We spend a lot of time discussing the failings of the Banks, the Regulators, and the Government, but we often forget to consider the role of the people who created the “asset” that was used as collateral for the borrowings which got us into this mess.

I did an interview with Ian Noctor on WLRfm on the subject this evening and we went through the whole issue of County Development Plans, Regional Planning Guidelines, and the National Spatial Strategy. We looked at how the system is supposed to work, and then talked about how and why it didn’t work.

But let’s start with the articles in the Irish Independent.

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Editorial: Manic zoning cost us dearly

The councillors rezoned an incredible 44,000 hectares of land — equivalent to half the size of Co Louth — in the last decade. This amounted to almost four times the official estimate for the quantity of land needed to meet the country’s housing needs until 2016.

It would have meant enough land to accommodate almost 1.5 million houses and apartments. These could have housed more than four million people, nearly equal to the present population.

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The manic zoning helped to lead to perhaps as much as €20bn of the banks’ stupendous losses, for which the taxpayers will foot the bill.

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Paul Melia: Children with crayons would have made better planners

THE sorry rezoning mess alone is reason enough to turf most of the country’s city and county councillors out on their ear come the next election.

Every serving politican who calls looking for a vote should be quizzed in great detail about their zoning decisions because it is these people who have left us with a multi-billion euro mess that will take years to sort out. Toddlers with maps and coloured pencils could have made a better fist of proper planning.

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NOW is the time to decide whether or not we trust local communities (and their politicians) to plan their own futures, or should we leave the decisions with central government?

The current strategy hasn’t worked — 2,700 ghost estates is testament to that. But what’s the alternative? Let Dublin decide?

This is the last throw of the dice for the councillors. In the next year, they will have to bring their plans in line with national policy. And when the dust settles, and the country gets off its knees, those toddlers better have grown up.

We can’t afford to get it wrong again.

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Councils zoned land for million surplus homes

LOCAL authorities fuelled the property boom by rezoning enough land to build more than a million homes that were not needed, the Irish Independent can reveal.

The full extent of the zoning madness is confirmed for the first time today as new figures show the scale of the problem is worse than previously feared.

Councils across the country rezoned more than 44,000 hectares of land for housing over the past decade — 31,633 hectares more than was actually needed.

This equates to enough land for almost 1.5 million houses and apartments — but just 400,000 units are needed up to 2016, according to the Department of the Environment.

The revelation raises serious questions about the complete lack of regulation that allowed councillors to fuel the property bubble by deeming vast tracts of land to be suitable for housing.

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One-third of the toxic property loans going into NAMA are linked to land, meaning taxpayers could be stuck with €20bn of loans linked to fields that may never be developed.

An Bord Pleanala chairman John O’Connor has previously criticised the extent of the rezoning, saying “excessive and unsustainable zoning of land” had been a contributor to the property bubble and its aftermath.

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So what does all this mean?

If we take the excess land that was zoned, and compare its value as agricultural land with a price tag of €10,000 an acre with its value as development land with a conservative notional value of €200,000 an acre.

31,633 hectares = 78,166 acres.

78,166 acres x €10,000 = €781,660,000 at Ag values

78,166 acres x €200,000 = €15,633,200,000 at conservative development values

€15,633,200,000 – €781,660,000 = €14,851,540,000

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That is €15 Billion of wealth that was created out of thin air by Councillors making rezoning decisions on land that was not actually needed for development during the period through to 2016.

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So what did the owners of this wealth do?

They toddled down to see their local Bank Manager, and they borrowed money against the value of their “asset”.

Either that, or they got a visit from an Auctioneer who had a client who had borrowed money from the local Bank Manager with which to buy said “asset”.

Either way, the landowner was now worth €190,000 an acre more than they were the previous day.

Post the collapse of Lehman Bros, and the great unravelling of the International Money-Go-Round, most of that uplift of €190,000 an acre has been spent, invested, or is buried in a tea chest behind the old McCormick combine up the top of the haggard.

The acre is now only worth €10k again, and this will be formalised when it is de-zoned in the next County Development Plan, however the debt to the local Bank Manager for the €190k still remains.

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Lots of people had their heads up their arses when it came to the property bubble, and the incompetence, stupidity and greed was not just confined to the Bankers, the Regulators and the Government.

Likewise, the mistakes in Ireland were replicated in many other Countries, including the USA, the UK, and Spain. James Howard Kunstler coined the term “cranial rectosis” in his Blog today when he ranted eloquently about the incompetence, stupidity and greed of all and sundry involved in the US Banking collapse.

The banking authorities were shocked – shocked – to discover last week that an awful lot of mortgage paper in this country is not quite in order… appears to contain, er, irregularities… seems less than kosher… frankly, exudes an odor like unto dead carp or, shall we say, a heap of dead carp the size of the building at 3900 Wisconsin Avenue, N.W., Washington, D.C. Any day now we will hear that… mistakes… were… made.

Is it indelicate to say that the USA as an enterprise has its head so deeply and firmly up its ass that the all the proctologists alive on planet Earth could not extract the collective cranium from the collective cloacal chamber even with the aid of a Bucyrus-Erie 1060-WX bucket-wheel excavator? Like, where were we the past ten years?

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But the important thing now is not to play the blame game, but to understand what happened, why it happened, and to figure out how we make sure it doesn’t happen again.

If the Countries of mainland Europe could pull themselves back up out of the devastation of World War II, then there is no reason that Ireland can’t get back on track now.

We now need to focus on how we get going again.

On the animal front, this week saw the arrival of three Khaki Campbell ducks. I cobbled together a duck house from an old kennel and a chicken run. The ducks stayed in the run on Friday and Saturday to get comfortable with all the comings and goings around the place – particularly the dogs – and then today we let them out in the late afternoon for a couple of hours. They made straight for the pond, even though it was out of sight over the brow of the hill. They arrived back safely before dark, and took a tour through the farmyard on their way. The good news is that they are already laying eggs.

I attended a Wexford Green Party meeting on Tuesday night and it was a breath of fresh air to see a group who were discussing things they had done, and things they are going to do. One particular novelty was the fact that there were two Green Councillors at the meeting who were able to bring us up to date on the activities of their respective Councils. Another novelty was the fact that there were two new members attending their first meeting.

On Friday morning I was on radio to discuss John Gormley’s proposal that all the Political Parties work together to create a robust four year budgetary strategy so we can demonstrate to the Bond Market that we are on top of the problem. This is something that has been discussed at length in the Green Party for a  number of years, and reflects our firm belief that building consensus on a course of action in advance is a more efficient and effective way of doing things, and will lead to better outcomes.

There was the argument that we should have an election first, but we saw the downsides of that strategy in the early 80s, when we had three elections in 18 months, and how this only made things worse. If all the Parties are agreed on the framework for fixing the crisis before the election, then there can be none of the carry-on we saw back then where Parties tried to pretend there was no problem for short term political gain. The objective, as far as I am concerned, is to get a solution implemented as quickly as possible, and the Country back on track.

Locally: The campaign to get the Rosslare-Waterford Railway re-opened with a new operator is continuing. There are a number of International Operators looking at the line as a way of getting a foothold in the Irish market. There are huge barriers – technical, logistical, financial, and (most importantly) political – to be overcome if the line is to be re-opened by a new operator, but the prize is huge if it can be made happen.

Nationally: The Banking crisis seems to have been parked, for the time being. The Government’s strategy of quaranting the problem seems to be holding together even as the worsening economic crisis makes mincemeat of many of the assumptions they originally used when developing the strategy.

The big issue now is how the Government are going to address their massive overspend in the 2011 Budget.

There isn’t much I can add to the points I made on September 5th:

What IS a problem is the fact that the Irish Government will take in €30 Billion in revenue this year, but it will spend more than €50 Billion.

That is a problem because the €20 Billion gap has to be filled with borrowings of REAL money (not IOUs).

We had that same problem in 2008, we had it in 2009, we have it in 2010, and we will continue to have it for the foreseeable future because the Permanent Government see the problem as being a shortfall in revenue, when the actual problem is that we are massively over-spending.

It was perfectly possible to run Ireland on €30 Billion in 2002. There is no reason why we can’t run it on €30 Billion in 2011.

Everybody is focusing on the Banking problems. The real problem is the bloated cost of running the Country.

That is where we need to focus if we are to turn things around.

If we turn things around the Banking problems will disappear PDQ.

Actually, there is one thing I can add.

Money!

The underlying problem that everyone is missing is money.

When Seanie Fitz and the other bankers were bringing about a Billion a week in new borrowings, every week, into the Country, this money was washing through the economy in the form of wages and salaries for people all across the Country. At every stage where this money changed hands there were taxes paid – PAYE, PRSI, VAT, CGT, RCT, VRT, Stamp Duty, Excise Duty, and many more. These taxes went into the Government coffers, and back out again as wages, salaries, expenses and pensions for public servants, as payments to people and businesses that provide goods and services to the State, and in payment for the big capital infrastructure projects up and down the Country.

This money got recycled through the economy many times, providing jobs and incomes for hundreds of thousands of people.

Now this money flow has stopped. The Money Fairy has stopped pumping a Billion a week into the economy.

All we have left is the money that we earn from the export of goods and services.

If we want more money in the Country, then we have to start exporting more goods and services – to bring in more money -, and we have to stop importing goods and services that could be provided by people and businesses that employ our family members, our friends, and our neighbours – to keep more money circulating in the Country.

It is hard enough to get money into the Country, and getting harder, without pissing it away on foreign holidays, or on foreign good and services. Through NAMA, we own a couple of dozen hotels. Through Social Welfare we pay out money to unemployed hotel and bar staff.

If we holiday at home we get to have some value for our ownrship of these hotels, and we get value for the money that is paid to the staff of the facilities we visit.

Internationally: The ASPO-USA Convention was held in Washington DC this weekend.

‘Peak Oil Is a Theory the Way Gravity Is a Theory,’ ASPO-USA’s  Jim Baldauf Says During Interview on Energy Policy

“Peak oil is a finite resource,” stated Baldauf. “Any finite resource has a beginning, a middle, and an end.  We’re not saying that we’re out of oil.  We’re saying that we’re about halfway out of it.  There’s still oil in the ground, but it’s going to be more difficult, more costly to acquire from this point on,” Baldauf said, adding that “we are already feeling the impact of peak oil.”  The recession has masked some of its effects, he said, but “even in the middle of this recession, oil is at $83 a barrel this morning.  It was in 2005 that oil topped $50 barrel for the first time.”

Baldauf also discussed his experiences as an oil man and witnessing the crisis first hand.  ”I happen to be an oilman in Texas in a very small way and I’ve seen peak oil play out under my own drill bit. We’re having to drill twice as deep at twice the cost to get a third of the production.”

Firsthand commentary from the Conference is available at The Oildrum website:

The ASPO-USA Conference – First Afternoon

Jeff Brown – Exportland Model

After commenting on how production declines in major fields, he tied this in to the rising standards of the producing country, and showed that, in a base case a 5% decline post-peak production for a country’s oil, when matched with a 2.5% growth in that country’s consumption, driven by the oil, but continuing after it starts into decline, rapidly lowers exports. Simplistically within 3 years after peak the country will have exported half the oil it will export post-peak. He then compared this theoretical situation with the realities of Indonesia and the UK, where within 9 years for Indonesia, and 6 years for the UK, the countries stopped exports and became importers. Export declines in the final years were over 25% per year.

He pointed to the problems that Venezuela is seeing, and noted that consumption in Saudi Arabia is rising at 6.9% a year. He anticipates that Saudi Arabia, until recently the largest exporter (now behind Russia), will stop exporting before 2030. Looking at the top 5 exporting nations, who collectively supply 50% of the imported oil around the world, he anticipates that they will have shipped half of their remaining export volume in two years. There are now only 33 countries that produce more than 100,000 bd. And, for these, production is sensibly flat over the past five years, while consumption has risen from 16 to 17.5% of production.

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ASPO-USA Conference, First Evening

China has already in place a “Post Peak Oil” strategy. It includes conservation, domestic supply, diversification, environmental impact issues, and international cooperation. It already buys oil from all over the world, including that still in the ground, and has a major blue water navy under construction to protect those interests. They are graduating seven times as many engineers as we are. They know you cannot rebuild exhausted reserves.

Admiral Rice was, until last week, the director of Strategy and Policy at the Joint Forces Command. They put out the JOE report, under the command of General Mattis. Admiral Rice recently took over from General Mattis. Since then Admiral Rice has received considerable push back on the contents of the report including comments on climate change; peak oil, China and Russia – and since these came from both sides, he felt that General Mattis had gotten it about right.

ASPO-USA Conference, Second Day, Before Lunch

Dr. James Schlesinger then gave the keynote address. He began with a bromide “A resource which is finite is not inexhaustible.” And followed this with others leading to the point that “peakists” have won the argument, though we debate the timing. We should be gracious in victory. Remember that politicians do not want to give pain to their voters, and so they must be reassured as we move into these new times.

We depend too much on the fields discovered 50 years ago, the Ghawar’s and Burgun’s of the world, and while it may not be Twilight in the Desert, it is definitely late afternoon. We are now seeing price spikes for oil based on availability. As fields decline, we will need to find 5 Saudi Arabia’s to replace them, and we can’t even find a second. Iraq may be such a place, and offshore Brazil a second, but neither is in a cheap location to produce. Shale gas may provide some help, but that will likely fade too soon.

In questions he noted again that politicians prefer to be reassurers, but that political tensions are rising as China moves into places such as Iran. The King of Saudi Arabia has talked for some time of the need to leave resources for later generations. The age of subsidies for renewable power sources is likely to be limited, and he pointed to economists who think that demand creates supply.

And he left us to ponder “Sufficient unto the day, is the evil thereof.”

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ASPO-USA Conference, Second Day, After Lunch

The final speaker of the evening was Robert Hirsch, who has also recently co-authored a book – The Impending World Energy Mess which was available in signed copy at the meeting. In large measure his talk followed the book (from which you may gather that I did buy, and have half-read, a copy – and it is worth doing so, I may do a review later). He noted that the economy depends on energy, not the other way around. Further we should expect that the general public will still be surprised when oil supplies start to decline in the next 2 – 5 years. From then they will continue to decline for at least a decade, until alternate sources of fuel become sufficiently available. He covered the oil problem, including their forecast of how it will develop, and what an individual could do about it.

The story is a familiar one to the peak oil community: we are over reliant on a few giant oil fields that are depleting and not being replaced. We have been sensibly in a production plateau since 2005, something not predicted by earlier models, but there are an increasing number of reputable sources that see an end to the plateau, and the consequent decline, coming relatively soon. This will impact GDP and hurt national economies. The recent recession and drop in oil demand may have only shifted the onset of the decline by a few weeks.

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Looking at individual response, we should all expect to be impacted, and because of the lack of political ability to resolve the issue (or even to address it yet) we should expect that the result will be very similar to the oil shortages of the 70s. There was a degree of panic – this will happen again. This time, however, there will be no North Sea or North Slope to come to the rescue. Nor can the oil taps be opened wider to remediate the problems. As a result he has got out of the market – since good stocks and bonds will be hurt as well as bad. He has added annuities to his portfolio, bought some gold, and moved closer to mass transit and the shops.

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ASPO-USA Conference, Last Day

Rick Munroe brought the debate into the larger picture of the Peak fuel debate. Ho pointed out the considerable difference between the military view of the coming crisis, in contrast with the more complacent civilian government point of view. The Energy Bulletin lists over 40 papers from military groups that have highlighted the coming problems of fuel availability. In contrast it was only in 2008 that the IEA began to express similar concerns. Yet, as a paper in 2009 from the war college noted, while these strategic shocks are predictable, they are either not prepared for, or inadequately addressed. The plans that do exist are over 30 years old, dating from the last time we had such a event.

On July 25th the Energy Bulletin carried a review of the Peak Oil situation by the German military. The response to the crisis, because of this lack of preparation, will not be stable, but chaotic. This instability will increase with time as economies shrink. The result will be unprecedented in its severity.

He pointed out that, by and large, these reviews are not individual opinions, but rather the consensus of qualified analysts and it defines a comprehensive domestic external threat to the point that peak oil can be seen as a weapon of mass destruction. In earlier exercises it was projected that if 4% of the world supply was removed from the market then prices would triple.

Yet with all this information available he was unable to find any significant interest in the topic either in Canada or the United States. There is no planning for the impact of oil shortage on the agricultural production of either country, and the GAO noted that planning on the topic ceased about 20 years ago. It is only, apparently, in the UK that plans for a Liquid Fuel Emergency exist. And yet a fuel crisis will, in very short time, transform into also being a food crisis. The problem is, in part, that while the response of many in government is to ration by price, but to give farmers priority, most operate on the margin and a trebling of fuel prices would put them out of business. It is a complex problem, and thus no-one wishes to address it.

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These articles about the ASPO Conference are important because they spell out the various aspects of the problems we will face, as a society and as an economy, once the quantity of oil available on the market begins to slowly decline.

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Protecting public purse at Poolbeg

A chara, – I totally agree with your conclusion that the proposal to locate a 600,000-tonne mass- burn incinerator at Poolbeg must be based on “hard-headed pragmatism and the need to meet EU environmental standards and to protect the public purse” (Editorial, September 8th). I would contend, however, that the only person demonstrating such an approach is Minister for Environment John Gormley.

Back in the late 1990s, when he was Councillor Gormley, he set out clearly the reasons why mass-burn incineration was not a viable solution for the waste problems faced by Dublin city. This was before there was any proposal to locate such a facility at Poolbeg.

The Minister has been consistent in his approach in the intervening years, as a councillor, as a TD, and now as Minister.

If we look at the other side of the argument, we see that the management of Dublin City Council are pushing ahead with this project even though they knew that it was contrary to Government policy, contrary to the expressed wishes of the majority of councillors, and that there was no way they could guarantee the tonnage that they are contractually obliged to provide to Covanta.

The put-or-pay aspect of the contract will see the rate-payers of Dublin city having to pay fines. The city management’s continued refusal to be open and transparent regarding the terms and conditions of the contract, even with the elected members of the council, is worrying.

I agree totally with your view that this whole thing is “a shambolic scenario”, but I see the reason for the problems as stemming from the inappropriate, undemocratic, and secretive manner in which the council management has gone about their business.

The letter was in response to an editorial in the Irish Times the previous day: The Poolbeg incinerator

“Essentially, Dublin City Council’s management is dug in on one side of the peninsula, unwilling to walk away from its contract with US waste-to-energy company Covanta, while the Minister snipes at them from the Custom House, using every weapon in his arsenal to frustrate construction of the controversial €350 million incinerator.”

Madam Editor has close links to the PDs, and Stephen O’Byrnes who looks after the PR needs of Covanta, is a former Director of Policy and Press Relations for the PDs. Is there a connection there?

Hopefully my letter rebuts the more ridiculous talking points “that bollocks” Stephen O’Byrnes has been peddling to numerous and assorted journalists in recent times.

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Locally, we have the Waterford Harvest Festival going on this week in Waterford City. I’m helping out with the Origins of Taste workshops, which is something that has been developed by the Slow Food organisation in Italy. We had our first proper run-through with a group of about 50 members of the public this afternoon and the whole thing seemed to go off pretty well.

Tomorrow (Sunday) we will run the workshop three times in the afternoon for the general public, and then we will run it for secondary school students – both Transition Years and Home Economics students – during the week.

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Nationally, the Banking crisis continues to make the headlines.

Nobody seems to get the idea that this is a global problem, and nobody seems to get the idea that we need to take a long term view of how to work it out.

Three years ago Anglo Irish Bank was worth €70 Billion. Nobody argued with this valuation, and everybody just accepted that “the market” was right.

Today Anglo Irish Bank is worth a fraction of €70 Billion.

In three years time it may be worth even less, or it may be worth even more.

We don’t know.

But getting hung up on today’s values, and forfeiting any potential upside, is a very dumb idea.

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Internationally, the Greens have a very strong role in the new Government in Australia.

The agreement includes a wide range of measures. These include:

• A Climate Change Committee
• A full parliamentary debate on Afghanistan
• A commitment to work with the Greens on dental health care investment
• Completion of a $20 million High Speed Rail study by July 2011
• Legislating for truth in political advertising
• A Leaders’ Debate Commission
• Establishing a Parliamentary Integrity Commissioner
• Establishing a Parliamentary Budget Office
• Restrictions on political donations
• A move toward full three year governments
• Specially allocated time for debate and voting on private members bills and a fixed and fair allocation of questions for Independent and minor party members in Question Time
• Referenda for constitutional recognition of Indigenous Australians and Local Government
• A commitment for reform to provide above the line voting in the Senate
• Better processes for the release of documents in the public interest in both Houses of Parliament

• Access to relevant departments, including Treasury and Finance & Deregulation for Greens election policies.