Asteroid (16) Psyche – Again! Or Riches Evaporate, Again

Thanks to my latest novel “Spoliation”, I have had to take an interest in asteroid mining. I discussed this in a previous post (https://ianmillerblog.wordpress.com/2020/10/28/asteroid-mining/) in which I mentioned the asteroid (16) Psyche. As I wrote, there were statements saying the asteroid had almost unlimited mineral resources. Initially, it was estimated to have a density (g/cc) of about 7, which would make it more or less solid iron. It should be noted this might well be a consequence of extreme confirmation bias. The standard theory has it that certain asteroids differentiated and had iron cores, then collided and the rock was shattered off, leaving the iron cores. Iron meteorites are allegedly the result of collisions between such cores. If so, it has been estimated there have to be about 75 iron cores floating around out there, and since Psyche had a density so close to that of iron (about 7.87) it must be essentially solid iron. As I wrote in that post, “other papers have published values as low as 1.4 g/cm cubed, and the average value is about 3.5 g/cm cubed”. The latest value is 3.78 + 0.34.

These varied numbers show how difficult it is to make these observations. Density is mass per volume. We determine the volume by considering the size and we can measure the “diameter”, but the target is a very long way away, it is small, so it is difficult to get an accurate “diameter”. The next point is it is not a true sphere, so there are extra “bits” of volume with hills, or “bits missing” with craters. Further, the volume depends on a diameter cubed, so if you make a ten percent error in the “diameter” you have a 30% error overall. The mass has to be estimated from its gravitational effects on something else. That means you have to measure the distance to the asteroid, the distance to the other asteroid, and determine the difference from expected as they pass each other. This difference may be quite tiny. Astronomers are working at the very limit of their equipment.

A quick pause for some silicate chemistry. Apart from granitic/felsic rocks, which are aluminosilicates, most silicates come in two classes of general formula: A – olivines X2SiO4 or B – pyroxenes XSiO3, where X is some mix of divalent metals, usually mainly magnesium or iron (hence their name, mafic, the iron being ferrous). However, calcium is often present. Basically, these elements are the most common metals in the output of a supernova, with magnesium being the most. For olivines, if X is only magnesium, the density for A (forsterite) is 3.27 and for B (enstatite) 3.2. If X is only iron, the density for A (fayalite) is 4.39 and for B (ferrosilite) 4.00. Now we come to further confirmation bias: to maintain the iron content of Psyche, the density is compared to enstatite chondrites, and the difference made up with iron. Another way to maintain the concept of “free iron” is the proposition that the asteroid is made of “porous metal”. How do you make that? A porous rock, like pumice, is made by a volcano spitting out magma with water dissolved in it, and as the pressure drops the water turns to steam. However, you do not get any volatile to dissolve in molten iron.

Another reason to support the iron concept was that the reflectance spectrum was “essentially featureless”. The required features come from specific vibrations, and a metal does not have any. Neither does a rough surface that scatters light. The radar albedo (how bright it is with reflected light) is 0.34, which implies a surface density of 3.5, which is argued to indicate either metal with 50% porosity, or solid silicates (rock). It also means no core is predicted. The “featureless spectrum” was claimed to have an absorption at 3 μm, indicating hydroxyl, which indicates silicate. There is also a signal corresponding to an orthopyroxene. The emissivity indicates a metal content greater than 20% at the surface, but if this were metal, there should be a polarised emission, and that is completely absent. At this point, we should look more closely at what “metal” means. In many cases, while it is used to convey what we would consider as a metal, the actual use includes chemical compounds with a  metallic element. The iron levels may be as iron sulphide, the oxide, or, as what I believe the answer is, the silicate. I think we are looking at the iron content of average rock. Fortune does not await us there.

In short, the evidence is somewhat contradictory, in part because we are using spectroscopy at the limits of its usefulness. NASA intends to send a mission to evaluate the asteroid and we should wait for that data.

But what about iron cored asteroids? We know there are metallic iron meteorites so where did they come from? In my ebook “Planetary Formation and Biogenesis”, I note that the iron meteorites, from isotope dating, are amongst the oldest objects in the solar system, so I argue they were made before the planets, and there were a large number of them, most of which ended up in planetary cores. The meteorites we see, if that is correct, never got accreted, and finally struck a major body for the first time.

A New Way of Mining?

One of the bigger problems our economies face is obtaining metals. Apparently the price of metals used in lithium-ion batteries is soaring because supply cannot expand sufficiently, and there appears to be no way current methodology can keep up.

 Ores are obtained by physically removing them from the subsurface, and this tends to mean that huge volumes of overburden have to be removed. Global mining is estimated to produce 100 billion t of overburden per year, and that usually has to be carted somewhere else and dumped.  This often leads to major disasters, such as mine tailing causing dams, and then collapsing, thus Brazil has had at least two such collapses that led to something like 140 million cubic meters of rubble moving and at least 256 deaths. The better ores are now worked out and we are resorting to poorer ores, most of which contain less than 1% is what you actually want. The rest, gangue, is often environmentally toxic and is quite difficult to dispose of safely. The whole process is energy intensive. Mining contributes about 10% of the energy-related greenhouse gas emissions. Yet if we take copper alone, it is estimated that by 2050 demand will increase by up to 350%. The ores we know about are becoming progressively lower grade and they are found at greater depths.

We have heard of the limits to growth. Well, mining is becoming increasingly looking like becoming unsustainable, but there is always the possibility of new technology to get the benefit from increasingly more difficult sources. One such possible technique involves first inserting acid or lixiviant into the rock to dissolve the target metal in the form of an ion then use a targeted electric field to transport the metal-rich solution to the surface. This is a variant of a technique used to obtain metals from fly ash, sludge, etc.

The objective is to place an electrode either within or surrounding the ore, then the acid is introduced from an external reservoir. There is an alternative reservoir with a second electrode with opposite charge to that of the metal-bearing ion. The metal usually bears a positive charge in the textbooks, so you would have your reservoir electrode negatively charged, but it is important to keep track of your chemistry. For example, if iron were dissolved in hydrochloric acid, the main ion would be FeCl4-, i.e. an anion.

Because transport occurs through electromigration, there is no need for permeability enhancement techniques, such as fracking. About 75% of copper ore reserves are as copper sulphide that lie beneath the water table. The proposed technique was demonstrated on a laboratory scale with a mix of chalcopyrite (CuFeS2) and quartz, each powdered. A solution of ferric chloride was added, and a direct current of 7 V was applied to electrodes at opposite ends of a 0.57 m path, over which there was a potential drop of about 5V, giving a maximal voltage gradient of 1.75 V/cm. The ferric chloride liberated copper as the cupric cation. The laboratory test extracted 57 weight per cent of the available copper from a 4 cm-wide sample over 94 days, although 80% was recovered in the first 50 days. The electric current decreased over the first ten days from 110 mA to 10 mA, suggestive of pore blocking. Computer simulations suggest that in the field, about 70% of the metal in a sample accessed by the electrodes could be recovered over a three year period. The process would have the odd hazard, thus a 5 meter spacing between electrodes employed, in the simulation, a 500 V difference. If the ore is several hundred meters down, this could require quite a voltage. Is this practical? I do not know, but it seems to me that at the moment the amount of dissolved material, the large voltages, the small areas and the time taken will count against it. On the other hand, the price of metals are starting to rise dramatically. I doubt this will be a final solution, but it may be part of one.

Our Financial Future

Interest rates should be the rental cost of money. The greater the opportunities to make profits, the more people will be willing to pay for the available money to invest in further profitable ventures and the interest rates go up. That is reinforced in that if more people are trying to borrow the same limited supply of money the rental price of it must increase, to shake out the less determined borrowers. However, it does not quite work like that. If an economic boom comes along, who wants to kill good times when you can print more money? However, eventually interest rates begin to rise, and then spike to restrict credit and suppress speculation. Recessions tend to follow this spike, and interest rates fall. Ideally, the interest rate reflects what the investor expects future value to be relative to present value. All of this assumes no external economic forces.

An obvious current problem is that we have too many objectives as central banks start to enter the domain of policy. Quantitative easing involved greatly increasing the supply of money so that there was plenty for profitable investment. Unfortunately, what has mainly happened, at least where I live, is that most of it has gone into pre-existing assets, especially housing. Had it gone into building new ones, that would be fine, but it hasn’t; it has simply led to an exasperating increase in prices.

In the last half of the twentieth century, interest rates positively correlated strongly with inflation. Investors add in their expectation of inflation into their demand for bonds, for example. Interest rates and equity values tend to increase during a boom and fall during a recession. Now we find the value of equities and the interest rates on US Treasuries are both increasing, but arguably there is no boom going on. One explanation is that inflation is increasing. However, the Head of the US Federal Reserve has apparently stated that the US economy is a long way from employment and inflation goals, and there will be no increase in interest rates in the immediate future. Perhaps this assumes inflation will not take off until unemployment falls, but the evidence of stagflation, particularly in Japan, says you can have bad unemployment and high inflation, and consequently a poorly performing economy. One of the problems with inflation is that expectations of it tend to be self-fulfilling. 

As a consequence of low inflation, and of central banks printing money, governments tend to be spending vigorously. They could invest in new technology or infrastructure to stimulate the economy, and well-chosen investment will generate a lot of employment, with the consequent benefits in economic growth and that growth and profitability will eventually pay for the cost of the money. However, that does not seem to be happening. There are two other destinations: banks, which lend at low interest, and “helicopter money” to relieve those under strain because of the virus. The former, here at least, has ended up mainly in fixed and existing assets, which inflates their price. The latter has saved many small companies, at least for a while, but there is a price.

The US has spent $5.3 trillion dollars. The National Review looked at what would be needed to pay this back. If you assume the current pattern of taxation depending on income holds, Americans with incomes (in thousand dollars) between $30 – 40 k would pay ~$5,000; between $40 – 50 k would pay ~$9,000; between $50 – 75 k would pay ~$16,000; between $75 – 100 k would pay ~$27,000; between $100 – 200 k would pay ~$51,000. For those on higher incomes the numbers get out of hand. If you roll it over and pay interest, the average American family will get $350 less in government services, which is multiplied by however much interest rates rise. If we assume that the cost of a dollar raised in tax is $1.50 to allow for the depressed effects on the economy, the average American owes $40,000 thanks to the stimulus. Other countries will have their own numbers.I know I seem to be on this issue perhaps too frequently, but those numbers scare me. The question I ask is, do those responsible for printing all this money have any idea what the downstream consequences will be? If they do, they seem to be very reluctant to tell us.

Living Near Ceres

Some will have heard of Gerard O’Neill’s book, “The High Frontier”. If not, see https://en.wikipedia.org/wiki/The_High_Frontier:_Human_Colonies_in_Space. The idea was to throw material up from the surface of the Moon to make giant cylinders that would get artificial gravity from rotation, and people could live their lives in the interior with energy being obtained in part by solar energy. The concept was partly employed in the TV series “Babylon 5”, but the original concept was to have open farmland as well. Looks like science fiction, you say, and in fairness I have included such a proposition in a science fiction novel I am currently writing, However, I have also read a scientific paper on this topic (arXiv:2011.07487v3) which appears to have been posted on the 14th January, 2021. The concept is to put such a space settlement using material obtained from the asteroid Ceres, and orbiting near Ceres.

The proposal is ambitious, if nothing else. The idea is to build a number of habitats, and to ensure such habitats are not too big but they stay together they are tethered to a megasatellite, which in turn will grow and new settlements are built. The habitats spin in such a way to attain a “gravity” of 1 g, and are attached to their tethers by magnetic bearings that have no physical contact between faces, and hence never wear. A system of travel between habitats proceeds along the tethers. Rockets would be unsustainable because the molecules they throw out to space would be lost forever.

The habitats would have a radius of 1 km, a length of 10 km, and have a population of 56,700, with 2,000 square meters per person, just under 45% of which would be urban. Slightly more scary would be the fact it has to rotate every 1.06 minutes. The total mass per person would be just under 10,000 t, requiring an energy to produce it of 1 MJ/kg, or about 10 GJ.

The design aims to produce an environment for the settlers that has Earth-like radiation shielding, gravity, and atmosphere. It will have day/night on a 24 hr cycle with 130 W/m^2 insolation, similar to southern Germany, and a population density of 500/km^2, similar to the Netherlands. There would be fields, parks, and forests, no adverse weather, no natural disasters and ultimately it could have a greater living area than Earth. It will be long-term sustainable. To achieve that, animals, birds and insects will be present, i.e.  a proper ecosystem. Ultimately it could provide more living area than Earth. As can be seen, that is ambitious. The radiation shielding involves 7600 kg/m^2, of which 20% is water and the rest silicate regolith. The rural spaces have a 1.5 m depth of soil, which is illuminated by the sunlight. The sunlight is collected and delivered from mirrors into light guides. Ceres is 2.77 times as far as Earth from the sun, which means the sunlight is only about 13% as strong as at Earth, so over eight times the mirror collecting are is required for every unit area to be illuminated to get equivalent energy. 

The reason cited for proposing this to be at Ceres is that Ceres has nitrogen. Actually, there are other carbonaceous asteroids, and one that is at least 100 km in size could be suitable. Because Ceres’ gravity is 0.029 times that of Earth, a space elevator could be feasible to bring material cheaply from the dwarf planet, while a settlement 100,000 km from the surface would be expected to have a stable orbit.

In principle, there could be any number of these habitats, all linked together. You could have more people living there than on Earth. Of course there are some issues with the calculation. The tethering of habitats, and of giving the habitats sufficient strength requires about 5% of the total mass in the form of steel. Where does the iron come from? The asteroids have plenty of iron, but the form is important. How will it be refined? If it is on the form of olivine or pyroxene, then with difficulty. Vesta apparently has an iron core, but Vesta is not close, and most of the time, because it has a different orbital period, it is very far away.But the real question is, would you want to live in such a place? How much would you pay for the privilege? The cost of all this was not estimated, but it would be enormous so most people could not afford it. In my opinion, cost alone is sufficient that this idea will not see the light of day.

The Future is Coming

The question then is, what will it be? I have just been reading a book by a number of futurists and it was remarkably timid, with a lot of conditional subjunctives and a bit of wishful thinking. Superficially, we should do better with the clues out there. Or can we? Are there too many unknowns? Is any part of the future impossible to predict with any reliability? Certainly, around here the professionals seem to make predictions on a par with the way I make them, that is, most of them are rubbish. About three years ago, economists were recommending New Zealand invest a lot more in tourism. OK, Covid 19 could be regarded as a Black Swan Event, but as soon as the virus struck, economists were advising that there would be unemployment of at least 11% by now, even with strong government financial support for the flailing industries. Accordingly, the Reserve Bank brought interest rates way down and began a major program of quantitative easing. The latest unemployment figures here are 4.5%, and thanks to floods of low interest money house prices have got out of control. Of course, the Reserve Bank will no doubt claim credit for the low unemployment (in part because anyone who can be of use at house building is employed) and ignore the house prices. So, what next? As usual, I have no idea.

Between 2008 and 2020, it appears the Federal Reserve, the European Central Bank, the Bank of Japan and the People’s Bank of China have been printing $1 trillion per year, and using this to buy government bonds. The governments have pushed the money into society with extremely low interest rates to encourage industries to employ more people and bring new things to market. Do you see this happening? No? So what will happen? Surely, if you keep pumping air into a tyre, eventually something will give. Quantitative easing has currently reached about 30% of various nations annual GDP, that is, 30% more than was needed to run the economies previously, yet they continue with greater enthusiasm. 

So what has happened? The reserve banks buy bonds from commercial banks, who then have managers that have to do something with the money. They lend to the wealthy and more to the rich to buy assets. Thus suppose you have an asset that yields 6% per annum. You use that as collateral to borrow money at 2%, or maybe even at 1% interest and buy another asset yielding 6%. Now you are starting to make more money and since you got rich by doing this sort of thing, you know what you are doing. As long as you make good investments and have fixed interest contracts, you cannot lose, leaving aside a massive disaster, and even then you will be in a better place than most others. The lesser wealthy either buy smaller assets, or stock. The net result is an overall increase in prices of these assets. If the asset is a house, the rent gets raised to accommodate the increased price. Those who sell or do not wish to buy assets put the money into banks or bonds, where it sits out of circulation, thus keeping the working money supply down. The extreme is when huge amounts of money are secreted away in tax havens.

So the poor get poorer because they have to rent, and their income has stayed the same because there is allegedly no inflation. Why is there no inflation? Because asset prices, housing, etc, do not count in most inflation indices. They do not count because it makes the establishment look so much more in control if they ignore these minor problems. Accordingly, the poor have to buy fewer consumables. That is why there is a shortage of productive investment: sales are static or, with this virus, are going down. The poor have less money, they buy less, hence industries do not expand. In fact, industries tend to contract. Last year, our national airline let go a third of its workforce. Quite high-earning people end up chasing much lower-paid jobs. They also suspended the purchase of new aircraft, so that is less income somewhere else. In such times, it is the higher salaried people let go unless they are essential, so we see even more hollowing of the middle class. The future is coming, but it is less clear from the financial point of view what it will hold. All that money effectively doing nothing is both a potential crisis and an enormous opportunity. Anyone who can think of an original way to capture some of that could become seriously rich.

Punish the Short, and Spinach

For the short, I refer, of course, to the short seller. Most, by now will be aware of Gamestop as a company. It makes and sells videogames, and its share price was something like $US19 before a certain hedge fund decided to short it.

First, to understand how a short works. The shorter borrows shares and has to pay some sort of fee to persuade the owner to lend. The shorter then sells the stock, and at a later stage has to repurchase, to return the “borrow”. You can make a lot this way if you handle enough stock, but also lose a lot, and to load it in your favour the short should involve a very large amount of stock. When that floods the market with unattractive stock, the price tumbles because who wants to buy so much? Then, the critical step: many other reef-fish who hold the stock panic and sell. This is needed because if nobody did anything, the price would go back up, and maybe higher when the repurchase was needed. The short works only because it persuades others it is time to sell and take a loss. If it works, shorter rubs hands and gets seriously richer, however when things go wrong, the loss is unlimited because the repurchase is required. 

So, the hedge fund bet big on Gamestop, and expected the soft market to fall, the reef-fish to try to cash out, and the hedgie to make big. Not much risk, because how could such a feeble company’s stock rise in price? Actually, fairly easily, but to understand that, we have to consider a relatively new phenomenon: the low-cost stock-trading platform. Once upon a time stock had to be purchased in packages of so many, and because bits of paper had to change hands, you usually had to find a buyer and seller prepared to trade the same number. If stock were in units of a dollar, not a significant problem, but some stock now come in units that cost a hundred dollars, which would put stock trading in the hands of the rich. But now we no longer deal with bits of paper; it is all handled electronically. That allows the low-cost trader into the scene, where people can even put up $10 and purchase a fraction of a unit share.

Now we see what went wrong, at least for the hedge fund. A huge number of gamers heard about this and plunged in, purchasing stock. This action from so many pumped up the price by factor of 20 in the middle of the short. These guys were not there to make money; they were there to punish the hedge fund for messing with the company that made their favourite games. They could all well afford to lose $10. Now, how much the hedge fund lost depends on how much stock they were betting with. Thus if they thought they would make a large amount of money if the stock price was depressed by a dollar, see what the loss is when you multiply that amount by 380.

There has since been a big commotion, urging the authorities to stop this “market manipulation”. After all you have to protect the rich on Wall Street. If they get it right, they win big; if they get it wrong, “Bail me out!” appears to be the cry, then if they are bailed out they pay themselves big bonuses for being so clever and continue on their previous ways. Perhaps I should add, I have no problem with short selling. It is a bet, BUT there must be the condition that if the bet loses, the loser pays, not someone else. As for market manipulation, where is the manipulation in advice to “buy this now” and give reasons why? What is different from the average financial advice from the big boys? It is quite reasonable, in my opinion, to buy stock in a company that makes a product you like to avoid it being taken over by some pirate company, be broken up and the assets sold off just to make someone a lot of money. If you are prepared to lose money to keep a company alive, what is wrong with that? They protest too much.

There is another problem with the protests by Wall St.: where does the shorter borrow the stock from in the first place? The easiest source is these new platforms. When the ordinary guy buys such stock, it is the platform that actually possesses it, and the platform can make more money lending it out. Without the small platforms it may not be that easy to purchase enough stock to be worth the effort, so these platforms are needed by Wall St. Regulating the small platforms just to favour Wall St will be very messy.Finally, something totally different. I came across an item in a newspaper that started with, “Spinach sends email”. You might guess this is wrong. What happened was it turns out spinach is surprisingly sensitive to certain soil contaminants, including certain nitrogen oxides. What happened was a camera detected the change and sent an electronic alert. But wait, there’s more. One of the proposed uses was that spinach could detect landmines. Yeah, right. I can just see everyone walking over land, digging it over, then planting spinach to see if there is a landmine below. They would probably know when they started walking over the ground while preparing it.

Asteroid Mining

One thing you see often in the media is the concept that perhaps in the future we can solve our resources problem by mining asteroids. Hopefully, that is fine for science fiction, and I use that word “hopefully” because my next piece of science fiction, currently in the editing mode, includes collecting asteroids for minerals extraction. However, what is the reality?

We know we have a resource problem. An unfortunately large and growing number of elements are becoming scarcer and harder to obtain. As a consequence, ores are getting less concentrated, and so much material has to be thrown away. As an example, the earliest use of copper at around 7,000 BC used native copper. All the people had to do was take a piece and hammer it into some desirable shape. Some time later someone found that if something like malachite was accidentally in a fireplace, it got reduced to copper, and metallurgy was founded. Malachite is 57.7% copper, while if you were lucky enough to find cuprite you got a yield of almost 89% copper. Now the average yield of copper from a copper ore is 0.6% and falling. The rest is usually useless silicates. So, you may think, if we have worked through all the easily available stuff here, nobody has worked through the asteroids. There we could get “the good stuff”.

At this point it is worth contemplating what an ore is and where it came from? All the elements heavier than lithium were made in supernovae or through collisions of neutron stars. Either way, if we think of the supernova, the elements are made at an extremely high temperature, and they are flying away from the stellar core at a very high velocity. The net result is they end up as particles that make the particles in smoke look big. This “smoke” gets mixed in with gas clouds that end up making stars and planets. To get some perspective on concentrations, for every million silicon atoms you will get, on average, about 900,000 iron atoms, almost 24,000,000 oxygen atoms, 5420 chlorine atoms, 52,700 sodium atoms, 522 copper atoms, almost half a silver atom, 0.187 gold atoms, 1.34 platinum atoms and about 0.009 uranium atoms.

So what happens depends on whether the elements react in the accretion disk, so that molecules form. For example, all the sodium atoms will either form a chloride or a hydroxide, but the gold atoms will by and large not react. About half the iron atoms form an oxide or stay as the element, and the oxides will end up as silicates (basalt). What happens next depends on how the objects accrete. That is not agreed. Most scientists say they simply don’t know. I believe the bodies are accreted through chemistry. If the former, we have to assume the elements end up as a mix that have those elements in proportion, except for those that make gases. If the latter, then some will be more concentrated than others.

On earth, elements are concentrated into ores by geochemistry. The heat and water processes some elements, and heat and volcanism concentrates others. Thus gold is concentrated by it dissolving in supercritical water, together with silica, which is why you often find gold in quartz veins. The relevance to asteroids is that processing does not happen in most because they are not big enough to generate the required heat. The relevance now is that the elements you want will either be bound up with silicates, or be scattered randomly through the bulk. To get the metals out, you have to get rid of the silicates, and if you look at the figures, the copper content is actually less than in our ores on earth. Now look at the mining wastes on Earth, and ask yourself what would you do with that in space? (There is an answer – build space stations with rocky shells.)

So why do we think of mining asteroids. One reason comes from asteroid Psyche. One scientific paper once claimed asteroid had a density as high as 7.6 g/cm cubed. That would clearly be worth mining, because the iron would also dissolve nickel, cobalt, platinum, gold, etc. You will various news items that wax on about how this asteroid alone would solve our problems and make everyon extremely rich. However, other papers have published values as low as 1.4 g/cm cubed, and the average value is about 3.5 g/cm cubed (which is what it would be if it were solid basalt). 

Why the differences? Basically because density depends on the mass (determined by gravitational interactions) and volume.  The uncertainty in the volume, thanks to observational uncertainty due to the asteroid being so far away and the fact it is not round, can give an error of up to 50%. The mass requires very accurate measurements when near something else and again huge errors are possible.

So the question then is, if someone wants to get metals out of asteroids, how will they do it? If the elements are there as oxides or sulphides, what do you do about that? On Earth you heat with coal and air, followed by coal. You cannot do that in space. On Earth, minerals can be concentrated by various means that use liquids, such as froth flotation, but you cannot do that easily in space because first liquids like water are scarce, and second, if you have them, unless they are totally enclosed they boil off into space. Flotation requires “gravity”, which requires a centrifuge. Possible, but very expensive,If you were building a giant space station, yes, asteroids would be valuable because the cost of getting components from Earth is huge, but we still need technology to refine them. Otherwise the cost of getting the materials to Earth would be horrifying. Be careful if you see an investment offering.

Unaffordable Houses

In New Zealand, house prices are rising at an uncomfortable rate, partly aided by a shortage of stock. Somewhere about the late 1980s a number of houses were built to “look desirable and be cheap”, but unfortunately they were built badly. Why? Because a nominal “Labour” party was hijacked by right-wingers who made the likes of Thatcher look almost left wing. Regulations were cut, the market ruled, and buildings are hard to tell how well made they are until some number of years later, when they started to fall to pieces. The consequence was that local government and a changed central government pushed out regulations, and with amendments, and from then on it became a bit of a nightmare to build. Further, Councils put restrictions on land use so developers began land banking, thus raising the price of available land to high levels. Prices rose dramatically, but houses were immediately bought because interest rates tumbled. I thought we might be unusual here, but I recently found an article in The Economist” on house prices. Apparently the New Zealand situation is occurring across most Western countries. Germany apparently has had an increase of 11% over the previous year, while South Korea and parts of China have had to tighten rules for buyers.

The Economist stated monetary policy is partly to blame. Cutting interest rates mean borrowers can afford bigger mortgages and others find it easier to manage existing loans. On the other hand obtaining the mortgage is far from easier as the banks are worried about the long-term effects of the virus. In America 60% of bank loan officers have tightened the requirements for borrowing. However, landlords are willing to pay more because the perceived return on other assets has fallen. That is why stock prices are rising, despite the fact that economies are in deep trouble. The quantitative easing is sending money into the economies, but too much is going to those who wish to invest rather than to those who want to buy consumables. Investing in new companies or new construction would be virtuous, but these guys want a quick effort-free result, in which case there is nowhere else for that money to go other than existing assets. Meanwhile the moderately richer people can liquidate some other assets, and particularly bank deposits, which now return very little and pay more for houses. Sorry, poor, but your rent will go up because these guys are not running a charity.

It should be noted that many governments claim that quantitative easing is not inflationary. Actually, it is, but we must recall relativity. It devalues the money relative to what would have happened had it not happened. Keynes would argue that is a highly desirable outcome, but only if the debt so generated is paid back when times improve.

Fiscal policy is also a problem. In a normal recession, people lose their jobs and as their income is insufficient, foreclosures drag house prices down, which leaves ex-homeowners with a blemish on their credit history, making further borrowing harder. Thus the supply of houses increases and the number of people able to get a mortgage falls, which leads to cheaper houses. However, this time the richer countries have preserved household incomes, at least for a while, through wage subsidies, furlough schemes and expanded welfare benefits. Apparently in the G7 countries, in the second quarter disposable incomes were $100 bn higher than before the pandemic. Go figure! A number of countries have also allowed borrowers to suspend or defer all or parts of their repayments, and some have even banned foreclosures. The governments are protecting those in debt, at the expense of those who save or are young.

There is also possibly a third factor: since it has now become desirable to work from home, many office workers are looking to buy a bigger home. This is not a bad thing regarding the poor, but it boosts the price statistics of larger houses. Accordingly, this creates an illusory aspect to house price increases, to add to the real increases elsewhere.Which raises the question, where to from here? Governments have to wind down the fiscal stimulus, and we can expect increasing unemployment to reduce demand, but supply may also decrease as investment for new houses becomes more difficult to obtain. Very low interest rates may lead to increased purchases, but it also leads to decreased savings, which means that other than printing money and inflating the economy, after the initial “sugar high” the investment needed to build new houses may dry up. As the Chinese curse reminds us, we are living in interesting times.

The Poor in a Democracy

One issue that is finally coming to public notice is the issue of inequality. When the virus started to make an impression, Jeff Bezos’ net wealth increased by tens of billions of dollars and that was effectively a free result of the increased significance of Amazon. Yes, Bezos did very well to set it up and he deserves a life of wealth, but that much? At the same time, a very large number of small businesses around the world were going bankrupt, workers were being fired, and in lands of plenty, very large numbers of people cannot afford a proper place to live, they struggle to buy enough food and electricity, and their children are hampered because they do not have the money to use internet technology for their learning. 

Let’s forget the virus. Before that, if the nation’s GDP went up, the lower incomes remained stationary; if there was a recession, the poor’s net wealth, if they had any, gets obliterated, and if they get sick they are in real trouble. The State makes policies that favour the rich, the bankers, and so on, and it is the poor who pay for it. How does this happen in a democracy? That it happens is shown by India, the world’s largest democracy. It is now a middle-income country, according to statistics, but it has the world’s largest number of extreme poor and the third largest number of billionaires.

A recent article on democracy in the journal Science used water as an example of 

a resource in limited supply. Suppose there is just enough for everyone to drink and wash. Now the rich can pay for huge private swimming pools so they make political donations, they get their water, and the poor get rationed through water meters and charging. The costs are trivial for the rich, but the poor cannot pay for the cost of the meter and the bureaucracy associated with charging and have enough income left over to pay for children’s education. So why did this situation occur? Essentially because the politicians permit it. The simple answer would be to ban swimming pools, but the rich will never permit that, and their power lies in the fact they fund the politicians’ election programs. There may be sufficient voters to have the overall power, but they cannot organise that advantage.

Further, politicians and parties become weaker if information flows improve. One of the first things you find out about governments is they seldom come clear with what they are doing. Politicians make grandiose generalized statements that sound good, but seldom show what is really occurring with any accuracy. That comment is sparked by the fact that New Zealand is having an election soon, and one thing that happens is there are TV slots in which senior politicians are asked questions from the public. Very seldom is a question answered properly. If you think that is just New Zealand, consider the debate (??) between Trump and Biden last night. Trust me, the NZ debates shine very brightly compared with that chaotic fiasco.

Nevertheless, when the word inequality was raised here, it got swiftly deflected. A recent question related to the effect of low interest rates. Strictly speaking, our government has no say in these – they are set by the Reserve Bank, but nevertheless the argument produced was that lower interest rates means less is paid on mortgages, and hence the poor get the benefit of easier accommodation, with money left over to buy food, etc. 

Yeah, right! Lower interest rates tends to lead to an increase in house prices. First, those with money see less return on bank deposits so take the money to buy assets. Accordingly, you get a booming house market and stock markets have record highs, even though thanks to the virus, businesses are not necessarily doing better business. That means house prices rise, so anyone buying simply pays a similar fraction of their income to the bank in interest, but their capital debt is higher. Because house prices rise, rent rises. The poor have just as little money to spend, or even less, business does not turn over better, while the rich stock up on assets, and probably work out ways to get tax relief for them. Thus lower interest rates are yet again another way to transfer wealth from the poor to the rich. Those who have houses tend to benefit, but they are not the poor.

We also have parties promising lower taxes. The poor would get enough to buy the odd extra loaf of bread a week, while the rich get serious increases because these tax reductions tend to be proportional to the tax. Rent/housing costs increase and that extra loaf of bread is gobbled up by the bankers, plus a lot more. Worse, we have quantitative easing. Either that has to be paid back (and that will not be paid by the rich, even though they are the only ones to benefit) or it will inflate the currency, at which time again the poor lose because the rich have their wealth tied up in assets. If you don’t believe the rich don’t pay tax, see the recent fuss over a certain Donald Trump.So why do the poor put up with this? There seem to me to be two reasons. The first is the poor cannot get themselves organised. They tend to be the ones who don’t vote. They say no party cares about them, but if they are not going to turn up and vote, guess why the parties concentrate on those who will vote. Another interesting point is that parties that nominally favour the poor usually have politicians who are quite wealthy. Getting elected by the poor might be easy, but getting nominated for a party with any show is hideously difficult. Parties pick candidates that will be trouble-free. Donors must not be upset. Which ends up with getting politicians whose major skill lies in getting elected. Asking them then to do something creative, as opposed to doing what the lobbyists want, is too much. Asking for a conscience is just plain silly. It ain’t goin’ to happen any time soon.

We Need Facts, not Fake News

Some time ago I wrote a post entitled “Conspiracies and Fake News” (https://ianmillerblog.wordpress.com/2020/02/19/conspiracies-and-fake-news/) and needless to say, I have not succeeded in stopping it. However, it seems to me this is a real problem for changing public policy or getting people to comply with the new policy. To be effective, policy needs to be based on facts, not on what someone would like it to be or fears it might be, or worse, doesn’t even care but feels the need to be seen to say something. Recently, our TV news has had about four different quotes of President Trump saying New Zealand is in a crisis regarding COVID – 19. I don’t want to give the impression it is like Utopia here; it isn’t, and we have our problems but we have a population of five million and so far the total deaths come to 22. Take your own country and multiply that 22 by your population in millions and divide by five. I think you will find we are doing some things right, and our current problems are almost certainly because the quarantine restrictions for returning citizens were too kind. Most obeyed the rules, but there were a very small percentage who did not. Here, the policy did not recognize the fact that some people are totally irresponsible. A few days ago someone who knew he had the virus broke out and went to a local supermarket for something. You cannot run a quarantine like that, and that selfish oaf will have made things much worse for future entrants.

But for me, the worst things are those who spout what can only be termed “fake news”. One lot of people, particularly young people, argue the virus is just like a mild cold. Well, fact check. Mild colds do not kill 800,000 people in a little over half a year. It is true that for the young it seems to be not very hazardous, but for the older people it is serious. Why? Here, understanding of causes might be desirable. Part of the reason may lie in angiotensin-converting enzymes, of which for the present there are two important ones: ACE1 and ACE2. These modulate the effects of angiotensin II (ANG II) that increases blood pressure and inflammation, which in turn leads to various tissue injury. The elderly tend to have more ANG II, which leads to higher blood pressure, etc. ACE2 mitigates the pathological effects of ANG II by breaking it down. However, ANG II does have useful effects, and so the body has ACE1, which leads to an increase in ANG II. If you are wondering where this is going, I apologise, but now to the virus, SARS-Cov-2; it binds to the ACE2 receptors as a way of getting into the cells and stops its action. As a result, ACE1 is busy stimulating ANG II, and too much of that leads to cell scarring, etc. As partial good news, ACE inhibitors, used to treat high blood pressure, block the activity of ACE1, and so may help stop the bad effects of the SARS virus. As to why the young are less affected, they seem to have fewer ACE sites. (The very young also have lower levels of androgens, which stimulate viral reproduction.) The reason I have gone on a little on this is because as you learn the facts, it becomes a little easier to see how this virus might be defeated. You win by logically applying true facts.

Another objection I have heard is the flu is worse, and I heard one assertion that in the 2018 season it killed 1.5 million. The CDC website says the figures are not yet in, but the biggest earlier figure was a little under 800,000 infected sufficiently to be hospitalized. On request for where the 1.5 million came from, no reply. It appears some figures are made up. Another figure that gets bandied around is the infection fatality rate. This is cited as extremely low. How? Because the number of infected are estimated. You can estimate anything you like! However, if the number of harmless infections and hence those with immunity were true, the virus problem would be over. It isn’t.

Some other bad news. First, masks don’t make much difference, then suddenly, yes they do and everyone should wear one. How did this situation arise? In the absence of tests, and hence facts, various people have expressed opinions. Here, you have to ask what you are trying to defend from. If you are trying to defend against coarse droplets any mask will do, but if you want to defend against an aerosol you need something more sophisticated, and it has to fit properly. On the other hand, a mask will not make the situation worse, so from mathematics if you don’t know, wear one and hope.Perhaps the worst news: vaccines are bad. Apparently someone made up the claim that vaccines have mercury in them, or aluminium nanoparticles. There are even claims that vaccines will contain nanobots that allow the authorities to keep track of you. The fact that these do not exist (application of energy conservation laws will indicate a minor problem with them) and if they did, someone in the vaccine business would object is no problem for these near paranoid rumourmongers. If someone knows that such pollutants occur, why don’t they take the samples to the authorities so the perpetrators will get long jail sentences. Oh, didn’t you know the government is out to get you? They are encouraging this to kill off citizens. That is the most ridiculous balderdash out. OK, Putin appears to have ordered specific attacks on people like the Skripals, but besides being incompetent, that is not general, and Western governments would not do that, and if they tried they would be exposed. However, it leaves the question, how can society survive if this sort of nonsense and non-critical thinking continues?