International Affairs: March 2013 Archives
The Economist has long article explaining that the climate may be much less sensitive to carbon emissions than previously thought.
OVER the past 15 years air temperatures at the Earth's surface have been flat while greenhouse-gas emissions have continued to soar. The world added roughly 100 billion tonnes of carbon to the atmosphere between 2000 and 2010. That is about a quarter of all the CO₂ put there by humanity since 1750. And yet, as James Hansen, the head of NASA's Goddard Institute for Space Studies, observes, "the five-year mean global temperature has been flat for a decade."Temperatures fluctuate over short periods, but this lack of new warming is a surprise. Ed Hawkins, of the University of Reading, in Britain, points out that surface temperatures since 2005 are already at the low end of the range of projections derived from 20 climate models (see chart 1). If they remain flat, they will fall outside the models' range within a few years.
This is great news. Civilization has spent trillons of dollars on carbon emission reduction and climate mitigation, and this expense has been a huge drain on the global economy. If climate change isn't as big a worry as previously thought then we can eliminate a lot of these policies and expenses.
This news isn't a surprise to any software engineers who took the time to look at the climate modeling code that was leaked back in 2009. The software models were garbage, so of course they started to diverge from reality.
(HT: Power Line.)
Everyone in the world with a bank account broke into a cold sweat when they learned about the EU and the Cypriot government raiding private bank accounts to bailout the banks. That could never happen here, right? Well, what's happening in the United States is much more subtle and also much more sinister. Thomas Sowell describes how inflation is worse than stealing bank deposits.
Does that mean that Americans' money is safe in banks? Yes and no. The U.S. government is very unlikely to just seize money wholesale from people's bank accounts, as is being done in Cyprus. But does that mean that your life savings are safe? No. There are more sophisticated ways for governments to take what you have put aside for yourself and use it for whatever politicians feel like using it for. If they do it slowly but steadily, they can take a big chunk of what you have sacrificed for years to save before you are even aware, much less alarmed.That is in fact already happening. When officials of the Federal Reserve System speak in vague and lofty terms about "quantitative easing," what they are talking about is creating more money out of thin air, as the Federal Reserve is authorized to do -- and has been doing in recent years, to the tune of tens of billions of dollars a month.
When the federal government spends far beyond the tax revenues it has, it gets the extra money by selling bonds. The Federal Reserve has become the biggest buyer of these bonds, since it costs them nothing to create more money.
This new money buys just as much as the money you sacrificed to save for years. More money in circulation, without a corresponding increase in output, means rising prices. Although the numbers in your bank book may remain the same, part of the purchasing power of your money is transferred to the government. Is that really different from what Cyprus has done?
The Fed has been printing money at a breakneck pace for five years now and we haven't seen a lot of inflation, right? Well, except for food and energy, which are conveniently excluded from "core inflation". Health care, ammunition and guns have gone up a lot, too. What's more, prices for goods that should be declining due to information technology improvements may instead be staying level, but that's a net level of inflation that's hard to measure.
Inflation has numerous advantages over stealing bank deposits:
1. Inflation lets the government tax everyone in the world who uses dollars. All dollars everywhere are devalued, which basically let's us "tax" all the countries and organizations who hold trillions of dollars in their foreign reserves. The Chinese can't just divest themselves of all those dollars, but they do complain a lot.
2. Inflation reduces the value of our national debt and deficit. This is the reason that I'm convinced that inflation is a goal for our government. There's simply no other way to pay off the debt we're accumulating. This is a good reason to be a borrower right now, as long as you can borrow at a fixed interest rate.
3. Equities and capital assets can float with (moderate) levels of inflation.
4. A weaker dollar enables greater US exports of all kinds.
5. Inflation helps moderate sticky economic factors, like wages and house prices. Unemployed people are very hesitant to accept jobs with a lower salary than their previous job. Homeowners are very reluctant to sell their house for less than they paid. Inflation allows salary and house price numbers to go up even though the value is going down.
So what's my advice?
1. Borrow at low fixed interest rates. Pay off your loans as slowly as possible, because future dollars will be worth much less than current dollars.
2. Don't sit on a lot of cash. Be fully invested in equities and hope they float with inflation.
3. Don't lose your job.
Glenn Reynolds outlines the legalities of asteroid mining.
Asteroids are certainly available, and they're valuable. More than 750,000 asteroids measure at least 1 kilometer across, and millions of smaller objects are scattered throughout the solar system, mostly in the asteroid belt between Mars and Jupiter. Even a comparatively small asteroid is potentially quite valuable, both on Earth and in space.A 79-foot-wide M-type (metallic) asteroid could hold 33,000 tons of extractable metals, including $50 million in platinum alone. A 23-foot-diameter C-type (carbonaceous) asteroid can hold 24,000 gallons of water, useful for generating fuel and oxygen. Even 1 gallon of water, at 8.33 pounds per, can cost tens of thousands of dollars to launch into Earth orbit. Prices will probably come down now that SpaceX and other private launch companies are in the game. But the numbers would need to improve a lot for water launched from Earth to compete with water that's already floating in space.
Larger asteroids could be worth as much as the GDP of a superpower. Asteroid 1986 DA is a metallic asteroid made up of iron, nickel, gold, and platinum. Estimates of its value range between $6 and $7 trillion. Something that size won't be retrieved anytime soon, but the figure gives some idea of just how much wealth is out there.
Ok, so that's just a quote about how valuable asteroids are. If you're interested in the existing legal issues go read the article, but the bottom line is that anything you can move is up for grabs.
After quickly checking to make sure that my bank is wholly owned in the United States I literally laughed at Europe's new bailout template.
The euro fell on global markets after Jeroen Dijsselbloem, the Dutch chairman of the eurozone, announced that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe."If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'," he said.
"If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders."
As Willie Sutton explained with regards to his bank robberies: "because that's where the money is".
Dijsselbloem's assessment of the economic incentives is basically correct:
"If we want to have a healthy, sound financial sector, the only way is to say, 'Look, there where you take on the risks, you must deal with them, and if you can't deal with them, then you shouldn't have taken them on,'" he said.
So now depositors have to share risk with shareholders, bondholders, and taxpayers. Most depositors aren't interested in that kind of arrangement, and they'll start withdrawing their money. Reserve ratios will drop. Interest rates will increase. Eurozone deficit spending will get even more expensive. The end of the euro.
An awesome choose-your-own-adventure where you play the sucker from the Secret One World Government who gets flown into fix the Cypriot banking crisis.
So Hugo Chavez looted $1 billion or more from Venezuela? Big deal! Moammar Kadafi stole $200 billion from the Libyan people during his 42-year reign.
I suspect there's at least one many who has outdone Kadafi, but we won't know for sure till he's dead.
