-to-distant future.
They should never have been sold in the first place.
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sorry, I meant “precursors of/too”
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>>ecome the precursors of/to our transport mode of the not-to-distant future.
No they won’t. They have very limited application.
They are last centuries answer to transport problems. They are not suited to low-density New Zealand
>>They should never have been sold in the first place.
They should have remain sold. They will cost a fortune to operate and run at a loss. They are a liability. Hopefully National will scrap them.
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I’ve yet to hear anyone explain the reason for the train buy back.
I can see how the trains could be used for, say, logs to port. Or on urban commuter routes in Wellington and Auckland. But they have very limited application compared to a car.
The idea that cars require oil to run is nonsense, so Greens need to get over themselves and admit they got it wrong. Your arguments seem to be based on the idea that if oil is expensive, then the car is not viable. That is clearly wrong.
The car is here to stay, and best suited to solving most of New Zealands transport problems.
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Shai Agassi
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“They should never have been sold in the first place.”
eredwen, so you would have prefered to see the New Zealand Rail Network have its northern boundary at Paraparaumu and Upper Hutt, and its southern boundary at Wellington – that is what would have happened had the years of inefficient state ownership carried on.
For your information, under public ownership, dozens of locomotives were scrapped. Under private ownership, dozens of locomotives were purchased from QR. Under public ownership, tonnages were low. Under private ownership, tonnages hit record levels. Under public ownership, Auckland passenger services were crap. Under private ownership, Auckland passenger services started improving and passenger numbers doubled in three year. Under public ownership, NZR had to be bailed out three times to the tune of $1 billion, under private ownership, Tranz Rail was reasonably profitable (at least until Ed Burkhardt was given the boot).
Of course, I fear that the inefficiency may be making its way back.
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Better Place
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BluePeter Says:
September 27th, 2008 at 6:53 pm
>>It is NOT normal. This place has the least affordable, least desirable houses on the fncking planet.
Agreed. Too much government meddling in the free market…..
………………………………….
It isn’t altruism that causes the developer to develop it is profit and so the developer squeezes as many apartments on a site as he can (never mind the lack sun).
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“eredwen, so you would have prefered to see the New Zealand Rail Network have its northern boundary at Paraparaumu and Upper Hutt, and its southern boundary at Wellington”
It is interesting to watch the CONFRONTATIONAL way that some of “our guests” assign SILLY motives to others who do not share their views of the World.
I would remind visitors to frogblog that this is a Green blog.
Confrontational behaviour is “not a good look” here!
However, in reply to your post, jh :
Yes ! I agree that a lot of rail use has been inefficient in the past.
(On the other hand a lot of it is not inefficient!)
I grew up in the days of railway jokes (mainly about the age of “refreshment” room pies and happenings “on the Main Trunk Line”… etc)
I remember being amazed, when in first in Europe (1965/6) to see huge consignments of fresh-picked flowers being sent by “State Owned and Operated TRAIN” right across countries. (They evoked in me: “Kiwi images” of wagons being disconnected and shunted endlessly around various railway yards while flowers withered away into little dry heaps !)
Of course this is not what happened in Europe … Trains were kept to their schedules (seemingly to the exact second!) with various carriages and wagons from either end being connected and disconnected rapidly to very well worked out schedules …
Hopefully, with what lies ahead for all of us in the future, our rail systems will fill the gaps in that same admirable way.
Let’s face it people:
1) Sea and Rail are much more energy efficient than endless individual heavy (and not so heavy) vehicles winding their way along our inadequate roads through very hilly country between population centres … (and increasing both the frequency and the extent of the maintenance needed on those roads).
2) There are two things happening here:
Global Warming AND the end of the Age of easily extracted Petroleum …
Rail and Water are potentially the most energy efficient ways to transport, and our long thin country is well suited to a combination of both.
THEN we can use our small personal vehicles to fill the gaps in this system when needed. These vehicles may be in a rent-a-car pool, individually or group owned … possibly electric … etc … etc
Interesting changes are ahead of us !
eredwen
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>>Sea and Rail are much more energy efficient
Not necessarily. Often the total opposite. You need to take it on a case by case basis.
>>Age of easily extracted Petroleum …
Irrelevant. Cars don’t need oil, they can run on electricity.
Why do Greens keep using this stupid argument? Get out of the 70s, already. You’re just looking partisan and luddite.
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Read up on Better Place, Shai Agassi and his work in Israel and Denmark.
You might actually learn something about the “interesting changes ahead of us” and why you’re utterly wrong.
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“Irrelevant. Cars don’t need oil, they can run on electricity. ”
Misleading: our car fleet is a million miles off running on electricity.
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No it isn’t. The car fleet will slowly change as the incentives change.
The oil won’t disappear overnight, and the electric infrastructure won’t emerge overnight. It will be a gradual process. As electric car use starts to diplace fuel demand worldwide, the price of oil will start to level out, even if supply drops.
For a time perhaps decades – both powerplant options will be economicly feasible.
Add to this the 100% guarantee of new technology emerging, there will be options we haven’t even factored in yet.
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Problem: Get me, and my family, to my batch.
Solution 1: (PT) Carry a cars load of baggage to the train station. Catch the train into town. Unload baggage. Wait for train to take us up the coast. Get baggage off train. Transfer it to a bus. Get baggage off bus and walk to the batch. Probably an extra mile or so. Do the same thing in reverse to get back, paying per head.
Solution 2: Electric car – get in the car and drive. Do the same thing on the way back.
Solution 2 is clearly preferable.
Either option requires a change in the way we do things.
Read this:
tinyurl.com/54upna
Solves:
The range problem
The global warming problem
The fuel security problem
The Peak Oil problem
The mobility problem
PT fails to solve the mobility problem for any trip that doesn’t involve many people from the same location wanting to move to one destination.
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Oh, and the economics are much better for Option 2.
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Sorry but there is an apartment block shading your batch owned by Kiwi’s form Dubai., however, you can get their by taking the train from the Chinxua Station and then swithching to Xuong No3. Remember to book early for a spot on the beach. You may only be able to afford June if you have a large family.
This is the place for you and your family
PS I have been there. My wife was at home but I wasn’t fussed
http://www.mikesblender.com/indexblog71.htm
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“batch’ of what..?
phil(whoar.co.nz)
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bach
>>Sorry but there is an apartment block shading your batch owned by Kiwi’s form Dubai
More hysteria. NZFirst voter, by any chance?
Anyone got a reasoned response to my proposal, hmmmm?
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BP
Your future car may be powered by electricity but it still runs on roads. Those roads are maintained by oil. The more heavy vehicles use those roads, the more oil is needed to maintain them.
Trevor.
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>>Those roads are maintained by oil
We don’t need to displace all oil usage, only some of it.
The supply lasts much longer, and can be used for roads. The price falls through the floor. There are also substitutes for oil.
Again, I’d encourage people to read this:
tinyurl.com/54upna
It is a good solution to the transport problem. It is also green.
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BluePeter is dreaming if he thinks the price of oil will fall through the floor. Yes we can displace some of our oil usage. But one of the drivers for that is high oil prices. If we do succeed in displacing enough so that supply can exceed demand, then that will cause oil prices to drop and efforts to displace further oil will ease off, keeping the oil prices high. After all, the easily substituted usages (i.e. the cheapest alternatives) will be the ones developed first.
Trevor.
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BP
I followed your link. The idea of swappable battery packs is attractive. I see one significant snag – the battery packs suggested are lithium ion batteries, as used in laptop batteries, etc, but on a much bigger scale. However we don’t have the lithium resources globally to make enough batteries to power enough cars to make a significant difference, particularly if more than one battery per car is needed.
Trevor.
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Receny study, An Abundance of Lithium, shows that “concerns regarding lithium availability for hybrid or electric vehicle batteries or other foreseeable applications are unfounded. There is plenty of lithium available, more than enough to meet the needs of all the electric cars the planet could afford to build.
And that is just known reserves….
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Trevor29
> BluePeter is dreaming if he thinks the price of oil will fall through the floor. Yes we can displace some of our oil usage. But one of the drivers for that is high oil prices. If we do succeed in displacing enough so that supply can exceed demand, then that will cause oil prices to drop and efforts to displace further oil will ease off, keeping the oil prices high. After all, the easily substituted usages (i.e. the cheapest alternatives) will be the ones developed first.
Yes I think this is right (although I too believe that oil must drop in price.) But if oil were to fall back down to $10 like it was 7 years ago then it would be competitive with electricity for car energy. Sadly, many first world governments have high taxes on petrol which mean that electricity would still win.
10KWhr of electricty (about the energy in a litre of petrol) costs around $2which is currently the same as petrol (including the 80 cents tax). But since petrol engines are only about 20% efficient, electricity works out at about 40 cents a litre. The tax alone is more than that.
Anyway, the price of oil could still fall a bit (maybe $50 or so) and encourage other energy forms. Remember coal is quite a bit cheaper, but we don’t use that in our cars.
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I’ll try to ratchet it down as I explain just what $700 billion means in terms of our nation’s energy infrastructure
“America has about 130 million private homes, so that’s about $5,400 per home—not quite enough to put a one-kilowatt photovoltaic system on every roof. I use that as a standard, because that’s what my wife and I have on our own house, and it basically zeros out our electricity bill for the year.”
http://www.energybulletin.net/node/46694
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BP – do you mean:
http://www.worldlithium.com/An_Abundance_of_Lithium_1_files/An%20Abund ance%20of%20Lithium.pdf
I’m not sure which side to believe:
http://www.evworld.com/article.cfm?storyid=1434
Let’s hope you’re right.
Trevor.
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Well the guy i supported for the republican ticket has come though this looking great,
during the primary’s the media was laughing at Ron Paul, now every day he is on and they are all bowing down to him and asking what will happen next. He’s getting more TV coverage than obama & Mcain on Fox.
The one thing i have to say during this bailout week is that Fox Busines channel has been awesome, they totally opose the bail outs and they are very vocal about it.
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>>the price of oil will fall through the floor
Remove car demand for oil, the price of oil must fall, unless supply levels fall faster.
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Well there are a couple of other things to think about with the price of oil.
All this money being printed in the US is going to equal more inflation which will send the price of oil up.
NZ can offset most of the inflation effects on oil by allowing the NZD to rise against the USD.
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“The car will have zero emissions, and could be the start of a wave Meridian Energy will early next year introduce several Mitsubishi MiEV vehicles for trial and promotion purposes.
The Government’s Energy Strategy plans for electric cars to reach 5 per cent of market share by 2020, and hit 60% by 2040.”
tinyurl.com/4xuhyl
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BP
28 million tonnes of lithium when our global annual usage is 16,000 tonnes sounds like a lot. 28 million tonnes divided into a billion electric cars plus assorted spare battery packs, electric buses and other applications sounds rather small to me. It works out to be around 20kg per pack or perhaps 2% of a typical car’s weight. After that, there is no more, so we had better recycle it carefully.
Trevor.
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Known reserves.
No one is yet looking too hard for lithium.
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Interesting comment:
“Lithium is not a fuel – it is more like a fuel tank if anything. It is not consumed as we drive but when new vehicles are produced and, as the previous comment pointed out, it is never destroyed so can be recycled at the end of the battery life. Oil consists of complex molecules that have formed over millions of years and once destroyed they will not be recreated so it is very much a finite resource. Lithium being a simple element (found in an ionic form) is indeed abundant it is only a matter of finding sources in economically extractable concentrations. Aside from these brines there is also a mineral spodumene which can be converted to Lithium Carbonate. Though this is a more costly process it was for a while the most common method of extraction. “
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In the future, I suspect we’ll look back and wonder what on earth we were thinking using petrol to power cars when electricity is the alternative.
Ticks all the boxes.
The car is here to stay. So, it is time for greenies to revise their long held beliefs regarding cars and do what they demand of others….
Change.
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“The car is here to stay. So, it is time for greenies to revise their long held beliefs regarding cars and do what they demand of others….”
BP,
I think you’re attacking a straw man. Of course the car is here to stay. Very, very, very few greens want to get rid of all cars. I’m sure you can find some. But they are a fringe.
Cars are an extremely adaptable and useful form of transport for taking small groups such as nuclear families, especially on trips that go moderate distances and don’t go to and from the same place that lots of other people are going to/from.
A family trip to a bach 50km away, for example, is highly suited to a car trip. But the overwhelming majority of car trips are not like that.
You don’t take the family to the bach every day. Most commuters are following a route that is extremely similar to thousands of other commuters. Most trips by car are less then 3km and the mode and median number of people in a car journey is one (alas, a quick google can’t re-find my reference – anyone got one?).
We can reduce car usage vastly *and* reduce urban journey times *and* make things cheaper for all by focussing on improving alternatives for daily commuting and short urban trips.
Carbon emissions are not the only form of pollution. Electric cars aren’t free (very far from it), aren’t non-polluting, and aren’t going to solve issues of traffic congestion.
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“Electric cars aren’t free (very far from it), aren’t non-polluting, and aren’t going to solve issues of traffic congestion.”
But, I admit, they are cool. The improved torque means quite nifty amounts of acceleration. With a light frame you could get something a lot like a smart car but which does a quite astonishing acceleration 0-60km.
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>>Very, very, very few greens want to get rid of all cars
A lot of the rhetoric is anti-car and anti-road.
Here’s the thing. I think they’re placing far too much emphasis on trains and buses. They are against road building. All because there is an underlying dislike of cars. That dislike comes from issues such as oil, pollution, and the disruption of communities (I actually agree with Greens on the last point – the other problems are solved by powering the car with electricity).
Public transport is mostly a density issue. I used it in London because the roads were clogged. It made more sense that driving. The same might apply in Auckland at peak times. So I support the reduction of congestion.
But this idea is simply not relevant to most other places. They aren’t really congested, and there is plenty of scope to build roads. We could build big highways and ring roads round cities, like they do in Holland, and free the inner city of cars. Holland gets this balance right, and I see no reason we can’t do it here.
>>improved torque means quite nifty amounts of acceleration
Right. I would love to buy a high end electric car, like a Tesla. Right now.
But I can’t, because they don’t sell them here.
And if a petrolhead like me can get on board, don’t you think you’ve found a great happy medium? Green cars?
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