Category: the daily column

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The Ripple Effects of the price of Oil

An analysis of the ripple effects of cheap oil –

The [1974] oil shock altered power relations between the world’s main geopolitical players and created new ones. Higher oil prices had many unexpected consequences—from breeding oil wars to fueling the international spread of Islamic fundamentalism thanks to funding from newly super-rich countries like Saudi Arabia. Today’s drop in crude-oil prices, which began in the summer of 2014, may be as disruptive as the quadrupling of oil prices that created the oil shock of 1974.

It’s amazing how much of an impact the price of oil has on the geopolitical and financial landscape – and it would be fascinating to see the development of oil alternatives shake out into an entirely new landscape. Underlying all that is a fundamental factor that plays into the climate change discussion as well – it’s all about energy, and humans need it increasingly so to maintain the modern living standards we’ve become so used to in the developed world.

This goes without examining the more micro-level changes – with low oil prices, will airfares drop? Will people suddenly take more holidays in further off destinations? Will people resume buying high fuel consumption cars, too late for car companies like Ford & Holden to reverse their courses? How does that change cultural consciousness around energy use? All those things changed because the nominal price for something so fundamental to our lifestyle changes one way or another; is the price oil a proxy for all manner of things?

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The Great SIM Heist

In 2010, GCHQ and the NSA hacked a company responsible for producing a huge number of mobile SIMs and stole all the security keys:

With these stolen encryption keys, intelligence agencies can monitor mobile communications without seeking or receiving approval from telecom companies and foreign governments. Possessing the keys also sidesteps the need to get a warrant or a wiretap, while leaving no trace on the wireless provider’s network that the communications were intercepted. Bulk key theft additionally enables the intelligence agencies to unlock any previously encrypted communications they had already intercepted, but did not yet have the ability to decrypt.

It’s not so much the brazen nature of the hack – mostly built on social engineering through hacking their personal emails – as it is their ability to wiretap without any kind of oversight or leaving a trace. This exports the fundamentally digital nature of these communications, that a tap is easy and undetectable because bits leave no fingerprints and suffer no degradation.

That the agencies for the UK and the USA have done it so broadly – not merely looking at services within their jurisdictions, but globally – is now standard fare. You can only imagine the furore if it had been perpetrated by China, Russia or even puny little North Korea. It’d be evidence of the police state, the surveillance possible too massive to ignore.

That these revelations continue to come years after Manning and Wikileaks, that this is still Snowden’s work coming to light, is likely a good thing, but in the short term, I despair at what this indicates is happening behind the scenes, stuff that we wouldn’t even believe would be happening, because that truth would be stranger than fiction.

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Since Records Began

2014 is the hottest average temperature on Earth since records began.

It’s only half a degree (Celsius) up on the 20th Century average, but that’s still half a degree in a human lifetime. This is no longer a geological-scale process of warming.

To bring this back home quite succinctly, this animation demonstrates the process of rising temperatures very well.

Two points to make a note on – the 1944 record stood for 36 years, until 1980; note also the massive jump between 1997 (a record year) and 1998 (another record year) – and it’s not as though that record stood for years, it was surpassed not very long after at all.

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The Detective Ladies of India

The Guardian has a fascinating article on the increasing number of detective agencies in India, particularly staffed with ladies investigating possible affairs:

The boy and the girl met each other, Paliwal says, and became very close in no time. “But just before the wedding, the boy began to feel a little doubt: ‘Why is this person marrying me? I am shorter than her and earn nothing in comparison.’ He called me.” It took Paliwal a month of work, which included tracing the girl’s history and having her followed. “What do I find – the business actually belongs to the girl’s boyfriend, a married man. He can’t leave his wife because her family has stakes in his business, so he has taken a house for the girlfriend and put her up there. Now the girl’s family in her village had come to know of all this and were very upset, therefore she needed to get married in order to keep her arrangement going.”

This is amazing stuff, and these detectives point the finger at social media for the rise of their business, too. Tangentially related, but I’m going to go hunt down that No. 1 Ladies’ Detective Agency book to read now.

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Subscribing to Wikipedia

Imagine a world in which every single person on the planet has free access to the sum of all human knowledge. — Jimmy Wales, Founder of Wikipedia

When you think about how many sites around the web are entirely powered off the back of advertising rather than direct money, it’s kind of astonishing something as frequently and widely used as Wikipedia runs without any advertising and serves up dynamic pages as quickly as you can imagine. There’s media and text and an ever-growing reference and resource that has proven invaluable over the years.

Think about how many times a day you use Wikipedia – whether it is because you’re a student and it’s the world’s best secondary source, or whether you want to check up a fact, or whether you’ve just gone to look up one thing and found yourself taking a wiki-walk to discover all manner of trivia. I know I look it up at least 2-3 times a day, often more.

Wikipedia from time to time runs fund-raising drives to try to pay for the upkeep of servers and suchlike, and presumably they’ve been raising enough whether directly or indirectly to keep the show running. I’ve contributed every so often over the last three years, recognising its role in the internet, but what has recently been brought to my attention is that Wikipedia offers an option to have a monthly payment.

“Subscription” was the first word that came to mind, in the magazine sense, or in the sense used these days for software offered on a timed basis, something increasingly common as a way to keep a revenue stream.

However, for Wikipedia, it’s almost more sensible to call it being a patron – in the old school, patron-of-the-arts style, enabling the people behind Wikipedia to do what they need to. I’m telling you all this to try to sell you the idea of paying for Wikipedia – it’s a resource we don’t want to see fail, the most visited site on the internet, all running for free and all built off the contributions of the visitors.

I’m a patron of Wikipedia, all for the miserly sum of $5 a month. You can be one too from as little as $3 – just head over here and sign up to support the best volunteer project in the world.

(And even if I haven’t sold you on being a regular contributor, I should’ve guilted you into throwing a little bit of money Wikipedia’s way, to make up for all those assignments it helped you pass, after all.)

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A little diversion into economics

First: an observation on house prices being driven by land use regulations: Rethinking Urban growth boundaries:

A related unintended consequence of urban consolidation is that ‘densification’ has often ceased to occur at its historically natural locations nearer the urban core and has instead shifted further away into less efficient locations (i.e. far away from employment and amenities). The reason for this is that the price of land is forced up so much by the growth constraint that households are unable to afford the ‘premium’ price commanded by more efficient locations, and are forced to locate instead at ‘less unaffordable’ but also less efficient locations. Essentially, budgets are squeezed so much by high land prices that households are forced to trade-off both space (smaller homes) and location efficiency (i.e. live further out).

This is happening in Sydney; closer to the city or in the east, NIMBYism and high prices to begin with leave those suburbs close and most easily commutable as medium density at best, while further out in brownfield sites like Rhodes are getting high density developments. Rhodes makes little sense; transport is severely constrained by georgraphical limitations, and it’s still a 30 minute commute to the CBD, but it’s getting two 25 storey apartment towers that would never be approved in Potts Point or Paddington because it wouldn’t be “in keeping with the character of the area”.

And second, a question regarding ratings agencies that I’ve had on my mind since before the 2008 crash – who rates the ratings agencies?

The 2008 crash might have been thought to have dented the agencies’ credibility. Enron products were still getting investment-grade ratings four days before it went bust. Freddie Mac preferred stock was top-rated by Moody’s till mid-2008. Shortly before its bail-out by the Fed, the insurance giant AIG had entered into credit default swaps to insure $441 billion of AAA-rated securities on the London market. In the FCIC’s words, ‘the three credit rating agencies were key enablers of the financial meltdown’. Moody’s comes in for particular flak. In 2000-7, it rated nearly 45,000 securities as AAA. Eighty-three per cent of the securities given that rating in 2006 were ultimately downgraded.

Not that there’s any answers on that page, but I have no idea how S&P, Moody’s and Fitch have a fig-leaf of credibility remaining, but yet governments remain hooked to maintaining the highest credit rating possible from these three agencies that utterly failed in their role as independent advisors of risk. It’s insane, and yet the circus continues.