May 2nd, 2008

Food

Ecological / organic farming

I just read an interesting little article in Norwegian on the topic of ecological food (which I believe is usually called organic food in English, or at least in American). This is food that is grown without synthetic fertilizer and without pest or weed poison. Instead, natural fertilizers are used, weeds are pulled manually or mechanically, and pests are deterred by planting certain types of plants together that repel pests, as well as using hybrid strains of cultivated and wild sorts that are naturally resistant to pests and diseases. Most customers of these products are probably vegans, but there is also some ecological milk production, at least there is here in Scandinavia.

The article questioned the morality of farming methods that give less than 60% of the crops you could have gotten from the same area, in a time where food is getting scarce.

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Money

Real and imaginary crises

Media thrive on disaster, and this is also true for the financial news. While some see a liberal mainstream media conspiracy to support the socialist presidential candidate, I think it boils down to getting out the big headlines for fun and profit.

The truth is that the crisis has hardly begun. Yes, there was a sudden and dramatic breakdown in a part of the finance sector after the collapse of the subprime bubble. But this was quickly and efficiently contained by the central banks. If you look at the stock market, it is still hovering eerily close to all-time high. It doesn't look like investors are dumping their shares in panic. There have been more amplitude than usual, but the overall trend is at worst a gentle slide. And house prices have not tumbled. Yes, locally they have. There are entire neighborhoods more or less getting shut down. But they are few and get a lot of publicity while young people looking for their first home still face the reality of artificially high prices. There is far more to go.

And that is the thing. There is far more to go. America in particular has built up a huge imbalance, financing consumption rather than investment with borrowed money. This will necessarily come home to roost, one way or another. I have predicted hard times ahead since the 1990es. Of course, people who predict the end of the world will sooner or later be right, but this is not quite it. Rather the recession of 2001 should have continued and deepened for a while, giving a Japan-like sideways slide for perhaps a decade. This did not happen. Instead, a rebound on borrowed money. Which is why I have become more pessimistic the longer the good times went on.

But it has barely even begun. Being back to the level of September 2007 is not exactly reason for impeachment, I think. If there is wailing and gnashing of teeth before there is even an official recession (two sequential quarters of GDP contraction), what will it sound like when the tide goes out?