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Graham Watson
onto Microeconomics: IB Economics December 10, 2018 11:54 AM
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Exclusive: Arguments in favour of capping rent inflation ‘overwhelming’, Khan tells MP
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US government shutdown and uncertainty about the economy has caused a surge in value of precious metal
Graham Watson's insight:
D&S and gold. Gold as a store of value, a safe haven.
Basics, really.
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Developing countries lead the historic clean energy charge but the US and EU rely more on fossil fuels than before, a think tank study shows.
Graham Watson's insight:
Is this an inflection point for the global economy - with renewable energy overtaking fossil fuels as the world's largest source of energy. However, it is interesting to note that, according to Ember, it's developing economies are leading the way, with the US and the EU more reliant on fossil fuels. Of course, President Trump's insistence on the 'con' of climate change and desire to use fossil fuels including coal, isn't going to do anything to improve this, but, overall, reasons to be hopeful.
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Under new proposals, sellers and estate agents will have to provide key information about a property up front.
Graham Watson's insight:
The government is looking at ways of making it easier to buy a house, with sellers and estate agents obliged to provide more information about the house, improving information and lowering the cost of buying a house.
The hope is that it will make the housing market more efficient.
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As well as embracing ‘beautiful coal’, the president has set about obliterating clean energy projects
Graham Watson's insight:
And, unsurprisingly, as well as falling behind in the market for electric cars, the US is falling behind in all sorts of other ways in relation to renewable energy and other markets.
It doesn't help that the President is a climate change sceptic, or ignorant to a quite remarkable degree.
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Despite a recent surge in demand, the US is a laggard in EV sales compared to much of the rest of the world.
Graham Watson's insight:
Why does the US lag behind the rest of the world in terms of the take-up of electric cars? In short, there's a lack of innovation in the US and government policy hasn't been as accommodating as it has been in Europe, to the extent that the recent pick-up in sales reflects not a permanent change in consumer tastes but the fact that the government is ending a subsidy worth $7,500 (£5,588) at the end of the month.
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The EU and the UK have imposed sustainable fuel mandates, but airlines question supply availability and pricing
Graham Watson's insight:
The prospect of aviation being net zero by 2050 is largely dependent upon technological advances, not least in terms of the commercial use of sustainable aviation fuel (SAF). The EU and UK have imposed mandates, stipulating that 2% of jet fuel should be sustainable, and this will rise to 6% in the EU and 10% in the UK by 2030.
Some airlines appear to have secured sources of SAF, but far from all - not least budget airline Ryanair who have dismissed the mandate as unattainable. although there are suggestions that it could become easier to produce 2nd generation SAF.
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Creditors may well succeed in their plea for lower standards, but at this point customers deserve to see some proper detail
Graham Watson's insight:
Another Nils Pratley piece looking at the danger of unsatisfactory intervention, with the future of Thames Water being debated. The notion that the government would allow a company not to comply with existing environmental regulation for a decade is absurd, and surely Thames' creditors must realise this.
This is why, on balance, it seems that Pratley argues for temporary renationalisation. That way the Augean stables may well get swept sooner rather than later, and things like the environmental costs of marine pollution prioritised over returns to creditors, which, to be fair, is what it should be.
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If the government is in the intervention game, it should be intervening where need is most urgent – among JLR’s suppliers
Graham Watson's insight:
Excellent evaluation of the government intervention to defray the costs of the cyber-attack on Jaguar Land Rover and an introduction to how lobbying distorts policymaking.
As Nils Pratley rightly outlines JLR should be able to access cash at a very reasonable rate of interest to sustain its operations; the same cannot be said for its smaller suppliers. Similarly, whilst JLR is likely to be heard by the government, the same cannot be said for its smaller suppliers.
All in all, a fudge. But one that could have been avoided. No doubt, the government will say that lending to smaller suppliers would represent more of a risk; however, not if JLR commit to continuing to buy from them.
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It will be increasing the price of its breakfast meal deals, with a smaller increase in the cost of its biscuits.
Graham Watson's insight:
A costs related article for Year 13 economists to get their teeth into. Greggs have reported that their costs are rising, and as a consequence, they are going to have to increase the price of its breakfast meal deals and its biscuits. You should be able to model the effect of an increase in variable costs on equilibrium price and output.
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Investigation shows extent of green land lost across UK and mainland Europe to development from 2018 to 2023
Graham Watson's insight:
Does economic growth necessarily entail an environmental opportunity cost? Discuss.
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Crisps, sweets, chocolate and fizzy drinks will be covered by restrictions starting in England.
Graham Watson's insight:
The government is intervening in the market for unhealthy foods - outlawing discounting on unhealthy foods, such as sweets and crisps, and similar BOGOF deals - "buy one, get one free". It's all part of a public health initiative designed to tackle obesity.
However, is it good economics? That, is very much open to question, and it also has implications for consumer choice and the cost of such goods for people on low incomes. Either way, my youngest son will be less than impressed.
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Zaanse Schans, popular for its windmills, has a population of just 100 people - but more than two million tourists will have visited this year.
Graham Watson's insight:
The BBC website carries this little insight into how the tiny Dutch village of Zaanse Schans, famous for its windmills is imposing an entry fee to control the number of tourists, and in doing so limit the social costs imposed by tourism.
It's not unique - Venice has imposed a €5 charge for day trippers - but Zaans Schans is planning to charge €17.50. This might seem like a lot but the village of 100 permanent residents is expecting to receive 2.8m visitors this year. You might also think how PED is relevant here...
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Interest rates, inflation and geopolitical crises are providing the metal its strongest annual performance since 1979
Graham Watson's insight:
Another D&S story, that also illustrates why gold is so important as a store of value in the modern economy. However, in essence, it's basics... |
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Renewable energy overtook coal as the world's leading source of electricity in the first half of this year - a historic first, according to new data from the global energy think tank Ember. Electricity demand has grown around the world but the growth in solar and wind was so strong it met 100% of the extra electricity demand.
However, Ember said the headlines mask a mixed global picture. Developing countries, especially China, led the clean energy charge but richer nations including the US and EU relied more than before on planet-warming fossil fuels for electricity generation.
Graham Watson's insight:
This BBC clip accompanies the earlier article looking at the rise of renewables, not least in developing economies, although fast growth of demand for electricity in the developed world has meant that there's become even more dependence on fossil fuels than previously.
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The Shenzhen-based electric car maker says the UK is now its biggest market outside China.
Graham Watson's insight:
"The Chinese are coming!" to paraphrase Colin Welland. One for the kids there....
However, Chinese EV manufacturer BYD has seen sales in the UK leap by nearly 900%, with over 11.000 cars sold last month and 100 dealerships in the UK, making it the company's second largest market after China.
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CMA poised to give verdict after appeal by five firms for permission to increase bills higher than allowed by Ofwat
Graham Watson's insight:
Interesting times in the water sector, with the regulator, OFGEM, due to rule on whether or not five water companies - Anglian, Northumbrian, Southern, Wessex and South East - can increase their bills by more than the regulator initially proposed.
It's fascinating because they are going to argue that in order to fund much needed investment, the proposed price increases are too small, and you can see that this may well be true. However, in the context of the post-privatisation era, you might also argue that previous mismanagement of the companies has brought us to this point; the difficulty though is that the companies can't act retrospectively.
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Exclusive: Differences over changes to environmental and legal provisions to prompt economic growth hint at chaos at heart of government
Graham Watson's insight:
It seems to be the case that the government are going to relax planning restrictions in the hope of kickstarting housebuilding. However, there's still disagreement about how far to go in changing legislation. Either way, it seems that the endless trade-off between economic growth and environment is going to be debated again in relation to the housing market.
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EVs rise nearly a third in September compared with a year earlier, as plug-in hybrids jump by 56%
Graham Watson's insight:
Nice little D&S story that Year 12 economists should be starting to get their teeth into. There's been an increase in the number of electric cars sold as a result of the reintroduction of a subsidy designed to encourage their take-up.
As a result, battery EV sales are up by a third and "plug-in hybrids, which combine a petrol engine with a smaller battery that can be recharged by cable, jumped by 56% to 38,300". The extent to which the quantity demanded will have increase depends upon the size of the subsidy and PED/PES, of course.
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New figures reveal mums in England see their earnings drop after having a first, second and third child.
Graham Watson's insight:
The ONS has investigated the cost of women having children on their post-childbirth pay. Indeed, as the article states "Five years after having their first child, mums' earnings drop by an average of £1,051 a month compared with their salary one year before having a child" with their earnings further affected as they have more children.
It's a stark reminder of the existence of the gender pay gap and how far we've got to go in tackling it, with some staggering figures produced: the total loss in earnings when having their first child is £65,618, £26,317 for a second child and £32,456 for a third.
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Lenders say a ‘full return to legal, regulatory and environmental compliance’ under new rescue plan would not be completed until at least 2035-2040
Graham Watson's insight:
Apologies for one of my 'going off piste' moments.
However, the executives who've allowed Thames Water to get into this state should face criminal prosecution for flouting environmental law. It will be the case that they are no longer in post, but this has been a persistent campaign to evade the law and should be treated as such.
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The industry has always wanted the NHS to pay more for its drugs; now it is pulling research and investment out of Britain, says director of Global Justice Now Nick Dearden
Graham Watson's insight:
This Nick Dearden article highlights the ongoing stand-off between big pharma and the UK government. The former have postponed nearly £2bn of investment, the latter are accused of negotiating down the price of drugs to an uncompetitive level, and the voluntary scheme for branded medicines pricing, access and growth.
It's also interesting to note that their are suggestions that there's been some collusion among the drug companies when they announced the postponement of investment so closely together - something that's not inconceivable.
It's almost as if there's a bilateral monopoly in the sector.
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The number of visitors to the region has risen 160% in 30 years as concerns grow for its fragile ecosystem and indigenous practices
Graham Watson's insight:
In a similar vein, are there inevitable environmental costs to increased tourism? This article looks at an explosion of tourism in Lapland and the potential external costs that this entails.
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Companies call for an "enduring" support scheme as energy prices rise by 2% for millions of households.
Graham Watson's insight:
The latest version of the energy price cap - or more technically the Energy Price Guarantee - which will see the average energy price increase by 2% per year. However, households are currently £4.4bn in debt to energy companies and there are concerns that this will get worse, even with interventions such as the Warm Home Discount, which knocks £150 off winter bills for one in five households.
Fuel poverty, it seems, is here to stay.
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White House allocating 13.1m acres of public land to coal mining, which has been on rapid decline over past 30 years
Graham Watson's insight:
Not sure what to make of this: US coal production has fallen in line with the falling share of coal-fired electricity generation - from 50% of the total in 2004, to around 15% today.
And whilst everyone else is moving towards cleaner fuels, the US is spending $625m reviving the dirtiest fossil fuel - coal mining. It just strikes me as a retrograde step given the environmental impacts.
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While Javier Milei’s shock therapy to tame inflation has won support from Washington and the IMF, ordinary Argentinians seem less impressed
Graham Watson's insight:
Interesting Heather Stewart article looking at the extent to which the US is supporting Javier Milei's government in Argentina, the effects of his two years in power on the Argentinian economy.
Elected on the basis of his opposition to the status quo, Milei has cut public spending, tackled the trade unions and privatized a number of industries, straight from the Thatcherite playbook. However, although these policies have proved popular with the IMF, have the increased economic welfare in the economy?
A number of indicators suggest not: unemployment is up, and under-employment may also have increased, real wages and investment has fallen. But is this the price that has to be paid for driving out inflation and getting the economy back on track? We shall see... |
One for my Divisions economists, with the news that the Mayor of London, Sadiq Khan, is thinking of introducing rent controls to the capital. We're about to start looking at the topic of price controls and whilst seemingly a good idea, there are lots of reasons for believing that this sort of move would do little to alleviate the problem and is, in fact, more likely to worsen it.
Additionally, the photograph associated with this article does rather look like the world's worst album cover.