Wednesday, December 06, 2006

Climate Politics


This is a little longer than usual, but your patience either will be rewarded or you will become very upset with me... or both.

Some government officials believe that government must "do something"... anything... and all of the time... and, thus, often will seek extensive and expensive legislation based on "popular wisdom" to fill that mandate. Witness the latest from California Senator Dianne Feinstein.

In a speech to the Commonwealth Club in San Francisco, California's senior senator unveiled a legislative package she intends to introduce when Congress reconvenes in January. The bills would require carmakers to improve mileage and would coax power producers to meet emission standards, while extending California-style green-technology programs nationwide.
"There now is a scientific consensus that global warming is happening and we can't stop it," Feinstein said during an interview. "The effort we have to make is to restrict it."

Some of you may have actually read the links on my recent post to an organization of eminent climatologists, geologists, and meteorologists who have evidence that disputes the popular wisdom of an increased level of CO2 as the cause of global warming. In case you haven't and don't have the time, they are summarized here.

They point out several inconvenient truths:
  • global warming begins approximately 800 years before an increase in CO2

    "What I would like to draw your attention to is the level of CO2 levels, as preserved in prehistoric air bubbles, from very high quality ice core records from Antarctica
    . When researchers first looked at the results from these cores they observed a repeating correlation between CO2 and temperature through several glacial/interglacial cycles. However, when they began to look at higher resolution cycles they say something different. They observed that temperature would go up first comes up first, with CO2 coming up later. This correlation indicates that as one might expect as temperatures warm biological productivity increases resulting in more CO2 in the atmosphere. The lag between CO2 and rising or falling CO2 levels is something like 800 years."significant changes in climate have continually occurred throughout geologic time. For instance, the Medieval Warm Period, from around 1000 to1200 AD (when the Vikings farmed on Greenland) was followed by a period known as the Little Ice Age. Since the end of the 17th Century the "average global temperature" has been rising at the low steady rate mentioned above; although from 1940 – 1970 temperatures actually dropped, leading to a Global Cooling scare."

    "Now let's look at the geologic record. I only want you to look at a couple of things on this diagram. First of all, please note in the top [half of the] chart the varying amounts of carbon dioxide in the atmosphere through the last 500 million years. At times in the past CO2 levels have been up to 16 times higher than at present."

    "The bottom [half of the] chart shows the range of global temperature through the last 500 million years. There is no statistical correlation between the level of carbon dioxide in the atmosphere through the last 500 million years and the temperature record in this interval. In fact, one of the highest levels of carbon dioxide concentration occurred during a major ice age that occurred about 450 million years ago. Carbon dioxide concentrations at that time were about 15 times higher than at present."

  • water vapor, not CO2 is the primary greenhouse gas by a margin of 50:1

"Although CO2 can have a minor influence on global temperature the effect is minimal and short lived as this cycle sits on top of the much larger water cycle, which is what truly controls global temperatures. The water cycle is in turn primarily influenced by natural celestial cycles and trends."

Dr. Tim Patterson, Professor of Geology at Carleton University

Although the current human-induced high levels of carbon dioxide (CO2) in our atmosphere are thought to be unprecedented in the recent geological record, some scientists argue that it's possible the changes we are making by pumping CO2 into the atmosphere could ultimately help usher in the next ice age.
"There are operations within the climate system that we still don't fully understand," explains Professor Chronis Tzedakis, from Leeds University, UK.
"It's possible that our pumping greenhouse gases into the atmosphere could somehow lubricate the flipping from one state to another."

It appears that Sen. Feinstein should be concerned about the increased presence of water in our atmosphere and take actions to ensure that legislation prohibits anyone from using more water... or maybe preparing us for the next ice age... or maybe she should just try to pass legislation without resorting to debatable theories about the climate.

I'm all for more efficient automobiles, heating and cooling systems, traffic management systems... for reasons other than problematic global warming... and less fear-mongering. While, I don't always agree with the conclusions drawn between economic theory and government action with my friends at Cafe Hayek, I think, in this case, they have a pretty reasonable conclusion based on some jumping through unnecessary economic-theory hoops.


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CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)