Showing posts sorted by relevance for query climate. Sort by date Show all posts
Showing posts sorted by relevance for query climate. Sort by date Show all posts

Sunday, May 27, 2018

Thoughts on Climate Change -- part 7: The Climate Science Mystique

When I was in high school some of my favorite classes were science classes: biology, general science, physics, chemistry, etc. And I did really well in all of them. As far as math is concerned, I aced every single class, with a perfect score in each final exam, including the NY State Regents exams. If I hadn't fallen in love head over heels with music, I might well have decided to become a scientist of some sort: a physicist, mathematician, biologist, chemist, astronomer, etc. It never would have occurred to me in a million years, however, to become a climate scientist -- that was simply off my radar. Nor can I imagine any young person of my generation with both a serious interest in science and a real aptitude for it hankering to pursue a career in climate science. Maybe it's just me, but the prospect of doing that sort of research just seems too utterly boring for words.

Sunday, April 15, 2018

Thoughts on Climate Change -- part 3: Sea Level

Violations of Occam's Razor, along the lines examined already in my previous post, are in fact rather common in the "scientific" literature supporting the so-called "consensus" view of climate change. The following excerpt from the previously quoted Wikipedia article on  Occam's Razor states the issue quite succinctly:
[F]or each accepted explanation of a phenomenon, there is always an infinite number of possible and more complex alternatives, because one can always burden failing explanations with ad hoc hypotheses to prevent them from being falsified . . . (https://en.wikipedia.org/wiki/Occam%27s_razor#Ockham)
The widely accepted notion that sulfur dioxide aerosols from the burning of fossil fuels were responsible for the mid-20th century hiatus in global warming (see previous post) is only one of many similar examples I could provide. In this post, I will focus on a more fundamental issue, that of sea level rise.

Here's what I wrote on this topic in a recent post on the RealClimate blog:

Thursday, May 24, 2018

Thoughts on Climate Change -- part 6: Let Me Count the Ways

This post is going to be very simple, but also, I'm afraid, rather devastating. What follows is a list of some of the most serious problems with the mainstream "climate change" paradigm and some of the many attempts to shore it up. I won't attempt to argue any of these points in any detail, as they have already been argued at length either on this blog or elsewhere, but simply present them in as succinct a manner as possible.

Tuesday, May 8, 2018

Thoughts on Climate Change -- part 4:Yet another "saving hypothesis"

Despite a significant amount of evidence that would appear to contradict the prevailing theory of "anthropomorphic global warming" (AGW), many activists either dismiss it as "lies" or attempt to explain it away with "saving hypotheses" of the sort we've already encountered in previous posts. I'll be providing several examples of such attempts to explain away the evidence, but since I've been discussing the topic of sea level rise, let's begin with a further consideration of that issue.

Friday, May 15, 2009

Climate Change -- Some Inconvenient Truths

One of my favorite columnists, Paul Krugman, has a piece in today's New York Times, entitled Empire of Carbon, that I have some serious problems with. Focussing on China, a favorite target of NY Times China-bashers for a great many years, he writes:

The scientific consensus on prospects for global warming has become much more pessimistic over the last few years. Indeed, the latest projections from reputable climate scientists border on the apocalyptic. Why? Because the rate at which greenhouse gas emissions are rising is matching or exceeding the worst-case scenarios.

And the growth of emissions from China — already the world’s largest producer of carbon dioxide — is one main reason for this new pessimism.
I felt impelled to respond with the following comment:
I am alarmed and disheartened by the persistent manifestations of naivete, hysteria, and yes, neo-colonialist arrogance, on the part of intelligent, well meaning individuals, many of whom, as is certainly the case with Dr. Krugman, should know better. Yes, global warming is undoubtedly a reality. Yes, in all likelihood it is caused, or at least hastened, by human activity. And yes, it is likely to present the human race with some serious challenges over the next 50 to 100 years. Nevertheless, there are some other truths, no less apparent, compelling and “inconvenient,” that must also be taken into consideration when evaluating this situation.
For examples of what I am talking about, I directed his readers to this blog. Here are some of the "inconvenient truths" I have in mind:

1. The Earth has undergone many cycles of climate change in the 150 to 200 thousand years we Homo Sapiens have roamed the planet. In every case, humans have found ways to adapt.

2. While persistent droughts in parts of Africa have been attributed to global warming, “a new study of lake sediments in Ghana suggests that severe droughts lasting several decades, even centuries, were the norm in West Africa over the past 3,000 years. The earlier dry spells dwarfed the well-documented drought that plagued West Africa in the late-20th century . . .” While drought is naturally of great concern in Africa, as elsewhere, global warming due to industrial activity is clearly only one, relatively small, part of the problem.

3. Many sources of greenhouse gas have nothing to do with industrial activity: “By burping, belching and excreting copious amounts of methane — a greenhouse gas that traps 20 times more heat than carbon dioxide — India's livestock of roughly 485 million (including sheep and goats) contributes more to global warming than the vehicles the animals obstruct”; recent studies of “black carbon” emissions (aka “soot”) from the inefficient stoves of hundreds of millions of third world households have shown that they, too, have a significant role to play in global warming: “ ‘It’s hard to believe that this is what’s melting the glaciers,’ said Dr. Veerabhadran Ramanathan, one of the world’s leading climate scientists, as he weaved through a warren of mud brick huts, each containing a mud cookstove pouring soot into the atmosphere.”

4. Any attempt to slow global warming by imposing economic restrictions is sure to have devastating effects, not only on the economies of emerging industrial nations such as China and India, but the poorest of the poor in every part of the world. And in the face of the worst economic downturn since the Great Depression, the effects on many working and middle class families may also be dire. If global warming can be characterized as a man-made disaster, ill informed and panicky attempts to reverse it can be seen as part of the same depressing trend, founded in human arrogance, hubris and sheer pig-headed ignorance. If nothing else, the recent ethanol farce should give us pause before we embark on yet another, possibly far more costly, folly.

5. A recent study suggests that global warming has already reached a point of no return, where the worst of its effects may well be irreversible, no matter what we do: “The damage will persist even when, and if, emissions are brought under control, says study author Susan Solomon, who is among the world's top climate scientists."

6. Global warming is a potentially disastrous, but also slowly developing, trend that we will have ample time to prepare for. The key to dealing with it clearly does not lie in desperate, hasty, attempts to reverse the irreversible, but in the sort of long-term planning that would help us adapt. Not emission control, but population control, thus emerges as a key factor in facing the coming challenge. Since China has been a leader in dealing, however clumsily, with this absolutely fundamental problem, the many criticisms that have been directed at this country with regard to climate change are both ironic and disturbing in the extreme.

Saturday, May 12, 2018

Thoughts on Climate Change -- part 5:Still more "saving hypotheses"

Still more "saving hypotheses" on  the part of true believers.

But first a brief summary of claims I've already debunked:

1. The mid-twentieth century hiatus in global temperatures can be explained by the cooling efffect of industrial aerosols (see the second post in this series).

2. Sea level rise isn't correlated with CO2 emissions, because, according to blogger CCHolley, it's "highly variable about the mean level due to the hydrological cycle," and besides "sea level rise correlating to temperatures has nothing to do with the cause of the temperature rise," and besides "perfect correlation to temperature would not be expected because ice will not stop melting just because warming stopped, it takes time for the ice to reach thermal equilibrium. . ." -- none of which has the slightest bearing on  the fact that it's impossible to claim a cause-effect relation if no correlation exists, for whatever reason (see also the third post in this series.)

3. Evidence that sea level rise has actually declined over the last several years can be explained by the cooling effects of the Mt. Pinatubo eruption, which masked the expected accelaration (see the previous post in this series).

Now for some more examples:

Wednesday, May 15, 2019

Thoughts on Climate Change -- part 9: Even Worse Than We Thought!

Latest climate change bombshell: Canada has been warming twice as fast as the rest of the world. If you don't believe me, Google it.

Yes indeed. Just one report out of many, from the BBC itself,
Canada warming twice as fast as the rest of the world, report says 
Canada is warming on average at a rate twice as fast as the rest of the world, a new scientific report indicates.
The federal government climate report also warns that changes are already evident in many parts of the country and are projected to intensify.
But wait. As we're reminded time after time by climate scientists, the situation is actually MUCH WORSE. Because China is also warming twice as fast:

Wednesday, March 28, 2018

Thoughts on Climate Change - part 2

As I stated in my response on the RealClimate blog, the apparently very reasonable argument presented by CCHolley (see my previous post) raises epistemological issues that call for additional discussion  and analysis. Epistemology, of course, is the philosophy of knowledge and the means by which we may attain  it. While it is sometimes contrasted with metaphysics, if we take the literal meaning of metaphysics, i.e., that which is "prior to physics," into account then  epistemology can be seen as a branch of metaphysics. It's not difficult to see that science must be grounded in certain basic principles that cannot themselves be subject to the usual sort of scientific testing, but must be accepted as "prior" to any type of scientific investigation. Among these, for example, is the employment of simple two-valued logic in the evaluation of any claim. Another example would be Occam's Razor, to which I'll be referring presently.

Tuesday, March 27, 2018

Thoughts on Climate Change

Haven't posted anything here in a long time, so please forgive the sudden intrusion. I'm here now because I've decided to use this blog as a venue for freely and fully sharing my thoughts on  the extremely controversial topic of climate change without having to worry over whether or not I'm taking up too much bandwidth on someone else's forum. For the last few years I've been posting comments from time to time on the RealClimate blog, a gathering, for the most part, of hard line "climate change" advocates, who usually find me extremely irritating, but can't resist responding to my posts nevertheless. Typically I will post some thought or quote some source that they object to; they will offer what I often consider rather lame responses, so I feel obligated to set them straight, which in turn prompts more responses from them and so it goes until everyone gets either bored or annoyed or frustrated and either I wind up backing off or my posts start getting exiled to their "Bore Hole" (don't ask).

I recently decided that there was no longer any point in continuing a prolonged debate that was going nowhere and promised to cease and desist from further responses on that topic. After making that decision, however, I noticed that one of my most persistent critics had actually posted what appeared to be a sensible response to an objection of mine, grounded in a basic principle of Occam's Razor -- specifically that certain "explanations" offered by certain climate scientists to account for evidence that, on  its face, appeared to falsify their theory, could be understood as what has been called "saving hypotheses," i.e., attempts to save a failing theory by pointing to additional factors that make everything "come out  right." As I see it, the interjection of such factors violates Occam's Razor by introducing unnecessary complications for the sole purpose of rescuing an hypothesis that would otherwise be inconsistent with the evidence.

Sunday, March 7, 2021

Thoughts on Climate Change -- Part 10: The Aerosol Excuse

Climate change advocates have been exceptionally ingenious in devising various ways to “cook” the raw data in such a manner as to fit their favored theory despite evidence to the contrary. For example, a common attempt to explain away the mid-twentieth century temperature hiatus is the frequently stated claim that an underlying warming trend was masked by industrial aerosols (i.e. pollutants) emitted, ironically enough, by the same process that also emitted large amounts of CO2.

Tuesday, November 2, 2021

Thoughts on Climate Change - Part 12: What is driving sea level rise?

According to this graph, based on evidence compiled by the Hadley Center, NASA and NOAA, we see little to no sign of global temperature rise from 1850 through 1910, a period of 60 years: 









Oceanic temperatures also did not begin to rise until roughly the same time:


Yet sea levels began to rise steadily from at least 1880 and probably sooner: 






Monday, October 22, 2018

Thoughts on Climate Change -- part 8: A Tale of Two Graphs


I will set before you two different graphs representing the relation between CO2 levels and global temperatures: number 1:

Global temperature vs. CO2 concentration


[added 12-22-18]: Since the graph presented above tells us little about 21st century temperatures, I've decided to add this one, which represents the so-called "hiatus" from 1998 through 2015 much more clearly. (The spike we see for 2016 is due to an especially strong El Nino and does not reflect long-term temperature trends):


number 2:



(from a blog post titled  Does CO2 correlate with temperature? by one Robert Grumbine.)

When I "eyeball" the first graph it seems evident, as I've contended in the past, that there is NO correlation between CO2 levels and global temps. during the entire 100 year period between 1880 and 1980. Nor do I see any sign of correlation between  1998 and the present. I DO see a correlation between ca. 1980 and 1998, but that represents only 20 years out of the last 138.

Graph number 2, a scattergram in which CO2 levels are plotted directly against temperatures, presents a radically different picture, where the two appear to be very strongly correlated. How is this possible?

(According to Grumbine "It's awfully hard to look at this and say that there's no correlation between CO2 and temperature.")

I scratched my head over this for some time before I realized that the two graphs represent more or less the same relationship, only presented in very different ways. Only when we attach dates to that second graph does it become possible to see that both are essentially the same, only with the time scale distorted in the second. After all, while graph no. 2 is a scattergram and graph no. 1 is not, essentially the same set of temperature data is represented in the vertical axis of both. For example, the year 1940, when temperatures peaked after a long increase, corresponds roughly with a CO2 level of 310 parts per million, as represented in graph no. 2, which shows temperature peaking at the same point; the year 1980, when temperatures began to rise dramatically, corresponds roughly with a CO2 level of 335 ppm. where the temperature begins to rise in graph no. 2 as well.

No sooner do we begin to recognize the relationship between the two graphs does it become apparent that there is in fact NO correlation in graph no. 2 until it gets close to the 335 level, around 1980. Similarly, we see no correlation after 370 ppm, the level reached around 1998, the beginning of the well-known "hiatus," as represented in graph no. 1.

The reason graph no. 2 appears to depict a correlation is due to the time distortion produced by the fact that CO2 levels shot up so rapidly from ca. 1980 to ca. 1998. [Correction: the previous phrase should read: "temperatures shot up so rapidly from ca. 1980 to ca. 1998."] Thus, unlike graph no. 1, which presents a more or less accurate picture of climate history since 1880, graph no. 2 distorts that history to emphasize the relatively brief 20 year period when both CO2 levels and temperatures were increasing at the same time.


When both graphs are examined critically it becomes clear that there is no evidence whatsoever of a correlation between CO2 levels and global temperatures, aside from the brief 20 year period at the end of the previous century, which all but rules out the possibility of a causal relationship, thus placing the entire human-caused "climate change" meme in serious doubt. 

Anyone following the analysis presented above should better understand why I'm so skeptical when it comes to the excessive reliance on statistical methodologies when attempting to evaluate scientific evidence. As a wise man once said, "If you torture the data long enough it will confess to anything."

Thursday, May 13, 2021

Thoughts on Climate Change -- Part 11:Tamino's Trick

The "hiatus" -- the period from roughly 1998 to 2015, in which the steady rise of global temperatures, so strongly evident during the latter part of the 20th century, appears to have leveled off, contrary to the expectations of "climate change" advocates, who've been trying desperately to explain it away for many years. At least 66 different explanations for the hiatus were published by 2014 and many more have been offered since. My own personal favorite was proposed by blogger "Tamino" back in 2014 (updated in 2018):

Saturday, February 7, 2009

The Shape of Things to Come -- Part 4


The caverns of the Grave I've seen
And these I showed to England's Queen.
If now the caves of Hell I view,
Whom shall I dare to shew them to?

William Blake


Don't get me wrong. I voted for Barack Obama and retain the highest respect for him. He is probably the most intelligent, well informed, well intentioned and charismatic leader we've had since FDR. He has brought this nation together as has no other political figure in our history and he amply deserves his unprecedented popularity. If my vision of the future differs from his, it is not because I consider myself smarter or better informed, but simply because I am not encumbered, as he is, by all the political baggage any president must carry -- the sort of thing that makes it all but impossible for certain outcomes to even be considered, much less advocated. If at times I come across as disrespectful or sarcastic, I apologize, because disrespect is not my intention. Nevertheless. To quote a once widely circulated satirical poem, by E. B. White: "'I paint what I see,' said Rivera."

The "stimulus" will get passed, in one form or another, to the tune of anywhere from $700 to $900 billion. The package will be a welcome temporary relief for many of the unemployed, and will pay for some badly needed infrastructure repairs, along with a boatload of equally worthwhile projects (what the Republicans are all too predictably and unfairly dismissing as "pork"). But it won't be nearly enough to compensate for the millions of jobs now being lost and the thousands of companies either going out of business or drastically cutting back. It certainly won't restore all the retirement investments (401 (k)s and the like) so severely clobbered when the Dow sank from 14,000 to 8,000 in less than a year.

What most people don't realize, however, is that the stimulus package, as huge as it is, will only be the beginning. Waiting in the wings is yet another installment of the TARP funding, designed to rescue the rapidly sinking banking industry and "get credit flowing again." Let's see now, roughly $800 billion for TARP, plus roughly $800 billion or so for the stimulus package, for a grand total of, say, $1.6 trillion, give or take a hundred billion or so.

That's an awful lot of money. "Taxpayer" money, so they say, despite the fact that no tax increases are involved, or even envisioned, since, God forbid, the wrong taxpayers (the wealthy) might get stuck with too large a proportion of the bill. Better to call it "money diverted from programs that will soon be badly needed by impoverished senior citizens, desperate welfare mothers, millions of unemployed workers, grotesquely underpaid minimum wage workers, families with no health insurance, dispossessed homeowners, etc., not to mention hundreds of billions already pledged for future redemption by foreign citizens, businesses and governments heavily invested in US Treasuries" -- only that doesn't sound quite as harmless and impersonal as the word "taxpayers."

But this too will just be a beginning. Because the crisis facing the banks is only one part of a far larger crisis facing the financial system as a whole, and the problems go well beyond the much discussed but little understood issue of "getting credit to flow again." The real problem is all those so-called "toxic assets" out there that no one, apparently, knows how to value. According to a recent article in the Wall St. Journal,

It is no longer just subprime mortgages and exotic credit-boom securities that are considered toxic. A wide range of other assets -- from certain prime mortgages to commercial real estate to plain old credit-card loans -- are now experiencing soaring defaults as the economy worsens.

Indeed, Goldman Sachs Group estimates that troubled assets could exceed $5 trillion, if defined as assets that could show a loss rate close to, or above, 10%.
I don't know about you, but I don't recall a time when a value could not be placed on any assets of any kind. When in doubt, put your assets on the open market -- via an auction, say -- and see what sort of offers come up. But this is the one thing no one wants to do -- obviously out of fear that there will be no offers at all. The argument has been made that such assets may have little or no value now, but that in the future, as the overall climate improves, they could have a substantial value. If investors believed that to be true, however, they'd be bidding on those assets now in the hope of collecting a substantial profit later on. No such bidding is taking place, however. Maybe the likes of Warren Buffett and George Soros know something Msrs. Gaithner and Bernanke do not: the "toxic" assets are not simply toxic, but also worthless. Which means the banking system we are hoping to save could be bailed out only via an infusion of many more trillions of "taxpayer money."

In for a penny, in for a pound. The $800 billion targeted for TARP will clearly not be enough to cover all the "toxic" (i.e., utterly worthless) debts incurred by the bankers and rogue investors deemed "too big to fail." When the financial markets figure that out, the Dow will once more take a nosedive, most likely from 8000 to 7000, or less.
And once again, the fed, or the treasury, or congress will be prevailed upon to save the day by coming up with yet another TARP, even larger than the first. Once again we will be warned of the "dire consequences" that will inevitably ensue if yet another bailout isn't engineered -- as soon as possible, natch.

Many experienced economists can see the handwriting on the wall and are ringing the alarm bells these days. One example is Peter D. Schiff, author of an especially alarming article, The Fed’s Bubble Trouble Will Cause Rates to Spike and Spawn Hyperinflation, published recently in Money Morning:
Just as the U.S. government issues mountains of new debt to finance the multi-trillion annual deficits planned by the incoming Obama Administration, speculative holders of existing debt will be offering their bonds for sale as well. In order to prevent a complete collapse in the bond prices, the Fed will be forced to significantly increase its buying.

However, since the only way the Fed can buy bonds is by printing money, the more bonds it buys, the more inflation the central bank will create. As inflation diminishes the investment value of low-yielding Treasuries, the scenario will become apparent and will kick off a downward spiral. But the more active the Fed becomes in its quest to prop up bond prices, the bigger the incentive to hit the Fed’s bid.

The result will be that all Treasuries sold will be purchased by the Fed.

But with the resulting frenzy in the Treasury market, and with inflation kicking into high gear, we can expect that demand for other debt classes that the Fed is not backstopping - such as corporate, municipal and agency debt - to fall through the floor, pushing up interest rates across the board.

In order to “save” the economy from these high rates, the Fed will then have to expand its purchases to include all forms of debt. If that happens, runaway inflation will quickly turn into hyperinflation, and our currency will be worthless and our economy left in ruins.

(to be continued)

Saturday, March 21, 2009

Cutting the Gordian Knot



In a comment to my post of March 15, The Rain in Spain, Maju asked a simple question, which I promised to answer in a future post:
You say abolish money... but how? It needs more than just supressing money: it needs real nationalization or collectivization of all. Today's ecnomy is not anymore a farm economy of self-sufficiency: every single productive process is interdependent with too many others. I think that more important than abolishing money is to make corporate decissions democratic and accountable to the workers and the public in general. The primary goal is to abolish any kind of organization that doesn't work by the principle: one person, one vote. Including corporations and religious sects.
Actually what I'd written was
We’ve woven a Gordian knot out of all these trillions of dollars worth of MONEY and are now desperately looking for some magic formula that will untangle it for us. So why not, simply, take up the sword of Alexander, who was not called “Great” for nothing, and cut the knot? Kill the money. Let all the leaders of the most heavily invested, and therefor most at-risk, nations meet and agree to simply do away with money. Or, at least, money as we now know it.
Cutting the Gordian Knot of our monetary system is actually even simpler than what Alexander did, because this system has already self-destructed. So in this respect what it would mean to cut the Gordian Knot would be to simply acknowledge that fact. Stop trying to revive a paper corpse and start concentrating on the real problems of real people. The alternative now being pursued by the US government in its efforts to shore things up will take longer, but will ultimately be even more effective because it will demonstrate in no uncertain terms that the old monetary system can no longer work. The more money that's printed, the less money is going to matter. This is not simply a question of generating runaway inflation, because inflation per se is not really what's most important. What's most important is meaning.

The electronic printing of trillions of dollars by the flick of a switch is in itself a demonstration that money no longer has any meaning, regardless of whether or not "inflationary forces" are at work. Because money cannot be separated from value and real value cannot be generated out of thin air. As this "money" comes increasingly into play in the world economy, its dubious meaning will undermine everyone's confidence, not only in the value of the new money, but the value of money in general -- because there will be no way to tell the difference. No one will any longer want to accept dollars, of course, but it will go much farther, because the value of all the world's currencies are tied to the dollar. This is why a UN panel recently suggested that the world should ditch the dollar. Ditching the dollar as the universal reserve currency would already be one way of cutting the Gordian Knot. But it will not solve the problem so long as the powers that be insist on reviving the old monetary system, a process that will still require the extravagant printing of currency of some kind, dollars or no.

So the first thing to be understood about the question of abolishing money is that this is already what is happening, the Gordian Knot is being cut as we speak -- by the very people hoping to gradually and carefully unwind it. But it's a slow process that has the potential to be extremely destructive. Why? Because every government is now concentrating on reviving its economic corpses and not paying enough attention to certain very serious social and human problems to be found among real, living people.

What I recommend, therefore, is to really then just cut that knot, as quickly and suddenly as possible. A meeting of the General Assembly of the UN could be called and there could then be a general agreement to abolish money as we know it. And with the money, all the accumulated debts that are at the heart of our current dilemma. In the past such agreement would have been almost impossible to achieve, because there would be certain nations that owed more debt than others, and the ones holding such debts would feel cheated if all such debts were canceled. But in the current climate every nation's economy is so closely bound up with every others that such a decision should come as a great relief to all -- once they are mentally and emotionally able to deal with the enormous paradigm shift, aka "gateless gate," that they would have to pass through. Perhaps a two week retreat in a Zen ashram would be a good idea for all the delegates before they vote on such a measure.

"Does a dog have the Buddha mind?" NO! Now rephrase the question: "Does this dog have the Buddha mind?" Again, NO. At this moment the dog (i.e., you yourself) will have attained the Buddha mind -- and there will no longer be any need to ask the question.

To be continued . . .

Wednesday, March 18, 2009

More from the Fed -- How does $1.2 Trillion Sound?

From today's Washington Post, Federal Reserve to Buy $1.2T in Bonds, Mortgage-Backed Securities:
The Federal Reserve said today that it will deploy an additional $1.2 trillion to try to lower interest rates and stimulate the economy, an aggressive move aimed at containing the recession.

The central bank will increase its purchases of mortgage-backed securities by $750 billion, on top of a previously announced $500 billion. It also will double its purchases of debt in Fannie Mae and Freddie Mac to $200 billion. Those steps are intended to lower mortgage rates. The announcement of the previous purchases pushed mortgage rates down a full percentage point.

The Fed also said it will buy $300 billion in long-term Treasury bonds, a step it had previously considered but had been reluctant to act on. That move will lower long-term interest rates for the U.S. government directly and, Fed officials hope, will indirectly lower borrowing costs for businesses and individuals.

Don't say I didn't tell you so. From The Shape of Things to Come, Part 4:
In for a penny, in for a pound. The $800 billion targeted for TARP will clearly not be enough to cover all the "toxic" (i.e., utterly worthless) debts incurred by the bankers and rogue investors deemed "too big to fail." When the financial markets figure that out, the Dow will once more take a nosedive, most likely from 8000 to 7000, or less.

And once again, the fed, or the treasury, or congress will be prevailed upon to save the day by coming up with yet another TARP, even larger than the first. Once again we will be warned of the "dire consequences" that will inevitably ensue if yet another bailout isn't engineered -- as soon as possible, natch.
I'll admit I'm not the only one to have seen this, not by a long shot. Economists all over the Internet have been screaming bloody murder about this intolerable situation for months.

This can't go on. But it will anyhow. Because it "has to." Because "there is no other choice."

But of course there are other choices, just not anything considered politically acceptable to Americans conditioned for so long by the policies and rhetoric that have brought us to this point. But the political climate is changing. Rapidly. Let's hope it changes soon enough to bring us back to our senses. People are more important than economics. Homes are more important than mortgages. Resources are more important than money.

To quote a sly old fox: When money becomes God, we will discover that, like God, we can do without it.

Tuesday, February 3, 2009

The Shape of Things to Come -- Part 3

Before discussing what I believe will ultimately take place, I want to offer an alternative that ought to be considered, despite the fact that there is little likelihood of its being implemented:

Let the system fail. Not just the banks but the entire financial system, the whole shebang. Just leave it be and let it fall of its own weight. Ironically, many of the most extreme neo-conservative Republicans have also taken this position, but for all the wrong reasons. I won't waste time discussing their take on the present crisis because they are clearly in a state of shock characterized by totally irrational denial. There is no course of action or inaction that could be taken at this point that could possibly advance the neo-conservative agenda. Their day is done!

Once the system has been allowed to totally and completely fail, not because of any action on the part of the government or any other entity, but simply as a result of the inherent limitations built into any Ponzi scheme, there will be an enormous destruction of something called "wealth." Not only will the investment banks we are now trying so desperately to save lose essentially all their value, along with all the tranched up bonds and other "toxic assets" no one understands how to value anymore (because they are essentially worthless), but the "market" (i.e., Wall St.), venerated for so long as the ultimate object of worship in the economic pantheon, will also dissolve, essentially, into nothing, diving, in all likelihood from a Dow now hovering around 8000 all the way back down to 1000 or below -- ideally down to nothing at all. Goose egg! (My old algebra teacher's nickname for the number zero.)

Funny thing about this thing called "wealth." After all that devastation, you'll look around you in every direction and not notice one single thing of any real importance that's any different from the way it was before. Well, maybe just one little thing. The Wicked Witch will be dead. The evil Kastchei will be destroyed. Lord Voldemort will be defeated. Darth Vader will be crushed. The vast wealth of the likes of Richard Fuld, John Thain, Donald Trump, a host of oil sheiks, Russian oligarchs, "geniuses" of high finance and "Masters of the Universe" will be reduced to a piddling few millions, hardly enough to fuel their private jets.

But (gasp) won't that also be a disaster for all us "little people" out there, the ones depending on the health of "the market" to preserve our precious 401 (k)s and other assorted retirement investments? Isn't the financial well being of "Main Street" dependent on the well being of "Wall Street"? Interesting question.

Think of it this way. If Donald Trump owed you $10,000 and was faced with imminent bankruptcy would you expect the US congress to bail him out with a gift of, say, $100 million so you could get your money back? Or would you be satisfied with an arrangement by which Trump's creditors would have to be paid back first, before he went bankrupt?

Let the system fail. Do not invest that trillion dollars in an attempt to shore up the wealth of all those billionaires just so some small fraction of it might trickle down to the rest of us -- an effort that will ultimately prove futile in any case. Let the whole thing crash totally and completely into nothing.

Next, nationalize all those banks. Take over all those foreclosed homes -- and put their former mortgage holders back into them (see my earlier post, "Just a Thought"). While you're at it, nationalize every failing business, and get people working again on their old jobs. Then take that trillion and spend it on infrastructure, well paying jobs, a meaningful social safety net, expanding Social Security, implementing universal health care, providing adequate clothing, food, prescription drugs, etc., drastically lowering the cost of higher education, etc. With an adequate safety net in place for the retired, the losses on all those 401 (k)s won't matter anymore. "Main St." will be in excellent shape. And Wall St. (the wicked witch of the East) will be dead.

A complete restructuring of not only the economy but government itself, along more or less socialist lines, would of course be necessary. On a worldwide basis, because the whole world is in this together. Every failing bank, every failing business should be (inter)nationalized. An international council modeled on the S. African Truth and Reconciliation Council should be convened, in order to forgive all debts and systematically redistribute all wealth worldwide on the basis of need, ability and willingness to work. Not too long ago such an idea might have seemed hopelessly Utopian. Now it just seems like the most practical (and possibly the only practical) recourse.

The above proposition makes a great deal of sense to me. But, for obvious reasons, there is no way anything like such a scenario could actually play itself out, given the current political climate, not only in the USA, but the world at large. In my opinion we are nevertheless headed in more or less the same direction. But via a more circuitous -- and no doubt far more painful -- route. Which will be the topic of my next post in this series. Stay tuned . . .

Friday, March 13, 2009

Reading the Entrails -- Part 2

Here's the latest Dow Jones Industrial's graph, hot off the (NY Times) press:
And here, for comparison is the Standard & Poor 500 Index, also for today:
Finally, here's the Nasdaq index for today:
Notice anything interesting about these three graphs?

Gee, they look almost identical, don't they? Now how could that be?

Well, I'm not an expert on this sort of thing, so I'm hoping someone reading here will be willing to lend us his or her expertise to explain this strange phenomenon -- because it looks awfully suspicious to me.

The Standard and Poor and the Dow Jones might be expected to have some things in common, since the Dow Jones is, I believe, a subset of the S & P. But the Nasdaq represents a completely different set of businesses, differing widely in many ways from the Blue Chips of the Dow Jones. What does it mean when the indexes of all three move up and down in lockstep like that? By all means, correct me if I'm wrong, but it looks to me like these markets are being manipulated, possibly according to a scheme similar to the one I presented in my last post, where bets are made based on the relation between the principal index and the VMA (voume moving average). If this is the case, then what does it mean when, at the end of the day, the "market" is up or down by this or that number? As far as I can tell, all it means is that this is where things stood at the time the betting window slammed shut.

Invariably the news media offer fatuous explanations of why the markets behaved as they did on any given day: "dire employment news causes market to nosedive," or "unexpected manufacturing profits boost market," etc. If these indices actually reflected anything meanigful about the business climate from day to day, then we'd expect to see significant differences between the way investors were investing in these three markets from day to day. But we don't. Keep your eye on these three indices from now on and you'll see how they're almost always in lock step, amost perfectly synchronized. Many people are acting very excited this week because the market has "gone up," which is taken as a sign of possible recovery. To me, however, it just looks like more of the same, just a lot of random gibberish, produced by some very heavy bettors manipulating the markets to sit up and beg on command.

Saturday, March 7, 2009

Big Government and Gutless Politicians

Many thanks to my good friend Dave for calling my attention to an extremely insightful recent article by journalist/historian Michael Lind that echoes some of my own thoughts rather eloquently: Obama's timid liberalism. Invoking memories of important public works projects sponsored not only by liberal Democrats such as FDR but conservative Republicans as well, he notes that
once upon a time in the United States, public goods -- from retirement security and energy research to public roads -- were provided by the government and paid for by taxes. As late as the Nixon administration, the provision of public goods by government was considered perfectly compatible with a robust market economy by so-called Modern Republicans like Eisenhower and Nixon as well as New Deal Democrats like Roosevelt, Truman, Kennedy and Johnson. In the intervening 40 years, however, free-market fundamentalists of the Chicago School have managed to change the debate, redefining "socialism" to mean not only public ownership of the means of production, but also public provision of public goods. Rather than fight back, most Democrats in the last generation adapted to this hostile conservative political climate by jettisoning New Deal "big government" liberalism for "market-friendly" neoliberalism.
. . . . . . .
You might have thought that the Crash of 2008 would have led Democrats to reconsider this neoliberal approach to providing public goods by private means. But to judge from President Obama's budget, the White House is still living back in the neoliberal era, when the diminutive Milton Friedman cast a giant shadow.
Right on!!!!

I'm especially impressed with what he has to say about the cost of education, as this has been bugging me for a very long time and hardly anyone wants to speak up:
The problem with higher education is that it costs way too much. Tuition costs at private universities and some state universities have been growing far more rapidly than inflation. A crude, old-fashioned, old-thinking New Deal liberal would see the problem as one of excessive prices demanded by universities, not insufficient funds on the part of the students whom the universities gouge. The hypothetical New Deal liberal would threaten to deny universities their privileged tax-exempt status unless they spend more of their endowments on tuition and keep their prices affordable.

The neoliberal alternative is to avoid impolite and divisive inquiries into the reasons for skyrocketing tuition costs. That would entail the government concluding that prices in a particular industry (in this case, a nonprofit industry) are too high, something that government should not do. Instead, the taxpayer will be forced to cough up money to help students meet the exorbitant fees. . . . Government subsidies without government price controls would encourage cost inflation, one might think, but this possibility appears not to bother the brilliant economists on Obama's team.
Why isn't anyone else saying this sort of thing? The whole "higher education" imperative has become a huge racket, with educators who should know better insisting that every high school grad simply must have a college education at all costs and the government encouraging skyrocketing tuition and a myriad of other fees as well. All paid for by the same "easy credit" that's wreaked havoc in the financial sector and imposed on far too many young people a lifelong burden of outrageous debt.

He then gets into another pet peeve of mine, the whole alternative energy issue:
Then there's energy. The problem with alternative energy sources like solar power and wind power is that they are still too expensive, compared to coal, natural gas and nuclear energy. The answer, according to a minority of enviromentalists like Ted Nordhaus and Michael Shellenberger, should be massive, Manhattan-style public sector R&D to discover ways to bring alternative energy prices down -- in absolute, not just relative, terms, to maintain cheap electricity for American industry and American households. That would be the Roosevelt approach. But the Obama approach is to use a cap-and-trade system to artificially raise the prices of conventional energy, in the hope that private capital (with modest help from public capital) will pay for efforts to invent a cheaper solar cell or wind turbine. The fact that most of the left embraces cap-and-trade should not blind us to the fact that cap-and-trade is a classic example of an indirect, overly complicated, "market-friendly" neoliberal approach, touted originally by conservatives and neoliberals as an alternative to the allegedly discredited "top-down, command-and-control" approach that gave us, among other things, the TVA, the Manhattan Project and the Internet.
Thanks once again to Al Gore, who's got everyone running scared, looking for any way they can to drive up the cost of conventional energy sources before the new, "clean" technologies are mature enough to compete. Prices are forced up, dumb solutions like biofuels are implemented prematurely, because everyone is now in panic mode and not thinking straight. God forbid we implement a "big government program" to develop alternative energy sources properly and in good time before unleashing them on our fragile economy. No, we must find a "private sector" solution immediately -- funded by the taxpayer in any case, with plenty of extra cash for all those middlemen we need to insulate us from any trace of "socialist" taint.

Lind continues, with lots more good stuff. You really need to read the whole thing, its very forcefully and convincingly argued. Thanks so much, Dave, for sending me this link.

Sunday, March 22, 2009

Interim Measures

I've been predicting that the value of money will eventually go to zero and that all the nations of the world will ultimately have to implement some type of planned economy more or less along socialist lines, and in close cooperation with one another. Why? Because with the monetary system gone there will no longer be a "private sector," and consequently all major institutions will have to be nationalized, there will be no other option. For some of us, like myself, this would be a very positive outcome indeed, almost a kind of Utopia -- if it could be made to actually work.

However, as my friend Maju reminds us in a recent comment:
Well, don't know. I could go for longer but what I really feel is that there is no push yet, nor a project to replace the moribund Capitalism (with a handful of very tentative neo-commy exceptions, mostly in Latin America). And that it won't be as easy as to just see the system collapse and then the new ideal society flourish automatically.

It will need a huge effort and a most creative reinvention of nearly all.
He is absolutely right. We can't afford to simply wait for the monetary system to collapse, especially because there are very powerful forces now being marshaled to prevent that from happening. Even after the collapse there could be a long period of chaos, where almost anything can happen. Maju fears the rise of fascism once again, and that is certainly a possibility.

What is needed now, therefore, are interim measures that could ease the transition from a private to a public sector economy. In my most positive, hopeful moments I believe the political climate is such that the proper interim measures will be taken as a matter of course, at least in the USA, as the need for them becomes increasingly clear. We do live in a democracy, liberal democrats are in control of congress and we have a potentially very powerful president, known for his humanity, in Barack Obama. In my more pessimistic moments, however, I fear we might have to fight for such measures, not through violent means, hopefully, but via the resurgence of various citizens interest groups, community organizers, labor unions, charities, even religious groups.

What interim measures am I thinking of?

1. First and foremost, we must find a way to get people back into their homes. The easiest way to do that would be by nationalizing the banks completely. That way, the delinquent mortgages would be owned by the government. The government could then set up a mortgage resolution system by which people could either renegotiate their mortgages at a rate they can afford, or give the house to the government outright in return for an affordable rental lease. Those who have already lost their homes could be assigned houses already standing empty. The government would hire carpenters, plumbers, etc. to restore the houses, which would also put many construction workers back to work.

2. Second of all, we could extend the food stamp system, which is already computerized (using cards very similar to credit cards) to many more people and many other commodities, such as clothing, shoes, inexpensive toys, even heating fuel and gasoline, as well as necessary services, such as a plumber, electrician, etc. These could be called "Resource Cards." Anyone without a job or earning less than the amount needed to maintain a reasonably adequate life style would be entitled to such cards. Since the food stamp system is already in place, such a program should not require a large increase in the federal bureaucracy. Though even if it did, that would be a good thing since we need to create more jobs anyhow. Anyone using a Resource Card who is offered a job commensurate with his or her training and skills would have to take that job or lose their card. Such a system would make our current unemployment insurance system unnecessary, so that would be discontinued.

3. The government would need to initiate a massive job creation program -- and to make it maximally efficient, there should be no middlemen, as there are now. In other words, the government itself should create specific entities that would perform needed services and hire the people to perform them, without benefit of the "private sector," aka the oligarchs. This would be very similar to the Works Project program initiated by Roosevelt in the 30's, and should include writers, which would mean I could be included as well if need be. :-)

4. The Medicaid system offering free health care to very low income people, should be extended to the same people eligible for Resource Cards.

What have I left out? Any other suggestions? Anyone see problems with such a plan?
Please comment.
 
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