The data docket is relatively sparse in the US this week. Housing figures, claims and Markit PMIs aren’t likely to move any needles, leaving traders to parse a crowded roster of Fed speakers for potentially actionable soundbites.
Or something. That’s the boilerplate copy. No sense in calling it anything other than what it is.
An update on the Chinese economy is doubtlessly the marquee macro event. Or at least the marquee scheduled macro event. Crucial data out Monday will validate expectations for a sharp deceleration amid overlapping and proliferating crises, not least of which is an acute power shortage emblematic of a worsening global energy crunch.
The figure (above) speaks for itself. Beijing is working to ameliorate the situation, but efforts to combat surging prices clash with climate priorities.
In the US, the growth outlook has deteriorated too, albeit not as dramatically as it has in China. Americans are losing faith in the government’s economic policies amid Democratic infighting, which is arguably doing more to undermine confidence than wholly predictable GOP recalcitrance.
Joe Manchin’s opposition to the White House’s fiscal agenda has all but torpedoed hopes of transformational socioeconomic change. And it may also be another nail in the coffin for the nascent green energy push.
It’s hardly surprising that Manchin, who hails from coal country, single-handedly compelled Democrats to abandon a sweeping plan to replace coal and gas with wind, solar and nuclear energy. “The $150 billion clean electricity program was the muscle behind Biden’s ambitious climate agenda,” The New York Times wrote, adding that “experts have said that the policy over the next decade would drastically reduce the greenhouse gases that are heating the planet and that it would be the strongest climate change policy ever enacted by the United States.”
I think it’s important we come to terms with our own demons and otherwise acknowledge why so many of us are obtuse about this issue. This is especially topical now that opponents of a rapid transition away from fossil fuels can point to soaring energy costs as evidence that we’re simply not prepared.
The figure on the left (above) shows how absurd the situation was in Europe earlier this month, while the simple chart of Brent (on the right) illustrates, in part anyway, the knock-on effect (i.e., gas-to-oil switching).
The worsening global energy crunch currently manifesting in surging prices lays bare the peril inherent in a rushed, haphazard transition to green energy, especially at a time when pandemic distortions are playing havoc with supply/demand forecasts.
However (and this is a big “however”), it’s not as if humanity hasn’t had ample time to execute this transition. We’ve known for decades that the planet faces an ecological disaster. We procrastinated, as we’re wont to do. Now we’re paying the price. At the pump and on our heating bills, yes, but also in flooded basements, inundated towns and scorched forests, where we’re suffocating, drowning and burning alive, along with our families, relatives and pets.
Although this is likely to irk a few people, the fact is, some folks really don’t care about their children and grandchildren. That’s not an emotional appeal or some kind of bleeding heart petition. I have no children which, in all likelihood, means I’ll have no grandchildren. So, if you’re inclined to be sarcastically callous by claiming it matters little to you how hot or cold it is in the year 2170, just note that it matters not at all to me.
In addition to having no children, I have no friends to speak of, which in turn means I have no friends with children. In short, no one connected to me will be alive in 2170. If you can’t say that too, you can spare me the pretensions to being less interested in the future than me. My assessment is objective by definition — unbiased not because I’ve endeavored to be even-handed, but unbiased because it couldn’t be otherwise.
We’re teetering precariously on the brink of an ecological catastrophe and it seems highly likely that large parts of the planet will be totally uninhabitable within 150 years. It strikes as me as wildly disingenuous that critics of “expensive” green transition policies cite the debt burden of future generations as an excuse for not taking action to stabilize the biome for their children and grandchildren.
Even if you believe the (manifestly false) claim that developed nations with sufficient monetary sovereignty are budget constrained, debt and deficits become less and less relevant the closer we get to outright ecological meltdown.
We live on a rock which fortuitously doubles as a giant biome. The rock is fine (I think), but the biome is dying. And no God or gods (lowercase, plural) are going to intervene to save it. Either humans fix it or, eventually, the rock will be all that’s left. It’s just that simple.
That we cite manmade constraints for our purported inability to address an existential crisis isn’t a testament to shortsightedness or even ignorance. It’s a testament to greed and the fact that, ultimately, most people care first and foremost about themselves and thereby place a premium on the here and now.
When faced with the prospect of financially ruinous heating bills, expensive gas for dump truck-sized SUVs, the loss of campaign contributions and/or the mental distress that goes along with admitting that your political philosophy is endangering not just your species, but all species, people simply look out for their own physical, economic and psychological interests. Regardless of what that implies about their lack of concern for ecological stability and, in turn, the lives of their own children and grandchildren.
You could argue that if hyperinflation ensues or if surging energy costs bankrupt your family or if fiscal and monetary largesse aimed at facilitating green transitions in advanced economies ends up exacerbating hunger in emerging markets by pushing up food costs, the longer run doesn’t matter.
But that’s wholly disingenuous. There’s no threat of hyperinflation in advanced economies. No serious person believes that. And fiscal policies (e.g., transfers and subsidies either unfunded or “paid for” by a small tax on corporations and the wealthy) can ameliorate higher energy costs for middle- and lower-income families over the course of the transition. As for food costs, what’s more likely to trigger widespread famine over the next several decades: Monetary policy or climate shifts that render it impossible to grow food in key locales?
Finally, I’d note that anyone who tells you this is a liberal versus conservative debate doesn’t know what they’re talking about. Most people can’t even define “liberalism” mostly because there’s no set definition.
This might come as something of a shock, but we’re all liberals. Every politician on the planet espouses some tenet that can be attributed to liberalism. If you make an exhaustive list of those tenets and try to imagine what life would be like if you reject all of them, you’ll find that you too are a liberal. What do you think got us here in the first place? Below, find a hint from “21 Lessons for the 21st Century“:
Liberalism reconciled the proletariat with the bourgeoisie, the faithful with atheists, natives with immigrants, and Europeans with Asians by promising everybody a larger slice of the pie. With a constantly growing pie, that was possible. However, economic growth will not save the global ecosystem — just the opposite, it is the cause of the ecological crisis.