In today's commodity markets, changing behaviour by private investors can temporarily influence prices more than changes in production or consumption. All commodity prices are up – for petroleum and minerals as well as farm products – in part because of a big shift of capital out of equity markets and real estate (as those bubbles have burst) into commodities, which are favoured as a hedge against inflation at a time of rate-cutting. Pension funds and large institutions have poured roughly $200 billion into commodity linked index funds since 2001, helping to drive prices temporarily higher. This bubble, too, could soon burst.

Back in the mid-nineties the planning fad then called "Growth Management", and now known as "Smart Growth", began to spread from California round the world. The Auckland Regional Council imposed its Metropolitan Urban Limits around Auckland which began to bite around 1996 and have been biting ever since. Soon this "meme" spread to several states of the United States, to Australia, to the UK and of course to Canterbury and eventually to smaller rapid growth scenic regions round the world.

Wherever 'Smart Growth' and Metropolitan Urban Limits (or Urban Growth Boundaries) took hold, residential real estate markets began to inflate into classic "bubbles" and house prices began to rapidly outstrip normal inflation as constraints on the supply of land meant developers could not rapidly and easily respond to changes in demand. Some of the most rapid price inflation took place in the slowest growing cities and regions. A long period of low general inflation with consequent low interest rates fed this bubble in many markets including the US.

George Magnus, senior economic adviser at UBS investment bank, writing in the same issue of Prospect,

an essay "The End of the Cult of finance?" reviewing The Trillion Dollar Meltdown by Charles Morris:

Lower inflation means lower interest rates, and that means a bigger incentive to boost returns. Most often, you do this by using leverage – borrowing money to invest in something. As asset prices rise, investors borrow more and more against them. History shows these periods of sustained low inflation tend to be accompanied by asset-price bubbles.

In those markets where house prices were being inflated by policies designed to constrain the supply of land, residential property became a target for investment and security for borrowing at the same time.

Eventually, that bubble burst, immediately causing havoc in markets where sub-prime lending had become commonplace, and more recently inflating all commodity markets as financiers looked for other places to park the investment funds which still needed to find a home.

We are all now feeling the impact of high prices for food, petrol, and any commodity you care to name.

Those planners who first drew their lines around cities, and insisted that low cost low density housing was a fraud and would actually impose massive costs on urban populations have a lot to answer for.

Remarkably, planners and councillors in the Auckland and Canterbury Regions continue to promote their policies of containment and high development levies on the grounds that this is the only way to avoid the hidden costs of urban sprawl. Canterbury Regional Council's new plan wants to draw the noose even tighter.

One early and somewhat shaky research project from the US suggested that suburban lots might cost an extra $ 12,000 per dwelling to service, compared to infill construction.

In California house prices in some cities soon moved towards a $1,000,000 dollar "planners' penalty" per dwelling.

(If you sell a house in San Jose and move to Houston to a similar house you will pocket a million US dollars.) These days we have to add on the cost of those savings invested in finance companies and now lost, and the additional costs we are now paying for commodities including food and petrol. Ironically the planners are now telling us that the solution to high fuel costs is more Smart Growth.

As Karl Marx observed, in the face of stupidity, even the Gods protest in vain.

Item Two: Questions from the Rural Sector.

Straight Furrow week has run an excellent whole page "Opinion Piece" by a Robin Grieve, Agricultural Tutor and consultathisnt, called "Greenhouse Gas Emissions in Balance". He is asking "Who is doing the research to establish the extent to which pasture is a carbon sink?" And if the answer is no-one, then why not? Grieve's figures suggest that each cow is actually a sink to the tune of 15 -19kgs, when its whole cycle is taken into account – and that calculation ignores any effect of pasture as a sink. He also asks how much of the carbon in the cow pat is absorbed into the soil (credit to the cow) and how much goes to atmosphere? He makes the point that any breakdown of vegetation produces N2O, so why is government targeting only the farmer, while ignoring biofuel production, native bush, wetlands and composting?

His key argument is that, until we know the answer to these and related questions, NO carbon tax or trade scheme can be fair.

Am I against pedestrianisation, then? Am I against restoration and zoning and controls? Of course I'm not, any more than I'm against owning books and recordings. But it's difficult to have the quiet and also keep the city, because the city isn't a collection of buildings among which the traffic moves; the city is the traffic. That endless stream of cars and buses represents the movement of people to and from the encounters that constitute the fabric of their lives. The jams and grid-locks are the tangles that all movement and interchange involve, the choking exhaust gases the emanations from the consumption of energy necessary for all activity. .... [quite a bit in here, then] .... Buildings are like snail-shells – the residue of last year's growth, the record of last year's traffic.

Think of a tree in its essential form, and you think of a trunk and branches. The roots are out of sight and forgotten, the leaves dismissed as frivolous optional extras that come and go with the seasons. We fail to see the trees for the wood, because in truth it is precisely the leaves and roots that are the essential tree. They are carrying out the processes that constitute it. The branches and trunk are merely the connections between the two – the streets that guide the traffic, the spoil heaps left behind as the leaves reach towards the sunlight. If there were no other trees competing for light then the tree would function perfectly well with the leaves springing directly out of the roots.