View From The Couch - 24/Dec/2015

Kim Jong-Un And His Hydrogen Bomb

As these things go, maybe it's not as hysterical as it sounds, but Kim Jong-Un recently said North Korea has a hydrogen bomb, and is able to stick it on the tip of a Rodong rocket and fire it into Washington DC. Amazingly, this didn't make the news in Australia because it's the kind of thing I tend to notice in the headlines.  It might have been missed because Reuters' headline was already tinged with scepticism. Experts think it is unlikely:

In Washington, the White House said it was doubtful that North Korea had developed a hydrogen bomb, but said Pyongyang remained a threat. 

"At this point, the information that we have access to calls into serious question those claims, but we take very seriously the risk and the threat that is posed by the North Korean regime in their ambitions to develop a nuclear weapon," White House spokesman Josh Earnest told a regular briefing.

The U.S. State Department repeated a call on North Korea to comply with its international obligations and abandon all nuclear weapons.

One sort of wonders what the dictator is up to, but it's all kind of kooky how he wants to get the wrong kind of attention at this juncture. In response to this claim, Xi Jinping shut off oil supplies to North Korea, which is unheard of when you think about what it might mean. It tacitly indicates China is ready to disown its old communist bulwark ally; or it may mean nothing especially because oil has collapsed down to US$35 a barrel, and seems to be the ubiquitous commodity - North Korea can buy it cheaply elsewhere. It's really hard to figure out how much this would even corner North Korea. When all the European banks closed off business with North Korea because of sanctions, they simply moved on to using African banks for international settlements. Much like ISIL, it is proving hard to completely shut off the supply of cash to the rogue state. Too many entities seem to be able to profit from dealing with the North Koreans.

Anyway, it's a nice thought on Christmas Eve that Kim Jong-Un has his nation working busily with a plan to blow up the world. He really is like some Bond villain.

Turkey, Russia, Oil

The business of that downed Russian jet by the Turks is turning into a drama of sorts. It goes back to the ISIL thing where the Islamist insurgents are selling oil on the black market. Buying this oil at next-to-nix is none other than Turkey, which then on-sells it for a tidy profit, even with prices crashing to US$35/barrel. As it turns out, the man running this operation out of Turkey is none other than President Recep Erdogan's son.

Sometime back at the the G-20, Putin pressed Erdogan about this issue. Erdogan denied all of it. Apparently Vladimir Putin pressed pretty hard, asking to make sure Recep Erdogan's family weren't in on the ISIL oil deal, and Erdogan still denied it.  So Putin ordered his airmen to go bomb all the lorries carrying oil out of ISIL held territory which resulted in hundreds of these oil trucks getting blown up in Syria. As it turns out, these trucks were mostly Turkish trucks. So Erdogan got upset and green-lit that attack on the Sukhoi. Basically, there was no invasion of Turkish airspace.

Since then Russia has closed off all trade with Turkey, which basically amounts to about half of Turkey's exports.Turkey for it's part is staggering towards more armed conflict with Russia, which is kind of insane because Turkey's nuclear deterrent is NATO. What's worrying about this is that the relationship between the two nations is pretty much naked power politics in the style of the 15th century, just with modern equipment. All this leads me to think that west will likely rue the day they let Turkey into NATO. A war could start on the eastern end of Turkey, and NATO might be drawn into this stupidity by dint of the alliance.

It would be especially galling if it happened as Turkey kept dealing and cash-funding ISIL.

On The Low Low Oil Prices

Jeez, the ACCC must be pretty dumb. If you ever needed evidence that petrol prices at the pump are fixed through collusion, you only have to look at the prices at the bowser and the oil prices by the barrel. Crude oil prices have gone from US$120/barrel down to US$35/barrel. That's roughly a third to a quarter. If the petrol stations and suppliers were genuinely competing, the prices at the bowser should proportionately go down to about 40-50cents per litre. The fact that it hasn't tells you all you need to know. It doesn't go down because they're not really competing, and if they're not competing, the only answer is that they're colluding. In short, these companies are pocketing the difference and not passing it on to the consumer. What a joke.

Anyway.
I saw this interesting account of fossil fuels and their future today.

Why and how coal (and oil) is and will be produced at a loss has been neatly explained by the Australia Institute's Richard Denniss: 

"Imagine you owned an ice cream van parked by the beach and your refrigerator broke. No matter what you paid for the ice cream, you should sell it for anything you can before it melts. Some money is better than no money. 

"Now imagine that you owned billions of tonnes of coal and you thought that in 20 years time new technology or new global restrictions meant you might not be able to sell it. We have heard for decades how Australia had 'hundreds of years' worth of coal, but now we are trying to sell it in a few decades. The green paradox says that talk of future emission reductions can cause an increase in current coal production. Indeed, global coal production has risen 50 percent since the world first agreed to reduce emissions in 1992." 

Dumping coal (and oil) on the market keeps renewables expensive, but it also provides the incentive to make renewables cheaper. There are very good arguments for governments to invest more in renewables research than just subsidising the existing quality of solar and wind projects.

And that explains why the Coalition Government is going to make sure the Adani mine goes ahead in Queensland. It's anti-democratic and breaks a whole bunch of environmental protections, but the promise of 10,000 jobs in North Queensland has essentially convinced this government that this is somehow going to be okay.

Yet if you look at it from the ice-cream truck simile, you can see why there's such a rush. If Australia doesn't sell off as much of its fossil fuels before it becomes totally unviable, we would be leaving too much money on the table. Greg Hunt isn't really a Minister for the Environment - he's kind of a spokesperson for the Government that addresses the environment as an issue, but doesn't do anything that might remotely be perceived to be standing in the way of corporate profits. He's somebody who is not terribly serious about his job or its title or what it means. He's a careerist pulling down a ministerial pay-packet, pretending to be doing something. He's about as effective as Tony Abbott was as the Minster for Women, and more's the pity. 

This reminds me... Way back a long time ago, I was a young person working at the parcel pickup service of Grace Brothers. The groceries would come up in numbered tubs and we'd hand them out to the customers with the tickets. On certain times of the week, like Thursday night and Saturday morning, they would come in droves, and leave their car engines idling in the driveway. The fumes would be terrible. Just terrible. At this time of the year, the car queues would be 20 cars deep all idling away, and the air was unbreathable. I would dry retch all night long after working some of those shifts. 

Eventually we complained to management asking them to install a powered vent or fan. They demurred. So we called the union, who then organised somebody from the EPA to take measurements. The EPA dude turned up on a Monday morning when there was hardly a vehicle in the whole shopping complex car park - and declared the air was safe. We told him he was there at the wrong time, and that he should come back to when it was peak fumes. He said no, because that would be a biased reading. We were ropable, apoplectic with rage. What was the point of the exercise? He shrugged and said they were the rules, and went back and reported everything was fine. So, management weren't protecting us; the union wasn't really protecting us; and the government wan't protecting us. It was pretty sobering. If you ever wonder why I have occasional bouts of political anarchism, it's from experiences like these. 

I relate this, just to share with you the sense of hopelessness in expecting the government to do the right thing when everybody working for the government, whether elected offical or employed, is against doing any such thing. Folks, they really don't give a shit. Oh, and there's no question that  the ACCC are idiots.