Well, Isn't That Special...

First and foremost, may the New Year bring you prosperity, health and happiness beyond your wildest dreams.

And this is a fitting end for this year: two examples of the New Royalty.

First, the Obamas see the movie Avatar, all by themselves. No one else in the theater. Lovely.

Second, the evil witch of the west, La Pelosi, is luxuriating in Hawaii as well.

But the Palins, who were there briefly, were hounded by paparazzi such that they bowed to the inevitable and left early so that other guests could at least enjoy their vacations.

To quote:

Pelosi's visit has not been noted in local or national media.  This contrasts strikingly to the treatment meted out to another high profile Hawaii vacationer--Sarah Palin.  While attempting to relax at a resort on Maui December 16 and 17, Palin, husband Todd and their children found themselves hounded by paparazzi hungry for photo bounties offered by the pro-Obama Hollywood gossip website TMZ.com.  Finally they were forced to leave.  Palin told Politico: "Todd and I have since cut our vacation short because the incognito attempts didn't work and fellow vacationers were bothered for the two days we spent in the sun."  Palin was obligated to issue an apology for wearing a visor with the McCain campaign logo covered.  Said Palin: "So much for going incognito." 

The contrast between the reverential privacy granted Pelosi and the petty harassment aimed at both Palin and the Detroit auto execs is an element of the ongoing decades-long campaign of politically correct thought reform aimed at American elites.  The message is simple:  Toe the line or be hounded out of our circles.

Apparently some people never left high school.

While Ms. Pelosi apparently paid her own way - instead of using the Air Force jets that she's been infamous in exploiting - she's also staying in a $10k/night suite:

...we have House Speaker Nancy Pelosi slumming reportedly in the Presidential Suite at the Hualalai resort for what is said to be a rate of $10,000 nightly or more -- hopefully on her dime, rather than a corporate credit card. Her staff steadfastly said she refuses interviews during her stay in Kona; can't interrupt that vacation break.

Give thanks this day to those who have made the peace and prosperity - despite recession, we remain that - possible during the last 365 days, during the Year of Our Lord 2009.







That is, of course, the men and women of our Armed Forces. They deserve profound and sincere thanks for their service.



Unlike the politicians who claim to be running the country. Apparently for their own gain and profit...

The Wisdom of the New York Times...

Meant only, of course, as a ironic comment.

This is one of the less ... clever articles that the New York Times has published, one that is mind-boggling dense.


As anyone with a couple of working brain cells and an ability to read knows, interest rates are effectively zero. The Fed controls the Fed Funds Rate that governs how the banks generate money from deposits, and because the banks screwed things up fairly drastically, the Fed Fund rate is about as close as you can get to zero without going negative (in terms of current dollars: in terms of real dollars, i.e. those adjusted for inflation, the Fed Funds rate is slap-down negative).

So what does the New York Times complain about?

How pensioners aren't getting any returns on their money. Apparently the days of 5%-6% returns on safe money are somehow, magically, evilly, gone. People are actually having to dip into their retirement equity to do things like pay for increased medical costs and aren't able to maintain their life styles without having to dip into savings. It's just terrible!



Ye Gods.

From the tone of the NYT article, written by Stephanie Strom: Oh, the humanity of it all! Seniors are going to have to live on a budget, their money is going to double only every 6,392 years (really, if your interest rate is 0.01%, what did you expect?), and and and and...

Well, duh: sorry, all you baby-boomer retirees, if you want safe money, then you're not going to earn anything on it.

It's the result of your government - largely Congress - having encouraged people to ignore the Gods of the Copy Book Headings and indeed not merely the laws of logic, but more importantly the laws of the market.

Go complain to them.

And another thing: the whole point of saving for your retirement isn't to live off the interest (nice if you can, but that's increasingly unlikely for the foreseeable future).

The whole point of saving for your retirement is to have the safety cushion for increased medical coverage not paid for by what is apparently inadequate insurance coverage, plus spending to maintain the chosen lifestyle whilst living off what little income you may or may not receive from whatever pension schemes you were involved in.

The whole point of saving for your retirement is to be able to do the things you wanted to before retirement but didn't have the time to because ... you were working.

The whole point of saving for your retirement is because you don't want to be a burden to your children.

The whole point of saving for your retirement is using your savings.


It's not about leaving a big nest egg for your grandchildren or kids, or for your church or whatever.

Seriously: anyone who dies with lots of money in the bank has made serious errors of judgment. You want to do with nothing left over, because you spent your last years living, rather than doing nothing, and when you can't do things any more because of health and age, then...you don't spend money like you do when you're active.

Right and proper insurance covers your aging costs, and if you're not getting it early because you don't want to pay for something you might not use, then you have no comprehension why you should be buying insurance.

This Is What It Means When No One Trusts You Anymore...

President Obama has achieved quite a bit within his first year.

Read this to really understand.

The Obama team tried to schedule a meeting with Indian Prime Minister Manmohan Singh and was told he was at the airport readying to leave. Brazilian President Luiz Inacio Lula da Silva also was unavailable. South African President Jacob Zuma said there was no point meeting without India and Brazil. Then the Chinese pushed the bilateral meeting back to 7 p.m.

"We were told they were at the airport," a senior administration official said. "We were told delegations were split up. We were told they weren't going to meet." So imagine Mr. Obama's surprise when he arrived for the bilateral powwow and found all four leaders in the room already in deep discussion. "Are you ready for me?" he said with an "uncharacteristic edge" to his voice, according to a CBS News report.

Understand now that the US is going to be increasingly ignored when it comes to substantive discussions because it is increasingly obvious that President Obama can't be taken seriously.

The countries reached agreement on three pages of noncommittal boilerplate - and Mr. Obama rushed out to declare that he had once again saved the day. "For the first time in history," he said, "all major economies have come together to accept their responsibility to take action to confront the threat of climate change." He then left the global warming conference, hurrying to beat the record-setting blizzard descending on Washington.

And we can see hence why President Obama isn't being taken seriously.

What a mess this presidency will be. President Carter was bad enough. President Obama will make it extraordinarily difficult for any Democrat to argue that they are fit to govern: they are proving, with each and every passing day, the exact opposite.

The Real Reason for Health Care Reform...

After immersing myself in demographics, I've found one constant: any pension/social security scheme that is based on younger folks paying for older folks can only work when the demographic development of the given country is generally positive, i.e. there are more younger folks than older folks.

The moment when life expectancies increase (but the retirement age remains the same) and/or when the demographics tip over so that fewer and fewer young folks enter the workforce, is the moment where all such schemes start their slow but irreversible slide towards insolvency (if retiree benefits are not adjusted downwards) or must be topped up with general government income to compensate for the shortfall (requiring either high levels of debt or reductions in other government outlays).

These are not opinions: these are the facts. You can't argue with them, you can't deny them, you can't ignore them.

Not if you're honest about the problem.



Of course, no politician is.

This is the real reason behind the fatally flawed health care reform bills that have passed both the House and the Senate and which will be reconciled into an abomination that will cause much suffering before the Gods of the Copybook Headings return in vengeance to set things right.

Here is a link with more details.

The real reason behind health-care reforms is the need for the current generation of politicians to hide their duplicity until they can get out of politics...there is no other reason.

Social security, while not strictly speaking a Ponzi scheme, remains unfunded. Health care reforms as envisioned remain unfunded. The costs are massive and unfunded.

Which means that the American taypayer will be paying the bill. These are the kinds of unfunded obligations that bankrupt companies when using the IFSR because they have to place a current value on unfunded obligations that make it impossible for them to operate.

The same principle applies here.



This is the path of national bankruptcy.

This is the path that Argentina, once the fifth richest country in the world, followed into populism, government largess to buy elections, policy incompetence, corruption, insolvency, and ultimately populist fascism ala Peron and Evita.

Wonder what sort of musical our great-great-grandchildren will be listening to about the Obama Administration and the decline of the United States and the rise of populism as the core of American democracy.

Probably in the form of a Chinese opera.

Further Data Points For The Trend XV...

Let's start with two aspects of the Harry Reid Health-Care bill that need to be understood to understand the problems that the Bill has.

First of all, while it appears to be legal, the corruption and bribery involved in getting enough votes to force cloture is breath-taking: seldom has the venality of at least some Senators (all of them Democrats, of course) been so blatantly apparent and, at the same time, have the bribes been taken so openly and without a shred of shame: $300 million "Louisiana Purchase" for Mary Landrieu, and $100 million for Chris Dodd's favorite Connecticut hospital, as well as Ben Nelson's super deal that gives an excellent example of beggar-thy-neighbor politics, including the surely to be infamous "My vote is not for sale" claim of Senator Nelson (need I say: a Democrat?) who then promptly turned around and sold his vote.

Of course, the Democrats think this is the way things ought to be: all fifty states should cut special deals.

...Iowa Democrat Tom Harkin replied that Mr. Nelson's Cornhusker kickback was merely an example all 50 states will soon follow. "Every Governor in the country is going to say, why doesn't our state" get that Medicaid deal, Mr. Harkin said, and the Nelson connivance is "going to be the impetus for" the federal government to pay 100% of the extra Medicaid costs for all the states.

Now, if everyone were to get in on the same kind of deal, it'd add an additional $30bn in costs to the health care spending plans, making absolute mockery of the already absurd notion that this won't add to the deficit.

But what Harkin is really saying as well is that the Democrats view this sort of beggar-thy-neighbor-and-what's-in-it-for-me mentality as normal, even desirable: they want all politicians, regardless of Democrat or Republican, to descend to the level of Chicago corruption politics, After all, it'd level the playing field.

I wish there was only one word to use to describe this open corruption and bribery. Disgusting doesn't quite describe it, puerile doesn't go quite far enough. I'll just have to push for the creation of a new epithet: Democrat.

Second, if you haven't been thoroughly off-put by the process of how this is apparently going to become law, then look at the content. I've mentioned this before: this bill wants to put insurance companies out of business and remove the profit motive from providing health care (guess that we'll then have the kind of care that places great value on the therapeutic effects of wanting to do the right thing, as opposed to actually doing the right thing).

Read this to understand the underlying problem:

In other words, the targeted health insurers would become de facto public utilities whose profits are gutted when the huge compliance costs under the Reid bill are piled on top of the hefty costs inherent in running a labor intensive health-care insurance business.

Worse still, the statutory rebate is only the tip of a larger regulatory iceberg that permeates the bill. Normally, insurers have the power to underwrite—to choose their line of business, to select and to price risks, and to decline unattractive risks. Not under the Reid bill. In its frantic effort to expand coverage to the uninsured, the bill will create state health-care exchanges supported by generous federal subsidies to unspecified millions of needy and low-income individuals. Any health insurance carrier that steers clear of these exchanges cannot keep its customers. Any insurance carrier that enters Mr. Reid's inferno will lose its financial shirt.

The Reid bill as it leaves the Senate calls for nothing less than to use the power of law to make it unprofitable to be a private insurance company (except, of course, in Nebraska, thanks to Senator Nelson). That's right, this bill aims at putting them out of business.

Initially, all insurers have to take all comers and to renew all policies except for nonpayment of premiums. Insurers are not allowed to take into account differential risks based on pre-existing conditions. And the premium differentials based on such matters as age and tobacco use are smaller than the market spreads. If too many customers demand coverage from a given insurer to insure efficiently, it's the government that will decide how many they have to keep and who they are.

Next, it's the government that requires extensive coverage including "ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorder services, prescription drugs, rehabilitative and habilitative [sic!] services and devices, laboratory services, preventive and wellness services and chronic disease management, pediatric services, including oral and vision care." The price squeeze gets even tighter because in every required area of care a collection of government standards will help set the minimum level of required services.

Ostensibly, the Reid bill does not impose any direct price controls on what health insurers can charge for this veritable cornucopia of services. But the bill's complex, cooperative federalism scheme authorizes state regulators, after recommendations from the federal government, to exclude insurers from the exchanges if their prices are too high, which would again be a competitive death knell. Exile from the exchange does not, however, restore traditional underwriting controls, as the Reid bill and other federal and state regulation continue to apply to these firms.

In other words, insurance companies are no longer allowed to require those taking larger risks to pay higher premiums, no longer allowed to decide what is covered, and may no longer decide what their prices are going to be.

If you own insurance stock now, SELL. Seriously: this destroys the basis for any private insurance company to survive, let alone have anything remotely near a return on capital that allows it to take on the risks of the business.

I sincerely doubt that the Reid Bill is even remotely constitutional, but that's something best left to the Supreme Court to decide.

On a broader front, read this.

While President Obama and his sincere disinterest in achieving any sort of success in Copenhagen certainly deserves the opprobrium he is receiving from the Left, the role of China in ensuring that Copenhagen was a farce appears to be on very solid ground.

China's strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world's poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait. The failure was "the inevitable result of rich countries refusing adequately and fairly to shoulder their overwhelming responsibility", said Christian Aid. "Rich countries have bullied developing nations," fumed Friends of the Earth International.

All very predictable, but the complete opposite of the truth. Even George Monbiot, writing in yesterday's Guardian, made the mistake of singly blaming Obama. But I saw Obama fighting desperately to salvage a deal, and the Chinese delegate saying "no", over and over again. Monbiot even approvingly quoted the Sudanese delegate Lumumba Di-Aping, who denounced the Copenhagen accord as "a suicide pact, an incineration pact, in order to maintain the economic dominance of a few countries".

Sudan behaves at the talks as a puppet of China; one of a number of countries that relieves the Chinese delegation of having to fight its battles in open sessions. It was a perfect stitch-up. China gutted the deal behind the scenes, and then left its proxies to savage it in public.

China gutted the deal behind the scenes and left its proxies to savage it in public.

I fear that too many understand nothing about the Chinese, even though it is quite simple: the Chinese government, which is run yb the Chinese communists, couldn't care less about what happens in Sudan or what happens to the Maldives except through one single vision: what does it matter to China.

China is nothing less than a completely straightforward and no-nonsense country, but one whose goal is nothing less than the betterment of China (or, more exactly, the betterment of the power position of the Communist Party in China). If it were not dependent on foreign trade, it would be heavily mercantile, and indeed the sort of import restrictions on finished consumer goods that China has in place is mercantile. China is interested in only one thing: China. The politicians in China are interested in only one thing: keeping power with the minimum of open repression and aggression, so as to minimize public criticism. Human rights are only of interest when the abuse becomes so obvious that it percolates down to the man on the street and endangers the hold the Communists have on the country. The government in China is riding a dragon: they dare not reign in the commerce that has boomed there, but they must also ensure that the newly rich (or even just the newly able-to-save middle class) do not get any whiff of the desire to hold political power. It will be an interesting ride, and the rider may well be eaten by the dragon.

To those who would blame Obama and rich countries in general, know this: it was China's representative who insisted that industrialised country targets, previously agreed as an 80% cut by 2050, be taken out of the deal. "Why can't we even mention our own targets?" demanded a furious Angela Merkel. Australia's prime minister, Kevin Rudd, was annoyed enough to bang his microphone. Brazil's representative too pointed out the illogicality of China's position. Why should rich countries not announce even this unilateral cut? The Chinese delegate said no, and I watched, aghast, as Merkel threw up her hands in despair and conceded the point. Now we know why – because China bet, correctly, that Obama would get the blame for the Copenhagen accord's lack of ambition.

China, backed at times by India, then proceeded to take out all the numbers that mattered. A 2020 peaking year in global emissions, essential to restrain temperatures to 2C, was removed and replaced by woolly language suggesting that emissions should peak "as soon as possible". The long-term target, of global 50% cuts by 2050, was also excised. No one else, perhaps with the exceptions of India and Saudi Arabia, wanted this to happen. I am certain that had the Chinese not been in the room, we would have left Copenhagen with a deal that had environmentalists popping champagne corks popping in every corner of the world.

China cannot afford such a deal: their only chance for long-term growth is to exploit their coal reserves to generate enough electricity that they can then afford to build enough nuclear plants (be they uranium-power fission or thorium plants) to ensure long-term energy independence.

Of course, the fact that environmentalists failed to impose their will upon the industry of the world is something for which we should actually be grateful to the Chinese. Seriously.

As Mark Lynas, author of the article linked to above, points out: China didn't need the deal. If anything, the collapse of the talks, the farce that is Copenhagen, is exactly what China wanted (and got):

So how did China manage to pull off this coup? First, it was in an extremely strong negotiating position. China didn't need a deal. As one developing country foreign minister said to me: "The Athenians had nothing to offer to the Spartans." On the other hand, western leaders in particular – but also presidents Lula of Brazil, Zuma of South Africa, Calderón of Mexico and many others – were desperate for a positive outcome. Obama needed a strong deal perhaps more than anyone. The US had confirmed the offer of $100bn to developing countries for adaptation, put serious cuts on the table for the first time (17% below 2005 levels by 2020), and was obviously prepared to up its offer.

The fact that Obama was unable to impose his will is fundamental: the Chinese know that Obama is, at best, a very weak President, one beholden to silly domestic issues and pressure groups, someone who is, additionally, way in over his head and barely able to tread the water of international politics. The Iranians know this, the Chinese know this, the Europeans are slowly figuring this one out (they'll get there, eventually, driven by an increasingly weak Dollar) and this weakness will become more and more apparent to the chattering sycophants in the newsrooms, cloaked in discussions about multi-polarity and American re-orientation.

Copenhagen was much worse than just another bad deal, because it illustrated a profound shift in global geopolitics. This is fast becoming China's century, yet its leadership has displayed that multilateral environmental governance is not only not a priority, but is viewed as a hindrance to the new superpower's freedom of action.

Well, duh: the touchy-feely-we're all part of Gaia silliness that dominates "green" politics - as well as the complete and utter inanity of placing all of their eggs in a basket placed on the big "X" marked with the sign "China will sit down right here" - is naive at best and reprehensible given their own (misplaced) concerns that the issues facing "all of humanity" are so dire that we must impoverish the emerging countries of the world in order to ensure our (First World) hegemony for the important issues.

Those who place a future state of the environment higher than the current state of their fellow human beings should not wonder when those whose lives are ones of desperation and deprivation decide that the future can go fuck itself, we want to eat. 

And get one of those iPods while we're at it.

As long as the environmentalists fail to understand that their policies mean that a huge swath of humanity must necessarily continue to live in poverty and must be denied any sort of growth that allows them to leave lives that are not dominated by desperation driven by hunger and avoidable death due to deprivation so that the West can feel good about itself (or, more exactly, that the "Gutmenschen" or "good people" of the West cease being tormented by world inequality, as they can justify it because it is saving the world (barf)), they are doomed to fail.

You can't ask someone to volunteer to continue to be poor and to die early because their aspirations for a better life mean that they will consume more (and live longer). To believe that this works is an act of sheer and utter stupidity.

Of course, that's pretty much par for the environmentalists.

If You're Going To Read One Article of ClimateGate...

Then read this one.


The author of that - Mencius Moldbug, one of the more ... creative pseudonyms around - says what he says better than I am able to say it, and while it's a tad long, please read it through.


And understand why we need to declimatize our politics, to coin a phrase.

Declimatize?

Yes, much like denazification.


Read the link to understand what is meant.

Copenhagen, Farce and Queanbeyan...

This is funny. If it weren't so absurd...

Check update 3 here.

Ian Fry, the lead negotiator for the island nation of Tuvalu, gave an emotional speech in Copenhagen, saying:

I woke up this morning crying, and that's not easy for a grown man to admit, the fate of my country rests in your hands.

As the papers said, tears welled from his eyes as he said this, and the crowd erupted with wild applause. It was the perfect moment to show how a citizen of one small island nation cares so much about the saving the planet.





The only problem?

He's not from Tuvalu. He's Australian. It's not his country.

Further, he doesn't even live in Tuvalu. He lives in Queanbeyan, New South Wales, and that's ... 144 km from the coast. A two-hour drive. And yes, there's a car in his driveway. And he lives in an air-conditioned house. He's been living there for the last 10 years, as well. He's a career environmentalist, was a political liaison officer for Greenpeace, and has found his niche in the Warming Industry, representing small island nations.


There are those who fear that Copenhagen will end in farce as procedural problems derail the talks.



Got news for y'all: it already is a farce.

How to Make Friends...

No matter what it does, the Obama Administration just keeps on getting whacked.


The recent 8th Alba conference in Havana, amongst other things, condemned the US for its support of ... the "coup" against Honduras ex-President Manuel Zelaya.

This despite the fact that the US punished Honduras because the Honduran Congress and military chose to depose a President who was trying to subvert the Honduran Constitution, which is quite clear on what Presidents may or may not do. The Hondurans made the mistake of not impeaching Zelaya publicly and worsening relations with their neighbors; they chose instead to simply get rid of him by removing him from office (legally) and throwing him out of the country.

So, rather than say to the US " 'atta boy" for not recognizing the Honduran actions and by placing sanctions that cost the Honduran economy literally billions, the Alba members decided instead that they need the bogeyman of US imperialism to help them.

So the attempts of Washington to curry favor with the powers-that-be within Alba (Chavez, Castro and Morales of Ecuador) by bashing a long-time Washington ally have failed completely: such folks need the US as bogeyman more than they can dare to acknowledge US actions that contradict their belief that all evil comes the US and the world could be a wonderful socialist paradise if it were for those pesky gringos.

Well, duh: the American actions were poorly thought out and are now clearly counter-productive.

In other words, just about what we can expect from the ... professionals of the Obama Administration.


Nice work, guys. Way to go.

Another Smoking Gun...Follow The Money!

We know that Al Gore has become very, very rich by scaring people.

We now also know that the titular head of the IPCC, Dr Rajendra Pachauri, is aiming to do that as well.

How?


Follow the money here.

Now, can anyone say, with a straight face, that this is all about the science and that skeptics - denialists in the language of the warming alarmists - are obviously in the pocket of Big Oil?

I guess we can call this Big Climate: Dr. Pachauri is set to profit very, very nicely, thank you, when carbon trading picks up the way that he is apparently trying to ensure it does. Very nicely indeed.


Let's see...

There are the groups directly connected to Dr. Pachauri:

Pegasus Capital Advisors L.P.
Oil and Natural Gas Corp. Ltd.
National Thermal Power Corp
GloriOil Limited
Indian Oil Corporation Limited

Those are only the for-profit groups: there are a slew of non-profits.

The point is, go read the article linked to: there is serious money involved for Dr. Pachauri if, for instance, a global cap and trade regime were to be approved in Copenhagen or any of the following conferences (and the Good Lord help us, there will be plenty of those, especially if Copenhagen, as it currently looks, turns out to be a dud...

This is called a conflict of interest.


It's also corrupt in a most sinister way: it's as bad as the Catholic Church selling off forgiveness for sins.

It's a despicable abuse of the trust that many true believers have placed in the whole warming alarmist movement, but should come, given the people involved, as no surprise.

This has nothing to do with "saving the planet" and everything to do with making those running the show obscenely rich. It's worked for Al Gore, Dr. Pachauri just wants his as well...

A Different Kind of Smoking Gun...

Those on the warming alarmist side of the "climate change" controversy claim, among other things, that there never was a consensus of climatologists in the 1970s who said that the danger was from global cooling, rather than warming.

This points to a slightly different version of history, one based on the actual facts, rather than claims and memories.

what we are really seeing here is an attempt to revise history, but not on the part of the skeptics, but, once again, on the part of the warming alarmists.

This from Newsweek, 28 April 1975, page 64:

To scientists, these seemingly disparate incidents represent the advanced signs of fundamental changes in the world's weather. The central fact is that after three quarters of a century of extraordinarily mild conditions, the earth's climate seems to be cooling down.
...
A survey completed last year by Dr. Murray Mitchell of the National Oceanic and Atmosphere Administration reveals a drop of half a degree in average ground temperatures in the Northern Hemisphere between 1945 and 1968.

From the CIA report linked to above (available as PDF there as well): I've compressed it fairly radically, but don't think I've fiddled with anything relevant.

A forecast by the University of Wisconsin projects that the earth's climate is returning to that of the neo-boreal era (1600-1850), a era of drought, famine and political unrest in the western world.
...
The world is returning to the type of climate which has existed over the last 400 years. That is, the abnormal climate of agricultural-optimum is being replaced by a normal climate of the neo-boreal era.

The climate change began in 1960, but no one including the climatologists recognized it. Crop failures in the Soviet Union and India during the first part of the sixties were attributed to the natural fluctuation of the weather. India was supported by massive U.S. grain shipments that fed over 100 million people. To eat, the Soviets slaughtered their livestock, and Premier Nikita Krushchev was quietly deposed.
...
With global climatic-induced agricultural failures of the early 1970s, the stability of many government has been seriously threatened. Many government have gone to great lengths to hide their agricultural predicaments from other countries as well as from their own people. It has been increasingly imperative to determine whether 1972 was an isolated event or - as the climatologists have predicted - a major shift in the world's climate.
...
Since the 1960s, a number of foreboding climatic predictions have appeared in various climactic, meteorological and geological periodicals, consistently following one of two themes.

 - A global climactic change was underway.

- This climactic change would create worldwide agriculture failures in the 1970s.
...
There are three basic schools or philosophies of climatology. The first is centered around Professor H.H. Lamb, who is currently the Director of the Climate Research Unit at the University of East Anglia in the United Kingdom.

Ouch. Climate Research Unit at the University of East Anglia...where have we heard of this institution before?

So much for the comments from the warming alarmists that the CRU at UEA is "just one of many": it is the source, so to speak. of the statistical-climate-history-as-predictor-of-the-future crowd.

There was a Conference then in San Diego in 1974:

By the fall of 1973 the Office of Research and Development (ORD) had obtained sufficient evidence the alert the Agency analysts that forecasts of an ongoing global climate change were reasonable and worthy of attention. ORD also determined that it was feasible to begin the development of forecasting techniques and impact assessment. However, Agency analysts remained skeptical, noting that the mix of approaches (Wisconsin, Scripps, RAND, NCAR) and the scientific personalities pursuing them prevented a clear expression of what the recognized authorities were agreeing on.

To resolve these issues, the principle investigators representing the various research approaches convened in San Diego in April 1974 to discuss these three issues:

 - The state of climatological forecasting: identification of elements of the methodology wherein there is some consensus, current trends in development and new approaches;

 - Prospects of developing near-term of climatology to Agency interests;

 - Recommendations for high- and low-risk approaches for long-range climatological models development.

For two days they argued, discussed and defended their approaches to climatic forecasting and the impact of climate change. By the second day a consensus was reached on the following issues:

 - A global climactic change was taking place

 - We will not soon return to the climate patterns of the recent past

 - For the future, there is a high probability of increased volatility of features of climate that are important to crop growth

 - The most promising long-range (1-5 years) approach to climate forecasting appears to be the statistical synoptic approach. The consensus expressed caution in using these projections without an attempt to develop some physical understanding of the underlying weather-forcing mechanisms.

At the end of the day, this was the birth of modern climatology: funding was made available, etc.


To deny that this ever existed is to deny how the climatologists got their start. This is a different kind of smoking gun, one that could be simply addressed by pointing out the advances made since then.

Instead, the warming alarmists want to revise history and deny that there ever were those who claimed global cooling was the danger.


And as an aside: reading the CIA report made me realize how poorly we have developed since then. Reading that report reminded me of straight-forward mature analysis, reporting all the facts, rather than the heavily biased "science" we see today.




Seems that some adults were in charge back then.

A Road Paved With Good Intentions...

So, let us understand, one more time, the effects of the subprime crisis. I know, it's tedious, but the effects are going to be with us for quite some time.

This time: housing prices.

Fundamentally, housing prices, despite their drop, are still, in the aggregate, too high. Why?

Because of this effect.

In order to prevent the full unrolling of the effects of the subprime crisis - which would take down most of the mortgage industry (and rightfully so) - the government has chosen, in its **infinite** wisdom, to prop up housing prices.

At the same time, the banks are in retrenchment mode, i.e. the next generation of housing buyers will face the most intense scrutiny and due diligence of any generation past the initial birth of the modern American housing market.

Which will result in one thing exactly: housing prices will be artificially held high to ensure that banks that hold those mortgages, even when they are foreclosing on them, can maintain the fiction that they are actually worth anything in order to prevent the bank holding the mortgage from having to write them off as more or less complete losses. This is done by subsidizing exactly that class of mortgagee that has caused the problem: those who shouldn't be in houses, the subprime cohort. Hence our tax money is being spent to pretend that the problem will go away.

The problem, however, won't go away if the cost of buying a house remains so high that few, if any can afford one. Remember, the average wage in the US is around $40k, which, if you follow the kind of conservative financial planning that most should be doing (and fail to, obviously), means that they should not acquire debt more than three times their earnings, i.e. shouldn't be paying more than $120k for a house.

Go to a realtor today and tell them that's what you can afford and most will laugh; they might point you to a foreclosure auction for a fixer-upper.

The real problem we're facing here is that someone has to pay the piper and no one wants to be that someone. Houses have a unique quality: they are real investments, ones that don't go away. Make a mistake out there in the bond market and your investment simply disappears, gone forever; make a mistake out there in the real estate market, and the house remains. It's there, it's not going away, it's a problem.

The problem arises when demand dries up and you need to sell that house. In that case, you normally (based on markets) take a huge loss on the house in order to clear your books. That's a financial tragedy when it happens to someone who can't afford to lose the equity in the house, but that's how the markets work (and is something that should be told to anyone who thinks a house is anything but a speculative purchase: houses are never investments (unless you are renting them out) and when you factor in the real price of the house (purchase+closing costs, financing costs for 20 years, minus rent equivalent, plus appreciation), houses are not a very good bet except when there is serious, long-term inflation. They're a rather expensive hedge against this right now.

In reality, they're not even that at this point: the individual financial tragedy turns into a massive problem, which is the reason why housing prices are kept artificially high. The problem here is that there is an irrational hope driving the entire real estate industry, a chimera that is preventing a proper market correction that would restart the housing industry.

The hope that if we all just hold on for a bit longer, housing prices will start to pick up again as jobs return and people get back into wanting to own.

The reason I call this both irrational and a chimera is that ... it's not going to happen.

Housing prices are fundamentally determined by income and equity. Equity reduces the amount needed to be financed, and there are - or were - rules about how income flows can be tapped to finance the rest of the house. The idea that housing prices can be driven by market appreciation expectations - that I can "afford" to buy a really expensive house, one that I cannot afford, because before I go bankrupt I can sell it for a lot more money and hence avoid financial ruin - is the chimera of the industry, a non-existent creature.

Coming out of such a major blow to the banking system and to the real estate industry, both sides - suppliers and builders - are going to be extremely financially conservative.

Yet the median down payment on new purchases is around 4%, according to the link. Four percent: that is, under normal circumstances, a recipe for disaster, as we have found over the last three years. Mortgages continue to be issued with nothing down, reflecting desperation on the part of sellers after the collapse of the housing market, who are able to sell at the artificially higher prices because the US government continues to subsidize them and guarantee those loans.

They do so because they cannot afford to sell it at any other price.

Prices should be dropping sharply, given that foreclosures are at an all-time high. New buyers should be making 20% down payments on significantly cheaper houses, and those who own the equity right now - now a theoretical equity at best - should be losing everything because they built based on heavily distorted market signals.

Instead, the market is being rigged to keep prices high. The Treasury has already spent $100 bn to keep prices up in order to prevent a market melt-down: the bubble, despite a massive tear along its side, is having plenty of resources plugged into it, despite leaking, and will continue to do so as long as resources continue to be pumped in,

The problem is: the bubble burst. It cannot re-inflate, it cannot soar to new highs. That's a fantasy, that's chasing a rainbow, and it is supremely irrational.


And it is happening because ...

People like Barney Frank can't allow it to go any other way. If they do, their world falls apart. Their goods deeds become undone, they won't be re-elected, they no longer have the favors to pass on to their cronies and supporters, and their entire world crashes and burns.

So they are more than happy to play pretend, much like someone who has lost their job and has no prospects at getting any job whatsoever continues to maintain their lifestyle with savings, pretending that something, somehow will magically happen to make their lives good again.


It is a road paved with good intentions, but if there is anything in this world that is unsustainable, it is this one. These politicians are dead set on taking the whole financial structure down before they abandon their shibboleths and failed dreams.

A problem of this magnitude postponed is not merely postponing some dire reckoning: it is actively making the problem worse, with the potential of a major meltdown in prices as the government runs out of resources. They believe that the market turnaround will happen before then.

That's one hell of a way to bet the financial health of the entire country.

Population Growth, 4-2-1 and Pensions...

There are those now who claim that we must surpress population growth in order to avoid the ecological cataclysm.

That idea is, shall we say, difficult to implement at best and would require drastic police powers (and you can imagine that thrill that policemen (and women) world-wide would have when they are called up to go baby-hunting...) to actively slow population growth.


Let us, however, propose that the idea would actually become popular and work.

Those proposing it have not things through.

Why?

Because of the way that demographics and retirement work.


Simply put, if the trend became 1 child per family, this means that the way pensions and retirement plans work no longer functions. First and foremost, virtually all pension schemes, unless they are capital-based, use transfer payments. Workers pay for the retirees, and the promise for the current working cohort is that their pensions will be paid for by the next generation, just as they have paid the pensions of the previous generation.

Reducing population drastically creates .. a few problems. This is best illustrated by that number combination, 4-2-1.

Four grandparents, two parents, one child. That is the ratio after 60 years of any rigorously enforced 1-child policy. That means that as long as the grandparents are alive and the parents have reached retirement age, then the single child of those 6 people has to support all six. Given the increasing longevity of plain ordinary folks, this means that that one person will be paying for these pensioners for at least 10 years, if not significantly longer. The problem doesn't go away, Unless, of course, you increase the number of workers in a given country, either by immigration - difficult at best - or by ... allowing people to have more children.

That either means that the child will either have virtually no income or, alternatively, pensions will be extremely low.

The alternative, right now, is that retirement systems - call them social security, state pensions, whatever - must switch from transfer systems (as are virtually all of them, currently) to capital-based systems.

Given the fact that such pay-as-you-go systems are invariably heading into financial problems as population growth declines (and many are effectively broke, kept solvent by appropriation of funds earmarked for other purposes and general tax incomes), this is in and of itself a good idea.

But under a strict plan to reduce population, it becomes an absolute necessity.

So, add to the horrendous (and absurd) costs being bandied about in Copenhagen at Copi15 the costs for a complete redo of the pension schemes world-wide to avoid either taxing work to the point of absurdity (to pay for the seniors) or condemning seniors to a life of poverty because they're the ones holding the short end of the stick.

Of course, in a democracy, that's impossible: seniors will become one of the most powerful political groups, as they have not only the political power - their theoretical voting block is growing and will continue to do so - but also the time (being retired, after all).

Hence the sort of police state powers that must necessarily exist for the one-child policy to be achieved can also be used to suppress the seniors. Perhaps simply removing the right to vote when you reach 65?


In any case, it's a bad idea that can only make things worse...

The Big Lie...

This got me thinking once again, not merely in terms of media and terrorism, but rather also how the media is fundamentally also part of the problem, as it has proved time and time again to be incapable of separating facts from narrative. Dominate the narrative and the facts become irrelevant.

From here:

All this was inspired by the principle--which is quite true in itself--that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.

Aiming at emotional manipulation - which is what the warming alarmists aim at - strikes a deeper chord in the human psyche than attempts at intellectual persuasion or moral arguments.

This should sound familiar, from the same source as above:

His primary rules were: never allow the public to cool off; never admit a fault or wrong; never concede that there may be some good in your enemy; never leave room for alternatives; never accept blame; concentrate on one enemy at a time and blame him for everything that goes wrong; people will believe a big lie sooner than a little one; and if you repeat it frequently enough people will sooner or later believe it.

Never allow the public to forget about humanity's sin of global warming, never admit that something could be wrong with the data or models, never admit that skeptics may have a point or two, insist that there are no alternatives, deny that a climate scientist - whatever that term means today after ClimateGate - could be at blame for anything, point out how the skeptics are horrible people, they must be beholden to oil companies...and repeat these all often enough so that it becomes a cultural meme, so that it becomes part of subculture identity and becomes a cultural given.


See the pattern? Take a look at where those links lead to understand the nature of the beast that apparently, like some sort of Leviathan-like Zombie, cannot apparently be killed. A hint: it's not what you might think.



As a footnote to the source referenced here, I think we can see the Anti-Americanism of the current day as a rebirth of what is called the Black Legend:

...the careful distortion of the history of a nation, perpetrated by its enemies, in order to better fight it. And a distortion as monstrous as possible, with the goal of achieving a specific aim: the moral disqualification of the nation, whose supremacy must be fought in every way possible.

This was used against Spain during the Early Modern Period,

Simply put, the constant harping of the anti-Americanists creates, amongst the non-critical parts of the population, a feedback loop that furthers the stereotype and the cultural demonization that is the legacy of the Soviet and Maoist disinformation campaigns of the Cold War.

There really is little new under the sun.

Reality, Hypocrisy, Pointlessness and Failure...

The usual morning perusal of Investor Business Daily led to a perfect four-topic lead-in.

First of all, Reality:

Barack Obama, understanding the histrionics required in climate change debates, promises that U.S. emissions in 2050 will be 83% below 2005 levels. If so, 2050 emissions will equal those in 1910, when there were 92 million Americans. But there will be 420 million in 2050, so Obama's promise means that per capita emissions then will be about what they were in 1875. That. Will. Not. Happen.

Skeptics about the shrill certitudes concerning catastrophic man-made warming are skeptical because climate change is constant: From millennia before the Medieval Warm Period (800 to 1300), through the Little Ice Age (1500 to 1850), and for millennia hence, climate change is always a 100% certainty. Skeptics doubt that the scientists' models, which cannot explain the present, infallibly map the distant future.
...

Copenhagen is the culmination of the post-Kyoto maneuvering by people determined to fix the world's climate by breaking the world's — especially America's — population to the saddle of ever-more-minute supervision by governments.

But Copenhagen also is prologue for the 2010 climate change summit in Mexico City, which will be planet Earth's last chance, until the next one.

That is reality: there is no way that the US, let alone the industrialized countries of the world, will accept penitence and poverty - for that would be the results of 450 mn people living with the per capita emissions of 1875 - in exchange for ... what? A "scientific consensus" that is a secular religion, complete with preachers and a pope (his Holiness Al Gore)?

Now, this is also reality:

We'll let others comment on the hypocrisy of those who, while trying to force the rest of us into an ever-smaller carbon footprint, will employ more than 1,200 limousines and 140 private jets while producing 880 pounds of CO2 per attendee at their conference.

Or the even-worse hypocrisy of Rajendra Pachauri, the U.N.'s global warming guru, who in one 19-month period flew 443,243 miles — including trips to have dinner at Washington's Brookings Institution and one memorable overnighter to attend a cricket match — but now wants the rest of us to be forced into a "carbon allowance."

That's right: the man chanting sonorously about the horrors that will face the world unless His Will Be Done flew to attend a cricket match. Of course, he won't have to pay the carbon allowance, he's doing The Good Work.

The hypocrisy here is about as bad as that of the Catholic Church during the Middle Ages, thoroughly corrupted and begging for a Martin Luther to nail his theses to the door of the Cathedral at Worms.

Now for something completely pointless:

The Environmental Protection Agency has declared carbon dioxide, a gas necessary for life on Earth, to be a health hazard that has to be managed. What follows will be a useless bureaucratic exercise.

The announcement was made by EPA Administrator Lisa Jackson — the same official who admitted under oath in July that no matter what the U.S. does about carbon emissions, it will have little impact on global CO2 levels if China and India don't limit their output.

...

Carbon dioxide is simply a natural product of the respiration process that keeps animals alive and the combustion that powers and expands economies. Without it, we have none of the lush greenery or old-growth trees that environmentalists pretend to protect.

These environmentalists, who presumably have no problem with naturally occurring carbon emissions, argue that it's the man-made CO2 that's causing the planet to warm. But that's nonsense. CO2 makes up a mere 0.0384% of the atmosphere, and man's contribution to that is only about 3%.

I calculated that out: man-made CO2 is 0,001152% of the atmosphere. For this we should wear hair shirts and live in utter poverty to please our new ecological masters?

This from the left, pointing to their failure:

Getting a health care bill is important on its own, but it's central to establishing Obama's credentials as a domestic reformer and to proving that Democrats are capable of governing.

The Democrats are doing their level-headed best to prove that what they claim to be stereotypes - incapable of governing, given to wild-eyed conspiracy and lunatic fringe theories that have no basis in empirical reality, spendthrifts when it comes to other people's monies, dependent on massive public spending to get anything done, incapable of working with business and commerce, and beholden to special interests like no others - is actually a fairly accurate rendition of reality.

President Obama has no credentials: this should have been apparent during the campaign, but the pet media and the starry-eyed voters willfully ignored this and voted him in. He's their man: he is, right now, heading for failure.

And their contempt for the realities of governing this country are increasingly apparent:

Liberals are absolutely right in their frustration with the Senate. It's become an absurd institution, perhaps the least democratic legislative body in any country calling itself a democracy. It makes no sense that four or five votes can trump 54 or 55 votes. But the Senate is what it is. For now, liberals have to live with this.

Sorry: the Democrats don't want the system of checks and balances, the protection of minorities from the will of the majority. How fast they forget.

I'm sorry: I cannot have any respect for a party that thinks this way. It is abhorrent to the way the US has been governed for over 200 years, and the insinuation is that this is something that needs to be changed. Given this message, my inclination is that it is something that needs to be strengthened to prevent the tyranny of the vox populi that destroys every democracy.

Which is why we have a Republic. If we can keep it.

It's Beginning To Become Clear...and the Green Paradox...

It's beginning to become clear what the warming alarmists have been planning....

First of all, this. That makes it painfully clear what the agenda is behind the warming alarmists' actions has been:

It seems what most concerns Mr. Pachauri now is not climatology, or glaciology, or oceanography—but the way we live. "Today we have reached the point where consumption and people's desire to consume has grown out of proportion," he told the Observer, also on Sunday. "The reality is that our lifestyles are unsustainable."

Mr. Pachauri's actions speak even louder than his words. Last month, he branded the Indian environment minister "arrogant" after his office released a study that called into question whether climate-change is causing abnormal shrinkage of Himalayan glaciers. The IPCC's line is that Himalayan glaciers could be reduced by 80% or disappear entirely by 2035—but for this factoid, it cites no scientists, only the activist group, World Wildlife Fund. Now, the meteorologist and expert IPCC reviewer Madhav Khandekar says on Roger Pielke Sr.'s blog that the 2035 date may have been derived from a typo, based on a 1996 paper on snow and ice edited by V.M. Kotlyakov, which estimates the glaciers could be severely depleted or gone by 2350.

Mr. Pachauri was not available for comment as of press time, but on his personal Website last week he made clear that the science, for him, comes second. Conceding that Copenhagen was "clearly not making much headway," he advocated a focus on "the larger problem of unsustainable development, of which climate change is at best a symptom."

In other words, if Mr. Pachauri is sanguine about the undermining of the IPCC's scientific methods, it's because his chief concern isn't the science at all. Rather, to judge by his recent public statements, he is more focused on an ideological economic agenda in which climate change is little more than a useful tool. Given the cover-ups exposed by the leaked emails, we'll take Mr. Pachauri's remarks as a welcome instance of full and voluntary disclosure.

Key point: Mr. Pachauri has a clear ideological agenda, but not so much the economics (that is secondary and follows from the primary point) as much more the political.

But this is starting to unravel, as can be seen here. Key quote:

As the world prepares to converge on Copenhagen for the COP15 Climate Summit, Denmark's Speaker of Parliament has expressed serious doubts as to the way in which the climate debate has developed.

"The problem is that lots of people go around saying that the climate change we see is a result of human activity. That is a very dangerous claim," Parliamentary Speaker and former Finance Minister Thor Pedersen (Lib) tells DR.

"Unfortunately I seem to experience that scientists say: 'We have a theory' – then that crosses the road to the politicians who say: 'We know'. Who can be bothered to hear a scientist who says 'I have a theory' when politicians go around saying 'I know'" Thor Pedersen says.

Now, this is coming from the Danes, who while enjoying an excellent reputation amongst the Greens, actually are rather intensive energy users despite it all.

Now, let's consider reality:

Here is a recipe that would work: Add 30,000 megawatts of new wind turbines every year between now and 2050 (this is nearly four times what was added in 2008, a record year). Add another 35,000 megawatts of solar photovoltaic capacity annually (more than 100 times what was added last year—a record year for solar, too).

That's just the beginning. Now multiply the nuclear reactor fleet fivefold by midcentury. Retrofit all existing coal-fired power plants with carbon capture and storage technology. And build twice as many new plants, also with carbon capture. Natural gas could substitute for coal, but only with carbon capture too. By 2050, the electric power system would be four times bigger than today. Two-thirds of the car and truck fleet would be powered by electricity, and the rest would run on advanced biofuels.

All of this would indeed reduce carbon emissions by 83%. It would also practically eliminate America's dependence on oil imports. But could it be done?

Perhaps, though not without enormous effort. Operating a power grid reliably and economically with intermittent solar and wind resources generating 40% of the electricity cannot be done today. Carbon capture and storage has yet to be demonstrated on a large scale. Meanwhile, a still vocal group of environmentalists remains adamantly opposed to nuclear energy—even though it is the only low-carbon energy source that is both scaleable and already generating large amounts of electricity.

Yet falling short on any of these decarbonization measures would require even more of the others, or even greater energy efficiency gains. Failing that, the only way to reach the 83% reduction goal would be through slower or even negative economic growth, i.e., lower living standards. This is a matter of arithmetic; it cannot be wished away.

Bingo: we have now hit the hard equations, where science meets reality. The reality of the situation is that to go Green the way the warming activists would demand, insist, require by law for us to do either means a major decline in living standards or ...

or what, exactly?

Actually, there is no "or": for the warming activists to be appeased and mollified, we must prostrate ourselves, don the hair shirt and sacrifice, sacrifice, sacrifice. After all, it's for the children...or is it?



You see, there are some people who are at least trying to think this thing through. One of them is an economist that I am a big fan of, of Dr. Herbert Werner Sinn, who writes this (only in German, but I'm providing the translation):

The green program has become a replacement religion for many. With the words "we believe in solar energy," the coalition contract (for Germany's new government -ed) pays tribute to the sun god. Politics pays no attention any more about solar roofs and wind mills in terms of reducing greenhouse gases, but rather in order to create new secular monuments for the new belief. Before, however, we allow out industrial base to be driven into the desert by the wind of our emotions, let's stop and think "what are we doing?". Reason and pragmatism must replace the blind activism of the last several years. Germany desperately needs a course correction in its environmental policy.

Dr. Sinn makes sense (my bilingual readers will appreciate that pun). Fundamentally he does not disagree with climate change as such, and he is willing to accept the science (I fear that he will be disabused of this notion before long...). What does he propose?

Basically, he says that if it really is five minutes before midnight, then we can't afford inefficiencies in implementing policies. Simply put, the German laws for renewable energy systems have nothing to do with their support, but are rather, as industrial subsidies usually tend to be, a form of political largesse that benefits a very small number of people at the expense of everyone.

Further, green policies have, if anything, accelerated warming (if you accept the premise, of course, that human activity has a warming effect):

Some argue that green energy will push energy prices below extraction costs for fossil fuels, ensuring that no company would bother to extract them. This is, however, a dangerous illusion, as extraction costs are a tiny portion of the price and this is not going to change. The price of fossil fuels has about as much to do with the extraction costs as the price of a Rembrandt has anything to do with the cost of the paint used. This argument is absurd.

Possible supply changes change differently. The owners of the usable resources always calculate if they can get a higher rate of return if they leave their resources in the ground in order to use them when they are in scarcer supply and can hence be sold at higher prices, or, alternatively, sell the resources now and invest their gains in capital markets. Hence the rate of resource use is dependent on interest rates and the expectations of price developments. If the resource owners wait, so that green policies get even greener, this reduces the value of the resources now in the ground, leading to a direct incentive to use these resources as fast as possible. This leads to more Co2 in the atmosphere, warming accelerates.

This is the green paradox. Policies that are greener and greener threaten resource owners with the destruction of markets and gives them the incentive to dispose of their resources before their markets disappear. This incentive comes in the face of what amounts to the exercise of eminent domain in the near future, leading to an incentive to overproduce in order to gain what can be gained before the resources become valueless. This only serves to accelerate any negative ecological effects. Given that the prices for fossil fuels, in real terms, are today not higher than they were in 1980 and the CO2 emissions have progressively increased, although many EU countries have reduced their emissions, is probably the result of the environmental discussion of the last decade, which has led to resource owners converting their resources to money rather than leaving it in the ground in anticipation of much, much higher prices.

Other countries in this time frame have not only used the amount of fossil fuels that the Europeans have saved, but the oversupply of oil on world markets shows that resource owners have brought their product on the market because of the fears they have that green policies will mean for them.

Woops. That didn't work out well.


I won't get into the rest of the article, as I don't agree with his premise - that anthropogenic warming is real - as anyone who takes an objective look at the politics of the science should be able to understand (given the apparent fudging of the numbers in order to hide the decline), if not agree with. He also argues, basically, for a kind of Tobin tax on financial transactions to make the business of fossil fuel extraction ... unprofitable. Here I cannot agree, but let that be the subject of another post.

Best Quote of the Decade...

And now for something completely different:

The miracle of national accounts statistics is that all over the world, very incomplete, imperfect, and partly outdated datasets are transformed into complete, consistent, and up-to-date standardized pictures of national economies.

This is my professional economics quote for the last decade. It's by Frits Bos, who works for the CPB Netherlands Bureau for Economic Policy Analysis, quoted in the Review of Income and Wealth, Series 55, Number 4, December 2009, in his article "The Art and Craft of Compiling National Accounts Statistics and Their Implications for Reliability", on page 930 of that issue.

This is an article that every aspiring economist, especially those who have been working as economists for the last 30 years, should read to understand what the reality of economic statistics is all about. Highly recommended. Really.

Unfortunately (at least I couldn't find it in a short look), not online, but there is a link to his professional home page here. There is an abstract here with access behind Wiley's commercial firewall.

When It's Not Enough...

This made me laugh. Because of the absurdity of it all.

Remember, Mr. Gore owns a big chunk of the carbon offset business. No wonder that he's calling for increased use of carbon emissions trading: if he gets his way, he'll be another Rockefeller. He stands to make not millions - he's already done that with his gloom-and-doom dog and pony show - but rather billions.

But this is what made me laugh:

He also brushed aside questions over the reliability of climate science that have followed the publication last month of leaked e-mails between climate experts. He claimed that the scientific consensus around climate change "continues to grow from strength to strength". He added: "The naysayers are in a sunset phase with a spectacular climax just before they subside from view. This is a race between common sense and unreality."

The race is over, Al. You lost. The unreality is yours, and it is rapidly unraveling.

After all, one of the most practical, pragmatic and realistic countries on this planet - Australia - cut off the grandstanding of their leader just a few days ago, refusing to don hair shirts and tear their clothes in repentance for the fact of their existence (metaphorically speaking).

No Plan B...

Once again the FT, this time in the supplement on the Copenhagen Climate Change Summit (CCCS).

Link to numerous articles here, but I won't go through them, as they simply reiterate the generic "knowledge" of the Climate activists.


Suffice to say that Climategate is not mentioned a single time here, although, as we now know, the data and the science behind the IPCC reports has been severely compromised.


What is especially interesting, though, is this: there is no Plan B for the Climate activists. None.

According to Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change, their plan is the only plan that can "beat climate change."

Tellingly, he writes: Human-driven climate change is not a cause but a result of unsustainable economic activity.

Action is the only way to avoid climate disaster.

The solution ... will provide the biggest opportunity since the industrial revolution to rebalance economic activity towards a mroe stable and equitable path for every nation.

What he expects on Dec 17 is that the rich nations commit to economic suicide and impoverishment. Sorry, he puts it this way:

It must record the ambitious commitments of rich nations to cut emissions and provide finance.

What are these ambitious commitments?

Emission reduction targets of 25%-40% by 2020.

Emissions abatement measures for developing countries.

Short-term and long-term financial commitments of at least $10bn/year by 2012 showing who pays what and how long-term commitments are to be financed.

A system that "deploys" this finance to the priorities of developing countries and "respects" the authority of the climate change convention to define how that is done.


Yikes.

Oddly enough, on that same page, Sir David King points out, unwillingly, what the end result will be. You see, regardless of what the world wants the US to do, and what President Obama commits to, the US Constitution, that marvelously subversive declaration of how governments should work, requires that the the US Congress give its advice and consent to any international treaty.

Advice and consent.





Thank God for the US Constitution.



The CCCS is the most brazen and unalloyed power grab in the history of the world, at least to date. Climategate pales in comparison, yet undermines the whole premise on which to grab power.


If emissions must be reduced by 25%-40% within 10 years, this comes only at the cost of outright banning of much industrial production, resulting massive unemployment increases, severe reduction in standards of living - most people will not be able to afford a car, which, given the fact that there won't be any more being made, is a tad moot - and more than a little in increased taxes.

A Modest Proposal...

Niall Ferguson and Laurence Kotlikoff in todays FT make a modest proposal that I'd like to expand on.

Their thinking is quite clear and robust: banks are financial intermediaries, first and foremost. In fact, if you look at how they are described in the industrial classification systems, that is where you will find them, next to insurance companies, stockbrokers and financial advisers.

Their job, first and foremost, is to bring people with money together with people who need money. They earn their money by charging fees for this and by determining risk for those with money when they lend to those who need money, which is then reflected in interest rate differentials between those who borrow money and those who lend money.

And that is all. Nothing more, nothing less: Ferguson and Kotlikoff call it Limited Purpose Banking or LPB for short.

Under LPB, all limited-liability financial institutes - which right now have transferred all liabilities to the general public in an absolutely horrific example of moral hazard gone dramatically, perversely and criminally wrong - become mutual funds: LPB may process securities and sell them to mutual funds, but would be limited to that and no more. First and foremost: LPBs may not borrow to invest themselves, guaranteeing that if investments go horribly wrong, they do not take down the financial infrastructure with them. Which is exactly what came close to happening last year.

These mutual funds aren't quite what we now understand mutual funds to be, but are nonetheless quite close. They would be small banks with 100% capital requirements, no ifs, ands or buts. That is exactly what the current mutual funds are, albeit they are not called banks.

The goal is to create numerous, small, flexible investment instruments that also carry all risks associated with each and every of their activities. This is the key solution to the monumental screw-up of the financial industry in 2008 and 2009, and allows for consumers to choose their risk portfolios easily: high returns, high risks, a modern God of the Copybook Headings if I ever saw one, but one that was grievously ignored (and is ignored in any bubble, indeed forms the bubble itself).

The mechanism for creating instruments would be straight-forward: create the "FFA" or Federal Financial Authority, which would be charged with verifying prospectii, as well as the credit histories, income statements and third-party custodies of fund securities, hiring external rating companies the rate the securities and value their collateral. Hence a bank when processing a loan or stock issue would send it to the FAA for verification, disclosure and independent rating, and then auction it off to buyers, who would be organized as mutual funds. Mutual funds could be aligned with the LPBs in order to offer financial services using cash mutual funds, and insurance mutual funds would permit diversification of individual risks and the sharing of aggregate risks.

This is the point that Ferguson and Kotlikoff end their analysis, and I'd like to extend it.


A number of years ago Germany abandoned one of the most useful tools it had for industrial and investment policies, largely due to a failure in the government to properly work out how to allocate capital effectively. Failure to allocate capital effectively is a cardinal sin of economic policy, and unfortunately the German government threw the baby here out with the bath water.

What had worked brilliantly for many years was tax credits for closed investment funds. Basically, for any investment there is an investment period where an instrument is developed before that instrument generates a cash flow. By allowing large tax write-offs during this period, sometimes in excess of the sum actually invested, the German government had an elegant method of directing private investments in areas that they deemed useful in terms of industrial investment, largely real estate investments. Why was this abandoned?

Basically, they overdid it in Eastern Germany after unification, with much too much money flowing there to be sensibly invested, resulting in misallocation of capital (remember, a deadly sin) as multiple projects were started up that ended up flooding the market with high-cost real estate investments in a low-wage environment, resulting in the loss of equity for many investors.

But not necessarily financial ruin: the investment phase brought very large tax write-offs for current income, resulting in an almost immediate payback due to tax reductions on current income.

How did this work? Simplified, like this: say an investor had a cash flow (income) of $500k/year. Taxed at an average of 30%, that meant paying taxes worth $150k/year. If the investor invested $100k in a closed fund - i.e. a fund where an investor may first exit after a set number of years - he could write off, in the first year, say, 80% of that in tax breaks during the investment phase of the project. That gives him a tax break of $80k, reducing his taxes to $70k, leaving him with $430k in the first year of his investment instead of $350k otherwise. The investment then proceeds normally, with any income earned taxed at the normal rate. Let's stipulate a closed-end fund with a clear exit 10 years after the initial subscription, with an average 6% return on equity after the investment starts producing income.

The nominal return on a $100k investment would be $54k over 10 years (1 investment year, 9 years of disbursement at 6% of equity for $6k*9=$54k). At the end of 10 years the investment object would be liquidated for $90k (for the $100k initial investment), resulting in taxable income of $44k ($100k-$90k = $10k loss in equity). While this is in and of itself a modestly attractive investment, the real key is the tax write-off in the first year: that nominal $44k profit, which would then itself be taxed, really is a $114k profit: there was, after all, that $70k tax reduction windfall. Again, this is highly simplified, but is how the system basically worked.

That makes such an investment instrument highly desirable for high-income, long-term investors.

This can be used by government to direct publicly useful but highly risky investments using private equity to meet industrial and investment policy needs: if the US, for instance, were to decide that it wants a watch industry once again, it would simply change the tax code to reflect this, directing high-income investors into those fields. Such funds could also be set up as cooperatives to allow corporations directly involved to participate in order to acquire productive assets after a set time period. Risk is carried by the investor, who can lose every penny of their investment.


Join the ideas of Ferguson/Kalikoff and the use of tax credits for directing investment activities for industrial and investment policy, and you have an enormously efficient method for governments to achieve policy goals with little or no direct outlays.

The downside?

Of course: governments making mistakes that lead to misallocation of capital. This was the biggest problem with the system, but if the FFA were also able to veto such tax policies to refute the ability of politicians to exploit and corrupt the system, then this can be defused (but not totally eliminated).

Again; a modest proposal. Which would give government enormous leverage on directing private investment to achieve policy goals without having to issue bonds or spend taxpayer monies to do so.

The cost? Foregone tax income. Cheap at the price, I say.

Timing...and Quite A Surprise

So President Obama has revealed his plans for Afghanistan.

By setting a deadline for withdrawal.


Ah, the best plans of mice and men...


When reading that article, one thing becomes apparent: President Obama wants US involvement over by Summer 2011. If this is not accomplished, he knows that his base, the lunatic left, will create massive problems for his re-election.

So what does he do?

In the name of political expediency, he wants the war over as soon as possible. So 30 000 new troops head to Afghanistan.

But they're not going there methodically and with adequate preparation:

Reflecting the increased sense of urgency, Obama is to speed deployment of an extra 30,000 American troops to Afghanistan within the next six months – a much faster timetable than the 12 to 18 months that had been briefed by US officials up until today.

...

The White House press secretary, Robert Gibbs, spoke today of "an accelerated timetable". During a round of television interviews he said the faster the US forces move in, the faster they will move out. "We can't be there forever," he said.

Obama was looking for an "end game" and wanted to "get in there quickly" and transfer responsibility for security to the Afghan military as rapidly as possible, Gibbs said. An administration official said the US aimed to begin winding down troop numbers in July 2011.

Gibbs indicated that there would be no further escalations beyond the one Obama approved on Sunday. Asked on Good Morning America if this would be the last order for extra troops, he said: "The president sure believes so."

US officials said Obama wants almost all the US troops out before the end of his first term in office in January 2013, leaving behind a small contingency force. Gibbs said the president did not want to leave the problem to his successor.

Whoa.

The President does not want to leave the problem to his successor?

Does this mean that Obama is not running for a second term? Gee, how can anyone have missed that?

That's the surprise of the title.

I know, get real: the only reason that President Obama is doing what he is doing is in preparation to being re-elected.

But think about this: the best laid plans come to naught when in war. No plan survives contact with the enemy (and any commander who insists on carrying a mission through without regard to what the enemy does is a fool) and this one will certainly not either: the Taliban now know that all they have to do is lie low for the next 12 months and wait for the Americans and their allies to leave. In this regard, the President is an idiot: you never tell your enemy what your plans are. This is sheer stupidity.

Unless, of course, you want to lose while pretending to want to win.

The risk for Obama is that the extra 30,000 troops may not be enough to counter an increasingly confident Taliban and that the timetable for training the Afghan army and police is over-optimistic.

Two brigades, one from the US marines and one from the army, plus reserves, amounting to 30,000, are to be sent to Afghanistan over the next six months, bringing American troops in the country to 100,000. They are to be based in the south and east, where US and British forces are under pressure and badly in need of reinforcements. The first of the marines are due to arrive before Christmas.

Britain has already committed to sending more troops. Extra troops for Afghanistan will be on the agenda at a Nato meeting scheduled for next week.

There are 95,000 Afghan troops at present and the US wants that number up to 134,000 by October 2010, three years earlier than originally envisaged, and then to 240,000 by 2013. There are about 92,000 Afghan police and the US target is 160,000 by 2013.

There is scepticism about whether the Afghan army and police can be trained up that quickly to take over. At present, the Afghan army has a loss rate of about 25% of its members trained by US and its Nato allies, the bulk of whom just walk away.

Obama, who has already set a timetable for withdrawal of a sizeable chunk of US forces from Iraq by 2011, is keen to shed the label of "war president" and increase his chances of re-election to a second term. Public opinion in the US is steadily turning against the Afghanistan war in the face of mounting American casualties and lack of faith in Hamid Karzai's government.

Obama spoke to Karzai for an hour late on Monday night to brief him about the new strategy that will include "benchmarks" for the Afghan government not only to train more members of the Afghan army and police but also to take steps to tackle government corruption.

So, we see the various outs: 

1) Blame the Afghanistani for failing to be like us, failing to change their culture to be "civilized", and let the inevitable corruption be the reason for wallking away ("We were there to help, but darn it, those guys were so corrupt that we just couldn't stand it any more")

2) By publicly chastising Karzai for corruption, the US government is doing its level best to support a self-fulfilling prophecy, while at the same time being the ones most responsible for corruption (the incompetence of the State Department, ever desiring to be everyone's friend, as well as that of the NGOs, is already legendary) in Afghanistan: hence the US can easily generate, if it so desires, a reason to get out whenever it wants.

3) Unrealistic plans and a deliberate ignoring of reality means that the White House plans are a recipe for failure.

What should have Obama done instead?

First and foremost, don't tell the world and the enemy what your plans are. Really. Doing that is really, really ... stupid.

Go with what the military wants: an orderly and deliberate escalation to keep the Taliban engaged and thinking that they are the ones controlling the fighting (guerrilla forces usually are until a counter-insurgency nails them), such that when the additional forces are in-country and ready, that a kind of reverse Tet can be accomplished, with the insurgents losing both the political and military conflict.

Third, work closely with the Pakistanis to eliminate the safe havens.

Fourth, and this needs to be done simultaneously, rebuild Afghanistan as Afghanistan: you are not going to rebuild the country as anything other than a tribal society. It will be corrupt (unless you understand that this isn't corruption, it's the way things work there) and it will be to a certain degree dysfunctional, but it will work: that is all that matters.

The only time to leave is when the last madras closes because the hate is gone.  The hate will be gone when everyone there realizes that the only path to heaven is a virtuous life and not martyrdom.