Challenges for AI: if you're so bloody smart ...

It is suggested that the acid test for AI - indeed, for it to qualify as AGI - is that it should start generating New Science: hitherto unknown but recognisably scientific advances that can be tested against the usual criteria for such things.  We read that 'ordinary' 2023-vintage AI has been used in developing a wholly new antibiotic for use against Acinetobacter baumannii, a nasty strain of superbug.  OK, and all power to the team that achieved this: but it's not quite an AI achievement per se: we're still in "useful software" territory.  Couldn't have been done without software?  Well, neither could much of what I've been doing today by way of working from home.

So - I'd like to propose a test.  To my mind, one of the weirdest "non developments" of the past 100 years has been the complete failure of bio-chemical science to come up with artificial blood.  Surely, that would be up there with genuinely efficient large-scale storage of electricity** - crack that, and you can have your university re-named after yourself.  "Being a big help with finding antibiotics" is great.  Devising artificial blood - there's the real test.  Go for it, Mr A(G)I.

Any other tests that readers would like to suggest?

ND

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** Yes, of course I know that it's never really electricity that gets stored, it's electricity-into-something-else-&-back-into-electricity-again-later. 

Rolling euphemisms, wokery, & the glories of the English language

Keeping up with whatever is the approved euphemism has always been a great lark.  We read that "obesity" now needs to be replaced - and not with "too fat", either.  The Beeb hasn't caught up with this one yet - you do really need to be on your toes.  Fortunately, the English language is replete with a wide range of colourful alternatives.

It was ever thus: whole histories could be written on the rolling evolution of the approved terms for, e.g. death, various disabilities, and descriptions of ethnicity.  Up to a point, this is to do with kindness: when a particular conventional usage becomes a term of abuse or mockery, it's time to coin something new.  Which is fair enough, albeit we sometimes get empty phrases like "learning difficulties" which covers so broad a spectrum of phenomena as to be rendered meaningless.  I have learning difficulties when I keep being interrupted, but I doubt I qualify for charitable largesse.

There's a nastier dynamic at work, though.  When anything is being politicised by the identitarian left, terminology becomes paramount, the left being beset by over-intellectualisation, theorising - and faddery, one-upmanship and ideological purity.  And nothing is more enjoyable than witch-hunting.  So nothing is neater than to keep changing the rules by making some term in common usage a shibboleth: utter it, or say it wrong - and you're damned.  Hurrah! - another heretic exposed and harried to the point of despair!

And this need to "be on your toes" ensures that only the elite of lefties at radical academic institutions can ever be up to date in these matters.  Everyone else is guaranteed to be behind the curve, beyond the pale, and in need of re-education and groveling self-flagellation, at the very least.  But maybe total cancelation and ruination.  Oh, the horrors of feeling oneself in thrall to such vicious little shits - who increasingly call the shot, not only in colleges, but in HR departments across the English-speaking world, depressing though it is to acknowledge.

If there is hope, it lies with the proles, as Orwell famously wrote.  They'll have some ideas on the subject of obesity, and one or two other things besides.  Who ate all the pies, eh?

ND

After Bakhmut: let the trolling commence

For all intents and purposes the town of Bakhmut has fallen, albeit that Ukraine has taken the opportunity afforded by the exhaustion and tactical ineptness of the invading forces, to pinch it on either flank.  For the time being there will be no Russian advance on Slovyansk and Kramatorsk, which were supposed to be the next towns down the road, last summer while Putin still enjoyed a (tiny) bit of momentum.  Informed opinion varies as to whether the 4-month street-fighting defence of Bakhmut was as advantageous to Ukraine in ratio of casualties as merited holding on for quite that long.  It certainly blunted the Russian Donbas offensive to the point of total standstill, depriving Putin of one of his stated main aims.  Further, it fixed Russian forces to an extent they would not have welcomed.  My own observation would be that Ukraine has not thus far demonstrated gratuitously bad military judgement, or overly emotional attachment to any particular piece of real estate.  (Most mistakes have, understandably, been ones of caution - always easier to identify in retrospect.)

We now await the long-heralded Ukrainian 2023 counteroffensive.  As I endlessly say, there's no such thing as strategic surprise ... so it will be interesting to see what tactical surprises they have up their sleeves.  It's imperative they have something clever in mind; otherwise, with no prospect of air superiority they are potentially in trouble against a lengthily-prepared, albeit unsubtle and static defensive plan, established in depth.  Frankly, there are no good 20th century precedents that I know of, notwithstanding that static defences have often been swept aside - with air support.  The major points in Ukraine's favour are:

• excellent intelligence; the initiative; and many months of active planning
• the front is huge, and Russian forces (of poor fighting quality on average) are thinly spread.  Their defensive depth looks excellent on the map, but only a small % is actively manned
• defence in such circumstances relies upon good communications, coordination and decision-making under conditions of chaos, plus adroit deployment of highly mobile reserves: and the Russians have thus far been found badly wanting in all those regards
• I'm not convinced Putin dares hazard his airforce, the only wholly irreplaceable asset he has

I shan't bother to list Ukraine's difficulties.  Anyhow, we may not need to speculate for long.

*   *   *   *   *

I was looking back at an excellent June 2022 article by Adam Tooze the other day, and was amused to take a peek BTL.  We've been honoured with some pretty silly trolling on C@W back in the early months of this war - who knew we merited the attention of the Russian troll factories? - but Tooze got both barrels.  Samples: 

... the [Russian] breakthrough at Popasna** and the developing envelopment of Slavyansk, as such defences tend to hold in place until they break, and then they break quite quickly. In this war the Ukrainian side has been the rigid and inflexible one (dig in, defend anything to the point of encirclement and annihilation), while the Russians moved and maneuvered over a 800km length of battlefield, changing axis of attack and intensity many times. The results are slowly becoming visible - the Ukrainians are losing the war 

Russia’s outnumbered, highly mechanized force has constantly set the rules of the engagement and Ukraine’s massive mobilized force, it seems, is fundamentally reactive.

it is very obvious that Ukraine is retreating everywhere. ... a full collapse (of Ukr) is coming

the Russians are winning in a very loss-effective manner. Once beyond the in-depth defences of the Donbass, and with much of the professional Ukrainian army under the ground, a prisoner of war, or injured beyond recovery to the field (or refusing to fight as has been shown in multiple cases), the war tempo will move much faster. Zelensky and his government have made a major strategic error in pouring in men and arms into a salient thats will inevitably collapse, a meat grinder being used by the Russians to destroy the Ukrainian army ... Zelensky throws more and more of his army into this cauldron. Once the cauldron, and much of the Ukrainian Army, is finished who will be left to defend the rest of Ukraine?

The Ukraine military has been defeated for two months already. I don't know what kind of funding you are smoking, Adam, but the only successes in Ukraine are the people cleaning up all the dead Ukrainian soldiers. It is beyond disgusting that people are pretending that those facts are not real ... They all should have surrendered long ago and every death is just another mark of American hubris.

Admit it. Russia has won, will win, will demand all sanctions removed. And Ukraine, for its efforts better remove crooked Zelenskyy and admit that their sacrifices were in vain. 

Hmm.  I think we shall see more like this with which to decorate Ukraine's counteroffensive.

ND

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** Russian "breakthrough"?  Very short-lived; subsequently routed; and Slavyansk never troubled. 

AI applications in the military

Recently, under a post about the fate of truth in 2023, I included (BTL) a link to a bot-written article on the issues around the use of AI in the military; and commenter Jim opined: 

Most probably serious development is going on to specialise in legal argument, military strategy, economic planning.

I said we'd come back to military applications, which do indeed proceed apace.  Many in the military (in many countries) hope for AI and other computer-based solutions to a whole range of challenges - not least because they think they'll be a lot cheaper, in both blood and treasure.  Of course, from time to time the 'smart', asset-lite approach comes badly unstuck at the hands of determined infantrymen, as Ukraine has taught the lazy Putin and his attempt at a 'smart' lightning campaign last year.  (He seriously fell for the plan to persuade Ukrainian officers to surrender by texting them all a threatening message on their personal 'phones, FFS.)

That said, just as fast-learning computers will cheerfully thrash anyone at chess nowadays, they will also thrash any fighter pilot in simulated dogfights.  Yup, they can get right inside any human decision-loop, and destroy the mortal sluggard with remorseless efficiency.  Who doesn't want drones like that?

But of course, issues arise about less-than-perfect "decision making" even by these computerised paragons.  How are they to be employed?  One answer is: in some applications, perfection never has been expected, and isn't necessary - just a very good probability of turning in a very good result in very quick time.  The rest is just, well, fortunes of war - casualties & all.  Always has been.  

Here's an example from my (somewhat dated, but recently updated) personal experience.  It's trivial enough in its own way, and won't surprise anyone: but it carries some lessons.  Starting around the time of the First Gulf War, a phenomenon that was long anticipated became real: total and utter data overload in the sphere of aerial imagery (inter alia).  More imagery was being produced, of areas of very high significance (e.g., known to harbour Scud missile launchers), than could be fully processed by the available highly-skilled analytic personnel.  Enter software that could run its unblinking eye over the coverage and identify + highlight straight lines, rectangles and circles that are of a size likely to be of interest.  There aren't too many of them occurring in nature: they'll almost always be man-made.  The human could then zoom in on what the computer had found, and discard those that were false positives.  Had the computer missed a few?  Maybe - but so what: they were never going to be found anyway!  And the next version of the software would be better.

To make a long story short, many learning-cycles later, computers nowadays have been trained to identify from aerial imagery, and put a name to - with high success rates - specific types of equipment: any ship or aircraft whatsoever, and quite a lot of vehicles.  Does camouflage still work?  Of course it does, sometimes.  Are there sometimes errors?  Yup (and the humans are quite prone to this, too.)  But 95% accuracy (say), carried out very fast, is a very acceptable result: like Patton said: a good plan executed violently now, is better than a perfect plan next week.  (In due course, 96% will be better ... they're learning all the time.) 

That's just one micro application in the military.  The point is: perfection is not required.  In the fog of war, something very good and very fast is highly desirable.  AI is going to provide a lot of that.

ND

100% Mortgage? In a banking crisis?

Actually, the new Skipton product - 100% mortgage, no deposit, but (they say) stringent borrower qualifications required (primarily, a good prior rental payment record), plus a small interest-rate premium - all seems sound from the lender's risk-management point of view.  One assumes they'll be pretty careful about getting their own valuation done, too.  Structurally this is all good, pragmatic RM - and moderately creative, to boot.  

When Miss D got her first mortgage recently she was in pocket immediately (on a current account basis), the payments being less than she was previously paying in rent.  That's a dynamic the Skipton product arbitrages neatly.  Don't know if that situation prevails everywhere; but it does in her part of London.

Commentators seemed to be fixating on the potential for negative equity.  Well, yes - but both parties ought to be able to take an intelligent view on that.  On the lender's side, one assumes more pragmatic RM, relating to the specifics of the property and the profile of the borrower.  And for the borrower: hey, did you want (a) to get into property, (b) & without putting in equity - or not?

Go for it, Skipton.  Nice structure: hope you've got the details right.

ND

France: always hanging back, always wanting to share the credit

A first today - a French Air Force recce aircraft over the Black Sea!  There have been non-stop US, UK, Italian, even Polish, Swedish and Finnish recce flights in support of Ukraine, but this is the first (openly detectable) French one.

Now, given that they have had the capability all along, why would this be?  It's the usual French thing.  Not us, gov, we're not like those warmongering Yanks and Brits, we're not feeding this conflict by providing one side with intelligence (actually, we don't have any), we're not helpfully wargaming strategies with one of the protagonists: we're responsible peace-loving people, neutral, here to negotiate like statesmen!  We'll talk Putin round, we'll get Xi onside ...

Oh, what's that? - the big Ukrainian counter-offensive push is on for next week?  OK, we're in, we're in!  They couldn't do it without us!  A seat at the Top Table for us!

Running with the hares, hunting with the hounds, or what?   Or perhaps the playground coward, rushing in to kick the guy who's already down on the floor.  Ho hum, better late than never.

ND

'Where is truth' in 2023?

'What is truth?' said jesting Pilate; and stayed not for an answer

A commonplace assertion is that we live in a 'post-truth' world, centuries after the Enlightenment supposedly (under the Whig theory of history) set mankind on an irrevocable path towards, at the very least, valuing and seeking after truth.  That's Truth as it would be understood by a philosophical Realist: existing objectively and independently of anyone's knowing it, or even having the capacity to know it.

Even within this worldview everyone has long resigned themselves to co-existing with all manner of deflections from the straight and narrow: the dogmas of religious fundamentalists (to be tolerated in a worldly manner, up until the point where they start to impinge on everyone else); an intelligent degree of relativism (provided Realism is not ultimately ditched); acceptance that politicians of all sorts are doomed to deal often in half-truths and evasions; knowledge that science only proceeds from one approximation to another, better approximation; that the capacity of most people for understanding and/or dealing with all the truths that are out there to be understood is distinctly limited, with various strategies being needed to accommodate this fact.  

At the end of the day, there's the smug intellectually comforting Realist consideration that a truth ignored or denied is still out there, and will potentially break your toe if you kick out against it.

All that said, the advent of Blair and Bush Jnr ushered in an era when even western politicians, supposedly 'better' than the Putins of this world, increasingly cared not a fig for truth, but merely and shamelessly called for Alastair Campbell to come up with one of his sophisticated utter-bullshit operations to suit the needs of the hour.

The Common Man has always had an interesting role to play in all this.  Firstly, he's not very concerned with the truth or otherwise of the dogmas swirling around (which he knows are well above his pay-grade); he just wants to know what he has to repeat solemnly in public, as and when required, in order for the (current) authorities not to be after him for unintended heresy.  If the dogma changes, he just wants to be told what are the new shibboleths.  In times of religious oppression this becomes an acute and worrying business, but fainter, less lethal manifestations are always in the air: as Homer Simpson says, the highest wisdom is - never be the only person in the room that's laughing.

Secondly, though, the Common Man does know some 'hard' truths very well indeed - most significantly, those that impinge on his making a living: these are the truths that will break your toe.  If he's a blacksmith, he's never going to 'believe' that you can hammer cold metal into a horseshoe, even if some idiot Inquisitioner forces him on pain of death to assert it in the middle of the town square.  Of course the average Inquisition, not wanting to be made mockery of, will stick to things that can confidently be asserted in the certainty that no hard-to-ignore practical disproof will ever be at hand (transubstantiation; virgins on offer for martyrs, etc etc).  Even so, Stalin's and Mao's dogmatic embrace of some outright lunacies in the scientific sphere forced any number of Soviet / Chinese engineers etc to endorse them publicly but ignore them without comment in their daily activity:  these ones require active doublethink.  (It has always seemed likely to me that the Stalins of this world don't much care about this phenomenon, just so long as everyone lines up for the 'loyalty test' of repeating faithfully the dogma of the day.  In fact, for loyalty-test purposes alone, the dafter it is, the better.  And the Common Man is generally OK with doublethink.)

*   *   *   *   *

What has caused me to muse on all this in May 2023?  The other day I watched Official Secrets, a rather good, fact-based movie (haha!) about the GCHQ whistle-blower who leaked a document in which the Bush operation sought the UK's assistance in blackmailing various UN delegations in order to swing a UN vote that would formally legitimise Gulf War 2 - not that neither Bush nor Blair ultimately much cared about that legitimation.  Whistle-blowers, of course, are just that small minority of people that can't bring themselves to do the doublethink.  It's a small minority indeed.

But ancient history be blowed: look at what we are faced with right now (- you can pitch in with your own favourites):

• Starmer systematically and merrily reneging on every one of his "10 pledges", with such pious outriders as David Lammy and Polly Toynbee all rushing to assert this doesn't matter a whit
• the complete absence of any reliable accounts on significant matters of the day such as the blowing-up of the Nord Stream pipeline
• the complete works of Donald Trump, Boris Johnson, Megan Markle etc ad nauseam

A particular favourite of mine - the 'progressive' line on trans self-identification - is thrown nicely into relief by this story in today's Graun (a paper which is actually, and to its credit, trying to drag itself painfully away from the progressive line).  This piece is really worth reading - it is absolutely hilarious in its straight-faced delivery of utter nonsense. 

NHS treatment algorithms ‘not taking transgender patients into account’:   Medics say trans people being put at risk by lack of evidence on how to assess them by gender-based metrics

Or to put the matter more simply: as 99.9% of humanity knows very well, "Trans women are, errr, men"  Now that's the kind of truth that really breaks toes when kicked against - ask Nicola Sturgeon.  

So: God Save The King!  And don't press me (or the Common Man) too closely on that Holy Anointing Oil ...

ND

Macron: dissing the EU in China

Macron is a real piece of work, n'est-ce pas?  (Is it really a French thing to marry your schoolteacher?)  But apparently his charisma is such that, they say, nobody who ever met him would ever vote against him.  And such self-confidence!  OK: but who'd trust him a single centimetre?

In fact, just the kind of person the Chinese can play like a tin whistle, the tune being that old favourite, Divide and Rule.  Flushed with his pre-invasion, errr, success across that long table with Putin, off he goes to Beijing to persuade Xi of, well, something or other that will surely bring conflict in Ukraine to an end.  Well, won't it?  But not content with this naïve presumption, he also drags along Ursula von der Leyen, only for her to be royally snubbed by the Chinese, fobbed off with having to carry her own bags through passport control while the Little Emperor is whisked off on a red carpet.  Two years ago I'd have found this very funny but since early last year, much to my surprise, von der Leyen seems to have grown in stature considerably.

Well: such is the nature of his diplomatic prowess that Macron is immediately suspected by everyone of plotting to sell Taiwan down the river.  And can anyone see the fragrant Ursula rushing to take his next call?  But it turns out that he's just brainstorming a bit, seeing what's on, floating ideas, trying a few things; c'est juste sa manière, tu ne sais pas? - and of course he's misunderstood.  Of course.  Here's how the ultra-articulate French spin-doctoring machine tries to walk it all back.  

But I rather doubt anyone is convinced.

ND  

Barry Humphries

What a man.  (What a woman!)  A brilliant brand of knowing, deadpan humour.  

The joke of his that comes immediately to my mind is from the first UK outing of Edna Everage, a very long time before the Damehood; in confident cultural-tourist-housewife mode, reporting back to her suburban friends.  She's standing in Parliament Square with St Stephen's Tower looming in the background:

"And here's me with one of those big clocks they have here"

Right up there in the Peter Cook category of someone that (almost) everyone loved and admired, despite the sharp edges.  We need them.  RIP

ND

SNP - like a Toytown constituency branch

If the fish-woman gets arrested shortly, as is widely speculated, the SNP's humiliation will be complete.  In the major parties one sometimes encounters an apparently thriving constituency branch which completely folds when a long-time figurehead chairman departs and it transpires there was nothing else of substance there at all: the difference being that with larger parties there is genuine institutional depth, and a Head Office that can intervene to put things back on their feet.  Poor 'Mo' Yousaf** resembles the hapless constituency stooge left inheriting such a situation - but there is no Head Office by way of stability and superior resources for him to lean on; he's it!  And it'll turn out the camper van doesn't actually belong to the SNP either: so, no holiday for him. 

Other illustrative parallels suggest themselves.  In the depths of History Corner there's poor old Richard Cromwell in 1649; and more recently UKIP (remember that?) when Farage's departure made it clear that it was less of an enduring political institution with depth and significance, and more of a shallow puddle with only one rather popular fish in it.

Let's see if Starmer can strategise this one to his advantage.  It ought to be possible, but he shows every sign of being a one-trick pony, and a very wooden pony at that.  Watch for a clunky and unconvincing move towards a devo-max offering in an announcement from that quarter soon.

You'd need a heart of stone, etc etc.  Personally, I'm hoping this all assists in the noble cause of scuppering Sturgeon's "trans self-ID" legislation once and for all.  Will Yousaf really go to the wall for that, in today's circumstances?   

ND

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** There is no deeper insult than incorrectly rendering somebody's name, which indicates to the victim you've no idea who they are really; don't much care either; and are probably representative of everyone else, too.  I discovered this by accident as a journo on a student newspaper many decades ago, when a simple typo caused an absolute outpouring of distress and anger.  Sorry to say, callow and uncaring youth that I was, this then became something I deployed deliberately to offend - ten times more effective than mere abuse.  (And not even actionable!)

German energy experiment lurches into new territory

At midnight on 15-16 of this month, Germany shut down its last nuclear power generation capacity - forever.  It was asked for one last hurrah over the winter (the Putin effect): but that's it now, despite dumb German politicians at the highest levels who seemed to think these things could just be switched on and off at will, and that actually we don't need fossil fuels or nukes at all.

Here's some dramatic irony.  For those that care about these things - and some people care a lot - the carbon intensity of the German power fleet on 15-16 April was 550 g/kWh**.  And what if Germany had maintained its nukes at the 2003 level, its peak in that country?  It would have been just 50 g/kWh, with no coal-, lignite-, gas- or oil-fired electricity required whatsoever on that day (peaking could have been provided by hydro and dispatchable biomass).  For comparison, the UK typically comes in at under 150g, having halved since 2012.  

So - as the usual suspects gear up to sue the EC for declaring nukes (and gas) to be "green", let them think on that 11-fold increase in carbon intensity which might, over-simplifying slightly, be attributed to the policy-driven closures of nukes in Germany.

Germany really is the poster-child for crass policy making across the spectrum, and it's unravelling at a rate of knots since Merkel headed off into the sunset.  I don't quite know where people get off on holding the country up as a model of rationality and consensus.  Good luck to them over the next few years, as they grapple with "new realities" for their energy, industrial, foreign and defence policies.  Not to mention the 1m+ refugees from the middle east.  Those Merkel memoirs will make for interesting reading.

ND

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** Was it perhaps a day with no wind?  No, there was a decent contribution from wind, ditto solar in the middle of the day.

A Revealing Russian Rant - and a prediction ...

The Putin stand-in Dmitry Medvedev, lately given to vehement anti-Ukrainian rants, has excelled himself.  Extracts:

WHY WILL UKRAINE DISAPPEAR? BECAUSE NOBODY NEEDS IT 

1. Europe doesn’t need Ukraine. The forced support of the Nazi regime, by the American mentor’s order, has put Europeans into a financial and political inferno. All for the sake of bandera’s unterukraine, that even the snobby, insolent Polacks don’t take for a valid country, and time and again toss in the issue of its western areas anschluss. There’s a nice perspective ahead: to permanently put the nouveau-Ukrainian blood-sucking parasites on the decrepit EU’s arthritis-crippled neck. That’ll be the final fall of Europe, once majestic, but robbed off by degeneration ... The ruling junta’s criminal ambitions forced Ukrainians to beg and roam around the countries and continents, searching for a better life. All that is for an obscure European perspective. Or rather, to let the harlequin in a khaki tricot and his band of thievish Nazi clowns to put the money stolen from the West into their offshore accounts. Would ordinary Ukrainians need that? Nobody on this planet needs such a Ukraine. That’s why it will disappear ...

Funnily enough, to judge from some of the BTL comments around here, some of our readers would broadly agree.  But that's not the point for now.  Why is Medvedev venting thus, like a two-bit incel bedsit dweller?  For answer we turn to the excellent Kamil Galeev, who has noted several times already this phenomenon of high-profile Russians going puce in public for Western consumption, and has set out his explanation once again, and at some length.  

Summarising:  any high-profile Russian Kremlin-dweller who might even vaguely appear to the West as potentially a more amenable interlocutor than Putin, is very dangerous to Putin.  That's because they might serve as a rallying point for Russian oligarchs etc who've had enough.  So, in order not to be a candidate for falling out of a window, such a high-profile, apparently Western-acceptable Russian must periodically rant in such unpleasant terms that nobody would take them for "someone the West could do business with".  Both Medvedev and Lavrov comply with this vital self-preservation imperative whenever it seems appropriate: and this is another example.

So far, so plausible.  But why such an extreme manifestation just now?  Assuming Galeev's explanation is correct, it must surely follow that Putin is fearful right now of some major setbacks about to come Russia's way, presumably when the long-foretold Ukrainian offensive bursts forth.  Or at least, as a risk-averse fellow he's making prudent preparations for setbacks and the inevitable domestic discontent that will follow.

We may not have long to wait.

BTW, Medvedev also follows in the grand C@W tradition of making New Year predictions.  You'll like these, too  - e.g. for 2023 ... 

1. Oil price will rise to $150 a barrel, and gas price will top $5.000 per 1.000 cubic meters

2. The UK will rejoin the EU

3. The EU will collapse after the UK’s return; Euro will drop out of use as the former EU currency ...

8. Civil war will break out in the US, California. and Texas becoming independent states as a result. Texas and Mexico will form an allied state. Elon Musk’ll win the presidential election in a number of states which, after the new Civil War’s end, will have been given to the GOP

You get the drift.  What a wag.  Bet he keeps away from windows, though ...

ND

Nigel Lawson. Not Easy to Categorise

You don't get many politicians like Nigel Lawson.  Perhaps the best thing about him was his intellectual self-sufficiency, which made him more immune than most from some of the typical politicians' permanent, minute-by-minute angst that they might not be perfectly-enough positioned (vis-à-vis their party's leadership, or their meejah image, or whatever else they worry about) for career advancement.  This leaves them always looking over shoulders - their own shoulders, and those of the people they are talking to - checking out the movements of the Important People in the room, metaphorically and actually.  This deeply unattractive paranoia, Lawson avoided better than most.

But it's all relative, and he did care.  When he first entered the Cabinet as Energy secretary, after the pathetic efforts in that job of David Howell (now there was a paranoid shoulder-checker par excellence), he was overjoyed, and held a sustained round of little parties in his splendid new office for all his friends, showing off like crazy.  He was also very circumspect in his dealings with Mrs T, with whom he disagreed on a lot of economic policy but whose favour he wished to court and to retain - even when he was at the height of his supposed invulnerability.  

A striking example was mortgage interest relief, which everybody knew was a pointless, indeed self-defeating economic distortion which merely served to increase house prices.  Geoffrey Howe, his predecessor as Chancellor, had cautiously mentioned the notion that it might be sensible to phase it out, only to be firmly beaten around the ears by Thatcher, for whom economic logic played a very lowly second fiddle to promoting (even if fallaciously) the idea of sustaining "her" voters in their aspirations.  Lawson, equally keen to scrap the subsidy, decided it wasn't on, while privately decrying it.  When, at length, he found the bottle to reform just one aspect of this nonsense, he screwed it up tactically by delaying its introduction after the announcement, causing exactly the baleful impact on house prices that theory indicated it would. 

I'd be interested to see an authoritative list of what enduring economic reforms his many admirers would claim for him.  My starter towards this little project: he played an important strategic role in defeating Scargill's epic strike of '84-85, both before and during.  That's not a small achievement: before Scargill was so soundly defeated the whole of the Left in the UK intuitively felt that Thatcher's regime was only there on sufferance: "Just wait till the miners go out ...". 

Other candidates for the list of achievements?  He certainly played a modest part in opening up the energy markets to competition, starting from the dreadful monopoly arrangements then in place.  But even on that he was half-hearted, despite being wholly persuaded intellectually of the merits of this long overdue measure.  It wasn't until John Major's often derided regime that serious progress was made, with a degree of success that made Lawson's (and Peter Walker's) efforts look like very uncertain baby steps.  A genuinely confident heavyweight proponent of free markets in his position could have moved much farther and faster. 

Feel free to add to this equivocal story BTL !

ND

Green Energy Day. Eventually.

Oh, what sport!  Is it to be Green Energy Day in a field somewhere?  No, it's to be Energy Security Day in industrial Aberdeen.  Oh, no wait, it's Green Energy again - in a nuclear fusion lab.

But are nukes green, as the French desperately (really desperately) want the EU to declare, or are they nasty old 20th century heavy industry?  HMG itself is out to consult on that question too: ministers are hoping a lot of ESG money will come swinging in if it's *serendipitously* concluded nukes are green.  Meanwhile, maybe nuclear fusion seemed suitably whizzy-hi-tech-future-ish and, well, green-ish, for the purpose.

Ironically, it's also a rather good metaphor for something costly that never actually arrives ... 

I haven't had a chance to read yesterday's monster documentation, so I'm afraid the usual C@W precis service is somewhat delayed.  Have a good weekend, all.

ND

Future of the UK electricity "market"

BTL on the last thread, Clive triggered some comments with: Renewables are rocking da house. And negative prices! So, while hydrocarbons will linger around for a while yet, they’re obviously not indispensable and are, arguably, definitely in run off;  followed by Anon: Interesting points being raised by @Clive on negative electricity prices due to generation imbalance. Perhaps another thread on suggestions on how to use up all the surplus power when its available e.g. pumped storage. 

So here we are.  Nobody quite knows the future evolution of the UK power fleet, seeing that the government is willing to throw really quite serious money these days - plus various threats of compulsion - into a range of energy-related options (nukes of various sorts, CCUS, hydrogen, EVs, HPs), some of which frankly look like backing several horses in case one or more turns out to be totally lame.  You can pretty much suspend the laws of physics for as long as you're willing to throw enough money at it - and certainly the laws of economics.  Also, they've allowed themselves some very prudent opt-out language in case this isn't working: for example, there's a 'security of supply' override on the 2035 'net zero carbon electricity system' deadline (which means it's just a target / aspiration).  And there's no date on ending sale of gas boilers. 

But some things we can say for sure.

1. there is absolutely no end in sight for dependency on natural gas
2. the cost of generating electricity to meet demand securely will rise
3. global anthropogenic CO2 emissions haven't peaked, and won't peak for a very long time (if at all) 

There's no point that I can see in banging on about 3, in the context of dealing with what's before us.  Anyone who thinks the global "drive to net zero carbon" (qua western-governmental policy) can be halted by blog discussions hasn't understood the force of politics behind it (as a policy).  As I first wrote in 2019, it's 100% mainstream now, including the entire banking sector, and most of industry, which expects to benefit from a whole new era of state handouts under various headings, always the source of revenue requiring the least effort.  Nothing to do with Greta, BTW, and everything to do with Business.  

So: back to 1 & 2.  It's entirely likely that the annual average amount of gas actually burned will remain on a decreasing trend, with total "renewable" electricity generated rising.  The final demise of coal will extend current levels of gas burn a while longer, simply by displacement of said coal.  But that's not the point.  Mention of pump storage - including SSE's new project - is fine and dandy but, like batteries of the present technologies, UK pump storage supplies minutes-worth, or maybe hours-worth of standby electricity capacity: important for micro-balancing of grid operations (for frequency stabilisation etc) but broadly irrelevant in terms of dealing with long periods of no wind.

But that means maintaining a lot of expensive stuff on standby, specifically, gas-fired electricity generating capacity AND the entire infrastructure, physical and commercial, to ensure gas will be available when needed.  That's easy enough** when (a) it all exists anyway; and (b) there's strong reason to believe that residential gas demand will continue for a long time at roughly the present level, even as UK industry slowly transitions towards electrification, hydrogen, or an early grave, a.k.a. further offshoring.   Keeping stuff hanging around mostly idle doesn't cost nothing.  Just like paying windfarms to stop generating; bringing ever more sophisticated batteries into the fleet; building vast new infrastructure to accommodate new windfarms; etc etc.  

But what of negative (wholesale) prices, increasingly a feature of most electricity markets?  Easy.  They are negative for just a few hours, just as they go wildly high for just a few hours (or longer ...).  It's volatility, that's all - and tells you nothing about the average price which, as I've asserted, will rise and rise.  And what do we know about volatility?  It's like a heartbeat: too low and it signifies death - but too high, and it's a Very Bad (and costly) Thing.  Or (to switch useful analogies) like friction:  too low, and you'll slide all over the place.  Too high, and you're seriously (and expensively) inconvenienced.

We hear endless chatter, mostly from the EU (though Will Hutton is egregiously stupid misinformed on this also) where ignorance about markets is a dominant strand in public life, about "decoupling" the price of electricity from the price of gas.  What do they mean?  Well, initially they "meant" nothing more than "we've heard renewable electricity is cheap, nay free - so why has the retail price gone up?" - an expression of pure ignorance.  More recently, they've been gently steered towards something meaningful, indeed, logical - i.e. thinking about a more widespread deployment of longer-term financial hedging against electricity price volatility.  There's nothing remotely new about this: any party that feels uncomfortable being exposed to price fluctuations should go for a fixed price!  If this is to be achieved via extending the market for 'renewable PPAs', i.e. fixed priced electricity sales contracts (or more likely CfDs) offered by renewables developers - compulsorily?? brokered by regulators?? - then so be it.  I'm not sure many industrial companies will enjoy the fixed prices on offer: that's another matter entirely.

But it does bring us back rather neatly to point 2 above.  Whether it's the average of volatile wholesale prices, or fixed-price PPAs, the price of electricity will carry on rising - long after Putin has been put back in his box.  That's what happens when you move to an intrinsically more complex and basically entirely new way of running an entire, very large, industry.  All at once++.  Across a very large part of the world economy.

Doesn't mean it can't be done.  Does mean it's gonna be expensive.

ND    

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** It'll be a lot more difficult without a base level of residential gas demand  

++ People who pretend otherwise  - and there are many - are like those who said Brexit would boost the UK economy.  I write as someone who voted for Brexit.  But I never thought it would be anything other than costly.  

Xi highlights Putin's pipeline predicament

Russia's massive oil, & particularly gas exports have always mostly been via pipeline: ice-bound sea ports speak to that.  There's some LNG - with liquefaction courtesy of western technology, but pipelines are the big game.  So when Europe stops buying, and Putin has only a small outlet direct to China, the income largely stops.  And if, as he's been using every opportunity to signal, he's in for the very long haul vs Ukraine, there it rests - and it's gotta hurt, economically - until a big new pipe to China, "Power of Siberia 2", can be built.  

And Li'l Volodya was hoping to confirm that deal during this week's Xi visitation.  Even then, his exports to China could only reach around half what he's been selling to Europe, by, errrr, 2030.  Maybe.

But.  In keeping with all the body language showing clearly who's boss in that rather functional and one-sided relationship, Xi wasn't playing.  The best announcement Russia felt able to make on PS2 was minimal and pitiful.  We know the score.  Xi is gonna drive a Very Hard Bargain Indeed, from which Russia won't be getting anything close to half the revenues it once enjoyed from Europe, even if they manage half the volume.  Yes, China has brutal form on this one.  Nice to know who your best friends are, eh, Vova?

So, living off scraps it'll have to be.  We all know Russians can do this, and suffer long.  They can't be 'defeated', as such.  But it's not much of a strategic argument, is it?  You can't defeat me, so you'd just better give me everything I want.  Hmmm.  Maybe even the new 'multi-polar world order' doesn't work quite like that.

ND  

Banking Crisis - again ...

Commodities down on banking stress

Here at C@W we pride ourselves on having spotted the "2008" banking crisis in the summer of 2007, when two German banks went down, followed by Northern Rock - all three being canaries in the dank, dirty coalmine of culpably fatuous and irresponsible banking strategies being practised deep underground, that turned out to be systemic.

So what's happening now?  It doesn't look good.

• Silicon Valley and Signature
• Deutsche Bank (again) and Credit Suisse
• risk to economic recovery due to reduced bank lending
• likely response of the authorities: back to QE! (interest rates coming off already ...)

Thus far, the current banking woes have been accompanied by a pronounced downtick in commodity prices.  If, on the basis of economic contraction, that persists then maybe inflation doesn't just take off again with QE ... and people are forever pronouncing on the Chinese property market ... but I'm no good at predicting these macro phenomena.  (What's more, I don't know who is.)  Are you out there, CU?!

ND

Budgetting for defence & deterrence

There was a Labour Chancellor, Hugh Dalton, who took the view that his purpose at the Exchequer, like that of the treasurer of a club, was simply to come up with whatever money the committee decided it needed for its purposes.  I don't know if Ben Wallace considers what extra dosh Hunt has found for defence spending as adequate: but at least the reportedly immediate £5bn has been correctly allocated: £3bn for something-or-other "nuclear", and £1.9bn for replenishing ammunition stocks. 

Never has the wisdom of retaining a nuclear deterrent been clearer.  NATO studiously avoids anything that represents a genuine nuclear-escalatory threat to Russia; and, equally clearly, doesn't have the will to generate the scale of conventional forces required to deter Russia by the latter means alone.  (Views that Russia has no designs on anything outside the borders of the Russian Federation look a little silly now: and the fact they'd get a bloody nose is obviously nothing that worries Putin: he has been vigorously doubling down** on bloody noses for 12 months now.)  Conversely, behind its own nuclear shield NATO is doing a great deal to incommode Russia materially.  Of course the exact status of the UK's deterrent vis-à-vis independence is a vexed issue - but for another occasion.  The basic point stands.

Financing costly nuke-related stuff has long been shrouded in fog.  The diligent chaps at the SPRU at Sussex University have long maintained that the whole point of the apparently bottomless government support for the UK's "civil" nuclear industry is to subsidise the military nukes, and they may very well have a point (though personally I reckon Keynsian job creation explains quite a lot, too).  Rolls Royce probably didn't endear themselves to HMG when their initial sales pitch for SMRs said as much.

One current and rather high-profile thrust of UK defence policy is the new AUKUS thing, which is also in the news.  I can't help wondering whether this is as much as anything to come up with a rationale for the ridiculous new aircraft carriers Gordon Brown saddled us with.  What a git that man is.  A bigger waste of money is hard to envisage (would the Aussies like to buy them?) and, as we've said before, naming one of them Prince of Wales was presumably some bright spark's brutal / witty way of underlining the point.  It says much for the total lack of knowledge of history these days, that nobody put a stop to that little piece of devilment.

ND

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 ** OK, sometimes this is useful shorthand.  Sorry about that.  But no leaning in or curating, I promise you. 

Open Thread: BUDGET DAY

Any signs of an Actual Strategy that we can see?  Or is that too much to expect?

ND

Natural gas as a feature of Putin's war

At the very start of Putin's war, I asked: What plans does Little Volodya have for his [natural] gas weapon?  (day one, 24.02.22)  Well, to his utter astonishment - and mine - we in Europe have managed a whole (exceptionally warm) winter without it, and gas turned out to be not the crucial geo-political trump card he quite fairly assumed (even if this is partly down to the ignorant nonsense that we don't actually need gas, peddled by greens and swallowed by many).   We went on:

Ol' Uncle Joe Biden said something at the weekend rather bellicose about Nord Stream 2 but I kinda doubt he has in mind blowing it up, easy and rather satisfying though this would be (there's a James Bond film involving a Russian gas pipeline, as I recall) ... Which leads us to consider a Big Accident. If there's too much high-explosive shit flying about in Ukraine, well, all that infrastructure is really quite fragile (although not too difficult to repair). Quite a big chunk of Russian exports still transit Ukraine, albeit NS2 is designed to put paid to that. Who knows what any number of rogue actors might think of doing in that very large country, in the fog of war? There are plenty of people who could profit handsomely from a Big Accident...

So now we have a new Nord Stream theory being widely bruited about: it was Ukrainians wot did it!  Let's see what evidence transpires - we've had enough quite evidence-free echo-chamber speculation for my liking already.  As you'll gather from the 24 February 2022 quote above, I'm not averse to a Rogue Actor hypothesis.  There are plenty of rogues, with plenty of money and complicated interests, in the world of Big Gas.

One thing I will tell you: there's almost no chance of anyone finding a smoking gun irrefutably in the hands of the Kyiv government.  With 100% certainty, we may be sure that Rule No.1 laid down to Zelensky by Joe Biden 12 months ago, will have been No Surprises.  And - can Zelensky get by without US aid?  I don't need to answer that.  So, let the wild speculation continue.  On the stopped clock principle, somebody's guess will turn out to have been correct (my money has switched from Soros to the military wing of Greta & the Greens). 

On the subject of Big Gas actors, they don't come much bigger than my old friends at Gazprom.  We hear that Gazprom is being encouraged to set up a 'private military company' on the Wagner model, but inevitably on much more Kremlin-friendly lines.  

Why?  Easy: Putin needs to harness all the local competence he can find; and Gazprom has plenty of competent people, well versed in mustering big efforts for big projects.  And, needless to say, they are part of the Kremlin elite (indeed, one of its paymasters).  If you're simply thinking like, perhaps a Shell or a BP - engineer-heavy companies stuffed with men-of-the-world with global experience of managing complex affairs - well, that's a fair starting point: but Gazprom has traditionally engaged in the practical world with even broader scope.  Not only do they have their own bakeries,  as I described here some years ago, they have schools and hospitals, AND an armed service, complete with AFVs.  

How come?  Because Russia is a big place (until 1990 it was even bigger) and the further you get from Moscow, the more you need to deal with local warlords of the Kadryov variety.  And Gazprom has always needed to do business far and wide.  Collecting money from a distant райо́н is often as difficult for the Big G as it was for the Tsar's tax farmers in earlier years, or the Golden Horde's tribute-gatherers before them.  The arrival of the men from Gazprom in a small armoured column is often how the matter is handled (as noted here 15 years ago). 

And would you rather be on the payroll of a Gazprom motor rifle regiment, or one of Wagner's cannon-fodder 'musicians'?

ND