http://online.wsj.com/article_email/SB10001424052748704541004574599981936018834-lMyQjAxMDA5MDEwNjExNDYyWj.html
As Santa gets his sleigh ready for his worldwide efforts this week, we want to wish our regular readers the happiest of holiday seasons! For those who celebrate as we do: Merry Christmas and Happy New Year!
Looking down at Earth from Santa's galactic perspective, Howard Bloom helps with a little Earth history in order to bring us some current perspective on what is and is not relevant about the two week meeting that just took place in Copenhagen. Of course, the short answer is that there is "nothing" relevant that took place in Copenhagen but we know those involved were sincere people so we'll be sincere too.
And, we'll set aside what we thought we heard was $100 billion offered by a representative of the U.S. (could that have been Hillary Clinton - perhaps she was confused about the asking price of her next book deal, but I digress) as good faith money for developed countries to offer developing countries to help move their climate efforts forward. It would appear that throwing money at the problem is seen as a way of showing sincerity.
Bloom's perspective is that we've been the beneficiaries of a stroke of luck: "In the over two million years during which we climbed from stone-tool wielding Homo erectus with sloping brows to high-foreheaded Homo urbanis ... we underwent 60 glaciations, 60 ice ages. And in the 120,000 years since we emerged in our current physiological shape as Homo sapiens, we've lived through 20 sudden global warmings. In most of those, temperatures have shot up by as much as 18 degrees within a mere 20 years."
All this took place without Al Gore.
Bloom defines our "stroke of luck" as the sheets of ice we lived with "peeling back some 12,000 years ago" leaving today's planet. But, this "weather standstill", as Bloom refers to it, has held on for an "abnormally long amount of time."
So, as our planet "wobbles" thru its solar system orbit, it produces weather alterations we cycle thru every 22,000, 41,000, and 100,000 years. This is called the Millankovich cycle, named for the Serbian engineer and geophysicist who discovered it.
In addition, the sun is going thru a cycle: as a result of maturing, the sun is 43% warmer today than it was when the Earth was first formed 4.5 billion years ago.
Bottom line: "Weather changes and the occasional meteor have tossed this planet through roughly 142 mass extinctions since life began 3.85 billion years ago. That's an average of one mass extinction every 26.5 million years. Where did these die-offs come from? Nature. There were no human capitalists, industrialists or cultures of consumerism to blame."
As Bloom says, we don't want to be the victims of one of these "extinctions", but we do need to prepare for more than just the changes "we" think we make. Bloom calls it preparing for "fire and ice." The big stuff is not caused by your neighbor's SUV.
The next time our global temperatures go up 18 degrees in 20 years, it won't be because we didn't convert to electric cars fast enough ...
Happy Holidays!
Monday, December 21, 2009
Friday, December 18, 2009
Health Care
http://www.nytimes.com/2009/12/18/opinion/18krugman.html?emc=eta1
Once again, we find ourselves in good company with Paul Krugman whose post today, entitled "Pass the Bill", is completely in line with our thoughts!
As we have said in other prior posts, the current Senate bill would do two things: first, it would prohibit discrimination by insurance companies on the basis of medical condition or history (no denial of health insurance based on a pre-existing condition), and second, your insurance can't get canceled because you got sick, or you got too sick. Krugman includes the second as part of the first but we feel it deserves an appropriate spotlight. Krugman designates the second most important thing (and our "third") as the bill would provide substantial financial aid to those who don't get insurance through their employers, as well as tax breaks for small employers who do provide insurance.
We don't care what else is in the bill because, pragmatically, we know that some senators need some things in order to make it a "win" for them.
All of this would be paid for in large part by the first serious effort to rein in rising health care costs.
The result would be, as Krugman says, "... a huge increase in the availability and affordability of health insurance, WITH MORE THAN 30 MILLION Americans gaining coverage, and premiums for lower-income and lower-middle-income Americans falling dramatically."
Because he has studied this issue, Krugman assures that the history of social insurance programs is that the coverage gets better and more comprehensive as the years go by. While we hoped for that, it is nice to see someone of Krugman's stature reassures us.
While nobody will be completely happy with what's on the table, isn't that how politics (or labor negotiations) works? We like Krugman's quote, "... rejecting an imperfect deal in the hope of eventually getting something better is a recipe for getting nothing at all."
So, let's pass the bill and take note of those senators who sought to block it. Those senators should be easy to run against!
Once again, we find ourselves in good company with Paul Krugman whose post today, entitled "Pass the Bill", is completely in line with our thoughts!
As we have said in other prior posts, the current Senate bill would do two things: first, it would prohibit discrimination by insurance companies on the basis of medical condition or history (no denial of health insurance based on a pre-existing condition), and second, your insurance can't get canceled because you got sick, or you got too sick. Krugman includes the second as part of the first but we feel it deserves an appropriate spotlight. Krugman designates the second most important thing (and our "third") as the bill would provide substantial financial aid to those who don't get insurance through their employers, as well as tax breaks for small employers who do provide insurance.
We don't care what else is in the bill because, pragmatically, we know that some senators need some things in order to make it a "win" for them.
All of this would be paid for in large part by the first serious effort to rein in rising health care costs.
The result would be, as Krugman says, "... a huge increase in the availability and affordability of health insurance, WITH MORE THAN 30 MILLION Americans gaining coverage, and premiums for lower-income and lower-middle-income Americans falling dramatically."
Because he has studied this issue, Krugman assures that the history of social insurance programs is that the coverage gets better and more comprehensive as the years go by. While we hoped for that, it is nice to see someone of Krugman's stature reassures us.
While nobody will be completely happy with what's on the table, isn't that how politics (or labor negotiations) works? We like Krugman's quote, "... rejecting an imperfect deal in the hope of eventually getting something better is a recipe for getting nothing at all."
So, let's pass the bill and take note of those senators who sought to block it. Those senators should be easy to run against!
Tuesday, December 15, 2009
Copenhagen Results
http://online.wsj.com/article_email/SB10001424052748704517504574589952331068322-lMyQjAxMDA5MDEwNTExNDUyWj.html
We haven't posted on "Climategate" or the "Copenhagen Collapse" in at least two weeks so we feel remiss. Today we received a very nice note from someone and they reminded me about what's not going on over there. By "over there", we mean the world climate conference taking place over this two week period in Copenhagen (the conference is now in its second week). Coincidentally, we heard an interview with Bjorn Lomborg (who is at the conference) on National Public Radio this morning. Lomborg is the "enemy" of the global warming police. He is also the Director of the Copenhagen Consensus Center, a think tank, and author of "Cool It: The Skeptical Environmentalists Guide to Global Warming" (Knopf, 2007). Among other things, Lomborg had the novel idea last year of putting together several Nobel Prize winning economists and other experts to prioritize what should be done to "fix" the earth. His approach: we give you $10 billion, $50 billion, $75 billion - what is the most important thing to do for the 6.7 billion (plus or minus) people who live on the planet today? And, his group came up with a ranking of those things.
Where did "global warming" come in on the list? Roughly, 30th. Why? There's a simple answer and a way for the climate fanatics to coexist with more rational souls. Continued economic growth will keep people, and especially children, from starving. Stealing money meant for that in order to move carbon capture up the list of important things to do, will increase starvation and disease. Lomborg has a creative and relevant recommendation: radically increase spending on R&D for green energy - to 0.2% of global GDP, or $100 billion. That's 50 times more than the world spends now - but still twice as cheap as anything being considered now by the carbon posse. Wait, and, it would have a real chance of working! What a concept!
We have attached Lomborg's 12/14 "OPINION" post in the WSJ. Please refer to his calculations on, for example, the European countries' plan to divert $50 billion in development aid budgets to repackage them as climate-change assistance. Look at the trade off between what that buys in climate change and what the world loses in children that stand to starve "now" if that's done.
Today's NY Times had an editorial that indicated nothing was accomplished in the first week of Copenhagen. Nothing will be accomplished in the second week either because China and India have no interest in sacrificing economic growth because Al Gore has a "cause". Good for them!
We haven't posted on "Climategate" or the "Copenhagen Collapse" in at least two weeks so we feel remiss. Today we received a very nice note from someone and they reminded me about what's not going on over there. By "over there", we mean the world climate conference taking place over this two week period in Copenhagen (the conference is now in its second week). Coincidentally, we heard an interview with Bjorn Lomborg (who is at the conference) on National Public Radio this morning. Lomborg is the "enemy" of the global warming police. He is also the Director of the Copenhagen Consensus Center, a think tank, and author of "Cool It: The Skeptical Environmentalists Guide to Global Warming" (Knopf, 2007). Among other things, Lomborg had the novel idea last year of putting together several Nobel Prize winning economists and other experts to prioritize what should be done to "fix" the earth. His approach: we give you $10 billion, $50 billion, $75 billion - what is the most important thing to do for the 6.7 billion (plus or minus) people who live on the planet today? And, his group came up with a ranking of those things.
Where did "global warming" come in on the list? Roughly, 30th. Why? There's a simple answer and a way for the climate fanatics to coexist with more rational souls. Continued economic growth will keep people, and especially children, from starving. Stealing money meant for that in order to move carbon capture up the list of important things to do, will increase starvation and disease. Lomborg has a creative and relevant recommendation: radically increase spending on R&D for green energy - to 0.2% of global GDP, or $100 billion. That's 50 times more than the world spends now - but still twice as cheap as anything being considered now by the carbon posse. Wait, and, it would have a real chance of working! What a concept!
We have attached Lomborg's 12/14 "OPINION" post in the WSJ. Please refer to his calculations on, for example, the European countries' plan to divert $50 billion in development aid budgets to repackage them as climate-change assistance. Look at the trade off between what that buys in climate change and what the world loses in children that stand to starve "now" if that's done.
Today's NY Times had an editorial that indicated nothing was accomplished in the first week of Copenhagen. Nothing will be accomplished in the second week either because China and India have no interest in sacrificing economic growth because Al Gore has a "cause". Good for them!
Financial Regulation 2
http://online.wsj.com/article_email/SB126080843481590571-lMyQjAxMDI5NjEwNTgxMDU4Wj.html
http://roomfordebate.blogs.nytimes.com/2009/12/14/banks-real-reform-and-pitchforks/?emc=eta1
As a follow up to our most recent post, we want to add that the "Bank CEOs" yesterday pledged to push for re-regulation (WSJ attached) while they acknowledged to President Obama that their behavior was, at minimum, disingenuous and probably outright deceitful. How? The CEOs agreed that the work of their lobbyists to weaken any new financial rules was not consistent with their public support for new stronger regulations. This practice was made especially more onerous when one realizes that the lobbying involved was being paid for by the very same public that stood to be protected by the new regulations - so paying back TARP money was not just about freeing up executive pay, it was also about lobbying against the public interest with public money!
As many people have said throughout the worldwide financial crisis, any institution that is deemed "too big to fail" is: TOO BIG!
As Lawrence Summers said over the weekend, a $300 million banking industry lobbying push to "gut" financial market re-regulation is "frankly a bit rich."
Of course, the next question is how likely is the prospect of significant regulation of the banking industry from Washington? The House passed a banking regulation bill last week, and the Senate is working on its own version. The NY Times "Room for Debate" forum (attached) presents us with some opinions on the odds of significant regulation. See especially Edward Harrison who says we are unlikely to see substantive changes that will prevent another crisis in the financial arena. That sums it up.
http://roomfordebate.blogs.nytimes.com/2009/12/14/banks-real-reform-and-pitchforks/?emc=eta1
As a follow up to our most recent post, we want to add that the "Bank CEOs" yesterday pledged to push for re-regulation (WSJ attached) while they acknowledged to President Obama that their behavior was, at minimum, disingenuous and probably outright deceitful. How? The CEOs agreed that the work of their lobbyists to weaken any new financial rules was not consistent with their public support for new stronger regulations. This practice was made especially more onerous when one realizes that the lobbying involved was being paid for by the very same public that stood to be protected by the new regulations - so paying back TARP money was not just about freeing up executive pay, it was also about lobbying against the public interest with public money!
As many people have said throughout the worldwide financial crisis, any institution that is deemed "too big to fail" is: TOO BIG!
As Lawrence Summers said over the weekend, a $300 million banking industry lobbying push to "gut" financial market re-regulation is "frankly a bit rich."
Of course, the next question is how likely is the prospect of significant regulation of the banking industry from Washington? The House passed a banking regulation bill last week, and the Senate is working on its own version. The NY Times "Room for Debate" forum (attached) presents us with some opinions on the odds of significant regulation. See especially Edward Harrison who says we are unlikely to see substantive changes that will prevent another crisis in the financial arena. That sums it up.
Monday, December 14, 2009
Financial Regulation
http://www.nytimes.com/2009/12/14/opinion/14krugman.html?emc=eta1
There's an old saying from a Bob Dylan song that "Denial is not just a river in Egypt!" Krugman's post in today's NY Times (attached) refers to the subject of "denial" as it relates to financial regulation. Nothing could get me to yawn quicker than a discussion of financial regulation but the potential disaster we face if it is not properly handled can effect everyone.
It was probably logical that the more years that passed by after the Great Depression, the more pressure would mount to "deregulate" again. After all, for 40 years everything was OK. So, as Krugman points out, we deregulated with Ronald Reagan and got the savings-and-loan crisis of the 80s. That didn't seem to phase us so we went on to scrap one of the great pieces of Depression Era legislation in 1999 (Glass Steigel) so that (literally) Citicorp could merge with Travelers creating the great monstrosity: Citigroup.
And, of course, in this decade, we had Alan Greenspan admitting that he was wrong about the ability of the financial markets to police themselves (in addition to having no idea, as it was happening no less, that the sub-prime lending situation was as extensive as it was!).
With all of this as background: "...last Friday in the House of Representatives...with the meltdown caused by a runaway financial system still fresh in our minds, and the mass unemployment that meltdown caused still very much in evidence...every single Republican and 27 Democrats voted against a quite modest effort to rein in Wall Street excesses."
So, as Krugman points out, it will be up to the Democrats in the Senate to get behind financial reform. If they don't learn from the lessens of history, then we will all be condemned to repeat them. It is an old saying but one that continues to be true. As George McGovern said in the Washington Post over the weekend, Afghanistan is looking a lot like Viet Nam.
There's an old saying from a Bob Dylan song that "Denial is not just a river in Egypt!" Krugman's post in today's NY Times (attached) refers to the subject of "denial" as it relates to financial regulation. Nothing could get me to yawn quicker than a discussion of financial regulation but the potential disaster we face if it is not properly handled can effect everyone.
It was probably logical that the more years that passed by after the Great Depression, the more pressure would mount to "deregulate" again. After all, for 40 years everything was OK. So, as Krugman points out, we deregulated with Ronald Reagan and got the savings-and-loan crisis of the 80s. That didn't seem to phase us so we went on to scrap one of the great pieces of Depression Era legislation in 1999 (Glass Steigel) so that (literally) Citicorp could merge with Travelers creating the great monstrosity: Citigroup.
And, of course, in this decade, we had Alan Greenspan admitting that he was wrong about the ability of the financial markets to police themselves (in addition to having no idea, as it was happening no less, that the sub-prime lending situation was as extensive as it was!).
With all of this as background: "...last Friday in the House of Representatives...with the meltdown caused by a runaway financial system still fresh in our minds, and the mass unemployment that meltdown caused still very much in evidence...every single Republican and 27 Democrats voted against a quite modest effort to rein in Wall Street excesses."
So, as Krugman points out, it will be up to the Democrats in the Senate to get behind financial reform. If they don't learn from the lessens of history, then we will all be condemned to repeat them. It is an old saying but one that continues to be true. As George McGovern said in the Washington Post over the weekend, Afghanistan is looking a lot like Viet Nam.
Friday, December 11, 2009
Krugman on the Fed and Job Creation
http://www.nytimes.com/2009/12/11/opinion/11krugman.html?emc=eta1
When we referenced Galbraith at UT in our "Thinking Big" post on 12/9, we mentioned his back of the envelope perspective that we'd need 250,000 new jobs per month for 60 consecutive months to make up for the 7 (or8) million jobs lost (and the 15 million currently unemployed) since the recession began. Krugman raises the ante in his post today about what the Fed could or should be doing: "I don't think many people grasp just how much job creation we need to climb out of the hole we're in. You can't just look at 8 million jobs that America has lost since the recession began, because the nation needs to keep adding jobs - more than 100,000 a month - to keep up with a growing population. And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment."
Krugman continues: "How big? My back of the envelope calculation says we need to add around 18 million jobs over the next 5 years, or 300,000 jobs a month. This puts last week's employment report, which showed job losses of 'only' 11,000 in November, in perspective."
Krugman has said all along (with Warren Buffet) that the stimulus package was too small to begin with. He sees the measures proposed by President Obama earlier this week as definite "job creators" but far short of what the economy needs. That leaves the Fed. If Bernanke "believes", then his own forecasts should lead him there: the Fed's forecasts predict that unemployment will remain punishingly high for the next THREE years.
Krugman adds that a study done at the Petersen Institute, based on the prior work of Bernanke himself, strongly suggests that the Fed should expand credit by buying a further 2 trillion in assets. Do we think Bernanke knows that?
In the strongest words I've seen Krugman use, "But there's also, I believe, a question of priorities. The Fed sprang into action when faced with the prospect of wrecked banks; it doesn't seem equally concerned about the prospect of wrecked lives."
Aside from the fact that we join more people in the world reading Krugman's blog than any other (Thomas L. Friedman is #2) just because we are interested, his "posts" can cause the entire world of finance to take note (this would include Bernanke).
So, Krugman's last words from today's post urge the Fed to lose its complacency and start lending a hand to job creation. There is no question he was "heard" - now lets see what happens.
When we referenced Galbraith at UT in our "Thinking Big" post on 12/9, we mentioned his back of the envelope perspective that we'd need 250,000 new jobs per month for 60 consecutive months to make up for the 7 (or8) million jobs lost (and the 15 million currently unemployed) since the recession began. Krugman raises the ante in his post today about what the Fed could or should be doing: "I don't think many people grasp just how much job creation we need to climb out of the hole we're in. You can't just look at 8 million jobs that America has lost since the recession began, because the nation needs to keep adding jobs - more than 100,000 a month - to keep up with a growing population. And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment."
Krugman continues: "How big? My back of the envelope calculation says we need to add around 18 million jobs over the next 5 years, or 300,000 jobs a month. This puts last week's employment report, which showed job losses of 'only' 11,000 in November, in perspective."
Krugman has said all along (with Warren Buffet) that the stimulus package was too small to begin with. He sees the measures proposed by President Obama earlier this week as definite "job creators" but far short of what the economy needs. That leaves the Fed. If Bernanke "believes", then his own forecasts should lead him there: the Fed's forecasts predict that unemployment will remain punishingly high for the next THREE years.
Krugman adds that a study done at the Petersen Institute, based on the prior work of Bernanke himself, strongly suggests that the Fed should expand credit by buying a further 2 trillion in assets. Do we think Bernanke knows that?
In the strongest words I've seen Krugman use, "But there's also, I believe, a question of priorities. The Fed sprang into action when faced with the prospect of wrecked banks; it doesn't seem equally concerned about the prospect of wrecked lives."
Aside from the fact that we join more people in the world reading Krugman's blog than any other (Thomas L. Friedman is #2) just because we are interested, his "posts" can cause the entire world of finance to take note (this would include Bernanke).
So, Krugman's last words from today's post urge the Fed to lose its complacency and start lending a hand to job creation. There is no question he was "heard" - now lets see what happens.
Thursday, December 10, 2009
Conversions and Economic Recovery
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2396
Knowledge@Wharton published an article yesterday that summarizes their discussions with a few professors, economists and company bosses in a range of industries on which economic indicators they plan to watch during the final quarter of 2009 and what they are waiting to see in 2010 that would convince them the economy is turning around. On the macro side, from retail to real estate, finance to factories, the central theme was "EMPLOYMENT". Retailers linked it to consumer confidence, real estate watchers to office space, bankers to loan losses, and manufacturers to product demand.
If we follow the logic of Susan Wachter (a Wharton real estate professor), high unemployment will persist thru 2010, impacting the real estate market. Now, although the residential real estate market is turning around, the commercial real estate market is the "next shoe to drop", and that isn't going to turn around until employment does. To quote Wachter: "Commercial is a lagging indicator, and it follows employment. Employment itself is a lagging indicator. Probably six months after we see employment improving we'll see commercial improving, and we won't see employment changing in 2010."
In business generally, one number we always tried to keep low was employee turnover. Of course, management accomplishes that with progressive employee relations policies that cause company loyalty and innovative thinking. However; low turnover can be an indicator of potential problems: as Arkadi Kuhlmann, president and CEO of ING Direct, pointed out to the K@W people, his company's annual turnover rate is usually about 18%. For the past year, it's been about 3%. Normally, 3% is great, but in this case it means that there aren't any jobs available out there. Now, Mr. Kuhlmann has other problems if his "normal" turnover rate is 18% - somebody calculate how long it takes his company to turn over 100% of it's population at 18% compounded - but the overall point is valid.
As we pointed out in a prior post, and K@W echoes, November's official numbers brought hope for an economic thaw. But, "jobs" are a lingering concern.
During the holiday season, the retail industry will be watching comparable store sales to see if shoppers spend more than they did in the same period last year. Retailers will also be watching "conversions": that is, how many shoppers who walk into a store actually buy something instead of just looking around.
So, during the holiday season, we have to get people into the malls, then get them into the stores, and then get them to "convert"! This is modern economics in America!
Knowledge@Wharton published an article yesterday that summarizes their discussions with a few professors, economists and company bosses in a range of industries on which economic indicators they plan to watch during the final quarter of 2009 and what they are waiting to see in 2010 that would convince them the economy is turning around. On the macro side, from retail to real estate, finance to factories, the central theme was "EMPLOYMENT". Retailers linked it to consumer confidence, real estate watchers to office space, bankers to loan losses, and manufacturers to product demand.
If we follow the logic of Susan Wachter (a Wharton real estate professor), high unemployment will persist thru 2010, impacting the real estate market. Now, although the residential real estate market is turning around, the commercial real estate market is the "next shoe to drop", and that isn't going to turn around until employment does. To quote Wachter: "Commercial is a lagging indicator, and it follows employment. Employment itself is a lagging indicator. Probably six months after we see employment improving we'll see commercial improving, and we won't see employment changing in 2010."
In business generally, one number we always tried to keep low was employee turnover. Of course, management accomplishes that with progressive employee relations policies that cause company loyalty and innovative thinking. However; low turnover can be an indicator of potential problems: as Arkadi Kuhlmann, president and CEO of ING Direct, pointed out to the K@W people, his company's annual turnover rate is usually about 18%. For the past year, it's been about 3%. Normally, 3% is great, but in this case it means that there aren't any jobs available out there. Now, Mr. Kuhlmann has other problems if his "normal" turnover rate is 18% - somebody calculate how long it takes his company to turn over 100% of it's population at 18% compounded - but the overall point is valid.
As we pointed out in a prior post, and K@W echoes, November's official numbers brought hope for an economic thaw. But, "jobs" are a lingering concern.
During the holiday season, the retail industry will be watching comparable store sales to see if shoppers spend more than they did in the same period last year. Retailers will also be watching "conversions": that is, how many shoppers who walk into a store actually buy something instead of just looking around.
So, during the holiday season, we have to get people into the malls, then get them into the stores, and then get them to "convert"! This is modern economics in America!
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