Contrasting the US vs. Canada

Here are some bits out of a Bank of Montreal (BMO) report done by one of their economists, Sal Guatieri. This gives an excellent contrast between the regulatory state and the outlook of the two economies:

Canadian officials say they have no plans to halt activity at the only deepwater exploration well in North America currently being drilled, which is off the coast of Newfoundland & Labrador, or at three other existing offshore production platforms. As well, the government will continue to grant exploration licences in the Beaufort Sea. However, the government plans to step up regulatory oversight in light of the BP disaster.

And this...

Alberta’s oil sands come out looking “cleaner” in the wake of the Gulf oil spill. This increases the chances that the Obama government will give the green-light to the proposed 2,000 mile underground Keystone Pipeline that would run from Alberta to Texas (a decision is due in the fall), a potential big win for Alberta. Canadian oil sands are already slated to become America’s top source of imported oil this year.

Here's a key assessment from this BMO economist:

Should the damage and political pressure escalate, the offshore oil industry could languish for years, similar to when the Three Mile Island core meltdown scare in 1979 virtually shut down development in the nuclear power industry. This would give a boost to the alternative energy industry.

Here are his calculations of the political fallout:

With the Administration facing voter anger for not resolving the problem sooner, the incumbent Democratic Party could lose seats in the November 2 congressional elections, when all 435 seats in the House and 36 of 100 seats in the Senate are up for grabs. Alternatively, voters seeing the need for even stricter regulation of the oil industry could lean towards the Democrats, especially since Republicans are seen as stronger proponents of off-shore drilling.

I sure hope it is the latter and not the former!

Richard Dawkins' "The Greatest Show on Earth"

I've read all of Richard Dawkins' books and enjoyed them all. This book summarizes the evidence for evolution. It is a devastating compilation of facts. Of course the religious nuts won't read it, and even if they did, they would deny every fact. You can't convince fanatics.

For those not blinded by religious fundamentalism, this book is a delightful romp through evolution. It is full of interesting facts. I heartily recommend it.

Krugman is Predicting a "Lost Decade"

In a posting on his NY Times blog, Paul Krugman sadly forsees a decade of grinding "Great Recession" because of foolish economic policies:

The deficit hawks have taken over the G20:

“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” it added. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”.

These words were in marked contrast to the G20’s previous communiqué from late April, which called for fiscal support to “be maintained until the recovery is firmly driven by the private sector and becomes more entrenched”.
It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labor market progress in the US.

But don’t we need to worry about government debt? Yes — but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt. Costly, because it depresses the economy further; ineffective, because by depressing the economy, fiscal contraction now reduces tax receipts. A rough estimate right now is that cutting spending by 1 percent of GDP raises the unemployment rate by .75 percent compared with what it would otherwise be, yet reduces future debt by less than 0.5 percent of GDP.

The right thing, overwhelmingly, is to do things that will reduce spending and/or raise revenue after the economy has recovered — specifically, wait until after the economy is strong enough that monetary policy can offset the contractionary effects of fiscal austerity. But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.

There's more. Go read the original posting.

How Fanaticism Works

I've wondered how the Germans rolled over and let the fanatical Nazis take over. The current "debate" over "global warming" is a small example of how fanatics can force an issue and suppress dissent. Here's an interesting bit published by Steve Goddard on the Watt's Up With That? blog. The posting shows current snow pack levels (high for the northern tier US western states). Then it provides this history of how a climate researcher was destroyed for daring to question the politically driven "global warming" message:

Has Pacific Northwest snowpack declined? Yes.

Well, actually – no. Oregon State Climatologist George Taylor lost his job over this issue. He dared to question the Global Warming Church Orthodoxy.

George Taylor on Global Warming.
Tuesday, October 16. 2007

Oregon State Climatologist George Taylor returned to the Lane County Rubicon Society on Sept. 27th to speak as a private citizen regarding global warming issues. The political climate for Taylor has been heated since he disagreed with Gov. Kulongoski by refusing to toe the “politically correct” political line.

Taylor said he still expects the governor to take away his title of state climatologist because of a slight disagreement on global warming issues. When Kulongoski developed the Oregon Strategy for Greenhouse Gas Reductions recently, he didn’t even ask for Taylor’s input.

Taylor discussed the history of climate cycles and how, for example, Oregon’s climate was actually much warmer in the 1930s than they are today. Also in the early 1800s there were 2 years where we had no summers in the US. Taylor said World War II enhanced a temperature increase and discussed how cities’ temperatures tend to be higher than rural areas due to human development. Taylor noted that where measurements are taken can affect the temperatures and the data we use to determine climate changes.

Taylor said the greenhouse effect is invisible and essential to life on Earth. He said 90% of it is water vapor and then the rest of it is methane and carbon dioxide.

Taylor noted that the tropical pacific patterns, the El Nino and La Nina events, and the impact they have on global temperatures overall. He said humans have some impact, but not nearly as much as sunspot activity or natural disturbances like volcanic activity over time.

Taylor went on to say that those who espouse the global warming line often point to the snowpack levels. He said a Washington climatologist was fired over climate issues that were not politically correct regarding snowpack levels and left sided concerns. Taylor said there are cyclical periods of La Nina and El Nino which effect snowpack levels.

He said the debate over sea level changes is an ongoing debate over whether the current changes are steady and reliable trends. He also mentioned how it is estimated that at the current rate, the global sea level may rise 8 to 17 inches per 100 years.

Moreover, heating the ocean takes a considerable amount of time. He said in the 1940s there was also an increase in arctic temperatures. And in the 1970s the big concern in the media was the possibility of another ice age or global cooling.

Taylor goes on to say scientists believe that in 2020 the global climate could return to a cooler period as sunspot activity is expected to change.

Taylor addressed the issue of whether the glaciers, sharing how they are shrinking due to human impact. He said there was much melting of the glaciers before 1950 and the SUV theory was a bit off. Taylor said surface temperatures may not be the best measure of climate change anyway, particularly on where the measurements are taken.

...

Taylor is a published author of several books regarding Oregon’s climate history.

I've edited out a crazy bit that claims that ozone depletion has no "effect". I'm assuming that was a garbled bit of "reporting". And I've suppressed the "author" since the original posting has two conflicting names. Ignore the error. The big theme is what need your focused attention.

The Nazis crushed their opponents. They used street battles, the big lie technique, subversion, and any other technique at hand to achieve what they knew to be "right", that the Aryan race was supreme, destined to rule the world, and the need to "solve" the Jewish problem. This heinous crime was perpetrated on a nominally intelligent German public by right wing fanatics. Well, we have been living through a modest version of this pushed by left wing fanatics. They have used political power, data suppression, and "insider" control of funding and key journals to "persuade" scientists to toe the party line.

Update 2010jun07: I'm not going bonkers by using Nazis when talking about global warming propaganda. Here is a bit from Nigel Calder making the same point:

What Ritchie Calder [Nigel Calder's father] told me about wartime propaganda against the Nazis has helped me to understand how a few scientists and politicians have persuaded governments and the docile media about a danger from man-made global warming that goes far beyond the real facts.

While not exactly scientific, the tradecraft of propaganda can be considered technical, so I’ve decided to post here the text of a talk I gave on the subject in London 18 months ago. It’s lightly edited to remove one comment about an individual and to correct one historical over-simplification, but I’ve not bothered to update remarks corresponding to the time of delivery of the talk.

If you go to the Nigel Calder post, you can find the text of his talk.

If you scan down the talk you will find propaganda examples used by the global warming folk. If you are naive and thought that these were all earnest scientists sworn to uphold the highest tenets of scientific honesty, you will be badly shaken to see the games they guys play with "facts". Here's an example:

And now the history of climate science has been airbrushed too. You’re not supposed to remember that in the 1960s and 1970s the top climate experts were predicting global cooling. A little ice age, or even a big ice age. They’ll try to tell you that this was just a scare got up by the media, but again that’s simply untrue. An advantage of old age is to have lived through various climate changes and the theories about them. For example, I was present in Rome in 1961 when UN agencies convened a conference of climate scientists, who discussed the dreadful effects that the all-too evident global cooling was going to have on world food supplies.

It’s not just the history of climate science that gets airbrushed, but the history of the climate itself. Most of the cathedrals of Europe were built in a time of great prosperity called the Medieval Warm Period, when French wine producers were lamenting the competition from the English vineyards. All around the world, temperatures were at least as warm as today or even a degree or two higher. But that was before the industrial revolution, and manmade carbon dioxide was insignificant.

“We have to get rid of the Medieval Warm Period,” the global warmers said. That’s a direct quote from an email sent in 1995 to a climate scientist at the University of Oklahoma. Supporters of the manmade warming hypothesis got busy with masses of data on past climates and in 1998 they came up with a revised temperature graph for the past 1000 years. Because of its shape, it’s called the Hockey Stick. It showed temperatures pretty flat until the past 150 years, when they suddenly shot up steeply till now. The Medieval Warm Period had vanished. Dispassionate experts showed that the Hockey Stick was a statistical mishmash and not to be trusted, but the global warmers still display it like a totem at every opportunity.

The Woes of Obama

Here are some bits from a NY Times op-ed by Maureen Dowd that hits the mark on Obama's strange inability to rise to the occasion and deal with the Gulf oil spill:

Obama wanted to be a transformative president and now the presidency is transforming him.

Instead of buoyant, he seems put upon. Instead of the fairy dust of hopefulness, there’s the bitter draught of helplessness.

His battle against water is taking on Biblical — even Job-like — proportions.

...

How does a man who invented himself as a force by writing one of the most eloquent memoirs in political history lose control of his own narrative?

In “Dreams From My Father,” Obama showed passion, lyricism, empathy and an exquisite understanding of character and psychological context — all the qualities that he has stubbornly resisted showing as president. It was a book that promised a president who could see into the hearts of other people. But there’s so much you don’t learn about candidates in campaigns, even when they seem completely exposed.

This president has made it clear that he’s not comfortable outside whatever domain he’s defined. But unless he wants his story to be marred by a pattern of passivity, detachment, acquiescence and compromise, he’d better seize control of the story line of his White House years. Woe-is-me is not an attractive narrative.

They say Obama is a "quick learner". But he is 1.5 years into a 4 year presidency and he hasn't gotten on top of the Great Recession, he hasn't corraled Wall Street, he hasn't stopped the hemorrhaging of house forclosures, and he hasn't managed to get a fix for the Gulf oil spill.

FDR flailed about, but he eventually got things done. He had the courage to do grand acts like close all the banks. Obama is far too timid.

By the way... according to the Myrmecos blog, the USDA is predicting a plague of locusts for 2010. Shades of Moses calling down plagues upon Egypt! The trials and tribulations for Obama appear far from over!

Fixing the Great Recession

The US (and most other countries seized by the Great Recession) need to go back to the playbook of FDR in the 1930s: they need a CCC to employ the unemployed during socially useful work.

Here's a suggestion from Robert Reich:

Friday’s job report was awful. For most new high school and college grads finding a job is harder than ever. Meanwhile, states are cutting summer jobs for disadvantaged young people. What to do with this army of young unemployed? Send them to the Gulf to clean up beaches and wetlands, and send the bill to BP.

Florida’s panhandle beaches are already marred with sticky brown globs of oil. Workers with blue rubber gloves and plastic bags are already losing the battle to keep them clean. Pelicans and other wildlife coated in oil tar are dying by the droves.

It will get far worse. Most of the oil hasn’t hit land yet. When it does, hundreds of thousands of workers will be needed to clean beaches, siphon off oil from wetlands, and rescue stranded wildlife. Tens of thousands more will have to bring in new landfill, replace tarred sea walls, and rebuild shoreline infrastructure.

Yet we’ve got hundreds of thousands of young people sitting on their hands right now because they can’t find jobs. Many are from affected coastal areas, where the tourist and fishing industries have been decimated by the spill.

The President should order BP to establish a $5 billion clean-up fund, and immediately put America’s army of unemployed young people to work saving the Gulf coast. Call it the new Civilian Conservation Corps.

(The old CCC — created by FDR at another time of massive unemployment and environmental stress — gave millions of young Americans jobs and training to reforest lands that had been degraded, provide emergency flood relief in the Ohio and Mississippi valleys, and build the infrastructure for our national parks.)

Economists will tell you that those who are long term unemployed almost never recover from the experience. Their lifetime earning is cut, they lose heart and ambition, they become depressed. This is a great tragedy for countries since the workforce is the real engine of the economy. Nothing else substitutes (certainly not the bond "ratings" or the opinion of central bankers).

Commiting Economic Hari-Kari

The stock markets around the world are staring this week with another big slide. Asia is down 3 to 4%. It is another panic. Over the past month markets worldwide are down between 15% and 18%. This despite generally good economic numbers (slow recovery). But the debt crisis in Europe has triggered fear and panic drives traders in the short run. In the long run fundamentals hold sway, but in the short run markets can go crazy.

But as Paul Krugman pointed out last weekend in his NY Times op-ed. There is a serious problem at the policy-making level. Officials are worrying about "inflation" and "deficits/debts" when they should be worried about keeping people employed and keeping economies away from depression. Sadly, those at the top are rich so they worry more about keeping their wealth than in making sure the great mass of people are productively employed. It is looking more and more like this "Great Recession" will become more and more a "Great Depression":

What’s the greatest threat to our still-fragile economic recovery? Dangers abound, of course. But what I currently find most ominous is the spread of a destructive idea: the view that now, less than a year into a weak recovery from the worst slump since World War II, is the time for policy makers to stop helping the jobless and start inflicting pain.

When the financial crisis first struck, most of the world’s policy makers responded appropriately, cutting interest rates and allowing deficits to rise. And by doing the right thing, by applying the lessons learned from the 1930s, they managed to limit the damage: It was terrible, but it wasn’t a second Great Depression.

Now, however, demands that governments switch from supporting their economies to punishing them have been proliferating in op-eds, speeches and reports from international organizations. Indeed, the idea that what depressed economies really need is even more suffering seems to be the new conventional wisdom, which John Kenneth Galbraith famously defined as “the ideas which are esteemed at any time for their acceptability.”

...

Thus, the O.E.C.D. declares that interest rates in the United States and other nations should rise sharply over the next year and a half, so as to head off inflation. Yet inflation is low and declining, and the O.E.C.D.’s own forecasts show no hint of an inflationary threat. So why raise rates?

The answer, as best I can make it out, is that the organization believes that we must worry about the chance that markets might start expecting inflation, even though they shouldn’t and currently don’t: We must guard against “the possibility that longer-term inflation expectations could become unanchored in the O.E.C.D. economies, contrary to what is assumed in the central projection.”

A similar argument is used to justify fiscal austerity. Both textbook economics and experience say that slashing spending when you’re still suffering from high unemployment is a really bad idea — not only does it deepen the slump, but it does little to improve the budget outlook, because much of what governments save by spending less they lose as a weaker economy depresses tax receipts. And the O.E.C.D. predicts that high unemployment will persist for years. Nonetheless, the organization demands both that governments cancel any further plans for economic stimulus and that they begin “fiscal consolidation” next year.

...

The best summary I’ve seen of all this comes from Martin Wolf of The Financial Times, who describes the new conventional wisdom as being that “giving the markets what we think they may want in future — even though they show little sign of insisting on it now — should be the ruling idea in policy.”

Put that way, it sounds crazy. And it is. Yet it’s a view that’s spreading. And it’s already having ugly consequences. Last week conservative members of the House, invoking the new deficit fears, scaled back a bill extending aid to the long-term unemployed — and the Senate left town without acting on even the inadequate measures that remained. As a result, many American families are about to lose unemployment benefits, health insurance, or both — and as these families are forced to slash spending, they will endanger the jobs of many more.

And that’s just the beginning. More and more, conventional wisdom says that the responsible thing is to make the unemployed suffer. And while the benefits from inflicting pain are an illusion, the pain itself will be all too real.

The world needs leaders with vision who have the courage to do the right thing and ignore that idiocy of the bankers and bond holders.

Ultimately deficits and debts can be "fixed" by inflation. What can't be fixed are the lives ruined by unemployment and the lost production from a depressed economy. The bankers and bond holders are concerned about the ultra-rich. The governments of the world need to be concerned about the average people.