Monday, July 16, 2007

What about the bigger picture?

While the Tories are focusing almost totally on their "social agenda", not a few newspapers today are reporting on the degeneration of our refuse collection system, most notably the Daily Mail.

This paper, however, picks on one tiny aspect of the whole debacle, choosing to condemn the moves towards fortnightly rubbish collections, failing to recognise that this is but one symptom of a system that is on the verge of breakdown. And, needless to say, the cause of that breakdown gets not a single mention – the EU's inept attempts at dictating our waste strategy and, in particular, its obsession with banning landfill.

What this, and the rest of the papers who have reported on the issue today do not realise is that the situation is going to get immeasurably worse, as the short-cuts adopted by local authorities are progressively closed down, most notably through the EU's waste shipment regulations.

These regulations are set, gradually, to restrict the opportunities from dumping waste and "recycled materials" on third world countries. As we reported last week, they will force local authorities to confront the huge costs of setting up a proper infrastructure for dealing with waste under the EU-imposed regime, which cannot help but create pressure to drive up local taxes.

It was, of course, in an attempt to cut back the massively increased costs of dealing with waste that local authorities turned to fortnightly collections and, despite the squawking of the likes of the Daily Mail, that pressure remains and is likely to intensify, even to the extent that even reduced collection frequency will have little effect in stemming the cost escalation.

But, if this is one example of the failure to see the big picture, there are many more. Earlier today, we drew attention to the potentially massive inflationary effect of the EU's efforts to enforce a ten percent biofuel quota on the 27 member states, both in terms of increased food and petrol prices.

But, as one of our readers has pointed out, this is only part of the picture. Owing to weather conditions and other factors, world grain production is dipping, while consumption overall is increasing. In 2005, there was in fact a surplus of 49 million tons, with 1,649 million tons produced against 1,600 million consumed but in the two years since there has been a 74 million ton deficit while, for the current year, the forecast production is 1,656 million tons against expected consumption of 1675 million.

Already, this is having a significant effect on prices and the upwards trend is set to continue, with an inevitable effect on inflation. Now is not the time, it seems, to divert massive amounts of agricultural produce into biofuel, or indeed into biomass production for electricity generation (requiring potentially even greater land areas) to meet the overall renewables quota of 20 percent.

What the global situation does suggest is that we should be devoting more land to agriculture and focusing on food production but, here again, the big picture intrudes. Various estimates suggest that net immigration to this country has increased the population by over a million, which is creating huge pressure on land, with the current government planning major incursions on agricultural land to meet housing and amenity needs.

Add to that the land taken for windfarms – which must also increase dramatically to meet the 20 percent renewables obligation (adding substantially to our electricity bills) - and the continued "environmental" requirements of the EU (such as two metre "conservation" margins around fields, to say nothing of the continuing set-aside programme) and the actual land available for agriculture is set to decrease rather than expand, even as the number of mouths increase.

Not only, therefore, do we see the spectre of inflation, but the prospect of real food shortages.

The immediate effects – increased prices and increased taxation - will all feed into an already inflationary climate, adding pressure on the Bank of England to raise interest rates. The knock-on effect – on the housing market and elsewhere – can only magnify the deflationary pressures already in the system and drive the economy closer to recession.

Furthermore, all of this is going on in addition to the stresses building up in the eurozone, of which Ambrose Evans Pritchard writes in The Telegraph today, on top of the surge in the value of the euro, which is having a profound destabilising effect on the wider European economy.

All of this is highly suggestive of storm clouds gathering. The "good times" such as they were, look to be coming to an end, and not least because of the infatuation with "climate change", the response to which is beginning to have a real impact on the economic health of nations. Yet, even today, The Independent is prattling on about Pacific islands being swamped by rising seas.

One cannot help but feel that the media and the political parties (the Conservatives in particular) are in denial. With the Boy trotting off to Rwanda next week for his latest round of "cuddly" photo opportunities, nowhere do you see signs of adults beginning to engage with real world problems. The term "sleepwalking into disaster" comes to mind, except that clich̩ is becoming over-used. We need another to describe the same thing Рfor that it is we are doing.


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