On a Grantham Interview, Austerity and the 1%, and the Maths on Weight Loss!

From: aditya rana
Date: Sat, Apr 27, 2013 at 2:31 PM
Subject: On a Grantham Interview, Austerity and the 1%, and the Maths on Weight Loss!

Hi!,

Jeremy Grantham gave a wide-ranging interview to the Guardian recently, covering the environment, energy, climate sceptics, China, austerity and long-term investments. As is usually the case, Grantham provides thoughtful and well researched insights into these important issues facing our planet and I have provided below relevant excerpts from the interview : http://www.guardian.co.uk/environment/blog/2013/apr/15/jeremy-grantham-population-china-climate

On the Environment:

– As Bill McKibben detailed in a Rolling Stone article last year, if we use up more than one-fifth of the amount of proven carbon reserves we will increase global temperatures by more than 2C, with devastating consequences.

-We will surely get there if, after using all the available cheap, high-quality oil and gas, we start burning an appreciable percentage of our coal, tarsands, third-derivative and energy intensive oil and gas and shale gas via fracking.

-No civilization in history has looked durable and resilient until the advent of coal, and after harnessing the amazing power of hydrocarbons, we are reaching the end of this era.

-The main issue confronting us is not “peak oil” but “peak temperature”, as we have benefited from very stable temperature over the last 10,00 years which has now become very unstable. Grains, in particular , are very susceptible to temperature increases. We have just had three consecutive very-bad grain harvests.

-Higher grain prices, which tripled over the 2002-2008 period, are having a devastating impact on the poor half of the world (and in particular the poorest 10%). Population growth, the growing middle-class in China, and the paradigm shift upwards in oil prices have been contributing factors.

-However, if we are able to achieve energy sustainability over the next few decades through the use of alternative energy, we can then focus on turning agriculture into a more sustainable form and also try and deal with the intractable long-term problem of depleting (and irreversible) metal resources. Declining global fertility rates will be critical in this process.

On Energy:

-We have studied 330 bubbles of which 40 are the really important ones – and every single one of them had burst back to the underlying trend. However, oil has clearly exhibited a paradigm shift in prices, with a steady trend line price of $16 (at current prices) until the jump to $36 in 1972/73, and then the dramatic four-fold increase over the 2002-2008 period.

-Every previous wave of technological progress – the steam engine, cars, air conditioning, iPads – required incremental demand for energy. The latest wave of alternative energy technology – solar, wind, biomass, intelligent grids, and critically storage – has the potential to reduce our dependence on increasingly costly and environmentally damaging carbon resources.

-Prices of alternative energy resources are falling sharply – prices of solar panels are 25% of what they were two years ago which can make them commercially viable. Meanwhile, the price of hydrocarbons are increasing and these price lines are likely to cross sometime over the next twenty years, hopefully leading to the shutting down of all coal production.

On China:

-China has the potential to make a huge impact on increasing our capabilities in alternative energy – they have the capital (50% of GDP in capital investment) and high scientific capability in their leadership class.

-To reduce pollution, China recently announced an incredible 65% increase in solar plants by 2015 – that’s equivalent to 20 large state-of-the art coal plants. They are also investing in wind, storage and smart grids and have the potential to achieve complete energy independence (through alternative and sustainable energy) in the next 25 years.

On Climate Sceptics:

-There are parallels between investor refusal to recognise market trends and our reaction to some of the environmental issues as there is a general unwillingness to process unpleasant data.

-As the scientific evidence for climate change gets stronger, the tone of the sceptics gets louder and shriller. They have profound beliefs – as opposed to knowledge based on facts – and their libertarian beliefs make them believe that any government interference is bad. However, dealing with climate change effectively requires government leadership.

On Austerity, Debt and Monetary Policy:

-Implementing austerity too quickly can inflict considerable damage and pain on the economy. The world tends to exaggerate the importance of debt as it takes away the focus on the real world and things like the quality of education, the quality and quantity of capital investment and the legal structure.

-China does not really have a debt issue as they have used their capital to build world class infrastructure with real people, real cement and steel which are all part of the real world. In contrast, America tripled their debt since 1982 without any significant impact on the long-term growth prospects of the economy.

On Long-term Investments:

-Farmland, forestry and land given the developing food crisis.

-Oil and gas companies (but not coal and tarsands enterprises as they will eventually become commercially unviable) as we expect a continuous rise in the price of hydrocarbons as we extract all the cheap resouces and move onto the expensive stuff.

Deep, well researched and thought-provoking thoughts. They reiterate the critical importance of having a significant exposure to natural resources, in particular energy, and China, as part of a well diversified portfolio.

There has been substantial coverage of the austerity versus stimulus debate in the media following the debunking of the “debt over 90% leads to a sharp fall in GDP growth” hypothesis of Reinhart and Rogoff. Paul Krugman, a leading proponent of the need for further stimulus view, provides an interesting take on the possible rationale behind the austerity agenda:

The 1 Percent’s Solution, by Paul Krugman, Commentary, NY Times:

-Economic debates rarely end with a T.K.O. But the great policy debate of recent years between Keynesians, who advocate sustaining and, indeed, increasing government spending in a depression, and austerians, who demand immediate spending cuts, comes close. At this point, the austerian position has imploded; not only have its predictions about the real world failed completely, but the academic research invoked to support that position has turned out to be riddled with errors, omissions and dubious statistics.

-Yet two big questions remain. First, how did austerity doctrine become so influential in the first place? Second, will policy change at all now that crucial austerian claims have become fodder for late-night comics?

-On the first question: the two main studies providing the alleged intellectual justification for austerity did not hold up under scrutiny. Meanwhile, real-world events quickly made nonsense of austerian predictions.

– Yet austerity maintained and even strengthened its grip on elite opinion. Why?

-Part of the answer surely lies in the widespread desire to see economics as a morality play. We lived beyond our means and now we’re paying the inevitable price. But you can’t understand the influence of austerity doctrine without talking about class and inequality, a point documented in a recent research paper.

-The average American is somewhat worried about budget deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face. The wealthy favour cutting federal spending on health care and Social Security — that is, “entitlements” — while the public at large actually wants to see spending on those programs rise.

-You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.

-And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?

-I hope not; I’d like to believe that ideas and evidence matter… Otherwise, what am I doing with my life? But I guess we’ll see just how much cynicism is justified.

The Maths on Weight Loss (Harvard Medical School – 3/13):

A quick and easy way to think about what is required to loose weight!

The pleasure of eating a candy bar lasts but a few minutes. Burning off the calories it delivers can take nearly three-quarters of an hour.

To lose one pound by exercising, you need to burn approximately 3,500 calories. It can take days of moderate exercise to do this. A better strategy for weight loss involves a two-pronged approach: exercising and cutting calories.

Although exercise by itself isn’t the fast track to weight loss, it does offer important benefits beyond cancelling out calories. It slightly increases the rate at which you burn calories even when you’re not working out. And pounds lost through boosting your activity level consist almost entirely of fat, not muscle.

Start with this number: 3,500. That’s how many calories are stored in a pound of body fat. With that number you can tally up how much weight you can lose through activity, cutting calories, or both.

  1. Walking or jogging uses roughly 100 calories per mile. (Precisely how many calories you’ll burn depends on a number of things, including your weight and how fast you walk.) So you’d lose a pound for every 35 miles you walk — provided you keep food intake and other activities constant.
  2. If you walk briskly (at a pace of 4 miles per hour) for 30 minutes on five out of seven days, you’ll log 10 miles a week. That means it would take three-and-a-half weeks to lose one pound if the number of calories you consume stays the same.
  3. If you alter your diet and cut back by 250 calories a day (½ cup of ice cream or two sugar-sweetened sodas), you’d lose a pound in two weeks.
  4. By eating 250 fewer calories and walking for 30 minutes a day, it would take just over a week to lose one pound. Reducing calorie intake even more and exercising more would further speed the process.

Here’s to thinking about the environment!

Regards

Aditya

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