http://online.wsj.com/article_email/SB10001424052748704804204575069123218286094-lMyQjAxMTAwMDIwNzEyNDcyWj.html
http://www.nytimes.com/2010/02/27/business/global/27yuan.html?emc=eta1
The Commerce Department announced this week that its initial estimate of 4th quarter 2009 GDP growth (5.7%) was going to be revised "upward" to 5.9%. Normally, we're used to downward revisions so that was something positive. But then, we have come to expect "negatives" from the "Dismal Science".
As Russ Roberts opined in yesterday's WSJ, some macroeconomists say if we just study the numbers long enough, we'll be able to design better policy. That's like the sign in the bar: "Free Beer Tomorrow."
For an economist, these are the best of times and the worst of times. We live in the best of times because everyone wants to understand what happened to the economy and what's going to happen next. Where's the job market going? Deficits? How well is "stimulus" working?
So many questions and so little in the way of answers. And so it is the worst of times for economists. There is no consensus on the cause of the crisis or the best way forward.
There were Nobel Laureates who thought the original stimulus package should have been twice as big (Krugman comes to mind). And there are those who blame it for keeping unemployment high. Some economists warn of hyperinflation while others tell us not to worry.
It makes you wonder why people call it the Nobel Prize in Economic Science. After all, most sciences make progress. Nobody in medicine wants to bring back lead goblets. Sir Isaac Newton understood a lot about gravity. But, Albert Einstein taught us more.
John Maynard Keynes has made a comeback from 50 years ago just in time to save us with government spending helping us to avoid disaster. So far "econometrics" has proved that there is always one more "variable" that is unaccounted for. Ed Leamer, a professor of economics at UCLA calls it "faith-based econometrics". When the debate is over $2 trillion in additional government spending vs. zero, we've stopped being scientists and become philosophers. Do we want to be more like France with a bigger role for government, or less like France?
As Roberts says, "... we should face the evidence that we are no better today at predicting tomorrow than we were yesterday. Eighty years after the Great Depression, we still argue about what caused it and why it ended."
So, the bottom line is that we should expect less from economists. Economics is a powerful tool, a lens for organizing our thinking about a complex world. That should be enough.
Unable to predict, or even explain our own economy, we jump into China's current situation and try to understand it. Just a year after laying off millions of factory workers, China is facing an acute labor shortage. Unskilled factory workers are being offered "signing bonuses."
Factory wages have risen as much as 20% in recent months. Obviously this can raise prices in the U.S. but it can also lead to greater inflation in China.
The immediate cause of this shortage is that millions of migrant workers who traveled home for the lunar New Year earlier this month are not returning to the coast. Thanks to a "half-trillion-dollar" government stimulus program, jobs are being created in the interior.
But many economists say the recent global downturn obscured a long term trend: China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh laborers for its factories.
Wages in Guangzhou for factory workers have risen from 80 cents an hour before the global financial crisis to 95 cents an hour to $1.17 an hour in the last few weeks. In some cases, higher wages could ease labor shortages by prompting factories to reduce their work forces.
Two powerful forces are still working to reduce the supply of young people headed for factories:
(1) The Chinese government has rapidly expanded post secondary education. Universities and other institutions of higher learning enrolled 6.4 million new students last year, compared to 5.7 million in 2007 and just 2.2 million in 2000.
(2) At the same time, China's birth rate has been sliding steadily ever since the introduction of the "one child" policy in 1977.
Labor shortages have returned quickly in recent weeks as these long-term trends have collided with a recovery in demand for Chinese goods.
Given that our economists, and those of us who follow them, have no real idea what's happening in our economy and a very feeble capacity to predict policy impact here (see the Obama administration's guarantee that the stimulus package would keep unemployment no higher than 8%), we will still venture to suggest that letting wages rise in China is a good thing (even if prices in the U.S. go up), while letting the renminbi rise against the dollar (as the Obama administration has urged) would erode China's advantage in export markets.
As Jing Ulrich, chairwoman of China equities and commodities at J. P. Morgan has said, letting wages rise benefits workers. Letting currency rise benefits currency speculators.
For those of us who read about our own economists and their various positions on issues, it sounds like Jing Ulrich makes much more sense than the "Dismal Science."
Saturday, February 27, 2010
Friday, February 26, 2010
Krugman on Health Care
http://www.nytimes.com/2010/02/26/opinion/26krugman.html?emc=eta1
Paul Krugman's "OP-ED" in today's Times addresses where we are with "Health Care."
We have posted in the past on this issue and summarized it by saying that we don't need 1174 pages of legislation to assure that no person can be dropped from medical coverage because they "cost too much!" (i.e. that their claims cost the insurance carrier too much), and, that no person can be denied medical coverage because of a poor prior medical record. In the latter case, the number of new people covered could get as high as the 45 million figure often quoted, or 30 million at the low end of knowledgeable estimates. And, of course, it all depends on the 29 year olds who don't want to pay for coverage they don't need (until they need it).
In any case, Dr. Krugman told us last fall that we'd have a health care plan before the year was over. While he has a very high batting average (which is why we read him), it is very difficult to read the political tea leaves in today's D.C.
Today's reading is that Krugman, and the rest of us, hope yesterday's Presidential Health Care Summit will be the last act in the "... great health care reform debate." If so, as Krugman says, it will end with the Democrats offering moderate plans that draw heavily on past Republican ideas, and the Republicans responding with "... slander and misdirection."
How can an issue as serious, and as obvious, as this be so subject to partisan politics? Aside from the insurance industry lobby (incidentally, the bonus information on insurance industry executives appears to serve notice that "profits" are more than adequate), Republicans seem to be intent on showing America that they are protecting costs: "... for millions of Americans, premiums will go up." As Krugman so accurately points out, that quote is not "technically" a misrepresentation, since the CBO analysis of the Senate Democrats' plan does say that average payments for insurance would go up. But, the analysis also makes it clear that this would happen only because people would buy more and better coverage. The "... price of a given amount of coverage ..." would fall, not rise - and the actual cost to many Americans would fall sharply thanks to federal aid.
So, here we are: Krugman has centered the debate to ask how the Republicans plan to deal with the emotional center of much of the health care debate: the plight of Americans who suffer from pre-existing medical conditions. The answer is that the Republicans have no answer. Krugman's references to the House Republican plan as something that will "... afflict the afflicted ..." is an absolute classic. And, he's right.
Most of us with responsible opinions wish health care was not a political issue. We don't want to blame one party and support another. But, sadly, the issue has descended to that now.
Krugman has once again called it right. His batting average is in tact. He should join the Yankees in spring training!
Paul Krugman's "OP-ED" in today's Times addresses where we are with "Health Care."
We have posted in the past on this issue and summarized it by saying that we don't need 1174 pages of legislation to assure that no person can be dropped from medical coverage because they "cost too much!" (i.e. that their claims cost the insurance carrier too much), and, that no person can be denied medical coverage because of a poor prior medical record. In the latter case, the number of new people covered could get as high as the 45 million figure often quoted, or 30 million at the low end of knowledgeable estimates. And, of course, it all depends on the 29 year olds who don't want to pay for coverage they don't need (until they need it).
In any case, Dr. Krugman told us last fall that we'd have a health care plan before the year was over. While he has a very high batting average (which is why we read him), it is very difficult to read the political tea leaves in today's D.C.
Today's reading is that Krugman, and the rest of us, hope yesterday's Presidential Health Care Summit will be the last act in the "... great health care reform debate." If so, as Krugman says, it will end with the Democrats offering moderate plans that draw heavily on past Republican ideas, and the Republicans responding with "... slander and misdirection."
How can an issue as serious, and as obvious, as this be so subject to partisan politics? Aside from the insurance industry lobby (incidentally, the bonus information on insurance industry executives appears to serve notice that "profits" are more than adequate), Republicans seem to be intent on showing America that they are protecting costs: "... for millions of Americans, premiums will go up." As Krugman so accurately points out, that quote is not "technically" a misrepresentation, since the CBO analysis of the Senate Democrats' plan does say that average payments for insurance would go up. But, the analysis also makes it clear that this would happen only because people would buy more and better coverage. The "... price of a given amount of coverage ..." would fall, not rise - and the actual cost to many Americans would fall sharply thanks to federal aid.
So, here we are: Krugman has centered the debate to ask how the Republicans plan to deal with the emotional center of much of the health care debate: the plight of Americans who suffer from pre-existing medical conditions. The answer is that the Republicans have no answer. Krugman's references to the House Republican plan as something that will "... afflict the afflicted ..." is an absolute classic. And, he's right.
Most of us with responsible opinions wish health care was not a political issue. We don't want to blame one party and support another. But, sadly, the issue has descended to that now.
Krugman has once again called it right. His batting average is in tact. He should join the Yankees in spring training!
Thursday, February 25, 2010
Akio Toyoda
http://dealbook.blogs.nytimes.com/2010/02/23/toyotas-growing-legal-problems/?emc=eta1
http://online.wsj.com/article_email/SB10001424052748704479404575087001494145936-lMyQjAxMTAwMDIwNTEyNDUyWj.html
We had an opportunity to catch a substantial portion of Akio Toyoda's testimony yesterday before Congress and then to see him on "Larry King" last night.
He was what Toyota needed but there was something disquieting about the situation: the Congressmen and Congresswomen (for the most part) lacked the dignity and courtesy that Mr. Toyoda exhibited. Many asked the same questions, just in a different way. My overall impression was that those who weren't pandering to him because they have Toyota plants or dealers in their districts were trying to show how "tough" they could be without really understanding what the man was trying to say. One Congressman was intent upon saying how embarassing a presentaion was that Toyota had put into evidence, but he was so inarticulate about it that we lost track (and, it looked like he did too) of "why" Toyota should be embarrassed.
What Mr. Toyoda did say was that Toyota has been unable to replicate the situations of unintended acceleration (UA) that have caused a tragic loss of life. Toyota is recalling cars and replacing "sticky pedals" while installing brake override systems but the company has been unable to replicate the UA situations that have been attributed to EMI (electromagnetic interference). It was not noticeable that Congress heard him on that point because there appeared to be a lot posturing with predetermined questions without a lot of listening to his answers.
One point made by the Congresswoman from San Francisco: she wanted to hear Mr. Toyoda say that his company would never "blame" the customer again. He so stipulated. This went directly to the testimony of the widow from Tennessee the day before.
It would be fair to say that Mr. Toyoda, overall, summarized his company's situation as having lost sight of the customer and outgrown its engineering resources.
Given this, Mr. Toyoda's response (and that of his colleague, the president of Toyota North America), on the question of why recalls that were done in Europe in 2008 weren't shadowed in the U.S., was disquieting. Two different answers: first, the U.S. operation didn't know, and second, that there are different, smaller cars in Europe so they thought the situation didn't connect. The first answer, if true, reflects an excessive level of compartmentalization, at best. A very bad case of "Silos". The second answer reflects a basic level of incompetence that's hard to believe.
Later in the evening, Mr. Toyoda appeared on "Larry King Live". We were impressed with how well King treated him and the room that King gave him to say what he (Toyoda) wanted to say. Unlike Congress. When King asked Mr. Toyoda whether he felt Congress treated him fairly, Toyoda's response was not to be critical at all.
On the same day as Mr. Toyoda was testifying, U.S., Japanese and European investigators raided the offices of auto-parts suppliers tied to Toyota stemming from a probe of anticompetitive practices: "cartel conduct of automotive electronic component suppliers." This would be additive to Congressional, Regulatory (SEC), criminal and civil investigations of Toyota directly. Because of the law suits that have been initiated, there were certain questions that Mr. Toyota could not answer yesterday but he was, all things considered, as straightforward as he could be. It is, perhaps, unprecedented that a vehicle recall is also the subject of a criminal investigation.
We understand that the potential focus of the criminal investigation is whether Toyota made complete and truthful disclosure to the N.H.T.S.A regarding the unintended acceleration and brake problems in its vehicles.
However this entire situation turns out, Toyota "was" the best car company in the world and can be again once all of these issues are resolved.
Akio Toyoda is doing his best and we are hopeful that that is enough.
http://online.wsj.com/article_email/SB10001424052748704479404575087001494145936-lMyQjAxMTAwMDIwNTEyNDUyWj.html
We had an opportunity to catch a substantial portion of Akio Toyoda's testimony yesterday before Congress and then to see him on "Larry King" last night.
He was what Toyota needed but there was something disquieting about the situation: the Congressmen and Congresswomen (for the most part) lacked the dignity and courtesy that Mr. Toyoda exhibited. Many asked the same questions, just in a different way. My overall impression was that those who weren't pandering to him because they have Toyota plants or dealers in their districts were trying to show how "tough" they could be without really understanding what the man was trying to say. One Congressman was intent upon saying how embarassing a presentaion was that Toyota had put into evidence, but he was so inarticulate about it that we lost track (and, it looked like he did too) of "why" Toyota should be embarrassed.
What Mr. Toyoda did say was that Toyota has been unable to replicate the situations of unintended acceleration (UA) that have caused a tragic loss of life. Toyota is recalling cars and replacing "sticky pedals" while installing brake override systems but the company has been unable to replicate the UA situations that have been attributed to EMI (electromagnetic interference). It was not noticeable that Congress heard him on that point because there appeared to be a lot posturing with predetermined questions without a lot of listening to his answers.
One point made by the Congresswoman from San Francisco: she wanted to hear Mr. Toyoda say that his company would never "blame" the customer again. He so stipulated. This went directly to the testimony of the widow from Tennessee the day before.
It would be fair to say that Mr. Toyoda, overall, summarized his company's situation as having lost sight of the customer and outgrown its engineering resources.
Given this, Mr. Toyoda's response (and that of his colleague, the president of Toyota North America), on the question of why recalls that were done in Europe in 2008 weren't shadowed in the U.S., was disquieting. Two different answers: first, the U.S. operation didn't know, and second, that there are different, smaller cars in Europe so they thought the situation didn't connect. The first answer, if true, reflects an excessive level of compartmentalization, at best. A very bad case of "Silos". The second answer reflects a basic level of incompetence that's hard to believe.
Later in the evening, Mr. Toyoda appeared on "Larry King Live". We were impressed with how well King treated him and the room that King gave him to say what he (Toyoda) wanted to say. Unlike Congress. When King asked Mr. Toyoda whether he felt Congress treated him fairly, Toyoda's response was not to be critical at all.
On the same day as Mr. Toyoda was testifying, U.S., Japanese and European investigators raided the offices of auto-parts suppliers tied to Toyota stemming from a probe of anticompetitive practices: "cartel conduct of automotive electronic component suppliers." This would be additive to Congressional, Regulatory (SEC), criminal and civil investigations of Toyota directly. Because of the law suits that have been initiated, there were certain questions that Mr. Toyota could not answer yesterday but he was, all things considered, as straightforward as he could be. It is, perhaps, unprecedented that a vehicle recall is also the subject of a criminal investigation.
We understand that the potential focus of the criminal investigation is whether Toyota made complete and truthful disclosure to the N.H.T.S.A regarding the unintended acceleration and brake problems in its vehicles.
However this entire situation turns out, Toyota "was" the best car company in the world and can be again once all of these issues are resolved.
Akio Toyoda is doing his best and we are hopeful that that is enough.
Tuesday, February 23, 2010
The Lean Years
http:/.nytimes.com/2010/02/21/opinion/21friedman.html?emc=eta1/www
When Thomas L. Friedman writes something, we tend to notice. We're not sure that there are that many people who own 3 Pulitzer Prizes (perhaps, nobody else) - that's right: "THREE"! Whether he writes about the Middle East or economics, he's clear and he makes a point. We don't always agree with him but we listen. His article from a few years back predicting Russian economic and political "growth" (or lack of same) based on where "oil prices" go is an absolute classic.
This time, Friedman is telling us that the "Fat Lady Has Sung". His article starts by telling us about Tracy, California where they now have to "pay" every time they call 911! In Tracy, you get "financial options" for this: residents can pay a $48 "voluntary fee" for the year (so one can call 911 as many times as one wants to), OR, one will be charged $300 for a single 911 call.
So, we have met the future, and Friedman calls it: "The Lean Years". Just as California was ahead of the rest of the U.S. in many progressive areas since WW II, it would appear that California is now leading us into a bleaker economic future.
Friedman gets a little help in describing this new era from Johns Hopkins University foreign policy expert Michael Mandelbaum who refers to it as a time "where the great task of government and of leadership is going to be about taking things away from people." To quote Friedman: "We've gone from the age of government handouts to the age of citizen givebacks, from the age of companions fly free to the age of paying for each bag."
Friedman joins most people in praising the Greatest Generation for bequeathing to us the prosperity we have enjoyed, and "we" have practiced what Kurt Andersen calls "Grasshopper Generation" behavior: eating thru the prosperity we were given like hungry locusts.
What "we" (really the children and grandchildren of that Greatest Generation) do about that is up to us. Can we do more with less? If any country can, it's us.
But, we would suggest that putting an observation deck on a space station for $400 million is probably a place to start. We didn't need that (or the expensive trip up there to do it). Say "no" to NASA. We're not picking on NASA but it's a good example.
Friedman does an excellent job of describing his impression of President Obama's problem: he has shown up just as we have moved from the fat years to the lean years - that's an excellent historical perspective. What most baffles Friedman about Mr. Obama is how a politician who speaks so well, and is trying to do so many worthy things, can't come up with a clear, simple, repeatable narrative to explain his politics when it's so obvious.
As we have said many time here, and in our classes, we don't stand for any political ideology (we are not Republican, Democrat or Independent). We are about business and the infrastructure that surrounds it. Friedman is about the sociology of our world and his description of what has happened to President Obama is a classic, and it follows:
"Alas, though, instead of making nation-building in America his overarching narrative and then fitting health care, energy, education reform, infrastructure, competitiveness and deficit reduction under that rubric, the President pursued each separately. This made each initiative appear to be just some stand-alone liberal obsession to pay off a Democratic constituency - not an essential ingredient of a nation-building strategy - and, therefore, they have proved to be easily obstructed, picked off or deligitimized by opponents and lobbyists."
So, advocating the right things the wrong way doesn't get you the votes you need, as they would say on the street. So, the President has to persuade the country to invest in the future and pay for the past at the same time. Friedman doesn't spare the Republican party either, calling them "irresponsible" for their refusal to take any responsibility for the deficit and lack of enthusiasm for raising taxes (where that is needed).
Lastly, in describing the sociology of what we are facing, Friedman goes on to say that "We simply do not have another presidency to waste ... If Obama fails, we all fail."
Friedman is right.
When Thomas L. Friedman writes something, we tend to notice. We're not sure that there are that many people who own 3 Pulitzer Prizes (perhaps, nobody else) - that's right: "THREE"! Whether he writes about the Middle East or economics, he's clear and he makes a point. We don't always agree with him but we listen. His article from a few years back predicting Russian economic and political "growth" (or lack of same) based on where "oil prices" go is an absolute classic.
This time, Friedman is telling us that the "Fat Lady Has Sung". His article starts by telling us about Tracy, California where they now have to "pay" every time they call 911! In Tracy, you get "financial options" for this: residents can pay a $48 "voluntary fee" for the year (so one can call 911 as many times as one wants to), OR, one will be charged $300 for a single 911 call.
So, we have met the future, and Friedman calls it: "The Lean Years". Just as California was ahead of the rest of the U.S. in many progressive areas since WW II, it would appear that California is now leading us into a bleaker economic future.
Friedman gets a little help in describing this new era from Johns Hopkins University foreign policy expert Michael Mandelbaum who refers to it as a time "where the great task of government and of leadership is going to be about taking things away from people." To quote Friedman: "We've gone from the age of government handouts to the age of citizen givebacks, from the age of companions fly free to the age of paying for each bag."
Friedman joins most people in praising the Greatest Generation for bequeathing to us the prosperity we have enjoyed, and "we" have practiced what Kurt Andersen calls "Grasshopper Generation" behavior: eating thru the prosperity we were given like hungry locusts.
What "we" (really the children and grandchildren of that Greatest Generation) do about that is up to us. Can we do more with less? If any country can, it's us.
But, we would suggest that putting an observation deck on a space station for $400 million is probably a place to start. We didn't need that (or the expensive trip up there to do it). Say "no" to NASA. We're not picking on NASA but it's a good example.
Friedman does an excellent job of describing his impression of President Obama's problem: he has shown up just as we have moved from the fat years to the lean years - that's an excellent historical perspective. What most baffles Friedman about Mr. Obama is how a politician who speaks so well, and is trying to do so many worthy things, can't come up with a clear, simple, repeatable narrative to explain his politics when it's so obvious.
As we have said many time here, and in our classes, we don't stand for any political ideology (we are not Republican, Democrat or Independent). We are about business and the infrastructure that surrounds it. Friedman is about the sociology of our world and his description of what has happened to President Obama is a classic, and it follows:
"Alas, though, instead of making nation-building in America his overarching narrative and then fitting health care, energy, education reform, infrastructure, competitiveness and deficit reduction under that rubric, the President pursued each separately. This made each initiative appear to be just some stand-alone liberal obsession to pay off a Democratic constituency - not an essential ingredient of a nation-building strategy - and, therefore, they have proved to be easily obstructed, picked off or deligitimized by opponents and lobbyists."
So, advocating the right things the wrong way doesn't get you the votes you need, as they would say on the street. So, the President has to persuade the country to invest in the future and pay for the past at the same time. Friedman doesn't spare the Republican party either, calling them "irresponsible" for their refusal to take any responsibility for the deficit and lack of enthusiasm for raising taxes (where that is needed).
Lastly, in describing the sociology of what we are facing, Friedman goes on to say that "We simply do not have another presidency to waste ... If Obama fails, we all fail."
Friedman is right.
Monday, February 22, 2010
NY Times Climate Change Editorial
http://www.nytimes.com/2010/02/22/opinion/22mon1.html?th&emc=th
Today's Times editorial on climate is powerful and direct. Anyone who reads it should respect it. Sincere people who resign from a position like Yvo de Boer's (chief steward of the United Nations' climate change negotiations) after 4 years of effort to try to get some progress on global warming mitigation, deserves attention and support. We would hypothesize here that the term "global warming" causes such negative reaction that, perhaps something else needs to be substituted (climate mitigation?).
Nobody wants pollution. For those of you who have discussed this issue with me, you know that nuclear power, wind power and other fresh alternatives are all sources of energy that we favor. Twenty years ago, we had a right to worry about nuclear - now we don't.
Mr. de Boer was frustrated by Copenhagen. The Senate is stalemated over a climate change bill. There will evidently be further talks on climate in December in Cancun. But, to what end?
The United Nations process on climate is cumbersome and slow but we feel that is a function of the sheer size of the process - as we have said in the past, you're not going to get 193 nations to agree on what time it is. As we predicted, Copenhagen would accomplish nothing (90 countries representing 83% of the world's greenhouse gases).
However; the approach mentioned by the Times that involves the "Major Economies Forum..." or the Group of 20 has a chance because there are "reasonable numbers" of countries/opinions on what to do.
The Times is right: the ultimate goal is a safe planet. That goal can be best achieved by aggressive national strategies to reduce emissions (this, of course, does not mean that we agree with our own EPA and their quest to get the carbon - we put "jobs" ahead of carbon).
As the Times points out, the United States has no national strategy. We could use one!
Today's Times editorial on climate is powerful and direct. Anyone who reads it should respect it. Sincere people who resign from a position like Yvo de Boer's (chief steward of the United Nations' climate change negotiations) after 4 years of effort to try to get some progress on global warming mitigation, deserves attention and support. We would hypothesize here that the term "global warming" causes such negative reaction that, perhaps something else needs to be substituted (climate mitigation?).
Nobody wants pollution. For those of you who have discussed this issue with me, you know that nuclear power, wind power and other fresh alternatives are all sources of energy that we favor. Twenty years ago, we had a right to worry about nuclear - now we don't.
Mr. de Boer was frustrated by Copenhagen. The Senate is stalemated over a climate change bill. There will evidently be further talks on climate in December in Cancun. But, to what end?
The United Nations process on climate is cumbersome and slow but we feel that is a function of the sheer size of the process - as we have said in the past, you're not going to get 193 nations to agree on what time it is. As we predicted, Copenhagen would accomplish nothing (90 countries representing 83% of the world's greenhouse gases).
However; the approach mentioned by the Times that involves the "Major Economies Forum..." or the Group of 20 has a chance because there are "reasonable numbers" of countries/opinions on what to do.
The Times is right: the ultimate goal is a safe planet. That goal can be best achieved by aggressive national strategies to reduce emissions (this, of course, does not mean that we agree with our own EPA and their quest to get the carbon - we put "jobs" ahead of carbon).
As the Times points out, the United States has no national strategy. We could use one!
A Bad Day for Global Warming
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/19/AR2010021903046.html?referrer=emailarticle
George Will continues his efforts to be reasonable about "global warming" as he chronicles a bad few months for the global warmers.
First, he chronicles the voice of Rajendra Pachauri, chairman of the United Nations' Intergovernmental Panel on Climate Change (IPCC) who shared the 2007 Nobel Peace Prize, denouncing persons skeptical about global warming: "They are the same people who deny the link between smoking and cancer. They are people who say that asbestos is as good as talcum powder - and I hope they put it on their faces every day."
Here, I would like to quote George Will: "Do not judge him as harshly as he speaks of others. Nothing prepared him for the unnerving horror of encountering disagreement."
As Will says, the global warming industry is having a bad few months, a period which began last November 19 with the publication of e-mails indicating attempts by scientists to massage data and suppress dissent in order to strengthen "evidence" of global warming. So, what happened to the broad and deep and unassailable consensus?
Then we have "The World's Last - We Really, Really Mean It - Chance" : the Copenhagen Climate Change Summit which, we believe, created more of a "carbon footprint" than it mitigated. As Will says, those at Copenhagen were "... trying to stampede the world into a spasm of prophylactic statism."
After that, we have the various US climate initiatives that are coming apart: the Western Climate Initiative, the U.S. Climate Action Partnership (USCAP), etc.
This leaves us with the following - wait for it - global warming "skeptics" have erred! AHA! They have said there has been no statistically significant warming for 10 years (Alas, that has certainly been our perspective.). Wrong! Phil Jones, former director of Britain's Climate Research Unit (source of the leaked documents), admits it has been 15 years!!
Now, who is Todd Stern? Todd is America's special envoy for climate change - we didn't realize there was such a position. "Todd" has warned that those interested in "... undermining action on climate change will seize on whatever tidbit they can find." So, a "tidbit" would be that there has been NO WARMING for the past 15 years? So, the absence of any "warming" still confirms that there is warming.
We've actually heard that the blizzard in DC (and the 12.5" in 24 hours in Dallas) helps to confirm "warming". George Will has heard that too. Our opinion is the same as his: it is just a little bit of a stretch to advocate that "any" aberrant weather is caused by global warming. How about, it was just aberrant weather? What a concept!
George Will continues his efforts to be reasonable about "global warming" as he chronicles a bad few months for the global warmers.
First, he chronicles the voice of Rajendra Pachauri, chairman of the United Nations' Intergovernmental Panel on Climate Change (IPCC) who shared the 2007 Nobel Peace Prize, denouncing persons skeptical about global warming: "They are the same people who deny the link between smoking and cancer. They are people who say that asbestos is as good as talcum powder - and I hope they put it on their faces every day."
Here, I would like to quote George Will: "Do not judge him as harshly as he speaks of others. Nothing prepared him for the unnerving horror of encountering disagreement."
As Will says, the global warming industry is having a bad few months, a period which began last November 19 with the publication of e-mails indicating attempts by scientists to massage data and suppress dissent in order to strengthen "evidence" of global warming. So, what happened to the broad and deep and unassailable consensus?
Then we have "The World's Last - We Really, Really Mean It - Chance" : the Copenhagen Climate Change Summit which, we believe, created more of a "carbon footprint" than it mitigated. As Will says, those at Copenhagen were "... trying to stampede the world into a spasm of prophylactic statism."
After that, we have the various US climate initiatives that are coming apart: the Western Climate Initiative, the U.S. Climate Action Partnership (USCAP), etc.
This leaves us with the following - wait for it - global warming "skeptics" have erred! AHA! They have said there has been no statistically significant warming for 10 years (Alas, that has certainly been our perspective.). Wrong! Phil Jones, former director of Britain's Climate Research Unit (source of the leaked documents), admits it has been 15 years!!
Now, who is Todd Stern? Todd is America's special envoy for climate change - we didn't realize there was such a position. "Todd" has warned that those interested in "... undermining action on climate change will seize on whatever tidbit they can find." So, a "tidbit" would be that there has been NO WARMING for the past 15 years? So, the absence of any "warming" still confirms that there is warming.
We've actually heard that the blizzard in DC (and the 12.5" in 24 hours in Dallas) helps to confirm "warming". George Will has heard that too. Our opinion is the same as his: it is just a little bit of a stretch to advocate that "any" aberrant weather is caused by global warming. How about, it was just aberrant weather? What a concept!
Saturday, February 20, 2010
Taking the 'R' out of BRIC
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2430
Over recent years, several economists have put forth the thought that the original Goldman Sachs acronym "BRIC" might need to be shortened to "BIC" since Russia was having difficulty keeping up with the consistent GDP growth of Brazil, China and India. This, of course was exacerbated by the worldwide financial crisis.
The article we've attached from K@W does an excellent job of describing how the economic downturn exposed Russia's weaknesses.
It is sad, though not unexpected, that a concept created by Goldman in 2003 to describe the best places for companies to invest has been turned into a concept that is used "politically". Russia's effort to do so is described in the article but the descriptions of Russia's economy and oil resources provide a perspective on why Russia may no longer qualify for the 'R' in BRIC.
Goldman, in 2005, put forth a follow up concept called the "N 11" - or Next 11 - group of BRIC aspirants, including Indonesia, Egypt, Mexico, the Phillipines and Turkey. And, Goldman may have a point with these aspiring BRICs but the original concept has been weakened by Russia's performance. Russia's economy was the worst among BRIC economies by a large measure: for the whole of 2009, its real GDP will have declined at least 8% (the numbers are in as of now but they have to be refined). Brazil dropped too, but dropped less and is coming back quickly in 2010. China and India both enjoyed GDP growth in 2009 of 8.3% and 6.5% respectively.
Russia is the world's largest producer of oil and gas but, for Russia, this simply creates a larger area of economic risk. Any weakness in that sector (read "oil price") can't be made up for in other parts of its economy. The bursting of the oil price bubble in 2008 curtailed export revenues and made the country's foreign debt obligation loom much larger than when oil prices were headed toward $150 per barrel. The consensus of most economic and political experts is that "... a combination of corruption, poor governance, government interference in the private sector and insufficient investment in the oil and gas sector (plus the erosion of civil liberties) will continue to stymie growth.
More important: "Even if there were a will to change, solutions are not obvious." This per Philip Nichols, professor of legal studies and business ethics at Wharton.
So, where is this all going? Well, hard as this is to believe, Russia had the humiliating distinction of joining the Ukraine and Zimbabwe as the only countries in 2009 that suffered from both double-digit output decline AND double-digit inflation!
Since the fall of communism 20 years ago, the Russian business landscape has "... gone thru a turbulent transition that is still nowhere near complete." There could be more darkness on the horizon with the increasing rate of non-performing loans on Russian bank's balance sheets.
Oil prices have saved and disguised Russia's economy in the past. Even if there were another "spike", if Russia can't do well with oil prices pushing $80 (at this writing), it will get harder and harder for Russia to achieve a balanced GDP and "real" BRIC status. Take the "ifs" out of the prior sentence and Russia has no chance.
Over recent years, several economists have put forth the thought that the original Goldman Sachs acronym "BRIC" might need to be shortened to "BIC" since Russia was having difficulty keeping up with the consistent GDP growth of Brazil, China and India. This, of course was exacerbated by the worldwide financial crisis.
The article we've attached from K@W does an excellent job of describing how the economic downturn exposed Russia's weaknesses.
It is sad, though not unexpected, that a concept created by Goldman in 2003 to describe the best places for companies to invest has been turned into a concept that is used "politically". Russia's effort to do so is described in the article but the descriptions of Russia's economy and oil resources provide a perspective on why Russia may no longer qualify for the 'R' in BRIC.
Goldman, in 2005, put forth a follow up concept called the "N 11" - or Next 11 - group of BRIC aspirants, including Indonesia, Egypt, Mexico, the Phillipines and Turkey. And, Goldman may have a point with these aspiring BRICs but the original concept has been weakened by Russia's performance. Russia's economy was the worst among BRIC economies by a large measure: for the whole of 2009, its real GDP will have declined at least 8% (the numbers are in as of now but they have to be refined). Brazil dropped too, but dropped less and is coming back quickly in 2010. China and India both enjoyed GDP growth in 2009 of 8.3% and 6.5% respectively.
Russia is the world's largest producer of oil and gas but, for Russia, this simply creates a larger area of economic risk. Any weakness in that sector (read "oil price") can't be made up for in other parts of its economy. The bursting of the oil price bubble in 2008 curtailed export revenues and made the country's foreign debt obligation loom much larger than when oil prices were headed toward $150 per barrel. The consensus of most economic and political experts is that "... a combination of corruption, poor governance, government interference in the private sector and insufficient investment in the oil and gas sector (plus the erosion of civil liberties) will continue to stymie growth.
More important: "Even if there were a will to change, solutions are not obvious." This per Philip Nichols, professor of legal studies and business ethics at Wharton.
So, where is this all going? Well, hard as this is to believe, Russia had the humiliating distinction of joining the Ukraine and Zimbabwe as the only countries in 2009 that suffered from both double-digit output decline AND double-digit inflation!
Since the fall of communism 20 years ago, the Russian business landscape has "... gone thru a turbulent transition that is still nowhere near complete." There could be more darkness on the horizon with the increasing rate of non-performing loans on Russian bank's balance sheets.
Oil prices have saved and disguised Russia's economy in the past. Even if there were another "spike", if Russia can't do well with oil prices pushing $80 (at this writing), it will get harder and harder for Russia to achieve a balanced GDP and "real" BRIC status. Take the "ifs" out of the prior sentence and Russia has no chance.
Thursday, February 4, 2010
Financing Our US Future & NASA
http://www.nytimes.com/2010/02/04/opinion/04collins.html?emc=eta1
What would I do without people like Gail Collins at the New York Times (article attached) to explain how our government is putting together the new budget for the coming year(s). I read earlier this week that the new budget is $3.8 Trillion and I was pleased to see that $100 Billion was installed for "jobs" because, as Warren Buffet, Paul Krugman and others have said, the original stimulus program was not enough ("we" just don't use the word "stimulus" for the new jobs program).
Collins lets us know that we should be fascinated when the White House announces it wants to cancel plans to put an American on the moon by 2020! Actually, this is a good thing because, as Collins reminds us, we did that in 1969. Many of us were around then and we remember that. Perhaps this was the new "discount" space program where we revisit old victories - like the Civil War battlefields where people "re-enact" today what went on.
Collins distinctly remembers George Bush promising to get us to "Mars" by 2020. Well, it turns out that NASA was a little off on that estimate - it would have been more like 2030. The 2020 date, it turns out, was a "moon visitation" which is the first step on the trip to Mars. Please correct me if I'm wrong, but 40 years later we had a "goal" to be able to get to the moon in 10 years so that we can go to Mars. What takes 10 years? Did somebody misplace the technology from 1969?
Perhaps all those shuttle flights which were very expensive and tragic were wasted. We have no interest here in finding out if one can grow tomatoes in the stratosphere while flying around the earth when people are starving and jobless. But, for some reason, we did that and, 40 years later, we have to wait 10 years to go to the moon on our way to Mars? Incidentally, Mars why?
So, the White House wants to save $3.4 billion a year with a "game-changing/paradigm-shifting space program that does not require any moon landings. The new goal is a little hazy. But it involves ... going farther, faster to interesting destinations as we learn things." So, the new cheaper program will be "... bold in a less expensive way."
Collins makes an excellent point that a federal program is next to impossible to cut because there is usually somebody who cares much more about keeping it than the White House does about making it go away.
Overall, we're hopeful that the $100 Billion for jobs is spent rapidly and effectively because we don't want it to go away.
What would I do without people like Gail Collins at the New York Times (article attached) to explain how our government is putting together the new budget for the coming year(s). I read earlier this week that the new budget is $3.8 Trillion and I was pleased to see that $100 Billion was installed for "jobs" because, as Warren Buffet, Paul Krugman and others have said, the original stimulus program was not enough ("we" just don't use the word "stimulus" for the new jobs program).
Collins lets us know that we should be fascinated when the White House announces it wants to cancel plans to put an American on the moon by 2020! Actually, this is a good thing because, as Collins reminds us, we did that in 1969. Many of us were around then and we remember that. Perhaps this was the new "discount" space program where we revisit old victories - like the Civil War battlefields where people "re-enact" today what went on.
Collins distinctly remembers George Bush promising to get us to "Mars" by 2020. Well, it turns out that NASA was a little off on that estimate - it would have been more like 2030. The 2020 date, it turns out, was a "moon visitation" which is the first step on the trip to Mars. Please correct me if I'm wrong, but 40 years later we had a "goal" to be able to get to the moon in 10 years so that we can go to Mars. What takes 10 years? Did somebody misplace the technology from 1969?
Perhaps all those shuttle flights which were very expensive and tragic were wasted. We have no interest here in finding out if one can grow tomatoes in the stratosphere while flying around the earth when people are starving and jobless. But, for some reason, we did that and, 40 years later, we have to wait 10 years to go to the moon on our way to Mars? Incidentally, Mars why?
So, the White House wants to save $3.4 billion a year with a "game-changing/paradigm-shifting space program that does not require any moon landings. The new goal is a little hazy. But it involves ... going farther, faster to interesting destinations as we learn things." So, the new cheaper program will be "... bold in a less expensive way."
Collins makes an excellent point that a federal program is next to impossible to cut because there is usually somebody who cares much more about keeping it than the White House does about making it go away.
Overall, we're hopeful that the $100 Billion for jobs is spent rapidly and effectively because we don't want it to go away.
Monday, February 1, 2010
Joseph Stiglitz
http://www.nytimes.com/2010/01/31/magazine/31fob-q4-t.html?emc=eta1
Before Paul Krugman won his Nobel Prize in Economics in 2008, the prior Economics Nobel was won by Joseph Stiglitz in 2001. Stiglitz, a professor at Columbia University, is being interviewed in a refreshingly short dialogue attached by the NY Times about his new book: "Freefall: America, Free Markets and the Sinking of the World Economy."
He is referred to as a leading critic of deregulation which he believes allowed the banks to wreck the economy. He refers to Ben Bernanke and Larry Summers as people involved in the mistakes of the past: Bernanke not wanting to admit to having made bad regulatory decisions. Larry Summers was, of course at the Treasury Department when the Robert Rubin team led the charge on repealing regulations that stood in the way of the Citigroup debacle.
Stiglitz is obviously not trying to throw bricks and sees Paul Volcker as a steadying presence on the President's economic team. Volker tells things as they are: "He is the one who said that if banks are too big to fail, then they are too big to be managed, they're to complex, there is no person who can really manage anything of that complexity."
Also note the reference to Paul Krugman in the interview. Also note how Dr. Stiglitz handles his telephone messages.
It is a good article and appropriately short, as is this "post"!
Before Paul Krugman won his Nobel Prize in Economics in 2008, the prior Economics Nobel was won by Joseph Stiglitz in 2001. Stiglitz, a professor at Columbia University, is being interviewed in a refreshingly short dialogue attached by the NY Times about his new book: "Freefall: America, Free Markets and the Sinking of the World Economy."
He is referred to as a leading critic of deregulation which he believes allowed the banks to wreck the economy. He refers to Ben Bernanke and Larry Summers as people involved in the mistakes of the past: Bernanke not wanting to admit to having made bad regulatory decisions. Larry Summers was, of course at the Treasury Department when the Robert Rubin team led the charge on repealing regulations that stood in the way of the Citigroup debacle.
Stiglitz is obviously not trying to throw bricks and sees Paul Volcker as a steadying presence on the President's economic team. Volker tells things as they are: "He is the one who said that if banks are too big to fail, then they are too big to be managed, they're to complex, there is no person who can really manage anything of that complexity."
Also note the reference to Paul Krugman in the interview. Also note how Dr. Stiglitz handles his telephone messages.
It is a good article and appropriately short, as is this "post"!
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