End of South African strike: ‘not quite win-win’

Only Canada’s Mail & Guardian had it in their heading. The public sector strike in South Africa (mentioned previously) is over, after 4 weeks. Impressive, no? Interestingly, I saw a comment that the teacher’s union had called an end to the strike because school holidays had begun. Which would be hilarious.

It is not quite win-win because the wage increase in the end was pretty well what it was in the beginning: 7.5% (recall that the government had initially gone to 6%, the unions had demanded 12%, and gone on strike when the government wouldn’t go higher than 7.25%. There are of course other elements not tied to the wage increase, including one interesting structural change:

The deal also contains a framework for setting up a minimum service agreement with essential-service workers. This will ensure that minimum services will be maintained during strikes.

“Definitely we would see a situation during a future strike that essential services would not be as severely affected. There would not be any loss of life,” said Success Mataitsane, of the National Union of Public Service and Allied Workers.

The majority of unions have signed on – a few (the teachers) have not yet, but will continue negotiation (they won’t themselves strike, because their numbers will now be too small – one hopes). My original open question answered, with regard to the 600-odd nurses fired for going on strike:

The deal also makes provision for dismissed workers to return to work and receive a written warning instead of being fired.

What isn’t yet addressed – and might not be for a while – is the skills deficit implied by emergency service workers taking this action in the first place. The current ones will return to work (after 4 weeks of no-work-no-pay you either return or start a new career fast: that’s a long time to earn any money), but the next generation may not, for these conditions, go to the effort.

Also not yet apparent is who won in the broader context of this strike, with regard to the strained relations between the Congress of South African Trade Unions and the ANC. Again, 4 weeks is a long and punishing action, and a few groups were beginning to turn on Cosatu for its apparent avarice in not taking the 7.5% when it became clear that it was the ceiling (probably a week or more ago). The cost to the economy has been estimated at around USD418m (GDP in 2006 was only USD587.5bn), and food has pushed inflation to 6.4%. Mbeki could win politically if it appears he’s protected the economy and rewarded workers. And if he can keep is leadership of the ANC at all.

Petrol rationing in Iran

The New York Times says fuel rationing in Iran prompts protests. Those protests?

Those did not set themselves alight, no. The New York Times: understater extraordinaire. Iran has a lot of oil:

(you’ll notice I have a thing for maps) Iran however has rather poor refining capacity. Currently it can produce 4.3m barrels per day, but refine only 1.6m barrels per day. It actually imports more thab 50% of its oil, (around USD10bn), which it subsidises for the market.

Along the way, Iran’s budget defecits are anything from 14% (their estimate) to 25, 30% (other economists). That may or may not be related – another explanation is tough-love preparation for sanctions, due to the whole nuclear thing. This might also help their case, arguing that oil is running out, we need nuclear energy, etc. (sounds familiar, doesn’t it?). It’s running counter to the declining exports argument I was making this morning, which is interesting to observe. Given the reaction of Iranians, though, I don’t see this lasting.

It strikes me that, rather than announcing a 3 litre-per-day ration 2 hours before it began, without so much as telling local police, dropping those subsidies and letting prices do their job would have made a hell of a lot more practical and fiscal sense. At these level of rationing, prices will soon go through the roof in an underground economy anyway – the government took roughly the dumbest approach to saving money and reducing demand for petrol. Plus it’s so damn unpopular. Who knows? It might well help the reformists in Iran.

Also along the way, it is apparently bad news for Australia. For some reason we are big on Iranian oil (unrefined, it’s probably cheap). I shall see what happens. it follows rather hard upon the strike(s) in Nigeria, though (instability another characteristic of peak oil, by the by).

US leads the way on house prices, sales

I mentioned yesterday Australia’s housing affordability problem. News today says the UK also is either (i) better than the US, because its housing prices and sales are still expanding, or (ii) lagging the US, and we’ll all get ours soon enough. I reckon it’s the latter, sadly. Australians seem to agree – the consensus is that prices are rather high, and borrowing to meet those prices is rather worrying.

The UK, also:

The strength of the UK housing market was underlined by the fact that prices in the past three months rose 2.2% compared with the previous three month period, up from May’s comparable figure of 1.9%.

Although steadily increasing rates are slowing purchases and permits down. The results of rather a different survey were also released.

Steps must be taken to address a shortage of affordable homes in Wales, says the charity Shelter Cymru, who have released their report An Unnatural Disaster (actually there’s very little unnatural about it).

A “rampant housing market” and a lack of affordable and suitable housing were key factors in homelessness, a report by the charity has found.

It wants the assembly government to build 3,500 affordable homes a year by 2011 to clear the “backlog of need”.
…
New low-cost home ownership initiatives and funds to tackle homelessness prevention work were also urged in the inquiry, to be launched at Shelter Cymru’s annual conference in Swansea on Thursday.

Urban dwellers to outstrip rural population next year

This isn’t a new story, though. The World Urbanisation Prospects, put out by the UN’s Population Division, has had projections for several years (this update the 2005 revision):

Which is probably true of most of our experiences – certainly Australia’s. Even as populations grow, rural populations decline. The Guardian has an excellent graphic:

That’s meant to be a world map. You can see it, if you try. Australia is actually among the highest – but then if you saw the satellite image that I put up the other day, you’d not be surprised.

The trick with this is not to assume people are going to live like us. Through urbanisation and urban aggregation, megacities will fit better the definition of megaslums; read the incomparable book by Mike Davis, Planet of Slums, if you’re interested. His statistics and figures, drawn out of UN reports, are more than a little sobering.

Consider this. If you divide the planet’s productive space by its people, we’ve something like 1.7 hectares apiece, on which to live. I’ve commented previously that Australia, with an ecological footprint of 3ha per person, is third-worst, after the US and Canada. The United States’ ecological footprint is 24ha per person. If we all did that, we’d need 5 planets to sustain us, not just this one.

So it’s easy to put together in your mind. We don’t have 4 other planets on hand (or 5, really – just to grow stuff, and this one we keep for living on. With a little left over for the mansions). Our standards of living have got to go down, we have got to share our resources. Or rather, start sharing other countries’ resources with them. New Yorkers can no longer wake up each morning in their fairy tale of cheap food, clean streets and stocked shelves every morning (we had a blackout here yesterday, actually. No sooner was power back on than so were the air conditioners).

It won’t work quite like that. Urbanisation is not growing nearly as rapidly for ‘us’ (Australia was probably very near that percentage all along). Rapid urbanisation is occurring in the developing world, particularly what Davis refers to as ‘Pirate Urbanisation’ – illegal (I won’t say illegitimate), and most importantly without infrastructure. The world already has hundreds of slums, with multi-million-people populations, even megaslums – and all without proper sewerage systems, potable water provision, electricity. Hospitals, schools, sealed roads, streetlights, you name it. By and large they are either astronomically violent, or wonders of decentralised human co-operation, but not for long. People will settle, become wealthy, want stability, want amenities (want cars, large houses, flat-screen TVs, you name it. Freedom and Democracy are on the march, baby!).

This also relates to what I saying yesterday about Venezuela and oil exports falling more rapidly than production. Think of the cheap crap we buy in America: the cheap food that comes from South America, the cheap plastics made in China, etc. More and more, those resources (a) won’t be used to make such things for us, and (b) won’t be used to make such things at all More agriculture, assuming it won’t be used for bloody cars, will be needed to feed more people in one’s own country. More minerals, construction and electronics will be needed for the people and projects of one’s own country.

And that will necessitate the rest of us becoming somewhat more self-reliant. Let’s hope we don’t forget altogether how to manufacture things. For us, the direct effect will be higher strains placed on the infrastructure that delivers water, removes (and recycles) waste, provides electricity. I will salute whomever responds to urban aggregation and megalopolii (?) by constructing commuter rail from Washington DC to Boston (just don’t hire any of the Big Dig people, for God’s sake).

And we should probably keep that last 6 inches of topsoil away from the bio-fuels hippies, just in case we need it for food.

Durable goods, buyouts, bond sales, housing – all down. At least interest rates might stay up.

Let us hope so, at least. There are (of course) two sides to all of this, but at the moment I reckon the Bank for International Settlements is probably on the right one. It’s more important to draw down credit than to bail out housing. Fed. Chairman Ben Bernanke is more of the mind (at least the stated mind) that it isn’t important to drop interest rates because Bloomberg’s Housing Recession is still localised. Business takes a broader view in their discussion, and I’m sure Bernanke does as well – I don’t have a lot of respect for Greenspan, but I don’t think Bernanke is an idiot.

I mentioned yesterday, though (or the day before?) that Bed Bath & Beyond had revised profits downwards, suggesting that it might be spreading (although it seems that was wrong – ? Seems odd).

News out today speaks much the same of durable goods:

Non-defence capital goods excluding aircraft, seen as representative of business spending fell 3 per cent, the biggest drop since January. In the first quarter the US economy grew by 1.3 per cent, its slowest pace in four years.

As a result of which – and other news – Wall Street is quite slow, just now. No, I won’t expend sympathy reserves on Wall Street, I couldn’t possibly. That other news, besides awaiting the Fed’s decision on interest rates, includes:

• The yen rose against the dollar, while the Euro seems to be holding while people wait for the interest rates
• MISC, the world’s biggest owner of liquefied gas tankers, day shelved its $750m bond offering
• Foodservice, the American division of Ahold, the Dutch supermarket group, postponed its $650m bond offering
• Arcelor Finance put plans for its euro-denominated benchmark bond issue on hold. All three of these, and probably more to come, were shelved after buyers balked, demanding higher premiums and greater security (do they know it doesn’t work like that?).

So some actual risk-aversion is setting in, bringing the level of leveraging in bond issues and buyouts down, which is good. If the value on the market of CDOs and ‘illiquid’ securities are being properly questioned, that might be bad. So far these changes are all negative, but small – they don’t portend a crash. Something like a swipe at confidence in CDOs, however, just might.

On the upside, kind of, US stocks are up, while Europe’s are down, based on oil and technology companies. The oil-prices-helping-oil-profits might not be such a good outcome, and it could only be a matter of time before the combination of risky-debt-purchasing and risky-mortgage-lending extend past housing, bonds and now currency markets to the value-based stock market, but I’d take good news where I find it, this week.