iron ore and our economy

Well firstly I'm no economist, but that may go for or against me depending on who you ask.

This morning I was reading the Australian and noticed in a discussion on the down turn of fortunes of BlueScope Steel I find this comment:

Since 2003, iron ore export prices have jumped from $US10 a tonne to $US140 a tonne and coking coal from $US50 to more than $US230.

Which would seem like a "wow" sort of figure, that seems like enormous growth in the value of iron ore and coal.

But is there more to it than that? Well I think there is.

the comparison is in US Dollars, which have been taking quite a hammering in value over that period. There have been numerous articles in proper literature (not newspapers) complaining that the US Federal Reserve has been printing too much money and causing inflation. This leads to situations where the dollar becomes worth less. Even if you play monopoly and have an extra stash of money under the table the other players will get angry with you won't they?

So what else can we compare it with? Well I say that money is a formalized exchange media, and that its "floating" is an experiment which history has indicated to be a little unreliable. Other commodities can be a source of exchange. Normally we pick something which is:

1. rare
2. impossible to counterfeit
   
3. desirable (my used tissues are rare and impossible to counterfeit but noone wants them)
   

For some greater part of human history Gold has been exactly this commodity (and also used to underpin currencies until governments over spend and have to un-pin)


Looking at Iron Ore prices in the context of another commodity (Gold) we see a different story.

Both have undergone quite large changes in their "worth" when measured in US Dollars.

So has their "worth" gone up, or has the value of the purchasing unit (the US Dollar) gone down?

Personally I would argue that it is in fact the fiat currency which has undergone deflation in value and that the commodities are undergoing far more normal sorts of supply and demand "valuation" changes.

The Australian starts their article with this quite interesting graph of the data of world Steel Production. It shows some interesting comparisons on the factors such as the Japanese Industrialisation and then the Chinese Industrialisation (which is not yet as matured as that of Japan).

its interesting to note how world steel production remained quite flat between 1971 and around 2000 (the point at which China started to increase its production). This becomes quite clear in the relationships presented in that graph.

This would make it seem reasonably clear that it is actually China driving much of the new demand and is perhaps also inserting itself in the market place and displacing other makers. Either way China has a lot of industrial growth to catch up on if you compare the state of China in the mid 1980's to what other industrialised nations were at that time to that same comparison now.

Eventually China will have to plateau out as did the previous historical demands, perhaps that may be in 5 years, perhaps that may be in 20 years. However "when" is not the question in my mind my question is "what happens then".

Economic theorists would suggest that we arrange our economies such that the author of that article has suggested: "that nations prosper from trading with each other after specialising in what they do best"

This is an ideal world in which many factors (often called externalities) are ignored in the analysis. I would doubt that anyone would suggest that we (for instance) give up on having an armed forces and allowing the nation who does that best to specialise in our national defense?

The natural systems which we observe fail to provide any real examples of this sort of concept, except perhaps the insect world. If things are made in the one place that 'specialises' in it, then diversity will vanish and we will suffer as a result.

Now people may claim we would get diversity because "the market place would demand it", well over the last 40 years of my lifetime equally as many good ideas have vanished from the market in the homologation of product lines as have entirely new products emerged. Just because I can get an iPad now and couldn't then doesn't mean that other tools and products which I valued and were very useful then are all still available now.

• I can buy a whole new hand saw for $12 at Bunnings but try to find a tool for sharpening and putting set back on the teeth?
• Increasingly people know less about stuff and how to fix it, just dump it and buy another.
• Stuff is increasingly less repairable.

My family and I benefit from my simple solar floor heating, which will also lend itself to an interior gas powered floor heating system at night. I was able to design and install that for next to no money. If I had to pay some one to install that it would have had a much longer (perhaps infinite) payback period

None of this matters however if you just stay living in the hive.

Let me adapt a quote from Robert Heinlein to take it outside the context of his novel "Time Enough for Love"

A human being should be able to change a diaper, plan an invasion, butcher an animal hog, design a building, write a poetry, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.

Maybe they would wish us to evolve as a society into something like insects, but I think there is a flaw in that theory. While White Ant hives operate in the manner these economists would direct us, the reality is that we do not yet have a global hive with a single purpose and single ethic. That stuff is the realm of Aldus Huxley and I for one will not be assimilated.

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PS: a good question by Joshie Boy ... this is that growth in price for Iron and Ore normalised on the value of Gold

new micro43 stuff

Regular readers of my blog may know of my interest in the micro 4/3 camera system; a system which promises smaller lighter cameras with big sensors as in most DSLR cameras.

Today I read that Panasonic have now released a new lens in the micro4/3 system range which at last brings compact zoom to interchangeable lens cameras.

I found this comparison image as part of an image on the dpreview site (here) and I think it shows just how compact they have managed this new lens is.

The new lens seems to draw upon the sort of motorised lens extension that all digicams have had since about the year 2000. So you get a compact lens for travel that opens out a little for use.

It would seem that the new lens is nearly as compact as the 14mm pancake or 20mm. But importantly it gets OIS while the others don't.

This is actually really significant when doing video. Even though fans of the 20mm will tout how much better it is to have the extra stops of light that only counts for something in stills. In video having OIS means with a reasonably steady hand you've got vid as smooth as if it was on a tripod.

FANTASTIC

As I have mentioned before we just don't see many (until now) compact lenses in the micro4/3 lens range and why can't we have digital cameras with interchangeable lenses which are compact.

Below is my Panasonic G1 with Pentax 110 lenses; a camera from the late 70's which used film of almost exactly the size of the sensor in the 4/3 cameras.



You can see that these lenses are quite compact and light. The one on the left is a 50mm which equates to an effective focal length of 100mm ... that's right a portrait telephoto.

Well it seems that since 2009 we are now starting to see movement at the station.

Fantastic

solar floor heating - rainy windy and overcast results

The last week has been windy, rainy and overcast, so I didn't expect that the solar system would be making any significant impacts.
But a quick trip outside in the day reveals the quiet bzzt bzzt bzzt of the motor pulsing a tiny circulation of water through the floor pipes. More so when there is a break in the clouds and it springs into action immediately.

This is a good sign as this means that at least some thermal mass (of water) is being circulated and doing something to make the floor warmer.

My temperature readings over the last 24 hours (in the blue) indicate that we've kept our inside max temp at the same level of the outside max temp which is great IMHO. Previously if we had a max daytime temp of (say) 20°C during the day the house would never get warmed up that much and would be at more like 16 or 17°C peak and with the inside often being just a few degrees (like 2 or 3) warmer than the minimum (see the magenta line).

I'm quite pleased with these results in the light of the energy input requirements (like freely environmental available) and the floor insulation not only helps bring this into the house but also keep it there.

I'll be very interested to see how this goes when I add in the component of gas heating in the night. I'm guessing that it will bring up my bottom and keep it from falling so low. Mmmmm nice even temps.

NOTE: as I write this at 7pm local time the outside temp has dipped to 16.4°C and the inside is remaining steady at the 20.0°C down from the 20.8°C its was at lunch time.

Keep Australia Beautiful

I heard this morning that litter is getting worse in Queensland compared to each of the mainland states (does this mean that Tassy is the worst?) and that Keep Australia Beautiful have released figures suggesting that:

"The biggest increases in Queensland litter, were recorded at shopping centres and carparks (both up in volume and number), highways (up in number, down in volume) and recreation parks (down in number up in volume)."

See the report here

As one who has been associated with environmental education folks for some time I find this trend to be exactly what I predicted over ten years ago.

I recall a conversation with 2 educators on Fraser Island (while we were collecting shit off the beaches there left by wankers who call themselves fishermen) that the last thing you want to do is encourage more people to come to national parks, even if it does somehow liberate more funding from the government it won't pay for the extra damage caused by the extra bogans.