Saturday, August 30, 2008
Watching DU Disintegrate
Can we please leave the Palin children out of this?That's right. There is now a vociferous contingent claiming that Palin's child is not hers, but her daughter's, and that the pregnancy was covered up because Palin's husband was the father. What the heck, there was never any evidence for MIHOP and LIHOP, either. Kos seems worse, from the little reading I've done.
I am disgusted by some of the posts in these "Palin pregnancy" threads.
Its one thing to insinuate that Sarah Palin is covering up a teen pregnancy. But to suggest incest? This is ridiculous. There is absolutely no increased risk of Down syndrome in incestuous relationships, unless one of the parties has down syndrome.
And while Republicans are vile, you can't attack a political rival by suggesting that their spouse raped their child. Based on absolutely nothing. What is progressive about this?
Not every teenager is rail thin. Just because the girl is chubby doesn't mean she's pregnant. When I was her age, I had the same physique.
Let's attack Palin on the issues, not any of this National Examiner BS. Its mean-spirited, and there is an actual child involved here. There is plenty to attack her on without dragging her children through the mud.
This stuff really, really convinces women that Democrats are for women:
Today, I am ashamed to be a DU memberThere are 293 posts on this thread, and not all can concede the point that perhaps these tactics are out of order. For example, one "JoeProgressive" responds:
I've been here a long time. Not a prolific poster, but a prolific reader. And from what I've read today, I don't belong here anymore.
Women being bashed for their right to choose having a family and a career with the support of their spouse.
Women being called sluts, bimbos and brood mares.
Women having their appearance dissected and witchhunts for compromising photos.
Innocent young girls being slandered with rumors & innuendos.
Enough. I want to win. But I don't want to win this way. And if you do, then I don't want any part of it.
joeprogressiveI think some women ARE going to vote for McCain because of this.
59. Bye. You have been here for a little over two years
Not really that long to most around here. Looks like you just want to stir the pot up by injecting sexism into the debate. Nice try but Palin is being bashed because of her inexperience. If there are a few sexist comments around then grow up and deal with it. Go vote for McCain if it offends you and enjoy setting women's rights back 40 years. That makes sense.
You know, I don't usually write about women's issues, but this kind of thing - well, it's pretty freaky. Apparently the meme that Palin wasn't really pregnant hit the radio - Thom Hartmann.
However all the claims that Palin should be NOT in a demanding job because she has kids- boy, oh, boy. That's going to make women see red. Most women in the US have to work for economic reasons, so what this amounts to is the claim that women with kids should be relegated to lower-tier jobs. This is not the sort of thing most women like to hear, but it is the type of thing that professional women know will be said behind their backs. Oh, sure, there are laws preventing prospective employers from asking you about kids, but it's still an issue. Reading all this is going to push so many buttons for women.
Now place yourself in the position of one of those Hillary devotees. Your candidate, who was far more experienced than Obama, lost. You may have attributed that (wrongly, IMO) to sexism. Isn't that opinion going to be reinforced by this feeding frenzy?
Democratic men need to wake up and stop this BS very quickly.
Friday, August 29, 2008
I Hope That Was As Good For You As It Was For Me
I didn't expect it. I saw some ranting and screaming about the woman at DU, and I flipped over to The Anchoress, because I remembered her having written that Palin would be a very good VP pick. So I read through a bunch of posts about Palin, and when I got to this I thought "Surely The Anchoress has lost some of her marbles. No way can the woman be this good.":
WHY do the press seem so surprised? Many of us thought Palin would be a serious contender for this slot. I suppose they’re so close to things and so “inside” they can’t always see things.And then I read a whole bunch more, and watched this interview, and read Jimmie, who makes sense. It happened when I watched the interview. In part it was her voice, but also all the rest - about her husband having a working class job, etc.
I can see Tina Fey being a natural to do Palin on SNL.
NOW - I am finally ready to say I’ll vote for McCain. McCain/Palin. Where’s my checkbook!
Finally, someone who's one of us. Finally a political woman who is like the women I know in real life. A woman who wouldn't have hysterics if offered deer meat, a woman who hasn't acquired the weary, traumatized Ivy ennui and distaste for real life and real people. A woman who understands it's a problem if truckers can't make a living and people can't stay warm in the winter. A woman who's shriekingly Middle America and middle class, and would sit down and have a cup of coffee with her plumber. A woman who'd date a plumber.
When I first encountered the news at DU and the shrieking and reviling, I thought it was just a clever political strategist's ploy to exploit the wacky-left's habit of demonizing their opponents to throw Hillaryites into the McCain camp. But no, it's real. She's the real thing - the candidate who looks and talks and thinks like all the rest of America, the candidate who is us. The candidate, we strongly suspect, who spit her beer across the living room when she heard the "tire pressure" comment JUST LIKE ALL THE REST OF US.
Yeah, I think this swung it for me. I'm still not happy about voting for McCain, but this helps a lot, and the tire pressure incident made me think that even if Obama got elected, he'd probably be a disaster. He also flubbed the European trip badly according to most of the reading I did on foreign forums. He's tone-deaf to the concerns of most of the US population, and he's all about tone, so that really hurts.
Oh, and the leftist activists are screwing the Democratic party so bad that it's almost like a bible story. As they scream about her, they are going to push woman after woman to vote for the McCain ticket. A big fight broke out on DU over some of the posts.
Listen, we women don't want to hear that we've had too many children, or too few, from some stupid male commenter. Nor do we want to hear that we should be home taking care of them, or that having a disabled child means that you have to stay home the rest of your life to take care of the child. He's not SICK - he's got Downs syndrome.
They just keep putting their foot in it, because they have no clue at all, and they can't restrain their habit of spewing venom. Right now on DU this is one of the top threads - they're down to criticizing Palin's traveling while pregnant while claiming that it's not her baby at all. And just watch them tying themselves in knots here - the vitriol is spattering everywhere:
24. ohmygod. Calm down.A progressive responds:
Stop attacking her because she is a mother or a female. Stop with the whore and bitch comments.
Talk about the issues. Dang--where are all the progressives?
31. I will attack her for whatever reason suits the purpose of making her look bad to my audience.See? They can't help it. It's in their blood. One of the memes is that she has no right to be in politics with the kid:
When I am among secular people I will attack her for being a religious zealot. When I am among people from church, I will attack her for being of a heterodox denomination. When I am among liberals I will attack her for her conservative views. When I am among conservatives I will attack her for her for anything they are prove to view as shortcomings in ideology. When I am among women, I will deride the obvious pandering of her nomination and the fact that McCain must not think much of womens' intelligence, when I am among conservative men who dislike women in authority, I will rub their noses in it.
If I can attack her for opposite reasons over the course of an afternoon, I will consider it an accomplishment.
Same goes for Johnny Boy.
9. I'm assuming the main argument you are talking about is the parenthood issue?She's more qualified than Obama!!! One DU denizen realizes the inevitable:
I agree on that.
A father of a newborn special-needs child would not be told he couldn't run for president or vice-president.
We can't be hypocrites here.
16. She was chosen largely as a token woman & she's a Fundie, a group that expects women to be breeders
obedient breeders who stay at home and raise their kids OR at least have a husband to look after the kid.
41. Do you mean the comments about her 4-month old child? What about the Edwards criticisms because of his wife's cancer? And, if any male had a 4-month old child at home with special needs, I'd say the same things about them that I'm saying about Palin. A special needs child deserves the attention and care required. It's not because of her gender, it's because she's made a very bad choice.
Aside from that, she's patently not qualified anyway.
47. And people wonder how the Democrats have lost 7 out of the last 10 electionsSo I leave you with this thread, laughing. This reminds me SO much of Obama's "bitter" comment:
11. I don't think we know everything.Yeah, I'm really just linking women here. Ann Althouse has a lot of coverage, but this was in her second post:
Her husband is evidently half native American. Most native Americans give women equal say in governance. However, I do understand the Christian aspect of being obedient to your man that she and her husband may believe in and the whole covering up of the daughters pregnancy because of small town values. (What would the neighbors think?) It's all so 1950s but the first time I went up to Idaho, and got some culture shock, I met another Californian who had lived their for awhile and I asked her what was wrong with the locals and she just basically said that they were backwards, still living in the last century and it seems odd to us because we had evolved beyond that. I'll probably upset some people now with what I have said but I don't know any better way to put it.
10:47: In the comments, Sloanasaurus writes:
Palin is the common man's dream wife. Smart, accomplished, beautiful, was a sportscaster, loves to hunt and fish.
Perhaps Palin is the "post-feminist" woman. She competes in a mans world being governor of the largest state, but she can still be feminine (a mother and wife).
Hmmm... maybe Ann will have fun with this analysis.
It's not perfectly feminist, Sloan, but I understand what you mean, and I think it's something that will appeal to many of the swing voters. As a feminist, I love that she did not leverage herself into power through her husband and consider this an important improvement over Hillary.
Sunday, August 24, 2008
I Think Someone Found A Way To Express His or Her Opinion
Thursday, August 21, 2008
The Sun Done Did It
Most of the US is cooling very fast. The cause is unequivocally the dampening of solar activity, which has reached levels that are much lower than the recent solar patterns. However, those recent solar patterns are themselves abnormal over the previous four centuries. As Baliunas and Soon remark in their paper on the influence of solar activity on recent warming and the inaccuracy of the IPCC theory (quoting Feynman):
The test of all knowledge is experiment. Experiment is the sole judge of scientific 'truth'Well, we are conducting an uncontrolled experiment in which the effect of changes in solar radiance on temperature are compared to the effect of changes in CO2 atmospheric content on temperature. Guess which is winning?
The historical correlation is strong (this is an enlarged version of Figure 3 from the above-linked paper):
Now the modern correlation is proved out also: (See Wood For Trees)
Note, please, that the change in temperature direction occurred years ago, when Cycle 23 (still not over) failed to reach the abnormal highs of the last two cycles. Also note that there is an overall correlation between cycle low points and multi-annual temperature averages. The last two years have been abnormal, but Cycle 23 was high normal, although lower than the previous two very high cycles. And as soon as the very high cycles ended, global warming ended. Now we are entering a period of global cooling, because late in cycle 23 we entered into a period of abnormally low solar activity.
The basics are these: Sunspot cycles vary in both peak-to-valley amplitude and in duration. In general, in periods of lower solar activity the cycles become longer as well as showing lower peaks. In the 20th century, sunspot cycles averaged higher and shorter compared to previous cycles, resulting in much more overall time spent at highs as compared to lows. That produced warming. The long term correlation between variation in temperature with the two sunspot measures (cycle length and peak strength) is very strong. Another way to measure the same thing historically is with Be-10 sampling, which shows the same correlations. See this page for more, and some references to the counter-arguments on the Danish work. The Armagh archive showed the same correlation.
Needless to say those who are farming the AGW grants for a living are not giving up without a struggle, but month by month the opposition is growing, and it is becoming more successful, due to having the experimental outcomes on the other side.
So what is the response? Calls for censorship from government scientists, such as Hansen, and growing support for that argument from the propagandized public. See, for example, Climate Skeptic's look at a journalist's call to censor bloggers and other such subversive elements. From the journalist's posting ("How To Balance Freedoms"):
So, let’s ask: what would happen if denial of both a) human-caused climate change and b) the dangers of such rapid change, were to be censored? If the science is beyond reasonable doubt, and miscommunication and denial leads to damaging inaction, should it not be censored? Beyond reasonable doubt is all we need to put someone in prison, or in the US, put them to death.The comments were hostile, and in a later post the individual announced that he doesn't believe in censorship, well, sorta:
This issue of censorship is complex. If you shut it up, does it go away? No.
However. Perhaps more importantly is the question. Where do we draw the line between the different gradations of scepticism:
* honestly held views that do not lead to inaction for the majority
* views that inadvertently foster inaction
* views that purposefully foster inaction
* views that lead to deeds that lead to counter-action against the majority
* counter-action against the majority
And if we do this, as we have done in other areas (e.g. incitement to racial hatred or violence; holocaust denial) on what basis do we make those judgements? The science? Or the ethical imperative? And what is the censure?
Can words be dangerous? That is, I believe, ‘proven beyond doubt’. Think of the propoganda of the Rwandan radio station Rwanda RTLM, that incited the death of thousands. And think also of the inaction of the international community–inaction fuelled by a control of the discourse around what was happening in Rwanda.
Words are what we use to shape law and uphold law. As Freud said, ‘words are deeds’.
So what should we do?
Ladle et al (2005, Interdisciplinary Science Reviews, 30:3) looked at the use of online sites and blogs dealing with the issue of climate change. It showed how scientific reports were taken and polarized by the two different communities–those advocates for action against AGW, and those sceptical of AGW, the harder edge of which you could call denialists.
Ladle et al advocated two possible responses. They saw:
[the] obvious need for a clear, definitive, authoratitive and realistic web resource written in accessible language that is explicit about the assumptions and limitations of the work. [and] a framework within which people can access information about new science, allowing them to access and judge information and its implications.
I’m an advocate for something stronger. Call it regulation, law, or influence. Whatever name we give it, it should not be seen as regulation vs. freedom, but as a balancing of different freedoms. In the same way that to enjoy the freedom of a car you need insurance to protect the freedom of other drivers and pedestrians; in the same way that you enjoy the freedom to publish your views, you need a regulatory code to ensure the freedoms of those who can either disagree with or disprove your views. Either way. While I dislike Brendan O’Neill and know he’s wrong, I can’t stop him. But we need a body with teeth to be able to say, “actually Brendan, you can’t publish that unless you can prove it.” A body which can also say to me, and to James Hansen, and to the IPCC, the same.
(Which is of course peer-review in the academic/scientific world. Why is it not trusted?)
The recent Channel4/Ofcom/Global Warming Swindle brought to stark attention either a) that Ofcom is strong and got it right or b) that the current regulatory rules for broadcast (and for th PCC, print and online) aren’t yet equipped to deal with such a global, complex issue as ”broadcast/published climate denial” (not scepticism: James Hansen disagrees with the IPCC, so he’s a sceptic; Monckton and Durkin are denialists, because they makes things up. Gore could be a propogandist if he also makes things up, as some claim).
What do you think? Perhaps a starting point is a draft point in the codes for governing how the media represent climate change, and a method for enforcing that code. And that code needs to extend out to cover new media, including blogs. And perhaps taking a lesson from the Obama campaign’s micro-response strategy: a team empowered with responding to complaints specifically dealing with online inaccuracy, to which all press and blogs have to respond. And so whatever Jennifer Mahorasy, or Wattsupwiththat, or Tom Nelson, or Climate Sceptic, or OnEarth, or La Marguerite, or the Sans Pretence, or DeSmog Blog, or Monckton or me, say, then we’re all bound by the same freedoms of publishing.
Would really love to hear your thoughts/feedback, so that it can help shape my upcoming paper on this. Thanks.
I made two errors in my blog post.A remarkable instance of a person propagandized to the point of being willing to violate his own conscience, based on his own experience, and a person who doesn't even understand what science is, what differentiates science from other fields of human ideation, purporting to base his willingness to violate his own conscience on the authority of science.
1. I made the error of confusing the question:
* ‘do we have the right media regulatory framework for monitoring and assessing harm and offence done by misleading information and purposeful disinformation?’
with the broader issue of censorship of free expression.
I shouldn’t have done that, because it muddied the issue, and more importantly, my second error:
2. I don’t believe in censorship.
Some of the commenters won’t believe that statement now, after the previous post. But I don’t. At some moment I became convinced that climate change as an issue was even more important that freedom of expression (where it doesn’t cause harm). And I still think we have to look hard at the regulatory framework and the social as well as the physical sciences of the relations, of power, politics, economy and of language, around the reporting and media representation of climate change. But the blog post was a bit too off the cuff and confused two distinct issues, and I did myself no favours for that.
There is an epic joke here, as explained by a commenter identified as Passer By on the second post:
Its quite simple, Science is an opened ended dialectic process, you put your theory up and if it cannot be shoot down it stands. Science progresses best in an open society for obvious reasons.When science may not be questioned, it is no longer science. Every US resident of my generation learned what happened to Galileo when his theory of the earth's rotation conflicted with the church's (of that time). He was arrested and made to recant. How is it possible that so many persons can not see that they are attempting to reproduce the same situation, and how is it possible that so many persons cannot understand that making science unquestionable converts science into knowledgeable superstition?
The answer, of course, is money. The "scientists" who are pushing the idea that questioning the role of CO2 in climate variation is a crime are getting a lot of grant money from the fears over global warming, and if the theory is questioned when the factual underpinning is so deeply devalued, they are likely to see that funding dry up. As Dr. Herman commented on the proposed CCSP release:
This report will undoubtedly play an important role in future climate related research programs supported by both NASA and NOAA, and therefore it is very important that all issues identified as important in the report be clearly and completely explained, and where controversial, both sides of the issue be included. This is important to ensure all important aspects of future research are given equal opportunity for funding, which is the basic reason I am requesting your input.Then monetarily-motivated scientists are followed by idealists lacking enough common sense to dilute their idealistic and religious fervor.
This post now ends. I wanted to return to the issues of energy prices and their economic effects as well as the Obama post-modernist theory, and this post is part of the necessary background. The bottom line is that we are close to reaching the gradient at which northern harvests could be affected, and speculation on that is raising corn prices, for example, and that space-heating needs will be higher than normal. And politically, both Obama and McCain are proposing carbon-oriented schemes that will inflict great harm on economies, and harm that will disproportionately impact the poor around the world.
This is a pretty bad situation, and it's a pervasive wrong that cuts across a lot of societal structures.
Sunday, August 17, 2008
It Was A Working Weekend
Interesting links. I was practically praying that Tanta would remark on this Bloomberg article entitled "Wall Street's Jobless Try Cupcakes, Cheap Haircuts, Maybe Omaha":
Jessica Walter didn't go to Harvard University to study cupcakes, but they're what she does since losing her job as a vice president in credit strategy at Bear Stearns Cos.Uh huh. Aside from the demand issue, just wait until she tries to get insurance on a business involved in teaching cooking to children. Good God, the liabilities, especially when one considers the number of children with parents who are lawyers in the vicinity of NYC. Tanta undoubtedly had much better taste and morals than to point out the obvious as it relates to a person who has fallen on bad times - this lack of recognition of risk and a somewhat pie-in-the-key optimism was a hallmark of Wall Street "credit strategy". So I have just earned myself another 10,000 years in purgatory. See you there. Apparently there'll be cupcakes, but I won't be baking 'em.
``I want to teach kids to cook,'' said Walter, 27, who founded Cupcake Kids! in New York to provide birthday parties and cooking classes for children. ``The goal is to have this be my full-time job and make enough to live.''
The RE sorrow has reached London. Bloomberg:
The average asking price for a home fell 4.8 percent from a year earlier to 229,816 pounds ($426,929), Britain's most-used property Web site said in a statement today. On the month, home values fell 2.3 percent, the most since December, led by London.For background music, this merits Sammy Davis "What goes up, must come down..."
``The lack of mortgage finance is central to the problem,'' Miles Shipside, commercial director of Rightmove, said in the statement. ``London, in particular, appears to be having its own special summer sale, with over 21,000 pounds off in a month.''
Back to programming. When it's hot, it's hot.
Oh, and I found the link to that churchoid political thingie. I guess I'm going to read through it, but I really wish they'd stop with the religion stuff. It is true that religious people are operating from certain sets of axioms. On the other hand, it is also true that science is based on a few axioms, and so are most non-religious ethical systems. The broad mass of the population agrees on most of the ethical questions - what's at issue is how to get there! And that is an issue of strategy, possibilities, experience, and sometimes guesswork. I just don't like aiming these things at a national audience from a religious backdrop. I don't care if the candidates go to churches to campaign, but national events should be aimed at national audiences, not particular segments of the population.
For my birthday, the Chief got me Michael Burleigh's Sacred Causes. I haven't finished it, but I do think it is very interesting.
Friday, August 15, 2008
HoHum, Friday, No Crisis After All
US industrial production was up 0.2. From a year ago, it has dropped only 0.1. This is quite a difference from most other economies. The details are more impressive than the headline; utilities were down 1.9 this month, but business equipment rose 0.8. That's probably on insourcing. Capacity utilization was 81.4, which is above the 30 year average and well above the 2001-2002 average (recession).
So it is not yet time to emit clarion calls of alarm about the US economy, although the YoY -5.3 drop in the construction segment is definitely still a drag.
Oil is down again. It still has considerably further to go.
I wonder if biodiesel from algae is going to become a market reality over the next 4-7 years? I have been following the saga of PetroSun this year. It started up its first commercial algae-to-biodiesel stock facility in Texas this spring:
The current algae farm consists of 1,100 acres of saltwater ponds that the Company projects will produce a minimum of 4.4 million gallons of algal oil and 110 million pounds of biomass on an annual basis. The Company has dedicated 20 acres of ponds for a proposed algae derived JP8 jet fuel research and development program.Rednecks remain focused on beer and fuel, I'm telling ya. PetroSun withdrew from the DARPA project for jet fuel because the project was delayed and it said it had an opportunity for commercial:
"Our business model has been focused on proving the commercial feasibility of the firms' algae-to-biofuels technology during the past eighteen months," stated Gordon LeBlanc, Jr., CEO of PetroSun. "Whether we have arrived at this point in time by a superior technological approach, sheer luck or a redneck can-do attitude, the fact remains that microalgae can outperform the current feedstocks utilized for conversion to biodiesel and ethanol, yet do not impact the consumable food markets or fresh water resources."
"Although it was an honor to be selected as a team member with such an elite group of companies, PetroSun has chosen to go down a separate path in order to expedite the potential of algae being processed into a commercial jet fuel," stated Gordon LeBlanc, Jr., CEO of PetroSun, Inc. "The DARPA program has been stalled due to a protest that was filed on May 29th by a firm that was excluded from the DARPA decision. Our withdrawal was prompted by the uncertainty of the award process, combined with an opportunity to initiate a project with a renewable fuel refiner and a commercial jet fuel end-user. PetroSun's corporate position acknowledges a true sense of urgency to prove that algae-to-biofuels can become an immediate part of the solution for our nation's energy independence."It is working on new projects in the US and Australia:
The Board of Directors has approved plans to install a pilot plant designed for algae production at an Arizona wastewater treatment facility. This project will be a scaled down version of a commercial algae farm system utilizing the wastewater and associated nutrients from the municipal treatment plant to produce algae as a biofuel feedstock.Well, until one sees hard numbers one does not know what to think. Imperium appears to be in trouble, so that gives me pause. However the Seattle plant was supposed to be using plant oils, and my guess is that the input costs rose too high?
But algae is known to be viable, although cost estimates have always been above the cost of oil. Until now, that is.
Some background on biodiesel from algae at U of New Hampshire, which has a biodiesel project group. There are stats in here on what it would take, and my theory was that I would be checking them with information from PetroSun, but it hasn't reached that point yet. A lot depends on marginal costs.
The theory is that algae would produce the raw material ("green crude") that could be used in refineries to make the biodiesel, which could then be used in place of regular diesel in current vehicles. Existing diesel cars can burn this stuff; I'm not sure if it has been tested in trucks. The military is very interested.
I am in no way recommending investing in this or other such companies, however I do feel that it is extremely likely that this fuel source will come into play within the next decade. That hypothesis only increases my skepticism about projections of higher and higher oil prices. Somewhere around $95 this should be a viable technology over time (the initial investment would be temporarily increase that cost). In general, production costs fall sharply over time. The $95 is still too high for economies to sustain current activity and usage, but it certainly is another indication that there is a ceiling to oil prices.
We'll see. I think we should drill; I doubt the environmental impact of drilling is really worse than such projects. Over 1,000 acres to produce only 4 million gallons of biodiesel a year raises questions about scaling, and I wonder how much energy has to be used to produce that amount of fuel? Algae biodiesel will use a lot of land and water, and even if it is seawater, such production will have an environmental effect. But then, so does large scale solar and wind, and biodiesel has several big advantages compared to solar and wind. I don't know what the pollution characteristics would be if this fuel were to be used widely in passenger vehicles.
However, such projects are definitely not as destructive to human life and welfare as corn ethanol. I think that program should be scrapped.
Since there is no worldwide death-to-the-masses crisis this Friday, some enterprising folks at a DU forum are discussing whether human sacrifice (provided the victims were volunteers) should be legal. I think not, given general human nuttiness, but at least in such a case the victims would be volunteers. It seems to me that the hungry and cold poor people of the world have been set up as involuntary victims of too many "green" initiatives which have passed as credos into the political system, and I think it is immoral.
Thursday, August 14, 2008
A Clarion Call Of Alarm Is Sounded
Hillary Clinton mounting a sub rosa campaign to steal the nomination after all? Nope. The Colbert Report is having too much fun with it. You can't be giggled or guffawed into the nomination.
Bigfoot WAS real, and some Georgia rednecks killed the only living specimen, thus causing a horrendous environmental loss to the whole world? Hardly. You can buy the costume yourself; never trust GA good ol' boys who are running Bigfoot tours as a business and just happen to coincidentally find a Bigfoot in their freezer, especially when the cost of beer and gas has gotten so high. Beer and gas are the two main fuels of the GA good ol' boy economy, and cost increases necessitate revenue enhancement. They got pretty far with it, though! Fox News. Smirk. This is most definitely going to spawn some more blonde jokes.
The seas are rising and we're all gonna drown? Nope, they've turned around and started to drop. (I was never sure why or how we were all going to drown anyway, because the previous trend was about 1.2 inches a decade, and even in my low energy periods I move quicker than that.)
So am I making up this "Clarion Call of Alarm" thingamabob? Nope. The International Air Transport Association is emitting it:
A clarion call of alarm was sounded yesterday as The International Air Transport Association (IATA) stated that global traffic data for June indicates a slowing of demand growth for air transport. Indeed, cargo contracted by 0.8 percent compared to June 2007. This is the first decline seen since May 2005 and follows several months of falling manufacturing sector confidence indicators.I found that phrasing so amusing that Logistics Management failed to exert its normal sedative effect on me. Maybe we're just a wee bit overanxious in general.
The organization’s director general, Giovanni Bisignani, described the overall airline industry as being “in trouble” and stated that “losses this year could reach $6.1 billion, more than wiping out the $5.6 billion that airlines made in 2007.”
While there’s been a slight reduction in passenger traffic due to rising fuel costs, too, IATA noted that it is the freight sector that is the most concerning.
There is a somewhat funny Economist article on the subject, which begins by noting that European economies are hurting more than the US economy:
EUROPEANS might be forgiven for feeling bruised. The housing bust across the Atlantic was the trigger for the credit crunch, so justice demands that America suffer most from the fallout. But America has not so far followed the script, weathering the storms better than it expected. Its GDP suffered a tiny decline at the end of 2007, but it grew at an annualised rate of around 2% in the second quarter of 2008.Well, it is what it is, and I don't think most Americans are feeling flush. The point is that the bubbles existed over there too, and several of them started earlier and were bigger than the US bubble. The pain of the UK and Ireland is cutting Eurozone exports to those countries as well, so the Eurozone is getting whupped for its own sins and those of its trading partners.
Europe is struggling to stay above water. Figures released on Thursday August 14th showed that the euro-area economy shrank at an annualised rate of 0.8% in the second quarter, the first such reverse since 2001. Nor are things likely to improve soon. A closely watched survey of purchasing managers in manufacturing and services slumped in July to its lowest level since 2001. Business confidence has turned down sharply in all of the three biggest economies in the euro area: Germany, France and Italy.
Since bank lending in Europe continues to contract, this European downturn has legs.
In the US, initial claims fell from last year on the week, however the longer trend is really showing up now. SA insured unemployment has risen to 2.6% from last year's 1.9%, and NSA insured unemployment has gone from 1.8% to 2.4% over the year. CPI-U 12 months ending in July all items is 5.6%, and CPI-W is 6.2%. Ex-food and energy both indexes come in at 2.5%. Mind you, bank presidents who expect consumers to pay mortgages ex-food and energy are jerks and fools, but the ex-food & energy index does show how relatively restrained inflation is. We are absolutely not in an inflationary spiral. We're struggling to stay out of a deflationary spiral.
These CPI figures will start to come down as energy comes down a bit, but slower than most economists are expecting. For one thing, the impact of winter heating costs kicks in from August through November (depending on where you live), which raises the energy-related percentage of the household budget for a huge number of households. Adding to that is the reality that temperatures in the northern US are running a few degrees below the post-80 average, so that causes a bit more suffering. Even the sun won't take pity on us.
Here is where the Treasury data I posted earlier this week comes in. No matter how you slice it, dice it, hang tinsel on it, or slap lipstick and eyeshadow on it, real incomes are falling. The YTD cumulative WIET has risen 4.0% as of July, and compare that to CPI! CPI is understated, also. Effective CPI is much higher for lower income levels. There are a lot of lower income working people who have experienced CPIs of 10-16% over the last year. Life is pure hell for a lot of older people living substantially off Social Security.
The Eurozone really does seem to be hurting more than the US (really because of their taxation system, which is exaggerating energy shocks), but that's hardly a consolation for about 70% of US residents.
And now the pain migrates to Asia.... Bigger bubbles, more risky lending, and manufacturing dependent economies that will feel a disproportionate amount of pain compared to the service-heavy western economies.
Not even Japan is immune to the coming problems with Asian property values, and Germany, which did not see much of a run-up in real estate while others were bubbling, is now seeing problems with commercial real estate. How bad are things in Asia and Europe? Well, would you BELIEVE that a Japanese bank wants to buy the rest of a US CA-based bank? Eweeeeewww:
Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz), Japan's largest bank, said it would bid $3 billion to buy the remaining 35 percent of California's UnionBanCal Corp (UB.N: Quote, Profile, Research, Stock Buzz), as it looks for growth beyond its softening home market.Do we laugh? Do we cry? It may very well be a decent investment, but that should tell us all something about what's really happening in the world.
The purchase represents a significant bet by Mitsubishi UFJ, which is looking to increase its presence in the United States even as the world's largest economy continues to stumble through the subprime mortgage crisis.
Saddled with slow economic growth and a declining population at home, Japanese financials, which have avoided much of the subprime meltdown, are increasingly aiming to boost their small market shares in the West.
Update: And Hong Kong's growth slows sharply, surprising everyone with the depth of the drop.
Wednesday, August 13, 2008
A Very Coordinated Downturn
But Japan didn't do that badly. Singapore's second quarter GDP came in at -6.0% annualized. Exports to the US shrank 21% and exports to Europe shrank 12%. Malaysia's economy is slowing, but we'll know more at the end of August. However I think growth is very pressured due to the government's plans to expand control of ports, which likely means the government is trying to expand tax revenue. Thailand's economy is spawning a war between the central bank and the government. The official forecasts are for 5-6% growth this year, but it seems very unlikely.
The theory that Asian growth can continue sharp expansion, absent decent growth in Europe and the Americas, falls on some fundamental facts about average income growth and distribution in "developing" countries. This article provides a major wakeup call with facts, and the facts are ugly. Whereas successful economies achieve healthy dispersion of income gains through a large percentage of their population, too many of the "developing" countries have stayed stuck in highly stratified economies, and this is why growth in those countries has no legs of its own. This is why I have been focusing so much on India, because it had managed to produce dispersion of incomes.
India's industrial growth rate is dropping sharply - down by nearly 50%. Its expected GDP growth rate is substantially below inflation, including producer price inflation, which is going to continue to weaken internal growth impetus. On average, real Indian incomes will fall over the year, which is bad news. Additional bad news is that the off-budget liabilities are still expanding (fuel subsidies are a major portion), which makes for a declining currency, which makes it much harder to control inflation:
The panel said budget deficit targets for 2008/09 would be exceeded and serious fiscal risks were arising from growing off-budget liabilities estimated at 5 percent of GDP.The Indonesian economy is harder to predict due to the wild variance in recent years between real and nominal growth rates (from 2005, approximately 16%, 15% and 12%). The mood is still optimistic, but Indonesia is running up against infrastructure problems which will tend to restrain growth. The government has to expand fundamental infrastructure investment in a weaker global environment in order to be able to maintain real growth, and this will be an economic challenge. Indonesia has also done well from Japanese investment in industrial plants, so a weakening Japan is not good news.
Hefty fuel subsidies, loan waivers for millions of poor farmers and proposed salary increases for government employees are constraining the country's finances.
"Despite appreciable fiscal consolidation, large and growing off-budget liabilities are however a matter of concern. With these included, the fiscal situation no longer looks stable and sustainable," the panel said.
The three biggest world economies are the US, Japan, and Germany, with China seeking to displace Germany. After that the top ten consists of the UK, France, Italy, Spain, Canada and Brazil. Brazil and China are growing, and Brazil may continue to grow at a close to steady pace. Canada is slowing but growing. Japan, Germany, Italy, Spain, and the UK are all in negative territory, although the UK hasn't figured it out yet. The US and France are still showing growth, although that's not going to continue; both economies should be undebatedly in negative growth later this year. For the US, I feel Q2 GDP will be revised down later (although a weak positive in the second quarter should remain). Germany and Japan contracted somewhat in Q2, although we will not have official German figures until tomorrow. France may have gone mildly negative. All in all, it means the Eurozone probably reports negative GDP growth in Q2.
For Asian economies, the US consumer spending slump which is just about to accelerate sharply will have a major impact.
In the meantime, global steel prices are beginning to drop and while coal demand is increasing, coal prices appear to have topped and be declining as coal becomes unaffordable at some locales for the countries in which it is in great demand. Both China and India are seeking to reopen domestic coal mines closed because of safety concerns. We are on a greased downward slide, and deflation of real estate bubbles around the world is going to add some additional slipperiness in the year to come.
US nominal seasonally-adjusted retail sales dropped slightly, which is no surprise to anyone who has been paying attention, and YTD YoY comparisons show growth much below the inflation rate. There will be further nominal drops in the months ahead, which will accelerate the pressure on Asian countries. Inventory/sales ratios have taken another decisive drop down, showing that the correction is well advanced:
If you look at the dip in 2007, that showed the first economic leg down. The rise beginning at the end of 2007 is a product of the production expansion as that segment of the economy exited trough; the current decline is the next leg down and is the product of consumer weakness, nor do the details of inventory/sales ratios support the idea that we are near the end. It's quite tough to keep running growth on export expansions with the growing weakness globally.
Current world overcapacity looks to be building in some metals and minerals, pharmaceuticals, probably cement and chips. There is strong demand for cheap energy and food, and the need to invest in power plants and the like will support some heavy industry. However growth in consumer discretionary items is likely to be slim in the year ahead. The German grocery WalMart equivalent, Aldi, is making great strides which ought to tell us all something.
Looking at buyout activity, which usually flags cyclical downturns six to twelve months ahead, downturns are ahead for some metals, minerals, coal, some categories of shipping, pharmaceuticals and some types of electronics. It's too soon to tell about the rest, except that the losses are building in natural resources. If you are a contrarian investor, the time to start looking at natural resources companies is about six months to a year from now. The aircraft boom in new orders is nearly over, with only the oil moguls stoking demand.
Tuesday, August 12, 2008
Treasury Receipts Show The Turn
|Type/Cat||WIET||Corp Inc Tax||FUT|
|June MTD 07||138,804||67,882||74|
|June MTD 08||145,500||61,589||77|
|June YoY Chg||4.8%||-9.3%||4.1%|
|July MTD 07||141,027||10,223||1,015|
|July MTD 08||142,964||12,374||984|
|July YoY Chg||1.4%||21.0%||-3.1%|
|2 Month Sum 07||279,831||78,105||1,089|
|2 Month Sum 08||288,464||73,963||1,061|
|2 Month YoY Chg||3.1%||-5.3%||-2.6%|
|July YTD 07||1,454,771||302,458||7,423|
|July YTD 08||1,513,171||285,834||7,438|
|July YTD Chg||4.0%||-5.5%||0.2%|
Treasury receipt reports are available here.
In June small businesses filed their taxes, and in July the small business FUT quarterly receipts were due. Big businesses deposit their taxes more often. Small businesses are hurting on profits, big businesses are starting to recoup on price increases (and oil - some of July is oil), and the drop in employment is showing up in FUT. WIET is telling us that real personal income is dropping rapidly now, and that the rate of increase is well below effective inflation for most income brackets. The big relative summer drop is partially due to construction/real estate and partly due to retail/summer employment being suppressed. Mortgage broker and realtor commissions, for example, would have had a large relative contribution to last year's July receipts.
A while ago I wrote that I was sure that the US economy was taking a sharp downturn in the second half, but that I didn't have the figures to prove it. Well, here they are. Personal consumption in the US is going to contract sharply from here on out. Business spending will not be so impacted.
This is an odd split recession, with the trough for industrials coming well before the trough for consumer spending. Because of the rising industrial tide, the impact of the consumer contraction will be somewhat blunted.
The big question is whether the global recession, which is going to take hold about at the end of 2008, will cause a second contraction in industrial/manufacturing domestically in the US? It's more than possible. If so, the trough for the US overall economy won't occur in second quarter 2009, but will come considerably later. We might turn positive in mid 2009 and then take a second, worse header. The potential for a mid-70s to early 80s type of pattern with rolling recessions is very real.
At the end of all of this, the consumer portion of GDP will be reduced from the recent US pattern for at least a decade and probably about two decades. In part that is due to US demographics, and in part it is due to inexorable fiscal realities. We are looking at a balancing act that will reduce the US consumer contribution to GDP between 3-5% relatively. Needless to say, we have to boost industrial activity to compensate! That's why energy is so important. You have to have reliable, competitive domestic energy production both to cut imports and to support industry. We are also going to have to take a hard, long and painful look at our tax policies. We cannot afford to undercut US companies' competitiveness, and since many other countries have cut corporate income taxes over the last few years, we must follow suit.
If you are looking at this from an Asian point of view, the impact of a European recession coinciding with a US consumer recession is severe.
Monday, August 11, 2008
Ah, The Smell Of Burning Credit
There is an excellent Tanta post on Alt-As that you should read. That whump, whump, whump in the background is the sound of banks imploding.... The Alt-A is where the real devastation lies in mortgage lending, and banks are just beginning to address that reality.
So now the builder bankruptcies will be rolling through hitting C&Ds, the CRE retail loans are going bust, and the Alt-A comes a-knocking in a manner reminiscent of those old horror flicks in which the dead started walking.
Anyone want to guess how much fun Bank of America's going to have from all those CW funny money loans that were rewritten and stuffed to Fannie? You can't fix loans AFTER they are written. You think Fannie isn't going to be diligent about shoving those babies back ASAP? They're ramping up to do it right now. The call of "Incoming" should be reverberating through WaMu about now. From Fannie Mae's press release on Q2:
Improving underwriting guidelines to eliminate higher-risk loans. Over 60 percent of our losses have come from a small number of products, but especially Alt-A loans. Through our recent underwriting changes, the volume of these products has declined more than 80 percent from their peak levels. We have already made underwriting changes to mitigate risk characteristics that drove those losses. After considered analysis, we will eliminate newly originated Alt-A acquisitions by year end.Fannie raised its provision for credit losses in the quarter to 3,700 million in the quarter, which brought credit-related expenses up to 5,349 million, as compared to 518 million in Q2 2007. Sweeeet, as Casey Serin would say. I mention Casey Serin because Rob at Exurban Nation kept insisting last year that fraud did cause real losses for real people. I think Rob's point is now made.
Ramping up defaulted loan reviews to pursue recoveries from lenders, focusing especially on our Alt-A book. The objective is to expand loan reviews where the company incurred a loss or could incur a loss due to fraud or improper lending practices. To achieve this, we are increasing post-foreclosure loan reviews from 900 a month in January to 4,000 a month by the end of the year, expanding our quality-control reviews for targeted products and practices, and are on track to double our anti-fraud investigations this year. We expect this effort to increase our credit loss recoveries in 2008 and 2009.
Fannie's estimate of eventual home price declines:
We estimate that average home prices declined by 0.6 percent on a national basis during the second quarter of 2008, which translates to an 8 percent total national decline since the beginning of the downturn in the second quarter of 2006. We have seen more severe declines in certain states, such as California, Florida, Nevada and Arizona, which have experienced home price declines of 25 percent or more since their 2006 peaks.The correlation between high levels of area Alt-A lending and subsequent price declines is quite powerful, and shows up in Fannie's overall book (1.36% as of June):
You know the best part? This isn't confined to the US. It crosses into more than half the nations. For example, a lot of Indian malls are running massive vacancies, the Spanish mortgage bonds (then vs now) are exploding in a dramatic fashion, and all those UK "investment" mortgages are turning from baskets of cute little fuzzy kitties into packs of Rampaging Saber-Toothed Lions. The really sad thing (if you've been following the US saga) is that the US came somewhat late to this party and did not get into it quite as deeply as many other countries. It's bad enough here, but it is going to be worse in a number of other countries. Even Dubai isn't a sure thing any more, no matter how much the authorities talk about the huge growth in population (because guess who is swelling the population?), and in Shenzhen, the question for many recent buyers is whether to keep paying the mortgage or not, now that the place is worth 25-35% less than when they bought. New Zealand? South Africa? Same story, different accent.
Loan loss severity has increased, with our average initial charge-off severity rate increasing from 19 percent in the first quarter of 2008 to 23 percent in the second quarter of 2008, driven primarily by losses on our Alt-A loans in markets most affected by the steep home price declines.
Performance of higher-risk loans. The deterioration in the credit performance of our higher-risk loans is especially pronounced in our Alt-A mortgage loans, with particular pressure on loans with layered risk, such as loans with subordinate financing and interest-only payment terms. As of June 30, 2008, our Alt-A mortgage loans represented approximately 11 percent of our total mortgage book of business and 50 percent of our second quarter credit losses.
And just wait until all those PE corporate loans in emerging Europe explode in correlation with a lot of their crappy corporate bonds.
By the way, among the dumbest proposals ever is the drive for the US to raise corporate income taxes. The US has the second highest rates in the world (among countries that count), just behind Japan. But the swell of support in Japan for cutting their rates is rising rapidly, and read why. US tax policy is really hurting US workers. Read the article.
If you haven't yet grabbed the concept of how serious the Alt-A problem is, see page 34 of Fannie's latest Investor Summary, which has breakdowns by state. MI, which has been in a depressed economic state for several years, ought to be leading credit losses far and away. But it isn't - MI is now improving, and compare that to the trend in credit losses for bubble states such as AZ, CA & FL. Note the correlation with Alt-A loans. Then go to page 36, and look at the five year trend. MI's dire state hasn't produced that bad a 5 year decline, but the one-year declines running around 20% in AZ, CA, FL and NV are so huge that it has knocked Fannie's five year HPA estimate down to 4-6% for those states. So there you have it - Fannie can handle an economic collapse better than bubble lending. Fannie's comparison of the characteristics and default rates of FNMA Alt-A vs private label Alt-A MBS shows that Fannie's is much better, so you can imagine how much pain is in store.
Someday, someway, the "subprime" meme will finally be laid to rest.
It's Thundering Again
PS: Big financial news of the week is not Euro moves, or energy moves, or even bombs in S. Ossetia. It's growing consumer financing problems in BRIC. Higher defaults, higher costs, or lower defaults with lower costs = lower demand. India's consumer goods industries have been hit hard, and Brazil is seeing the same thing. If you lower your default rate and double your credit grants, yet see losses, what does that mean? It means you're buying current sales at the cost of future losses.
This is happening all over the world. The structure of consumer financing is changing from India right through the US, with car leasing deals and various credit securitizations no longer "working".
Saturday, August 09, 2008
I Be Living
So let's see how close I come. I've got Fed Funds rate between 1.25 and 1.50% by the end of second quarter 2009, and that's the low with any luck. And believe me, we are about to get some luck delivered to us by ECB. What WAS Trichet thinking?
Tuesday, August 05, 2008
Oil! Texas Tea!
Even though this turned out to be unsuccessful, it wasn't unfruitful. One of the clear patterns that emerged was that diesel prices are major factor here, and this was a surprise to MoM-The-Spam-Blogger. That's so for a number of reasons, such as diesel's higher correlation with transport costs and consumer prices (and even with the net price of other energy), diesel's higher usage in countries in which the power infrastructure is poor and/or it gets a higher subsidy (see India), and the amount of diesel one gets from a barrel of crude. (See this EIA page about the refining process.) You can eke some more out, but not tons. It is at least theoretically possible to have dropping gasoline prices and rising diesel prices depending on demand differential.
It is not until diesel fuel drops substantially that the cost add-ons in a vast range of products drop, and until those cost pressures diminish, demand for crude should continue to decline due to pricing pressures reducing consumption. Therefore gas prices are a misleading index. Another very important lever moving prices, economies and demand is ag chemicals, many of which are made at least partly from petroleum! Demand for ag chemicals is being stoked by biofuel production, and ag chemicals will continue to be an inflating component for food prices for some time to come.
The last major component of this is that spot prices are not contract prices, and a lot of refining is done on contracts. So overall import oil prices for the US, for example, have substantially lagged the spot market and will continue to lag it. July crude import prices won't be released until August 13th, but over the year ended June, crude import prices had risen a staggering 86.2%. As contracts expire, they are rewritten at higher prices. Refiner crude acquisition prices reported by the EIA were $127 a barrel in June, which is an increase of about 96% over the year. The reason that these two measures differ is that transportation costs are jacked higher too, so actual acquisition costs make the effective price increase higher than the nominal increase.
India was experiencing similar increases, as Indian crude import prices crossed into the $100+ territory in April. Further, the rupee is still stuck on a downward trend, so world oil prices are hitting them harder. Their other problem is that diesel demand is rising around 25% a year, whereas gasoline demand is only increasing 10-11%. Here is where their lack of energy infrastructure is just killing them - many private residences and most businesses have private generators to kick in when the electricity supply fails to meet demand, and in many places this is happening every day!
So if I calculate a stable US price, I am overshooting for India. Indeed, one wonders what in the heck is going to happen in India, because their energy subsidies are causing diesel shortages. Read the article - they are experiencing their own Jimmy Carter episode.
There is some theoretical price cP of crude oil that would allow the emerging countries to continue to grow at a slower rate but sufficient to maintain the supply of petroleum products they use, but it does not look to me like that price can be found under current circumstances, partly due to problems with infrastructure and subsidies which have distorted markets. If I am correct in that surmise, the result should be an end price skewed toward the lower bound of my range, but my surmise also implies a slower approach to that range.
Rolling my eyes and cursing my incompetence, I finally decided to use a target price of $85-$90 at 6-8 months and a target price of $70 at 14-16 months. I then paused to laugh hysterically at Obama's theory that gas prices are going to be $12 a gallon. Not likely, because consumption would plummet. I am afraid that he has been hanging in the wrong salons to learn much about fuel prices; gasoline is a consumer-skewed product. Diesel is a commercial-skewed product, and is less immediately susceptible to demand changes.
I am not pleased with my level of uncertainty in these calculations, and if anyone has helpful insights, I'd love to have them. If you just want to hurl invective, try to make it at least as balanced and objective as the truck drivers. Note that they are very good at checking facts and quite effective at researching and rebutting lies.
Even though gasoline can't go to $12, I can conceive of circumstances in which a temporary shock could push diesel to $5.50 or so, and that would be a crushing blow to the world economy. I think the US population is taking energy independence much more seriously than Washington is. See Carl's post and the really bizarre first response in the comments. Neither McCain nor Obama really seem up on the topic, and although McCain talked about drilling first, he is also a recent convert.
The bottom line is that economies which have heavily subsidized energy have also starved their energy companies of capital to provide infrastructure, and that is now posing a limit to growth. It's not just India. In Indonesia relatively recently, there was a near rebellion among many companies in response to utility outages: The Indonesian government's plan had been to tell companies to rotate shifts into weekends, and one of the stories I read said that a group of the foreign companies threatened to pull out. The only recourse for the Indonesian government is to price electricity far closer to the generation cost, which will undercut its attractiveness in siting:
Unlike the prices of oil for industrial users which have been floated on international market prices, PLN is required to sell electricity to all categories of users at government-fixed prices. These electricity rates cannot be changed without approval from the parliament, while the prices of the diesel and coal that fire most PLN power stations have been rising steadily and steeply over the past 18 months. Things could become even worse for PLN before they start to improve. The sharp increases in diesel prices have prompted many companies to stop operating their own captive power units, relying instead on power supply from PLN.In one case, the outgage occurred because PLN simply didn't have coal. The price of coal has since dropped, so we are reaching limits on all major energy categories.
The current situation is unstable and becoming rapidly more so.
For base data, see the BP Statistical Review (pdf).