The Moderate Voice » MIKKEL FISHMAN, Economics Editor http://themoderatevoice.com An Internet hub with domestic and international news, analysis, original reporting, and popular features from the left, center, indies, centrists, moderates, and right Sun, 25 Sep 2016 01:09:28 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.9 http://themoderatevoice.com http://themoderatevoice.com/media/favicon.ico The Moderate Voice Question: How Are The Federal Reserve Programs Different Than ‘Just Handing Rich People Money?’ Answer: It’s Not http://themoderatevoice.com/question-how-are-the-federal-reserve-programs-different-than-just-handing-rich-people-money-answer-its-not/ http://themoderatevoice.com/question-how-are-the-federal-reserve-programs-different-than-just-handing-rich-people-money-answer-its-not/#comments Tue, 12 Apr 2011 18:01:33 +0000 http://themoderatevoice.com/?p=106461 abstract six line blue transparent vector

So says Matt Taibbi, “It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure.” Maybe we should just use non-recourse 0% interest loans from the Federal [...]

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So says Matt Taibbi, “It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure.”

Maybe we should just use non-recourse 0% interest loans from the Federal Reserve to balance the budget? We could use 1% of the American People as collateral, which while a bit harder to trade on the market are at least not made of fiberboard and cheap siding on top of often toxic drywall. At least not most of us. And like the loans that have already been given, if we fail to pay them back then the Fed just shrugs and opens up a new program to loan from.

Fun fact from the piece: “And at a time when America is borrowing from the Middle East at interest rates of three percent, why did the Fed extend $35 billion in loans to the Arab Banking Corporation of Bahrain at interest rates as low as one quarter of one point? Even more disturbing, the major stakeholder in the Bahrain bank is none other than the Central Bank of Libya, which owns 59 percent of the operation. In fact, the Bahrain bank just received a special exemption from the U.S. Treasury to prevent its assets from being frozen in accord with economic sanctions. That’s right: Muammar Qaddafi received more than 70 loans from the Federal Reserve, along with the Real Housewives of Wall Street.”

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Hold The Phone On How Bad The Worst Case Scenario May Be http://themoderatevoice.com/hold-the-phone-on-how-bad-the-worst-case-scenario-may-be/ http://themoderatevoice.com/hold-the-phone-on-how-bad-the-worst-case-scenario-may-be/#comments Tue, 15 Mar 2011 04:32:49 +0000 http://themoderatevoice.com/?p=103883 abstract six line blue transparent vector

Talk about sticking my foot in my mouth. It now looks almost certain that the containment for Unit 2 has been breached and that the core may be in or close to full meltdown mode. I am being told second hand that my fears that the core will create a massive steam explosion that compromise [...]

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Talk about sticking my foot in my mouth.

It now looks almost certain that the containment for Unit 2 has been breached and that the core may be in or close to full meltdown mode. I am being told second hand that my fears that the core will create a massive steam explosion that compromise the whole structure are not unfounded by still “unlikely.” This is by a friend of a friend who works at a nuclear plant, however they are totally caught off guard by developments as well.

Yet, I read something a few hours ago that horrified me. I did not want to post on it until I got confirmation because unlike the other aspects of light water reactor design I had never heard about it. It comes from this Washington Post article:

At the 40-year-old Fukushima Daiichi unit 1, where an explosion Saturday destroyed a building housing the reactor, the spent fuel pool, in accordance with General Electric’s design, is placed above the reactor. Tokyo Electric said it was trying to figure out how to maintain water levels in the pools, indicating that the normal safety systems there had failed, too. Failure to keep adequate water levels in a pool would lead to a catastrophic fire, said nuclear experts, some of whom think that unit 1’s pool may now be outside.

“That would be like Chernobyl on steroids,” said Arnie Gundersen, a nuclear engineer at Fairewinds Associates and a member of the public oversight panel for the Vermont Yankee nuclear plant, which is identical to the Fukushima Daiichi unit 1.

People familiar with the plant said there are seven spent fuel pools at Fukushima Daiichi, many of them densely packed.

Gundersen said the unit 1 pool could have as much as 20 years of spent fuel rods, which are still radioactive.

This is mind boggling to say the least. I was incredulous that it could be be true. I told my friend about it and asked him to find out more and yes, it is accurate. If the spent fuel rods are exposed it could release much more radiation than Chernobyl because of the amount of radioactivity stored and the fact there is almost no containment on these rods. I should mention that this is still not likely, I repeat: it is not likely. However it is not beyond the realm of possibility.

I am conflicted about whether to post this because I don’t want to contribute to fear mongering, but on the other hand I think it is important to note this for posterity at a time where we still don’t know what’s going to happen. I want to reiterate that this entire design (both the reactor and the storage) is not how the vast majority of reactors are designed as it is an old flawed one. I am greatly concerned that it will be conflated with all nuclear technology, which is why I have been irritated by how this situation has been presented from the beginning.

Let us hope it’ll just be a bad dream.

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Even The Worst Nuclear Power Plant Disasters Pale In Comparison To Fossil Fuels http://themoderatevoice.com/even-the-worst-nuclear-power-plant-disasters-pale-in-comparison-to-fossil-fuels/ http://themoderatevoice.com/even-the-worst-nuclear-power-plant-disasters-pale-in-comparison-to-fossil-fuels/#comments Mon, 14 Mar 2011 17:49:09 +0000 http://themoderatevoice.com/?p=103840 abstract six line blue transparent vector

While I’m not so happy about how the odds of disaster are presented, I think it is imperative that we put the safety of nuclear power in context. The truth of the matter is that coal power plants release much more destructive pollution into the environment than even the worst nuclear accident. This article in [...]

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While I’m not so happy about how the odds of disaster are presented, I think it is imperative that we put the safety of nuclear power in context. The truth of the matter is that coal power plants release much more destructive pollution into the environment than even the worst nuclear accident. This article in Slate cites 1 million annual premature deaths [or “500 Chernobyls”] from particulate pollution. Literally every nuclear plant in existence could have catastrophic failure and it would still not affect nearly as many people as coal. This is not even including the indirect contribution caused by global warming and its associated misery due to increased extreme weather events. And that is only particulate pollution!

As Tom Blees points out in Prescription for the Planet, “The Oak Ridge National Laboratory calculated in 1982 that the average coal power plant releases 5.2 tons of uranium (containing 74 pounds of fissile U-235, used in both power plants and bombs) and 12.8 tons of thorium….Worldwide releases totaled 3,640 tons of uraniums (containing 51,700 pounds of U-235) and 8,960….By the year 2040, cumulative releases of radioactive materials from these power plants will have reached the following levels: U.S. releases: 145,230 tons of uranium and 357,491 tons of thorium; World releases: 828,632 tons of uraniums and over two million tons of thorium” and of course the daughter products of those. The majority of these releases are concentrated in fly ash ponds that are truly hell on earth, especially when they break. I cannot fathom the disaster that would occur if there was a major quake in the midwest or south simply due to the release of this toxic sludge.

Yes, nuclear power produces waste that must be contained but it is done far more safely than fly ash. Even more to the point, that waste could be processed and reused for next generation plants that can be constructed much more safely than the reactors in Japan. [And as Slate points out, even the modern reactors are orders of magnitude safer than the design in Japan.]

Far from nuclear power being abandoned, it needs to be accelerated in order to transition to a post fossil fuel world. The key is that it needs to be done correctly and that includes active citizen engagement to ensure that corners are not cut. As the epilogue to Adam Curtis’ brilliant documentary states, the problem that society has in relationship to technology is that both its proponents and opponents have largely acted like the chosen implementation of technology is its only possible form. We sit and argue about whether science/technology is good and bad in theory by evaluating the function of designs that were chosen primarily for business and political reasons. In reality what we are seeing in this disaster (or the Gulf or GM foods or pesticides, etc.) is more of a referendum on our socioeconomic system rather than scientific understanding.

Like all too many scientists through the ages, I marvel at the possibility of what could be but am saddened by how our society has chosen to use its knowledge. While all generations face the fierce urgency of now, I believe ours is even fiercer, one in which we will have to decide whether to fall into the pit of despair and alarm or reorient to a more holistic approach that will avoid the worst. Nuclear power is the only conceivable cornerstone for such an approach, no matter how much wind and solar we install.

Click here to view the embedded video.

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“I Have Come To The Paradoxical Conclusion That Technology Must Be Protected From Man” http://themoderatevoice.com/i-have-come-to-the-paradoxical-conclusion-that-technology-must-be-protected-from-man/ http://themoderatevoice.com/i-have-come-to-the-paradoxical-conclusion-that-technology-must-be-protected-from-man/#comments Sun, 13 Mar 2011 09:45:27 +0000 http://themoderatevoice.com/?p=103700 abstract six line blue transparent vector

As a scientific rationalist I get irritated when people argue without understanding all the facts, but as a student of history I get more irritated when people with the facts argue without understanding their limits. One of the things that engineers tend to do incorrectly is assess risk factors largely independent of each other: if [...]

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As a scientific rationalist I get irritated when people argue without understanding all the facts, but as a student of history I get more irritated when people with the facts argue without understanding their limits. One of the things that engineers tend to do incorrectly is assess risk factors largely independent of each other: if X happens then part 1 will address it and if Y happens then part 2 will address it, etc. They think this way in part because they design different functionalities in a contained fashion and in part because systemic modelling is so difficult. Yet unforeseen shocks to complex systems almost always often destroy the assumption of independence because they affect multiple parts concurrently and therefore make the risk of catastrophic failures much higher than anticipated. To make matters worse, what may be a safety feature for one part may inadvertently cause catastrophe for another, e.g. pouring water around a very hot reactor to cool it off in an attempt to fix things, only for it to turn into hydrogen and cause an explosion.

It is a fundamental truth that we will not be able to think of all possible chains of events and even when we do we cannot actually know what will happen because there is insufficient data to predict it. People try to model from basic principles but once a few subsystems are out of their design parameters the number of variables becomes so large that it is a shot in the dark about whether the models will capture the behavior or not.

In light of these issues I find condescension that pops up when there is potential disaster to be unwise and detrimental to the type of discussion that needs to take place. I’ve been having a really hard time figuring out what the real risks are in Japan because people are mostly either freaking out or shutting down conversation by insisting that there isn’t a problem because of the various safety measures that will “fix things.” I find Kathy’s post to be an ideal because she explains what the intent of the design is while putting in caveats that the systems may be compromised, but I have yet to find a good summary on what would have to happen for there to be a dangerous release of radiation. Everyone can explain why it won’t happen, but they won’t talk about why it could; without knowing both sides it’s difficult to determine which arguments are stronger. And I mean that both from a physical and man made perspective: even if the physical law holds, what are the engineering tolerances needed in order to satisfy the conditions and what evidence is there that they’ve been followed?

I had personal discussions with friends that have a professional level understanding of this type of reactor and for each reason they had about why we shouldn’t worry I had a counterargument about why they may not be able to take that action or why it may not work as expected. Instead of being placated by a convincing argument they both ended up making assertive statements that they had faith in the operators and design.

And on that note I present Adam Curtis’ documentary “A for Atom”, from his Pandora’s Box series. It can either be downloaded from here or watched below in parts (just click on the next part once the current one is done).

Click here to view the embedded video.

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Libyan Diplomats Call For No-Fly Zones http://themoderatevoice.com/libyan-diplomats-call-for-no-fly-zones/ http://themoderatevoice.com/libyan-diplomats-call-for-no-fly-zones/#comments Mon, 21 Feb 2011 20:27:31 +0000 http://themoderatevoice.com/?p=102123 abstract six line blue transparent vector

There are numerous confirmed reports that protesters in Libya are being bombed from fighter jets. CNN reports there may be helicopter gunships opening fire. Protesters are increasingly reporting that foreign mercenaries are leading the ground attacks and continue to be shipped in by helicopter. Two fighter pilots have defected to Malta claiming that they were [...]

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There are numerous confirmed reports that protesters in Libya are being bombed from fighter jets. CNN reports there may be helicopter gunships opening fire. Protesters are increasingly reporting that foreign mercenaries are leading the ground attacks and continue to be shipped in by helicopter. Two fighter pilots have defected to Malta claiming that they were ordered to carry out bombings and refused.

Against this backdrop Al Jazeera is reporting that seven diplomats have now resigned — with several more diplomats explicitly stating they are against the regime — and are calling for the international community to enact no fly zones over the country to prevent further bombings and possible mercenary intrusions. Furthermore the deputy ambassador to the UN has called for humanitarian supplies to be delivered and distributed in protected zones.

An Al Jazeera reporter and analyst stated that contrary to a country like Egypt, the Libyan regime is much more loosely organized (indeed the ambassadors kept repeating that they were never part of the “regime” but represent the people) and that as a consequence a lot of the worst abuses have always been by mercenaries directly paid by Gaddafi; mercenaries that rival the organized military in power. This suggests the possibility that attacks may continue against protesters even if the government officially falls apart and will put pressure on the international community to do something to stem the violence.

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Widescale Military Attacks Against Peaceful Protesters Leading To Unfathomable Ledes; Anti-Government Pushback In Libya http://themoderatevoice.com/breaking-reports-of-widescale-military-attacks-against-peaceful-protesters-in-bahrain-libya-and-yemen-leading-to-unfathomable-ledes-anti-government-pushback-in-libya/ http://themoderatevoice.com/breaking-reports-of-widescale-military-attacks-against-peaceful-protesters-in-bahrain-libya-and-yemen-leading-to-unfathomable-ledes-anti-government-pushback-in-libya/#comments Fri, 18 Feb 2011 17:51:13 +0000 http://themoderatevoice.com/?p=101842 abstract six line blue transparent vector

Al Jazeera is reporting massacres against protesters in Bahrain through a combination of on the ground reporting, interviews with medical personnel and (unverified) Youtube videos. Read the Bahrain blog for more. These reports are backed up by journalists from other sources that are seeing them first hand (e.g. Nicholas Kristof) and international NGO and governmental [...]

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Al Jazeera is reporting massacres against protesters in Bahrain through a combination of on the ground reporting, interviews with medical personnel and (unverified) Youtube videos. Read the Bahrain blog for more. These reports are backed up by journalists from other sources that are seeing them first hand (e.g. Nicholas Kristof) and international NGO and governmental authorities.

I’m not sure what is on CNN at the moment (I don’t have cable) but their website headline and story is unfathomable.

Violence erupts at Bahrain landmark

Violence flared again in the center of Bahrain’s capital Friday evening, as a confrontation between security forces and protesters resulted in casualties.

At least four people were killed and others were wounded when demonstrators clashed with security forces, an ambulance worker told CNN.

But Hady Mousaui, a member of parliament from the Wefaq party, told CNN that there were 27 injuries and no deaths. Three of the injured were in critical condition, he said, and were being treated in a hospital.

The casualties occurred when shots and tear gas were fired at a few hundred anti-government demonstrators who were trying to make a push on Pearl Roundabout, the focal point of anti-government demonstrations this week. It had been cleared early Thursday in a stiff crackdown and security forces had since cordoned it off.

This language is one of war and implies that both sides are fighting. I have seen no evidence of this reported anywhere. A panicked doctor at the main hospital in Bahrain echoes that people are being shot down “as if we were in a war” with “uncountable” casualties despite the protesters’ nonviolence:

Click here to view the embedded video.

Yesterday it was reported that medical personnel were beaten severely while trying to help demonstrators (with the video evidence and Nicholas Kristof to back it up) and today there are reports that the military targeted people even as they were trying to flee into the hospital. I’ve heard less corroboration of that save Kristof’s tweet: “Panicked crowds running thru hospital after police attack. Drs rushing to ER. Tear gas grenades outside, wafting in” implying that tear gas was fired close enough to drift into the hospital.

Reuters uses similar language to describe Libya:

Soldiers sought to put down unrest in Libya’s second city on Friday and opposition forces said they were fighting troops for control of a nearby town after crackdowns which Human Rights Watch said killed 24 people.

Protests inspired by the revolts that brought down long-serving rulers of neighboring Egypt and Tunisia have led to violence unprecedented in Muammar Gaddafi’s 41 years as leader of the oil exporting country.

There has been some destruction of property in Libya (police stations burned down) but again I have seen no evidence that there has been any violence directed against people by the demonstrators [that the article is referring to]. This type of language is unconscionable.

I can’t find much about Yemen on non-Al Jazeera sources. This article on CNN describes attacks against protesters but says nothing about wide scale shootings that are being reported.

Tell me that what’s going on on TV isn’t this bad. It was like this during the beginning of the Egyptian uprisings too but I figured they’d be more on the ball this time.

That said, it appears that there has been some fracturing in Libya amongst the police and has led to fighting between the sides. Al Jazeera’s blog on Libya states:

There is a fierce battle over the eastern Libyan city of Bayda, the Reuters news agency reports. Two Libyan exile opposition groups earlier claimed that that the city had been taken over by anti-government protesters who were joined by local police forces, but now it appears that government “militias” have been reinforced and are clashing with residents, who are fighting back “with any weapons they could find.”

[and later]

More reports of potentially very deadly fighting in Bayda. Aamir Saad, a political activist, claims that anti-government demonstrators in Bayda have “executed 50 African mercenaries” – presumably a reference to the government militias – and “two Libyan conspirators”. Remember: Bayda is where protesters managed to regain hold of the city with the support of local police, according to Reuters.

Ironically the only events that would justify the rhetoric being used in all the stories above aren’t even being reported on yet by either CNN or Reuters’ main site.

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Stratfor On The History And Future Of The Muslim Brotherhood http://themoderatevoice.com/stratfor-on-the-history-and-future-of-the-muslim-brotherhood/ http://themoderatevoice.com/stratfor-on-the-history-and-future-of-the-muslim-brotherhood/#comments Fri, 04 Feb 2011 01:10:15 +0000 http://themoderatevoice.com/?p=100219 abstract six line blue transparent vector

Geopolitical analyst company Stratfor has a great release on the history of the Muslim Brotherhood.

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Geopolitical analyst company Stratfor has a great release on the history of the Muslim Brotherhood.

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Is This The Beginning Of A New Age In The Middle East? http://themoderatevoice.com/is-this-the-beginning-of-a-new-age-in-the-middle-east/ http://themoderatevoice.com/is-this-the-beginning-of-a-new-age-in-the-middle-east/#comments Thu, 27 Jan 2011 23:30:02 +0000 http://themoderatevoice.com/?p=99484 abstract six line blue transparent vector

Tunisia. Algeria. Egypt. Now Yemen. Soon Jordan? Is this a flash in the pan or the beginning of the end for the petro-dictatorships? Unfortunately I have been and will continue to be extremely preoccupied with some nascent personal life changes and haven’t been able to keep up. If you have any insights then please comment. [...]

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Tunisia. Algeria. Egypt. Now Yemen. Soon Jordan? Is this a flash in the pan or the beginning of the end for the petro-dictatorships?

Unfortunately I have been and will continue to be extremely preoccupied with some nascent personal life changes and haven’t been able to keep up. If you have any insights then please comment.

I do have these quick feelings:

I am more optimistic that these will work than the prior demonstrations in Iran, particularly due to geopolitical differences.

The demonstrations appear to be primarily economic; all of these countries are pegged to the dollar do and have been experiencing runaway inflation for the last decade as the dollar has depreciated. Unlike China and India (which are also both starting to see some really heavy inflation) the ME countries don’t have the economies to take advantage of this through export increases and so they haven’t seen enough growth to make up for the peg.

At this point the protests seem to be a wide groundswell without much directed leadership. While this can be seen as a good thing (i.e., no Islamist leaders yet) I fear that it could also leave the countries ripe for anarchy and conflict if they do manage to bring down the ruling coalitions. As we saw in Iraq, leadership vacuums can lead to far worse conditions than even dictatorships, and I hope that there is an effort made to keep the relatively clean careerists in place even while ferreting out corruption and those at the top.

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Get Your House Free And Clear If You Live In Utah! http://themoderatevoice.com/get-your-house-free-and-clear-if-you-live-in-utah/ http://themoderatevoice.com/get-your-house-free-and-clear-if-you-live-in-utah/#comments Mon, 17 Jan 2011 17:23:30 +0000 http://themoderatevoice.com/?p=98624 abstract six line blue transparent vector

More MERS related mess.

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More MERS related mess.

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What If Everything You Knew About Projected Global Warming Was Wrong? http://themoderatevoice.com/what-if-everything-you-knew-about-projected-global-warming-was-wrong/ http://themoderatevoice.com/what-if-everything-you-knew-about-projected-global-warming-was-wrong/#comments Fri, 14 Jan 2011 17:58:06 +0000 http://themoderatevoice.com/?p=98291 abstract six line blue transparent vector

One of the dirty secrets in the climate change community is that the IPCC consensus is widely seen as the lower bound of likely warming because the models do not incorporate the slower and much more powerful positive feedbacks such as increased methane release from permafrost and bogs. In the years since it was released, [...]

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One of the dirty secrets in the climate change community is that the IPCC consensus is widely seen as the lower bound of likely warming because the models do not incorporate the slower and much more powerful positive feedbacks such as increased methane release from permafrost and bogs. In the years since it was released, every study that has looked at the issue has concluded that the models are far far more likely to drastically understate warming and sea level rise than overstating. One reason for this is the growing work on past climate that shows we’re not even in the same ballpark:

The atmospheric CO2 concentration currently is 390 parts per million by volume (ppmv), and continuing on a business-as-usual path of energy use based on fossil fuels will raise it to ?900 to 1100 ppmv by the end of this century (see the first figure) (1). When was the last time the atmosphere contained ?1000 ppmv of CO2? Recent reconstructions (2–4) of atmospheric CO2 concentrations through history indicate that it has been ?30 to 100 million years since this concentration existed in the atmosphere (the range in time is due to uncertainty in proxy values of CO2). The data also reveal that the reduction of CO2 from this high level to the lower levels of the recent past took tens of millions of years. Through the burning of fossil fuels, the atmosphere will return to this concentration in a matter of a century. Thus, the rate of increase in atmospheric CO2 is unprecedented in Earth’s history.

What was Earth’s climate like at the time of past elevated CO2? Consider one example when CO2 was ?1000 ppmv at ?35 million years ago (Ma) (2). Temperature data (5, 6) for this time period indicate that tropical to subtropical sea surface temperatures were in the range of 35° to 40°C (versus present-day temperatures of ?30°C) and that sea surface temperatures at polar latitudes in the South Pacific were 20° to 25°C (versus modern temperatures of ?5°C). The paleogeography of this time was not radically different from present-day geography, so it is difficult to argue that this difference could explain these large differences in temperature. Also, solar physics findings show that the Sun was less luminous by ?0.4% at that time (7)….

Thus, Earth was 16°C warmer at 30 to 40 Ma.The conclusion from this analysis—resting on data for CO2 levels, paleotemperatures, and radiative transfer knowledge—is that Earth’s sensitivity to CO2 radiative forcing may be much greater than that obtained from climate models (12–14).

As Joe Romm notes:

Methane release from the not-so-perma-frost is the most dangerous amplifying feedback in the entire carbon cycle. The permafrost contains a staggering “1.5 trillion tons of frozen carbon, about twice as much carbon as contained in the atmosphere,” much of which would be released as methane. Methane is is 25 times as potent a heat-trapping gas as CO2 over a 100 year time horizon, but 72 times as potent over 20 years! The carbon is locked in a freezer in the part of the planet warming up the fastest (see “Tundra 4: Permafrost loss linked to Arctic sea ice loss“). Half the land-based permafrost would vanish by mid-century on our current emissions path (see “Tundra, Part 2: The point of no return” and below). No climate model currently incorporates the amplifying feedback from methane released by a defrosting tundra.

OK so the question to the people that don’t think this is a major is simple: why? But before you answer, I will note something about the possible methane release dynamics. In a paper that I regrettably cannot find again (although it was so mathematical that I would expect only a couple of TMV readers would get anything out of it) they point out that based on what we know about permafrost and decomposition, there is a high chance of a random “detonation” of methane. Here is why:

The majority of organic matter waiting to be decomposed is trapped below the surface. As the tundra heats up, the upper layers of this matter are warmed to the point that they thaw out and anaerobic processes start decomposition, which produces methane and heat. This methane and heat are largely trapped under the surface because the top level is compressed in a way that it can’t vent, so the heat warms the matter more, increasing the reaction rate and widening the reaction depth. At some point the pressure underground becomes so high that it fractures the top level and vents. This isn’t speculation, it is a widely observed fact.

What IS speculation is how widespread this is occurring and what it means. Scientists on site are noticing an uptick in the amount of venting locations and we are detecting an increase in methane release through satellite measurements, but so far it is a linear increase (meaning predictable…it’s rising but slowly and steadily). However this paper was a mathematical modelling of the dynamics in a compartmentalized model, which basically means that there are different basins of decomposition that are relatively separate but have some connections, and is a relatively realistic assumption. They show that the dynamics of the whole system will exhibit local stability (small increases in venting) but that the region as a whole will be vulnerable to simultaneously massive methane release, a so called “methane bomb.” Oh, and there would be absolutely no way to predict when it would occur until it does, all we can say is that the warmer the Arctic gets the greater the risk. [For those that know about neuron firing, this is the exact dynamics of action potentials in neuronal firing….you have a quiescent period that holds until the resting potential rises near the threshold and then you have an indeterminate amount of time until the coordinated feedback kicks in and you have the unstoppable action potential. This model even produces the same refractionary period after the methane release that neurons display after APs.]

So in summary, we know we have enough methane trapped in the arctic regions to increase radiative forcing by an extreme amount, we are increasingly confident that in the past that level of GHGs produced temperatures that even if you take the lower bounds are still several times worse than the IPCC projections and there is a very convincing argument that the nature of the Arctic and chemistry means that it could explode without warning at a fundamentally unknowable time…which increases in probability (exponentially) with temperature and all evidence suggests that the last few decades of warming are almost certainly anthropogenic and will continue to increase.

Can we ever “prove” any of this stuff? No, we can’t, but at this point the evidence that supports the fears encompasses an extraordinary amount of scientific fields and the dynamics that suggest we need to be really careful are seen widely in biology, electronics, the stock market/economy, weather formation patterns, crowd behavior, chemical reaction dynamics, ecology, etc etc etc.

We cannot know with certainty what will happen but we seem to be damn close (actually past) the danger point when we may not have any control no matter what we do. People that argue “well I believe in AGW but we need to do a risk analysis to make a rational approach weighing cost and risk” better understand the massive tail risk that is getting wider with our increased understanding…something that wasn’t taken into account for the financial system and the reason why literally “impossible” events transpired. The “impossibility” of rapid warming may prove just as shortsighted.

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Corporatism And Libertarianism http://themoderatevoice.com/corporatism-and-libertarianism/ http://themoderatevoice.com/corporatism-and-libertarianism/#comments Thu, 13 Jan 2011 18:29:08 +0000 http://themoderatevoice.com/?p=98178 abstract six line blue transparent vector

Balloon Juice’s resident libertarian points to a Cato series about corporatism from a couple years ago. It takes place as a dialogue between the Cato libertarians, mainstream liberal Matthew Yglesias and progressive economist Dean Baker. I have not read it all but what I have read is an excellent demonstration of the potential and pitfalls [...]

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Balloon Juice’s resident libertarian points to a Cato series about corporatism from a couple years ago. It takes place as a dialogue between the Cato libertarians, mainstream liberal Matthew Yglesias and progressive economist Dean Baker. I have not read it all but what I have read is an excellent demonstration of the potential and pitfalls for left-libertarian alliances that I have long felt were desperately needed.

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It’s Not About Him, It’s About Us! http://themoderatevoice.com/its-not-about-him-its-about-us/ http://themoderatevoice.com/its-not-about-him-its-about-us/#comments Tue, 11 Jan 2011 22:49:50 +0000 http://themoderatevoice.com/?p=97876 abstract six line blue transparent vector

Yes, another post about the climate of “political rhetoric” that at this point is surely unneeded. I’ll make it quick, because it’s something that I have yet to see pointed out. Personally, for quite some time I’ve been expecting there to be something like Tuscon, and I believe that there will be more incidents like [...]

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Yes, another post about the climate of “political rhetoric” that at this point is surely unneeded. I’ll make it quick, because it’s something that I have yet to see pointed out.

Personally, for quite some time I’ve been expecting there to be something like Tuscon, and I believe that there will be more incidents like it in the next few years. This is because we’re going through a major societal shift which is generating a lot of conflict about the proper path forward; conflict that isn’t necessarily reconcilable through compromise. In times like these there is always a rise in political violence from all sides, so it’s hardly a shock.

Was the shooter influenced by this political climate, and if so, to what extent? I have no idea and won’t pretend to. But the details of any individual case aren’t necessarily important. I’m too young to have experienced a comparable time (say the 60s-70s) but history shows that some attacks against political leaders are for rational reasons and some for irrational, some by lone wolves and some by conspirators…it’s really a grab bag and motive doesn’t necessarily mean anything to the course of history. How do you compare JFK to RFK?

At the end of the day we don’t have a lot of control over whether the perpetrators carry out their attacks, that’s just life. Fortunately, what matters a lot more is the reaction of everyone else, and this is something that we do have control over and is a direct byproduct of the overall environment of political rhetoric. I obviously have personal sympathy for victims but as long as we have a stable social climate violence will not lead to social disintegration no matter who is hurt, while a poisonous climate can spiral quickly out of control by fostering a widespread breakdown in trust and an increase in tribalism.

To me the question isn’t about whether the climate influenced him to action, but how it influences our social response. On that I have to say that it seems we’re doing quite poorly; which I have been fearing would happen even as it seemed inevitable. But honestly, even when it comes to rhetoric I view it more tragically than feeling the need to condemn because I view our problems as a symptom of a failed paradigm that neither major ideology can address. Until there is something major that we can all work towards as a society, I fear ugliness will continue to increase. I just hope that that “something” isn’t War, which it too often is.

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Massachusetts Supreme Court Makes Mortgage Securitization Ruling With Potential MAJOR Consequences [Updated: Maybe] http://themoderatevoice.com/massachusetts-supreme-court-makes-mortgage-securitization-ruling-with-potential-major-consequences/ http://themoderatevoice.com/massachusetts-supreme-court-makes-mortgage-securitization-ruling-with-potential-major-consequences/#comments Fri, 07 Jan 2011 17:00:10 +0000 http://themoderatevoice.com/?p=97324 abstract six line blue transparent vector

Update 2: Yves Smith points out that this is a narrow ruling that is largely about MA law: The judges based their ruling strictly on Massachusetts law issues, and did not opine on the New York trust law issues we have highlighted. The ruling emphasized the horrible job the banks did in protecting and documenting [...]

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Update 2: Yves Smith points out that this is a narrow ruling that is largely about MA law:

The judges based their ruling strictly on Massachusetts law issues, and did not opine on the New York trust law issues we have highlighted. The ruling emphasized the horrible job the banks did in protecting and documenting their ownership interest and the overall carelessness of the securitization process. Massachusetts. law is somewhat unique in requiring that not only the note (the borrower IOU) be assigned correctly, but also that the lien (the so-called mortgage, or deed of trust) also be conveyed properly.

As such, my generalizations may prove to be unfounded at this time. She (and her commenters) conclude that it is more a sign of the general weakness of securitization rather than a coup de grace and to expect more lawsuits that target the issues I discuss below.

Update: Calculated Risk says that the concurring opinion has specifics that argue this is not a systemic risk. However, as noted below, this is true in a narrow sense. The “but it’s a simple paper work” argument would be true if there was not systemic fraud in the actual mortgages themselves, but forcing the entire process to open up to do proper assignment will shine light on the systemic corruption that has been widely reported by the (few) audits done directly on the loan portfolios. Doing the reassignment will give a chance for the trusts to argue that the terms of the securitization were invalid and request putbacks. So in the end the ruling provided a direct and simple (albeit costly) resolution to the problem, but it is one that the banks were trying to avoid at all costs. If it is followed through then the greater points about property rights will be addressed, at the cost of exposing the size of the balance sheet holes.

Remember how a few months back there was a big flareup about the point that most mortgages weren’t properly assigned into their securitization trusts and there was systemic fraud? Yeah well none of that was ever actually resolved, contrary to the banks’ pronouncements that it wasn’t a big deal and therefore case closed.

Well now the Massachusetts Supreme Court has ruled that the securitization process was invalid when reviewing a case that was fighting a foreclosure. In the most narrow sense, this means that the particular foreclosures are overturned and opens the way for many more state foreclosures to be overturned as well. In the more general sense, Bloomberg notes that it opens up the banks to lawsuits from the trusts that will force them to buyback all the mortgages that were improperly transferred, which by many accounts is nearly all of them. Lastly, Yves Smith notes that the ruling will most likely be used as a pattern when deciding cases in other states and that people that were foreclosed upon may be able to sue for damages.

This brings up some important questions:

  • What happens to the people that are in foreclosure but still in their houses? From what I’ve read people aren’t entirely sure, as it’s agreed that they still legally owe money but there is argument about whether the mortgage would still be technically asset backed. One camp believes that technically the mortgages would become unsecured loans.
  • What happens to the people that have already lost their homes, and to the people that bought them? If you follow the letter of the law then the chain of title has been broken and the new owners don’t actually own the property.
  • Will banks be forced by the trusts to buy back the mortgages at par (which the trusts will want) and how large will it be? Potentially in the trillions of dollars…
  • How systemic is the problem? Well even more to the point, how large is the problem in the absolute sense, not just the paperwork sense. There are many affidavits coming out that there is widespread fraud in order to make up the legal paperwork chain when needed, so just because the banks say that there aren’t problems doesn’t mean anything.
  • Will the government investigate and prosecute cases of fraud? The state AGs got together and said that they would open a criminal inquiry into cases of paperwork fraud but recently backed off that promise. However, after this ruling homeowners will have lots of motivation to attack the integrity of the paperwork chain so this will put heat on the whole apparatus and eventually the AGs I’d imagine.
  • Will Congress step in and make blanket laws to “fix” the problem? This has been the whispered resolution of the whole mess from the beginning, but would be an infringement on the state based nature of property law that has existed from the beginning.

This brings up the excellent article written by Matt Taibbi (in his usual bombastic style) about foreclosure mills in Florida. This passage is too true:

Now all of this — the obviously cooked-up documents, the magically appearing stamp and the rest of it — may just seem like nothing more than sloppy paperwork. After all, what does it matter if the bank has lost a few forms or mixed up the dates? The homeowners still owe what they owe, and the deadbeats have no right to keep living in a house they haven’t paid for.

But what’s going on at the Jacksonville rocket docket, and in foreclosure courts all across the country, has nothing to do with sloppiness. All this phony paperwork was actually an essential part of the mortgage bubble, an integral element of what has enabled the nation’s biggest lenders to pass off all that subprime lead as AAA gold.

In the old days, when you took out a mortgage, it was probably through a local bank or a credit union, and whoever gave you your loan held on to it for life. If you lost your job or got too sick to work and suddenly had trouble making your payments, you could call a human being and work things out. It was in the banker’s interest, as well as yours, to make a modified payment schedule. From his point of view, it was better that you pay something than nothing at all.

But that all changed about a decade ago, thanks to the invention of new financial instruments that magically turned all these mortgages into high-grade investments. Now when you took out a mortgage, your original lender — which might well have been a big mortgage mill like Countrywide or New Century — immediately sold off your loan to big banks like Deutsche and Goldman and JP Morgan. The banks then dumped hundreds or thousands of home loans at a time into tax-exempt real estate trusts, where the loans were diced up into securities, examined and graded by the ratings agencies, and sold off to big pension funds and other institutional suckers.

Even at this stage of the game, the banks generally knew that the loans they were buying and reselling to investors were shady. A company called Clayton Holdings, which analyzed nearly 1 million loans being prepared for sale in 2006 and 2007 by 23 banks, found that nearly half of the mortgages failed to meet the underwriting standards being promised to investors. Citi­group, for instance, had 29 percent of its loans come up short, but it still sold a third of those mortgages to investors. Goldman Sachs had 19 percent of its mortgages flunk the test, yet it knowingly hawked 34 percent of the risky deals to investors.

Since these mortgage-backed securities paid much higher returns than other AAA investments like treasury notes or corporate bonds, the banks had no trouble attracting investors, foreign and domestic, from pension funds to insurance companies to trade unions. The demand was so great, in fact, that they often sold mortgages they didn’t even have yet, prompting big warehouse lenders like Countrywide and New Century to rush out into the world to find more warm bodies to lend to.

In their extreme haste to get thousands and thousands of mortgages they could resell to the banks, the lenders committed an astonishing variety of fraud, from falsifying income statements to making grossly inflated appraisals to misrepresenting properties to home buyers. [MY NOTE: the meme that the subprime crisis is primarily one of borrower fraud has been widely shown to be incorrect as the majority of fraud occurred somewhere in the lender side of the chain.] Most crucially, they gave tons and tons of credit to people who probably didn’t deserve it, and why not? These fly-by-night mortgage companies weren’t going to hold on to these loans, not even for 10 minutes. They were issuing this credit specifically to sell the loans off to the big banks right away, in furtherance of the larger scheme to dump fraudulent AAA-rated mortgage-backed securities on investors. If you had a pulse, they had a house to sell you.

In short, all of this was a scam — and that’s why so many of these mortgages lack a true paper trail. Had these transfers been done legally, the actual mortgage note and detailed information about all of these transactions would have been passed from entity to entity each time the mortgage was sold. But in actual practice, the banks were often committing securities fraud (because many of the mortgages did not match the information in the prospectuses given to investors) and tax fraud (because the way the mortgages were collected and serviced often violated the strict procedures governing such investments). Having unloaded this diseased cargo onto their unsuspecting customers, the banks had no incentive to waste money keeping “proper” documentation of all these dubious transactions.

“You’ve already committed fraud once,” says April Charney, an attorney with Jacksonville Area Legal Aid. “What do you have to lose?”

Taibbi elucidates the core point that all the spin about paper work and blaming the borrowers is an attempt to obfuscate the core issue that unmitigated greed and goverment/rating agency acquiescence was at the heart of the financial meltdown, yet there have been no prosecutions and Wall Street bonuses are hitting new records; not to mention that the number of financial sector people at the highest levels of government is continuing to increase.

In their haste to blow the biggest bubble in history, they relied on “standards” that were created on the fly and are against centuries of established property law. This has led to a fundamentally unjust situation. Unjust because some homeowners are acting in good faith and losing their homes while some are not acting in good faith and staying in them; it’s nearly impossible to tell the difference between the two. Unjust because the chain of title has been broken which not only invalidates future transfers but opens up the path for multiple claims on the same property as there is anecdotal evidence that many mortgages were sold off multiple times into trusts. Unjust because of the repercussions for pensions and investments both domestic and international that were hoodwinked into buying “safety” based on a lie. And most of all unjust because if we were ever to be honest about the situation in its clear terms, our entire financial system would be on the brink of collapse yet again and trillions more in bailout money would be demanded. So we are covering our eyes to see no evil and thus implicitly endorsing the immense moral bankruptcy that led to the problem in the first place…which of course will be repeated again.

This ruling is another chance to set off events to peel back the veil.

Update: Just yesterday Yves Smith noted: “the US trustee, which is a Department of Justice overseer of bankruptcy courts, in two cases in Albany, New York…has filed responses which are effectively in support of the debtor (the bankrupt borrower) and in opposition to creditors, which in this case are servicers claiming to act on behalf of securitization trusts. The issue? The parties trying to foreclose haven’t presented a document trail that the bankruptcy trustee finds persuasive.”

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Obama Picks Reveal More Of The Same http://themoderatevoice.com/obama-picks-reveal-more-of-the-same/ http://themoderatevoice.com/obama-picks-reveal-more-of-the-same/#comments Thu, 06 Jan 2011 23:04:05 +0000 http://themoderatevoice.com/?p=97248 abstract six line blue transparent vector

Anyone hoping Obama would change course through his picks for Chief of Staff and National Economic Advisor will be surely disappointed with his selections. Bill Daley has already been announced for the former and Gene Sperling looks like a shoe in for the latter. Both were pivotal in crafting Clinton’s neoliberal policies that I believe [...]

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Anyone hoping Obama would change course through his picks for Chief of Staff and National Economic Advisor will be surely disappointed with his selections. Bill Daley has already been announced for the former and Gene Sperling looks like a shoe in for the latter. Both were pivotal in crafting Clinton’s neoliberal policies that I believe are the root cause of our economic woes, and to make matters worse, Volcker is going to step down from his position. This signifies the continuation of Too Big To Fail and other big government corporatist policies on one hand, combined with the belief that we shouldn’t have any radical labor creation programs on the other. Faced with the midterm losses Obama had the opportunity to present a strong new course, but these picks show that he truly believes the biggest problem of his Presidency is lack of acknowledgment of his accomplishments instead of their content. It’s a pity, especially given the increasing stress in Europe and slowdown in China that will require radical new direction in the coming years.

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NASA Announces Warmest November On Record, 2010 Almost Undoubtedly Hottest Year http://themoderatevoice.com/nasa-announces-warmest-november-on-record-2010-almost-undoubtedly-hottest-year/ http://themoderatevoice.com/nasa-announces-warmest-november-on-record-2010-almost-undoubtedly-hottest-year/#comments Sat, 11 Dec 2010 04:45:33 +0000 http://themoderatevoice.com/?p=94704 abstract six line blue transparent vector

It’s been a few months since I’ve kept track of my bet to no one in particular that 2010 would be the hottest recorded year. With the conclusion of the Cancun climate meetings proving fruitless and NASA releasing data for November, it’s time to see how I did. To briefly recap, in fall 2009 I [...]

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It’s been a few months since I’ve kept track of my bet to no one in particular that 2010 would be the hottest recorded year. With the conclusion of the Cancun climate meetings proving fruitless and NASA releasing data for November, it’s time to see how I did.

To briefly recap, in fall 2009 I started to tell people that I believed there was a 99.9% chance that we’d see at least one new hottest year before 2013, with a 75% chance that 2010 would set a new record. Based on the recently released data for November, this is almost guaranteed to happen.

My reasoning was fairly simple. In 2008 we had nearly every known short term cooling factor in full force: there was a large La Nina, decadal oscillation was providing a good amount of cooling and the solar minimum was a century low. When I made the prediction it was apparent that those cooling factors had started to reverse and would the warming phase would peak sometime around 2012. It was unclear when they would peak or how fast they would accelerate, but it was an easy bet to make. I remember telling someone “as long as there is a moderately large El Nino in 2010 then predicting that will set a new record is almost like taking candy from a baby.” Indeed, by November 2009 it looked like an El Nino event was forming that was going to be at least as large as normal, so I felt confident and it looks like I was proven correct.

Now how well did my assumptions play out?

  • Will first of all, even at the time I made the caveat that if there was a major volcano eruption then the bet was off. When the Icelandic volcano started to erupt (with fears of its much larger neighbor erupting as well) I felt glad that I had remembered to add that caveat. It’s possible that the volcano caused some cooling, as the temperature anomaly was lower this summer, but I’m not sure about its total effect. It may have made it cooler than I was counting on. [Although probably not.]
  • When it came to solar activity, it did start increasing from the minimum but the onset has been slower than anticipated. In general this would have made it slightly cooler than I was counting on.
  • The biggest surprise by far was the rapid decline of El Nino into a moderate La Nina event. I was caught completely surprised by that, and around August thought there was a strong chance that the rest of the year would fall in anomaly quite a bit. That La Nina is still in force but somehow we just set a record for November. This effect was strongly cooler than I anticipated. In fact looking at the NASA graphs, you can’t even tell this was an El Nino year anymore.
  • The Pacific Decadal Oscillation continued the reversal from its low back to a neutral range, which is in line with what I was expecting.

There are a few other oscillatory effects, but it is my understanding that these are the main ones to focus on. Therefore, I conclude that even though I was correct about 2010 being the warmest year, it was warmer for a reason that I didn’t anticipate. Now there are a few possibilities for this. There is always going to be random noise that can’t be predicted and we may have just happened to hit a higher level of warming due to that. Another possibility is that there is an observed by not well understood mechanism for heat transfer between the ocean and atmosphere. It is basic physics that as the ocean warms it will be unable to hold in increased energy effectively, but there is growing evidence that it does so in a dynamic process based on interactions with the ocean depths. The data about this is relatively old (last data point I’ve seen is 2005) but it’s possible that we got some “extra” heating that had been stored from prior in the decade and is being released now. Another possibility is that increased CO2 levels have made us more sensitive to the increase in solar activity to the point that it has more of an effect than I predicted. Yet another possibility with increasing data support is that some of the climate positive feedbacks like permafrost methane release, decreased Arctic ice leading to more heat absorption, etc. are starting to be felt more strongly.

Whatever the reason, Jim Hansen has been talking about 2012-2013 as being the years that end the climate debate for good because we should be at another solar maximum by then [assuming we’re not at a paradigm changing atypical spot], and combined with an El Nino will absolutely demolish temperature records. It will remain to be seen if Hansen is absolutely correct, but the point of this exercise is that I strongly believe that our understanding is now qualitatively strong enough to a) make predictions like I have and b) use the model to look for unexplained phenomenon that cause a deviation from CO2 based forcing. The message that there hasn’t been warming since 1998 (or even cooling) is not only wrong from a proper data analysis perspective because you should average at a timescale that sufficiently takes care of noise and dominant oscillations (look at the difference between the 5 year mean around 1998 and the past decade) but the framework of understanding perfectly explains why 1998 was so abnormally hot (look at how massive the El Nino was) and why temperatures fell a bit in 2007-2008, creating the appearance of flattening (the La Nina combined with solar minimum). The collection of climate hypotheses are being strongly supported by data and showing that scientists have a strong grasp on short-medium term climate dynamics, and should be recognized as such. Yeah something may happen that invalidates our understanding, but that’s the basic premise of science, and hope is no way to make decisions.

Finally, it is a valid criticism to say that I have addressed shorter term climate metrics and not the longer term feedbacks that lead to runaway warming [although our current pace is already starting to cause a lot of problems] in the coming decades. While that is true, I would note that not only has every long term positive feedback been observed over the last few years, but it has been occurring faster than the assumptions in the models. Hence the models are too conservative unless there is a HUGE negative feedback dynamic that no one has even thought of. With the possibility of increased cloud generation acting as a major negative feedback shown to be highly unlikely, there is no proposed dynamic that I can think of that could be true and lead to the temperatures we are seeing. Due to the nature of complex systems it’s possible one could pop up at any second, but that would be sheer luck.

While there are honest disagreements about how to accomplish the goal, it is imperative that CO2 reductions be seen as the primary consideration in political and industrial decisions about long term planning. The window for doing so is fast closing, not only due to current CO2 emission paths, but the increasing evidence that peak oil is upon us — an event that will cause huge upheaval and pressure to make CO2 emissions explode through indiscriminate usage of coal and poorly constructed natural gas wells (which have as bad emissions as oil). There is no rational basis for refusing to take action, especially since even moderate warming scenarios will cause far more economic damage than drastic mitigation plans. It is unconscionable that this has fallen off the press radar and has become entirely partisan.

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The Big Lie About WikiLeaks: They Have Dumped The Cables Indiscriminately http://themoderatevoice.com/the-big-lie-about-wikileaks-they-have-dumped-the-cables-indiscriminately/ http://themoderatevoice.com/the-big-lie-about-wikileaks-they-have-dumped-the-cables-indiscriminately/#comments Thu, 09 Dec 2010 16:21:55 +0000 http://themoderatevoice.com/?p=94538 abstract six line blue transparent vector

Glenn Greenwald had a radio interview and follow up examples where he hammers the point that WikiLeaks is being falsely accused of dumping “thousands” of cables instead of the careful vetting by major press institutions. The reality is that nearly without exception they are simply posting cables that have already been reported by one of [...]

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Glenn Greenwald had a radio interview and follow up examples where he hammers the point that WikiLeaks is being falsely accused of dumping “thousands” of cables instead of the careful vetting by major press institutions. The reality is that nearly without exception they are simply posting cables that have already been reported by one of their media partners, and with the full redactions in place…redactions that are made with input from US officials.

In other news, Daniel Ellsberg supports WikiLeaks:

Ellsberg strongly rejects the mantra “Pentagon Papers good; WikiLeaks material bad.” He continues: “That’s just a cover for people who don’t want to admit that they oppose any and all exposure of even the most misguided, secretive foreign policy. The truth is that EVERY attack now made on WikiLeaks and Julian Assange was made against me and the release of the Pentagon Papers at the time.”

That excerpt is part of a statement of support for WikiLeaks signed by seven people who worked in the intelligence or state apparatuses, with several of them attempting to stop the Iraq War by releasing documents about the falsity of the pre-war propaganda push. It also includes Larry Wilkerson, who was Powell’s long time assistant and Chief of Staff. He has since spoken very loudly about the lead up to the Iraq War and its execution. I always have been chagrined at the lack of attention paid to Wilkerson considering that he was privy to the highest levels of decision making and the disputes between State and the Cheney “cabal.”

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An Excellent Video By Reagan’s OMB Director About The State Of The Labor Market http://themoderatevoice.com/an-excellent-video-by-reagans-omb-director-about-the-state-of-the-labor-market/ http://themoderatevoice.com/an-excellent-video-by-reagans-omb-director-about-the-state-of-the-labor-market/#comments Sun, 05 Dec 2010 20:08:11 +0000 http://themoderatevoice.com/?p=94135 abstract six line blue transparent vector

David Stockman, the director of the Office of Management and Budget for Reagan’s first term has a great breakdown of job growth during a segment on CNBC. In it he claims that there have been zero new “breadwinning” (i.e. enough to raise a typical family) jobs created since the official end of the recession, with [...]

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David Stockman, the director of the Office of Management and Budget for Reagan’s first term has a great breakdown of job growth during a segment on CNBC. In it he claims that there have been zero new “breadwinning” (i.e. enough to raise a typical family) jobs created since the official end of the recession, with the enormous losses from the recession on a pace to take decades to recover. Nearly all the growth has been in the temporary and service sectors, a pattern that continues from earlier in the decade. Watch below:

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The Philosophical Motivation Behind WikiLeaks http://themoderatevoice.com/the-philosophical-motivation-behind-wikileaks/ http://themoderatevoice.com/the-philosophical-motivation-behind-wikileaks/#comments Wed, 01 Dec 2010 07:34:35 +0000 http://themoderatevoice.com/?p=93794 abstract six line blue transparent vector

In my last post I argued that an analysis of WikiLeaks shows it is operating on anarchist principles and methods. These views were elucidated in the comments, including the point that Assange had worked on some key technical components behind the crypto-anarchist movement. As someone that has been exposed to these ideas, I readily understood [...]

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In my last post I argued that an analysis of WikiLeaks shows it is operating on anarchist principles and methods. These views were elucidated in the comments, including the point that Assange had worked on some key technical components behind the crypto-anarchist movement. As someone that has been exposed to these ideas, I readily understood the context in which Assange operates, if only on an intuitive level that was not based on reading his philosophical writings.

Leonidas supplied a great link that comments on Assange’s philosophical writings and how that translates to WikiLeaks’ radical action. Whether you agree with it or not, it is crucial to understanding why the group is doing what it is doing and its potential impacts on the future. I will note the irony that WikiLeaks itself has a very fragile leadership structure at the moment (or so it seems), but I am sure that they are rapidly diversifying. If they can do so they will be extremely difficult to counteract as the counterculture he is part of is fairly large and extremely technically adept. Indeed, a lot of the people that write the core components of the internet are associated with it. I’ve always thought they were filled with delusions of grandeur but this is a real attack on the status quo that is getting a huge response so their ranks should quickly swell.

Osama bin Laden made it very clear in the 90s and in 2004 that his mission was to force the US to bankrupt itself by baiting us into drawn out foreign wars and raising the level of paranoia to the point that governance and trade was severely hampered (e.g. the 2004 statement: “[It is] easy for us to provoke and bait this administration. All that we have to do is to send two mujahidin to the furthest point east to raise a piece of cloth on which is written al-Qaeda, in order to make the generals race there and cause America to suffer human, economic, and political losses … This is in addition to our having experience in using guerrilla warfare and the war of attrition to fight tyrannical superpowers, as we, alongside the mujahidin, bled Russia for 10 years, until it went bankrupt and was forced to withdraw in defeat.”) Now comes Assange who seems to have the aim of disconnecting governments from themselves and each other through nonviolent means instead of bin Laden’s aim of disconnecting them from the populace through murder both real and imagined. Indeed, his mission arises in large part because of bin Laden’s success.

Something that has always bothered me is the lack of conversation about terrorist groups’ various philosophical underpinnings, even on erudite political blogs. [How many people know what Al Qaeda means and what it references?] The inability for our political classes to discuss these matters has a severe negative effect on our policies because they blind us to tackling them on their fundamental level; a view shared by various CIA and State intelligence assessments. However, I can understand this reaction because of what those groups do and the tens of thousands they have killed.

By contrast there is no reason why people should not learn and evaluate WikiLeaks in terms of its ideology to understand exactly what it is doing and why.

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The Greatest Exposure By Wikileaks Is In The Reactions http://themoderatevoice.com/the-greatest-exposure-by-wikileaks-is-in-the-reactions/ http://themoderatevoice.com/the-greatest-exposure-by-wikileaks-is-in-the-reactions/#comments Tue, 30 Nov 2010 19:07:23 +0000 http://themoderatevoice.com/?p=93671 abstract six line blue transparent vector

There are digital reams of pages about how we should feel about WikiLeaks but nearly no one is talking about the actual content inside the US; which is the pattern for the prior leaks but is getting worse. I’m beginning to wonder how many Americans actually read the articles written about the leaked contents (I [...]

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There are digital reams of pages about how we should feel about WikiLeaks but nearly no one is talking about the actual content inside the US; which is the pattern for the prior leaks but is getting worse.

I’m beginning to wonder how many Americans actually read the articles written about the leaked contents (I try to), let alone the primary documents (I have not nor would I have the time and patience…perhaps to my detriment). For those that are interested I would check out the New York Times section on it, as well as Der Spiegel and The Guardian.

The sites follow the tone that occurs more generally when talking about the US. The NYT focuses almost exclusively on “bad countries” being bad while being suspicious of potential rivals and implied US criticism is largely that we aren’t doing enough to be victorious or have areas of incompetence. By contrast European sources are always mixed with a combination of righteous anger at our clumsiness (bordering on sociopathy) mixed with a strong dose of envy and fawning about what we think of them.

Reading these summaries I have a Wilde sense of cosmic despair, but first I think it’s important to note some basic facts:

As the Washington post says: “MANY OF the State Department documents released so far by WikiLeaks are embarrassing to their authors or subjects, but otherwise harmless…There is apparently no top-secret material in the WikiLeaks documents”

The Guardian states: “The state department knew of the leak several months ago and had ample time to alert staff in sensitive locations. Its pre-emptive scaremongering over the weekend stupidly contrived to hint at material not in fact being published. Nor is the material classified top secret, being at a level that more than 3 million US government employees are cleared to see, and available on the defence department’s internal Siprnet.”

Der Speigel gets specific and writes: “Around half of the cables that have been obtained aren’t classified and slightly less, 40.5 percent, as classified as “confidential.” Six percent of the reports, or 16,652 cables, are labelled as “secret” and of those, 4,330 are so explosive that they are labelled “NOFORN,” meaning access should not be made available to non-US nationals.”

I agree with Ron Beasley who wrote on a post that, “When I worked for the DIA long before PCs and the Internet we used to joke that Confidential meant the information was in Time Magazine last week – Secret meant it would be in Time Magazine next week.” So only a small subset were even deemed to be “truly” secret by the government itself. I would like to see a breakdown of the NOFORN documents. From what I’ve read most of them are about meetings with Middle East leaders that are concerned about Iran. I skimmed the WikiLeaks site and also saw some time sensitive information that is otherwise trivial with passage.

In summary, with the exception of a very few cables, there was little de facto secret information that was leaked going by the government’s own informal standards. [With the caveat that I am looking at this from how the DoD would classify information. If State is different and someone knows first hand then correct me.] In my view the hyperventilating about this is entirely political…

Which is apparent from the information itself. I have looked at dozens of media posted summaries from across the globe and have yet to find a single bit of information that I didn’t know from casually reading politics and foreign policy blogs or that could be obviously inferred. President Sarkozy is thin skinned! PM Berlusconi is vain! The US is worried about Islamism rising in Turkey! Pakistan has a poor handling on its nuclear technology! Iran has been working with North Korea on missile technology! The US actually pressured Canada not to make a fuss about kidnapping and torturing one of its citizens that wasn’t actually a terrorist, and tried to get its CIA agents in another case to be let go! Did you know that the Queen is more respected than Prince Charles?

Wow this is truly mind blowing stuff if you haven’t been following anything the last 10 years but hit your head yesterday and suddenly give a Schröder (although you’d be five years too late for those particular tidbits to mean anything).

Greenwald and the Independent rightfully pillory the press for not doing its job at a time when it would actually mean anything. The truth of the matter is that governments have perfected the art of propagandistic spin. When they are caught doing something that goes against the fantasy narratives they have created they deny deny deny. After all, you’d have to be anti-American to actually believe the US could torture or that there was little evidence for WMD. How do I know? Because no trusted sources have said so! Sure there are many officials near the top of their branches that said so at the time but they are only covered by radical organizations and/or were recently fired so they have an agenda or are just bitter. As long as you can draw it out long enough by demonizing those that object, then by the time the evidence is so overwhelming it has to be stated it is “old news” and we should just move on. Or even better, since the world hasn’t ended that proves that the government was right, so really we should codify that behavior and be grateful that they lied to us. In either case, this process devalues the information both intellectually and emotionally until it loses all power.

That is ultimately what WikiLeaks is about. These leaks aren’t the new Pentagon Papers or Watergate as there is no mind blowing conspiracy that has been uncovered with the immediacy to do anything about it. No, Assange is much more of a Loki character whether he would agree or not. His power is not in releasing knowledge, but in being a jester. In contrast to a power struggle oriented agenda in which knowledge is used as leverage, he is using an anarchist perspective that merely seeks to show the idiocy and infantilism of the power structures by using their own words against them. What is written in the documents is trivial, who it’s written by is what matters because it shows that the Kings and Queens have no clothes. This is precisely why governments around the world are stammering and throwing hissy fits while swearing grave repercussions in the same way that schoolyard bullies react when initially confronted. But just like bullies, most of the leaders have immense personality defects that can easily be laughed out, robbing them of power. We have the documents to prove it.

This is why anti-establishment progressives and conservatives should praise WikiLeaks. What they are releasing fits in very strongly with their narrative that the powers that be are bumbling prima donnas towering on a stack of expendable foot soldiers made to act in a monstrously absurd play. WikiLeaks just releases the scripts.

Footnote: The people that I have genuine concern for are the small players on the ground that provide the information, especially in totalitarian regimes. If there really are crackdowns because of this then that would be on Assange’s shoulders. However there was concern about this when the Afghanistan/Iraq documents were released and to date there have been no reports of that occurring. Therefore, unless there are specific reports of people in danger I will not evaluate the leaks on that premise. Moreover, while I strongly condemn the release of information that harms innocents, it pales in comparison to how foreign policy operates. For decades the US and other powers have rationalized indirect collateral damage as being part of the greater good. Whether it is selling out informants for political reasons, overlooking repression based on dictators professed ideology or encouraging whole scale rebellion that ends in slaughter (such as at the end of Gulf War I) the United States in particular has the blood of countless victims that were killed by their murderous tyrants in part due to our policies.

These decisions are post hoc rationalized as being “good” if they actually do benefit a lot of people or “bad” if they do not. [Or cynically, they are good if it allows Americans to buy more stuff and feel safe.] In the same vein, WikiLeaks is sure to cause collateral damage at some point but it will be difficult to assess whether they are “right” until the full consequences are known; at least using the same standards that everyone else is held up to. Any opinion at this point is just ideologically driven, as we’re all grasping at straws. Based on my ideology and the diligence that WikiLeaks does apply, I see it as being for the greater good. Of course that will change if the content changes in the future.

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How To Save Society And The Planet Too: A Book Review of Prescription For The Planet http://themoderatevoice.com/how-to-save-society-and-the-planet-too-a-book-review-of-prescription-for-the-planet/ http://themoderatevoice.com/how-to-save-society-and-the-planet-too-a-book-review-of-prescription-for-the-planet/#comments Wed, 24 Nov 2010 05:35:59 +0000 http://themoderatevoice.com/?p=93148 abstract six line blue transparent vector

Ron has had an increasing amount of posts about the coming energy shortages that are going to threaten industrial society. The estimates are converging across nations and social groups: we have already hit peak conventional oil and it is almost definite we will have sizeable overall oil shortfalls by 2015. Various agencies across the world [...]

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Ron has had an increasing amount of posts about the coming energy shortages that are going to threaten industrial society. The estimates are converging across nations and social groups: we have already hit peak conventional oil and it is almost definite we will have sizeable overall oil shortfalls by 2015. Various agencies across the world project this to be around 10 million barrels per day or about 15% of total demand. This will cause oil to skyrocket to unimaginable levels or lead to a commensurate decline in economic activity. In other words, we are out of time to avoid the first wave of shortfalls.

One of the criticisms about the energy peaker-environmental movement is that it doesn’t offer any “solutions.” Yet this criticism is loaded because it has an implicit assumption that is never stated: it demands solutions that will maintain the current socio-economic paradigm. Well there aren’t any and at this point the rise of propaganda in the press to cover over this fact is becoming interesting. For instance, in a recent New York Times piece they go to great lengths to not only dismiss problems but to portray an era of unbridled prosperity! Of course even a cursory amount of skepticism shreds the piece apart. Embedded in the narrative is the acceptance that the age of cheap oil is waning (but that’s ok because of the unconventional oils) and anyway we have tons of natural gas (a hundred years supply at current consumption rate!) that we will undoubtedly transition over to to get around the oil prices (but wait, what is the supply of NG at the new consumption rate?). With an energy 101 education the piece is even worse as it glosses over the fact that the natural gas supplies are continuously revised upward because it assumes the safety and efficacy of fracking techniques that haven’t been proven yet. In fact there is plenty of anecdotal evidence that fracking delivers far less extractable gas than claimed at a far higher environmental and health cost. It also ignores the concept of energy return on energy invested of non-conventional oil. Conventional oil is around 80-100, meaning an barrel of oil of energy use returns 80-100. Non conventional is 20 on the high end (some deep water) and 3-4 once you start talking about the heavier tar sands. This means that thermodynamically we will have a lot less usable energy from these deposits, so in order to compare to a Middle East oil field you should divide the announcements of new finds by 4-20 based on their type. Once this is done the numbers quickly fall apart.

It’s been assumed (and feared by people that are worried about CO2) that the world would transition to coal as a stop gap measure, but there is increasing evidence that peak coal energy extraction (not total amount, but the net energy from it) will peak in around a decade as well. Of course there is growing consensus that not only will global temperatures rise to the top of the models but that the environment/weather is far more sensitive than previously imagined; so we’re going to be forced to do without expanding coal one way or another.

Renewables can’t plug the gap in nearly enough time.

All of this combined it is evident that our current industrial paradigm is finished. Finito. No mas. Ron has been covering that well enough and the intellectually honest disagreement is about what society will look like afterwards. It ranges to apocalyptic to pre-industrial to low impact techno-localization. The latter posits that we have made enough technological and scientific advances that it is possible for most localities to produce the majority of their needs while maintaining a high standard of living and trade can be relegated back to its historic role of luxuries. In this paradigm travel is a luxury but we’ll hardly be starving…the trick is how to transition without everyone getting blown up.

This is the only realistic positive scenario I’ve seen but a book recommended by DLS has a framework that would actually enable us to continue with our social paradigm largely intact. Not only is it very convincing based on my technical understanding, but I have been unable to find any substantiative criticisms. Indeed it has won plaudits by several physicists and scientific environmentalists.

It has the provocative title Prescription for the Planet: The painless remedy for our energy and environmental crises and is the brainchild of Tom Blees. My emphasis added by the way…with a subtitle that strong my skepticism level was at 11 going in. But, much to my surprise, he managed to (nearly) pull it off. I will give a basic overview while noting that the Australian blog Brave New Climate has an extensive series of posts that comment about its technical merits.

Blees starts out with a few fundamental social premises that frame his narrative:

  • Global warming is the greatest challenge that civilization has faced in a very long time
  • It is unjust that industrialized societies have a high standard of living that is predicated on resource extraction of weaker countries
  • We are running out of time when it comes to cheap fossil fuels
  • Humanity will level off at around 11-12 billion people if there are no great conflicts

One thing that i particularly liked about his book was taking both the status quoers and the green energy wizards to task for proposing models that are unsustainable even for a billion people with high standards of living when the only reason why globalization is being accepted is the promise that nearly everyone will eventually reach it. Unlike most green books he takes great pains to put his solutions in the context of not only industrialized society but helping to build emerging ones, and accurately points out that developing countries are responsible for much of the environmental pollution in their quest to participate in the global economy.

In the first part of the book Blees summarizes the potential sources of energy and blasts away the vast majority of them as being able to contribute anything of significance. He saves his most pointed vitriol towards corn ethanol which is obviously valid (I cannot think of anyone that supports it other than politicians and agribusiness) while being light footed around solar and wind but chastising those proponents for their wishful thinking. This section is very solid and lays to waste the idea of green utopia as it is commonly presented.

Then there is the section on nuclear. While Blees is quick to deride anti-nuclear advocates as being irrational and fear mongering, he makes it clear that he is no fan of the nuclear energy complex himself. He brings up waste and security issues with tepid personal feelings but notes that they are political hurdles of good policy and thus any proposed solution must address them. His biggest issue with reactors though is there isn’t a whole lot of uranium left. If we were to start producing the majority of electricity from nuclear power, we’d only buy a few decades until peak uranium, so we haven’t gotten anywhere.

So, in one fell swoop he has cast aside everything that is commonly discussed. What’s left?

To Blees it is nuclear power (done the right way), a reusable fuel for transport and a way to recycle other materials, including organics that can be made into plastic. Oh yeah and all of the technologies already exist in nearly complete form.

The backbone of Blees’ world is the integrated fast reactor (IFR) which is his name for fast breeder reactors. Unlike the plants currently in usage that use about 1% of the total energy available in the uranium and leave a ton of radioactive waste, IFRs create more radioactive material than they consume in most of the cycle, allowing for nearly 100% energy extraction over the course of several cycles. Blees also takes pains to point out that they are significantly simpler and safer, which will allow for reduced costs through standardization and eliminates any risk of a major leak occurring. Fast breeders have been around since the beginning of the nuclear power age, but the downside is that the fuel that must be reprocessed has a huge amount of weapons grade plutonium and it’s always been seen as a proliferation hazard. The “integrated” part of the IFR is to note that the reprocessing is built into the secure area of the plant, minimizing risk. Moreover, this technique would guarantee that only a very small amount of radioactive waste ever leaves the plant, and that waste is orders of magnitudes more manageable due to a much shorter half life. Oh yeah, and they can use the current waste that we have lying around, which Blees’ calculates that we would be able to run the world for two hundred years without mining ANY more uranium.

The math is simple: without IFR we have about 40 years of uranium left if we were to make it our dominant power source, with IFR we have (including using waste) ~40,000 years! What is astonishing to me, although not mentioned in the book, is that this was known back in the 1950s. I came across a speech by Edward Teller noting that we should use breeder reactors for this very reason (and also to avoid global warming due to excessive CO2 emissions) that was given in 1961 I believe. The science has always been on the IFR side, it’s just politics that has gotten in the way, and believe you me, Blees has a bit to say about that. He has a fascinating tale about the government’s research into this technology and Clinton’s success in killing it (well to be entirely accurate it was John Kerry but Clinton didn’t stand up for it).

In any case, Blees is on fire about the potential for IFR to the point that he gets highly repetitive and I started skimming the book because he started making the same points from a thousand different directions. But there is a reason for this as it powers the most innovative part of the book.

Imagine that you could drive a car that a) had no emissions, b) had entirely reusable fuel and c) had similar energy density to gasoline. That would be the perfect car to me and I would have thought science fiction. Blees says it’s possible through the magic of boron. He points out that fine grains of boron will combust in a 100% O2 environment to form boron oxide in an exothermic reaction that is sufficient to power a car. To make matters even better, boron oxide can be turned back into boron through electrolysis. Using these facts he imagines a car that is fueled with pure boron and has a built in oxygen extractor to grab O2 out of the air. Add in a powerful electrical system and this setup gives us the ABC above, with the quirk that instead of the car getting lighter as fuel was burned, it’d actually get heavier (O2 would be continually reacting with the boron, adding weight). He has some numbers and shows that boron itself has an energy capacity that exceeds gasoline but that the fully reacted boron would make it about the same, so cars would most likely travel around the same distance they do now.

After all the boron was reacted he imagines that you could go to a convenience store, drop off your used boron and pick up a new block. That boron could then be shipped to a reprocessing center that would make it good as new and send it back out. Thus as long as we have a huge amount of electricity (conveniently provided by the IFRs) we would be able to drive to our hearts’ content without worrying about any environmental impact once the initial amount of boron was extracted.

He argues that financially and politically this setup is great because it requires very little added infrastructure to get started. The construction of even one reprocessing plant could serve all the initial adopters of the technology as the boron blocks could be shipped over rail, so there is no need for pipelines or complex storage. Moreover, he calculates that the per gallon equivalent would conservatively be about 45 cents a gallon, although I feel that he went out of his way to add in more costs than needed. Based on the amount of electricity that regenerating uses, even 45 cents a gallon would give a four-five times larger profit margin to the transporters and retailers than currently exists for gasoline. I really could see no flaw in his suggestion other than the fact that small O2 compressors don’t exist yet, but that is an issue that I feel confident can be overcome although I haven’t done the math myself to make sure about the rates of compression are realistic given the physical constraints.

This overview is getting long but there is one final piece to his technovision: plasma incinerators can be used to recycle basically all garbage. I’ll be very brief but the basic idea is that you dump all your garbage through plasma that operates at such high temperatures that it tears apart things to their molecular level. Organics will naturally be able to be extracted in gaseous form and those can be used to do all sorts of neat things like make plastics, while metals can be theoretically extracted based on their molecular weights. He has a lot of detail but the short end of it is that we should be able to reuse nearly 100% of the elements in products for a cost far cheaper than mining virgin sources. I felt that this particular chapter was the weakest as it is by far the most speculative in how difficult it will be to separate the different materials out of the sludge that is created. Indeed, the incinerators I’ve found that are operational only extract the organic gases and ignore everything else, and even then there are some issues. I can see that theoretically his vision will work but it will require a lot of research and experimentation before anything close to it can be approximated.

All of the above is in the first half of the book, the latter half is about the politics of implementing the vision, which is almost as interesting as the technology itself. However, unlike the technical aspects, I imagine there will be a ton of disagreement about his politics, although it is a view that I wholeheartedly support. If there is interest I can summarize that at a later date.

I highly recommend that everyone reads this book and am amazed that DLS hasn’t pointed to it more than a few times. Blees not only does a good job of providing enough information to win over technical skeptics such as myself, but he does it in such an engaging fashion that I imagine general readers will be able to communicate the logic behind his vision with ease. His writing style is full of energy and barbs but never becomes detached from his larger messaging of inclusiveness. Honestly his wit and passion is much needed in this area as most of the genre breaks down to hyperventilation in one camp and accurate but exceedingly boring writing that will never stir anyone to action in the other.

My biggest problem with the book was that it was too good. While I have always been a believer that we can overcome the challenges of the 21st century through clear proactive thinking, I’m growing increasingly pessimistic that we will be able to do it for political reasons. At least I could always take comfort in the fact that what I believed was necessary was a huge paradigmatic shift to society on all levels, so it was understandable that it wouldn’t be embraced except as a reactionary move. To be convinced that there is actually a straightforward and practical way of addressing the problems in our current paradigm, that we have known how to do most of it for decades and that it is no where to be seen? Well that’s harder to swallow. I just hope that these ideas will leak out to the point that in a few years it will provide a blueprint for governments around the world to embrace as a long term vision.

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A Truly Amazing Driverless Car Test Is Completed http://themoderatevoice.com/a-truly-amazing-driverless-car-test-is-completed/ http://themoderatevoice.com/a-truly-amazing-driverless-car-test-is-completed/#comments Thu, 28 Oct 2010 16:21:44 +0000 http://themoderatevoice.com/?p=90204 abstract six line blue transparent vector

A few weeks ago everyone was in a tizzy over Google’s announcement that they had made some cars that could drive themselves. With the caveat that I have a growing chip on my shoulder about corporations copying academic work and getting lots of good press for “inventing” stuff a good 5-10 years after government funded [...]

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A few weeks ago everyone was in a tizzy over Google’s announcement that they had made some cars that could drive themselves. With the caveat that I have a growing chip on my shoulder about corporations copying academic work and getting lots of good press for “inventing” stuff a good 5-10 years after government funded grants and awards (in this case primarily DARPA) have already done so I found, the ruckus to be way overhyped as driving on well mapped roads has been old hat for a few years.

Well now a European project has blown the existing ones away: an 8,000 mile journey from Italy to China without any preprogrammed map. The scale and number of conditions faced is incredible; truly amazing considering that the first DARPA Grand Challenge had no finishers and that was just in 2004. To be fair the DARPA routes where in the desert with tough terrain instead of roads, but the obstacle detection and AI has progressed faster in six years than I expected in fifteen-twenty.

At this point the primary challenge comes down to processing power and the ability to react to terrible human driving.

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Starlight http://themoderatevoice.com/starlight/ http://themoderatevoice.com/starlight/#comments Wed, 27 Oct 2010 17:58:01 +0000 http://themoderatevoice.com/?p=90026 abstract six line blue transparent vector

XKCD: (Be sure to put your mouse over the image for a second to see his message)

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XKCD:

Don't worry! From the light's point of view, home and your eye are in the same place, and the journey takes no time at all! Relativity saves the day again.

(Be sure to put your mouse over the image for a second to see his message)

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Does Anyone Want To Give Advice (Legal And Otherwise) About Starting a Non-profit And Credit Union? http://themoderatevoice.com/does-anyone-want-to-give-advice-legal-and-otherwise-about-starting-a-non-profit-and-credit-union/ http://themoderatevoice.com/does-anyone-want-to-give-advice-legal-and-otherwise-about-starting-a-non-profit-and-credit-union/#comments Sat, 23 Oct 2010 02:34:11 +0000 http://themoderatevoice.com/?p=89625 abstract six line blue transparent vector

If you’ve read either Ron Beasley or my ramblings you’ll know that we think that the problems that society faces are structural in nature and only going to get worse due to peak resources, demographics, deflation, etc. In light of this belief I am growing increasingly involved in ground up movements to address these issues [...]

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If you’ve read either Ron Beasley or my ramblings you’ll know that we think that the problems that society faces are structural in nature and only going to get worse due to peak resources, demographics, deflation, etc. In light of this belief I am growing increasingly involved in ground up movements to address these issues at their foundation, which is working towards moving back to local structures in production/consumption of basic needs and eventually governance. I’ve talked and worked with some interesting people but I find the efforts sorely lacking and not translatable. This is primarily because these organizations are heavy on the emotion and personal change while light on the physical and structural change. Basically there are a lot of neat ideas that work and are good in theory but are hand crafted and not scalable. This just won’t cut it, especially with peak oil bearing down on us.

Due to my personality I am focusing primarily on the technological and business development to try to start translating this worldview into concrete products that can be installed widely and foster local economic activity. Let’s just say that there is a surplus of intellectual and emotional talent and a deficit of upfront development and/or consumer funds. I can give some specific examples in the comments if people want to know.

In any case, over the last few years I have had perused many venues of possible funding and always run into the same problem: if you don’t have a megacorporation that is interested then it is very hard to secure funding, and even though investors are more than happy with the technical side and potential, they are wary about the size of the potential customer base…especially because many of these ideas involve products that will cost $10k+.

It recently occurred to me while talking to local entrepreneur that we do have a very large customer base for these products if they could get financing and I drew up an cashflow model based on his product to show that it would work. That led me to the eureka moment: we should all just get together and form our own bank! If we could convince the members to move their deposits out of the big banks into this one, then it would provide an asset base to then make loans in this area of efficiency improvements, electrical generation, food production, etc. to the households (notice all the loans I’m talking about are for things that are guaranteed to have relative lifetime appreciation in value while lowering monthly expenses). They could also give some loans to small businesses in the field to help with all those needs. This way we’d have a good estimate of the customer base, have financing available for the products and have business inventory support; thereby making the pitch to investors on the development side of new products much stronger.

There are more details but the conclusion is simple. I am looking to start a nonprofit group that will seek to push this paradigm through community involvement, economic consulting, publishing, etc. Once a nonprofit group has been established (or we may tag onto an existing nonprofit group such as Transition) and has a membership base then we will start a credit union for the members of the nonprofit to serve its members’ financial needs generally, with a strong focus on the type of loans I’ve talked about above.

Anyway I have conversed with a few people that have quite a lot of influence over moderately large sectors of this community and I’ve been tasked with developing the path forward in order to make a formal pitch to their following. Is there anyone on TMV that wants to a) learn more about what I’m trying to do and hopefully b) has legal/financial expertise to contribute at least in the development phase? There is a major conference in Cleveland in the first week of November where people are going to pitch ideas and the winner will get mental, political and material support from the participants to make it into reality. I would like to have the idea fleshed out by then to pitch.

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China Halts Rare Earth Shipments To US/Europe http://themoderatevoice.com/china-halts-rare-earth-shipments-to-useurope/ http://themoderatevoice.com/china-halts-rare-earth-shipments-to-useurope/#comments Tue, 19 Oct 2010 21:57:11 +0000 http://themoderatevoice.com/?p=89292 abstract six line blue transparent vector

A month and a half ago China halted most rare earth shipments to Japan; today the NYT reports they have done the same to US and Europe. As I noted, all the major technological industries rely on these materials and the move is intended largely to force production to move to China/protect their burgeoning industry. [...]

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A month and a half ago China halted most rare earth shipments to Japan; today the NYT reports they have done the same to US and Europe. As I noted, all the major technological industries rely on these materials and the move is intended largely to force production to move to China/protect their burgeoning industry. If shipments are not continued you can basically kiss the bulk of basic green energy and high tech manufacturing jobs goodbye (although China seems perfectly willing to sell manufactured components).

I am very ambivalent about this move if it continues: on one hand it is a big blow to the potential for new industry. On the other hand, rare earth deposits in the entire world are only large enough to last around 50 more years, and this stoppage is forcing people to reassess their usage of rare earths as well as investigate the feasibility of recycling. Therefore it could lead to longer term benefit…but for now it is throwing industrial plans into disarray.

Andrew Leonard has a good take that didn’t immediately strike me. “It is hard to imagine a more provocative gesture,” vis a vis trade conflict. The US Treasury is set to say whether China is a “currency manipulator” (supposed to last Friday but it has been delayed) which would open up the legal possibility for tariffs and other trade actions. There is growing pressure to do so and this serves as a big, “Bring It” from China, perhaps to dissuade that designation. The question is how we will react…it could quickly turn into the major trade war that Chinese guru Michael Pettis has been foreseeing.

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Big Banks Accused Of Buying Tax Liens Through Secretive Front Companies In Order To Foreclose http://themoderatevoice.com/big-banks-accused-of-buying-tax-liens-through-secretive-front-companies-in-order-to-foreclose/ http://themoderatevoice.com/big-banks-accused-of-buying-tax-liens-through-secretive-front-companies-in-order-to-foreclose/#comments Tue, 19 Oct 2010 20:13:14 +0000 http://themoderatevoice.com/?p=89287 abstract six line blue transparent vector

The Huffington Post Investigative Fund website (the first I’ve heard of it) has a lengthy article on a new way that big banks are driving foreclosures. Apparently local governments do not have the resources to pursue property tax collection themselves so they bundle up past due liens and sell them off to investors that can [...]

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The Huffington Post Investigative Fund website (the first I’ve heard of it) has a lengthy article on a new way that big banks are driving foreclosures. Apparently local governments do not have the resources to pursue property tax collection themselves so they bundle up past due liens and sell them off to investors that can then collect or foreclose. I hadn’t heard of this practice but the article makes it sound like it has been long standing. What it says is new in the arena is the activity of major banks and hedge funds that buy the debts and then tack on massive “legal fees.”

For example:

In May, the Investigative Fund reported how an unemployed former mental health counselor with four children named Vicki Valentine lost her home even though the mortgage had been paid in full. She had owed $362 on an overdue water bill when investors took over and added thousands of dollars in legal fees she couldn’t afford…

D.C. Attorney General Nickles criticizes Aeon Financial, LLC, a bank-financed investment group from Chicago that buys tax liens in some 10 states. Nickles asserts that Aeon has slammed homeowners, who sometimes owed just a few hundred dollars in back taxes, with $7,000 or more in legal fees.

This is in addition to upwards of 18% interest. When people can’t pay then the homes are taken to foreclosure. What is particularly egregious about this process is that everything is done through front companies that are sometimes not even registered in the country. Not even the governments know who they are dealing with:

Banks and hedge funds usually buy the liens through online auctions that permit them to bid in bulk, and they can use any name they want.

The giant Bank of America, for instance, has bid in Florida tax lien sales using colorful names such as Bennu, LLC, named after a mythical bird said to be the soul of the ancient Egyptian sun god. It also has bid as Osprey, LLC, and Ecru, LLC, named after the French word for a pale brown color…

Tax collectors in Florida don’t always know who they’re doing business with, either. Officials in Pinellas County want to know who exactly is behind a company called GL Funding Limited. Sales records show that GL Funding spent more than $10 million and dominated the tax sale in at least 10 Florida counties, most of them rural or smaller cities where interest rates tended to be much higher than in urban and resort areas.

GL Funding registered with several Florida tax collectors as a company with offices in the Cayman Islands. But other counties list a post office box in Philadelphia as its address. The person who registered GL Funding in Pinellas County’s tax sale provided Pinellas with a telephone number in Dallas, Tex. At that number, a man named Jess Weir declined to tell the Investigative Fund who is investing through the name GL Funding.

Said Sam McClelland, deputy tax collector in Pinellas County, Fla., where GL Funding acquired hundreds of liens earlier this year: “We’re still trying to sort this out.”

Yes, banks that are backed explicitly and implicitly by hundreds of billions of dollars from the government each year are tacking on thousands of dollars of fees and then foreclosing on people that owed a few hundred bucks…from the shadows. Ecru, indeed.

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The Mortgage Securities Ship Can’t Take On Much More Water Before Sinking http://themoderatevoice.com/the-mortgage-securities-ship-cant-take-on-much-more-water-before-sinking/ http://themoderatevoice.com/the-mortgage-securities-ship-cant-take-on-much-more-water-before-sinking/#comments Sun, 17 Oct 2010 22:26:21 +0000 http://themoderatevoice.com/?p=89034 abstract six line blue transparent vector

Former lead prosecutor in the Savings and Loan fraud Bill Black and derivative expert/author Janet Tavakoli have been saying for the last couple years that the financial problems were not caused solely due to unforeseen circumstances but the largest fraud in history. Information about the nature of mortgage backed securities that confirms this view has [...]

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Former lead prosecutor in the Savings and Loan fraud Bill Black and derivative expert/author Janet Tavakoli have been saying for the last couple years that the financial problems were not caused solely due to unforeseen circumstances but the largest fraud in history. Information about the nature of mortgage backed securities that confirms this view has trickled out for years now, but we appear to have reached a tipping point where it is now flooding.

It’s becoming widely known that 1) banks submitted improper affidavits when foreclosing, which is fraud on the court but they are spinning it as “paperwork inconsistencies” that only affected deadbeats that should be foreclosed on anyway. This is the primary issue that has been talked about thus far over the last few weeks, and — despite the fact of numerous anecdotal accounts that people were unjustly foreclosed on — they seem to have mostly contained it. Unfortunately it turns out that the foreclosure mills hired to do the dirty work 2) committed fraud to maximize their fees, including at least one business that foreclosed on people that were not in default. Between these two it is a no brainer that a foreclose moratorium should be enacted, which will greatly hurt banks’ bottom lines. However, this is just the tip of the iceberg.

3) It is becoming clear that due to the securitization process no one’s mortgage that was packaged (over 70% of all outstanding mortgages) was properly transferred to the trusts. This means that all outstanding MBS technically isn’t backed by anything. No one really knows how to resolve this, as legally it is impossible to just brush away and any Federal “solution” would severely impede on state property and securities’ laws. The size of this problem is much larger than the foreclosure one but is very hard to pin down what it means.

Which brings me to the newest “smoking gun” — 4) evidence that the banks knew that the mortgages did not meet underwriting standards when creating the MBS, but sold them off anyway. Felix Salmon has a lot on this, and Parker-Spitzer had a segment on it. The implications of this are straightforward: the banks will be open to many lawsuits and have to take back much of the $1.5 trillion+ securities they sold. This report suggests that Bank of America could lose half of its book value even without fraud litigation and penalties.

Some combination of these reasons has 5) caused the state AGs of all 50 states to investigate and a Federal Home Loan Bank to sue. I find the latter part to be important because despite the FHLB’s supposed independence, they have stepped in to protect the real estate market under political pressure. The fact they are suing could make the calls for Fannie and Freddie to look at all their MBS in detail be more likely to come to fruition.

In light of these (at least) five major and relatively independent issues, I would note that the Titanic sunk due to six of its flood compartments flooding.

I am not sure what is going to happen…obviously if the banks were forced to buy back all the securities then they would be insolvent again. Some of this is outright fraud with clear legal consequences and some of it will vary by state. However I will say that this article “One nation, under fraud” not only has a catchy title, but a correct one as well. The stories and quotes in there have to be read to be believed…and even then.

Update: Marshall Auerback has a passionate call for the government to use its resolution authority to inspect all the major banks’ books and break up the ones that are insolvent after fraud is taken into account (this would be all of them). He is cavalier about what to do next other than sell of the assets to smaller institutions, but is absolutely correct that the status quo guarantees continued economic fragility.

Update #2: There actually is a 6) that is present in the Daily Caller article linked above.

When banks bought bunches of mortgages to create now-infamous mortgage-backed securities, they did so by forming trust companies to hold the mortgages themselves and forward money to the investors who bought the securities…When the companies were created, they had to abide by what’s called a pooling and servicing agreement, which defined the steps they had to take to acquire mortgages and send mortgage payments to the correct investors. The agreements allow the companies to enjoy tax-free status with the IRS, because the payments they receive aren’t considered income due to the fact that the role of the trusts is to send virtually all of the money to someone else.

The IRS has strict rules regarding these companies, and when the rules are broken, there’s a slight penalty. From 0%, the tax rate on payments received by a trust company that broke the rules jumps to 100%. One of the rules states that a trustee is supposed to acquire any mortgages it will hold within three months of the formation of the trust. There’s an exception for replacing a mortgage with another mortgage, but remember, the notes and assignments involved have either been destroyed or are so erroneously marked that they’re fraudulent. Even if the notes and assignments were all accurate and still in existence, the status of the mortgages in question has changed dramatically. Countless payments that were being made in 2005 have stopped in the aftermath of the housing bubble. The trusts can’t acquire anything close to the number of healthy mortgages they claim to hold, and even if they could, the IRS would take the payments or money from foreclosure sales away. Trusts haven’t been selling mortgage-backed securities. They’ve been selling nothing-backed securities. And as people discover this fact, the value of both the “mortgages” that banks only think they own and the nothing-backed securities will become $0, unless homeowners decide to get their jollies by giving banks money for no reason.

…and 7)

It gets worse. The equally-infamous credit-default swaps that bankrupted AIG will come roaring back with a vengeance as the foreclosure process grinds to a halt. Credit-default swaps are financial instruments called derivatives, which are assets with values determined by other assets. When a mortgage isn’t really a mortgage, a derivative based on that mortgage is suddenly called into question. Banks own trillions in derivatives. They also own derivatives of derivatives. Amazingly, they even own derivatives of derivatives of derivatives. The total dollar value of all derivatives in the American financial system is listed by the Office of the Comptroller of the Currency at an absolutely incomprehensible $233 trillion. And much of that will simply vanish into thin air, crashing major banks into the ground.

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What It’s Like To Be A Peregrine Falcon http://themoderatevoice.com/what-its-like-to-be-a-peregrine-falcon/ http://themoderatevoice.com/what-its-like-to-be-a-peregrine-falcon/#comments Mon, 20 Sep 2010 17:51:58 +0000 http://themoderatevoice.com/?p=86267 abstract six line blue transparent vector

EOM

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EOM

Click here to view the embedded video.

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Mark Your Calendars For Oct 30, 2010: Rally To Restore Sanity http://themoderatevoice.com/mark-your-calendars-for-oct-30-2010-rally-to-restore-sanity/ http://themoderatevoice.com/mark-your-calendars-for-oct-30-2010-rally-to-restore-sanity/#comments Sat, 18 Sep 2010 16:55:19 +0000 http://themoderatevoice.com/?p=86132 abstract six line blue transparent vector

Jon Stewart is getting into the National Mall Rally Game by hosting his own Rally To Restore Sanity: “Rational people will gather on the National Mall in DC to spread a timeless message — take it down a notch for America.” The Daily Show With Jon Stewart Mon – Thurs 11p / 10c

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Jon Stewart is getting into the National Mall Rally Game by hosting his own Rally To Restore Sanity: “Rational people will gather on the National Mall in DC to spread a timeless message — take it down a notch for America.”

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Rally to Restore Sanity
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

Of course Stephen Colbert rightfully views this as a grave threat to America, threatening one of our core principles of society. “America, the Greatest Country God ever gave Man, was built on three bedrock principles: Freedom. Liberty. And Fear — that someone might take our Freedom and Liberty. But now, there are dark, optimistic forces trying to take away our Fear — forces with salt and pepper hair and way more Emmys than they need. They want to replace our Fear with reason. But never forget — “Reason” is just one letter away from “Treason.” Coincidence? Reasonable people would say it is, but America can’t afford to take that chance.” As such he is holding a simultaneous counter rally at the same place.

The Colbert Report Mon – Thurs 11:30pm / 10:30c
March to Keep Fear Alive
www.colbertnation.com
Colbert Report Full Episodes 2010 Election Fox News

So come on down to Washington DC whatever your proclivities may be.

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Yves Smith Says Warren Appointment Is All Smoke, No Fire http://themoderatevoice.com/yves-smith-says-warren-appointment-is-all-smoke-no-fire/ http://themoderatevoice.com/yves-smith-says-warren-appointment-is-all-smoke-no-fire/#comments Thu, 16 Sep 2010 18:34:40 +0000 http://themoderatevoice.com/?p=85930 abstract six line blue transparent vector

And she is rarely wrong about political optics. So look at this as another feint by an administration that is perfect at getting a large part of the country mad for seemingly authoritarian and radical moves, while in actuality changing hardly anything.

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And she is rarely wrong about political optics. So look at this as another feint by an administration that is perfect at getting a large part of the country mad for seemingly authoritarian and radical moves, while in actuality changing hardly anything.

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Many Manufacturing Industries In Big Trouble As China Cuts Rare Earth Exports http://themoderatevoice.com/many-manufacturing-industries-in-big-trouble-as-china-cuts-rare-earth-exports/ http://themoderatevoice.com/many-manufacturing-industries-in-big-trouble-as-china-cuts-rare-earth-exports/#comments Sun, 29 Aug 2010 17:58:35 +0000 http://themoderatevoice.com/?p=84319 abstract six line blue transparent vector

China produces 97% of the global supply of rare earth metals, elements that are used in nearly every electronics component and many other advanced technologies. There has been whispering for a couple of years that they would be cutting exports on most rare earths starting this year and all rare earths by 2012 due to [...]

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Rare earths

China produces 97% of the global supply of rare earth metals, elements that are used in nearly every electronics component and many other advanced technologies. There has been whispering for a couple of years that they would be cutting exports on most rare earths starting this year and all rare earths by 2012 due to their domestic manufacturing demand. This will leave Taiwan, Japan and other technology manufacturers out in the cold, as well as ensure that China benefits the most from “the green revolution” since the metals are pivotal in advanced photovoltaics (solar), magnets needed for turbines (wind) and batteries.

The rumors have become reality as China announced cuts of 72% in order to “protect the environment.” Japan and the United States are warning that they will file a WTO complaint; a near certainty considering that it is estimated it will take at least 10 years to bring new sources of rare earth production online. This move will cripple the ability for domestic production of electronics and most renewables, and is even considered a national security threat due to military shortfalls. Getting caught flat footed on this is an immense embarrassment and direct result of having no industrial policy over the last decade; a clear instance in which “the market” produced a negative outcome. Not only does it threaten the existing economy but it makes most of the promises of a “new green economy” a pipe dream for at least a decade. All of this was completely foreseeable and should have been counteracted with government policy years ago.

However, this collective failure may prove critical to my personal success. After I first read about the issue last year I decided to start development on the design of a solar power based system that was not dependent on rare earth metals, anticipating that the crunch would provide a huge boon. That decision led to a collaboration with several colleagues from Case Western Reserve University and the fruit of our labors has yielded a design that we project will be cost competitive with the grid and has several aspects that are superior to any PV system. Of course PV is the “hot” item right now so it’s proven difficult to get any support for a system on paper; thus we have submitted an SBIR grant to construct a prototype and formalize the design parameters. In the grant we explicitly mentioned the ability to create the system from existing domestic supplies and our desired manufacturing strategy of domestic production to maximize job creation in the United States.

In addition we have submitted an entry into the GE challenge explaining our system’s ability to provide stability to the electrical grid that PV and wind are incapable of, while also being immune to rare earth supply disruption. The entry for our idea is here and I explained a little in this past post.

The timing of this announcement is perfect for our group as it’s under review by both the NSF and GE [hopefully they’ll notice the announcement] but I’m saddened and concerned about what it means to the world at large. Between this and China’s growing trade surplus, the probability of a full trade war is increasing by the day; a war that the US will be at a severe disadvantage in due to the dilapidated state of our domestically sourced industrial base.

Update: Here is a link that gives more context. Note: “The range of applications in which they are currently used is extraordinarily wide, from the ordinary (automotive catalysts, petroleum cracking catalysts, lighter flints, glass and ceramic pigments, polishing compounds) to the highly specialized (miniature nuclear batteries, superconductors, lasers repeaters and powerful miniature magnets).”

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More Fear Mongering About Iran http://themoderatevoice.com/more-fear-mongering-about-iran/ http://themoderatevoice.com/more-fear-mongering-about-iran/#comments Wed, 18 Aug 2010 15:05:36 +0000 http://themoderatevoice.com/?p=83225 abstract six line blue transparent vector

Why does John Bolton get into the press when he has repeatedly been shown to distort the truth and fear monger in order to try to back the Administration (first Bush now Obama) into a corner politically? Wait, I guess that’s the answer. His latest drummed up controversy about the Bushehr reactor again takes advantage [...]

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Why does John Bolton get into the press when he has repeatedly been shown to distort the truth and fear monger in order to try to back the Administration (first Bush now Obama) into a corner politically? Wait, I guess that’s the answer.

His latest drummed up controversy about the Bushehr reactor again takes advantage of the profound societal ignorance (and refusal of the media to critically inform) of nuclear technology in order to create a demon where there is none. In the past I have pointed out that the idea that Iran can literally wipe Israel off the map is absurd, and the distortion about Bushehr is just as bad. I thought of writing up a post explaining the difference between uranium/plutonium and light/heavy water reactors, but I’ll just summarize: basically, everything about the light water Bushehr makes it impossible to create a bomb from the material if used properly, and if they try to pull anything we will know instantly:

Furthermore, it would be very easy to tell when the Iranians or North Koreans shut down their light-water reactors. To extract the fuel rods, you have to lift off a giant lid at the top of the reactor and take them out all at once. Weapons inspectors love this feature because it requires a large-scale operation that’s almost impossible to conceal. So-called “research reactors” tend to be both harder to inspect and more efficient at producing weapons-usable plutonium than the light-water variety. The North Koreans say they’ve already pulled some plutonium from their gas-cooled research reactor at Yongbyon. You can run a gas-cooled reactor for a few months at a time and then pull out the fuel rods for reprocessing without making a big deal of it.

Now in order to run a light water reactor you need to have enriched uranium, which is ostensibly the reason for Iran’s centrifugal enrichment facilities. However they haven’t created enough fuel themselves and the fuel for this is being supplied by the Russians and then the spent rods will be taken back, meaning that they can run the plant without needing to accelerate their enrichment program. Again, if they broke this arrangement we’d know instantly.

So, the running of Bushehr has nothing to do with creating weapons directly nor can it without setting off many red lights. As the JPost says:

Iran expert Ilan Berman of the American Foreign Policy Council said that the uranium enrichment plants are the real backbone of Iranian efforts and expenditures to get a nuclear weapons capability, and he suspected that they, rather than Bushehr, would be Israel’s primary targets in any attack.

He suggested that Bolton was setting up a “straw man” by focusing on the fuel delivery to the Bushehr reactor.

“It’s not at all clear that Bushehr would be a high value target because it’s only tangentially related to any conceivable Iranian nuclear weapons program,” he said. “My suspicion is this isn’t a game changer. This isn’t going to give Iran enough fissile material for a bomb overnight.”

Bolton’s comments about Bushehr are clearly meant to stir up panic and paranoia in order to put political pressure on the US to eventually support an attack on the enrichment facilities, the parts that could be possibly used to make bombs (although at a very slow rate) which they appear to be threatening to expand. We should actually welcome the inauguration of Bushehr as Iran’s actions will now be much harder to justify if they stray off a peaceful path.

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Why Miles Per Gallon Is An Awful Measure (Also, Hybrids Are Overrated) http://themoderatevoice.com/why-miles-per-gallon-is-an-awful-measure-also-hybrids-are-overrated/ http://themoderatevoice.com/why-miles-per-gallon-is-an-awful-measure-also-hybrids-are-overrated/#comments Tue, 17 Aug 2010 01:56:56 +0000 http://themoderatevoice.com/?p=82984 abstract six line blue transparent vector

Logan’s recent post reminded me to highlight why MPG is a terrible measure that is severely distorting consumer and regulatory behavior. If you had to guess, which do you think saves more gas: going from 20 MPG to 30 MPG, or 30 MPG to 45 MPG? Well the latter is an increase of 15 MPG [...]

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Logan’s recent post reminded me to highlight why MPG is a terrible measure that is severely distorting consumer and regulatory behavior.

If you had to guess, which do you think saves more gas: going from 20 MPG to 30 MPG, or 30 MPG to 45 MPG? Well the latter is an increase of 15 MPG so you might be tempted to choose that, but they are both 50% increases, so maybe they are the same, right?

Well let me add in more detail. Let’s say you are driving 100 miles. Now calculate how much fuel each would take:
20 MPG = 5 gallons
30 MPG = 3.33 gallons
45 MPG = 2.22 gallons

Well now it’s clear, going from 20-30 saves 1.66 gallons while going from 30-45 only saves 1.11. Of course we can expand it even further, since a lot of smaller cars now get around 40 mpg while even the best hybrids only get 60 mpg. That is saving a mere 0.83 gallons/100 miles. So why do we look at it in terms of MPG instead of a more realistic measure? I actually have no idea; I’m genuinely asking since apparently if you walk into a dealership in any country in the world except the US, they will display efficiency in terms of litres per 100 km so you can make accurate comparisons.

Let’s do a comparison for an average midsized car that gets 30 mpg to an average hybrid that gets 45 mpg. In general the hybrid costs about $6k more, which at a price of $3 per gallon (we’ll assume price will continue to go up) is 2000 gallons. Since you are saving 1.11 gallons per 100 miles, that means you have to drive around 180,000 miles in order to break even in terms of price. OK you say, let’s say price isn’t the primary purpose, saving energy is. Well it is hard to find good sources about how much energy goes into hybrid batteries, but based on their price you can estimate that it’s about 900 gallons (I used $3k of electricity for the battery) or break even at 80,000 miles when compared to a 30 MPG car. This means that you are saving about 1100 of gas in terms of energy.

Now let’s look at the 20 MPG to 30 MPG. The 180,000 miles it would take to break even in cost above would result in $9k of cost savings for 3000 gallons of gas. Obviously targeting the ~20 MPG of the market and moving that up to 30-35 MPG is far more important for both pocketbooks and the environment than having people that currently get ~30 move into hybrids, yet in practice that is not what is happening.

How realistic is it to move the average MPG (around 24) to around 35 MPG? I think it’s very realistic with existing technology if we move to diesel engines which get about 40% more MPG. These aren’t your father’s diesel engines either, since with modern computer controlled systems most of the drawbacks of diesel are addressed. This is why 50% of all cars and nearly all sedans in Europe are now diesel, leading to an average of 40 mpg!

Making this transition will take a lot of changes in marketing for consumers and also regulatory agencies that define things in terms of MPG. In fact a lot of designs for passenger diesel cars are getting scrapped because emission regulations are per gallon instead of per mile, and diesel engines cannot pass them even though diesel blows away gas engines in terms of emissions per mile, also known as reality. Moving to gallons per 100 miles in both marketing and regulations would allow market forces to create better cars (or just have the same design here that they do in Europe) based on increased consumer demand.

It’s much more simple and impactful than fixation on hybrids.

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Miracles To Woes, A Look At What We Have Wrought http://themoderatevoice.com/miracle-to-woes-a-look-at-we-have-wrought/ http://themoderatevoice.com/miracle-to-woes-a-look-at-we-have-wrought/#comments Sat, 14 Aug 2010 17:37:37 +0000 http://themoderatevoice.com/?p=82793 abstract six line blue transparent vector

Antibiotics are amazing; arguably the second most amazing discovery behind electricity. I have heard cogent and persuasive arguments that antibiotics are the defining feature of modern medicine being modern, meaning that you have a better chance of a doctor helping you instead of making you worse. Unfortunately when using technological advances, humanity has repeatedly decided [...]

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Antibiotics are amazing; arguably the second most amazing discovery behind electricity. I have heard cogent and persuasive arguments that antibiotics are the defining feature of modern medicine being modern, meaning that you have a better chance of a doctor helping you instead of making you worse.

Unfortunately when using technological advances, humanity has repeatedly decided that if a little of something is good, a ton of it is great. Hence antibiotic use is now prevalent just about everywhere for use as a cure all. In the past I have talked about how simple changes to medical protocol would save hundreds of thousands of lives and billions of dollars a year. Reading back, what I did not mention explicitly is that a major reason for the laziness is due to the rise of antibiotics. It became standard protocol to use them as much as possible — give it to the patient, put it on your hands, run it through the IV, etc. — and worked for a long time, so doctors and nurses stopped following sanitation protocols because they could with minimal failures. However, evolution is the most powerful force on the planet and we are now reaping the full bore of those decisions.

While the last few decades has seen the immense rise of MRSA in hospitals, most of those infections could be stopped if caught in time with a small group of super antibiotics that are kept under lock and key as a last resort. Now a new mutation has arisen, creating bacteria that nothing can kill at the moment or for the foreseeable future and could potentially be transmitted to all sorts of common strains.

It is far too early to tell how much of a problem this will be because infectious disease must be evaluated on metrics of transmission and virulence in addition to treatabliity. Diseases that are highly virulent and nearly untreatable (like Ebola) can have a far lesser impact than highly transmittable diseases with moderately low virulence and moderate treatability (like seasonal flu). On the other hand, hospital infections have proven to be very transmittable and fairly virulent, so this could potentially turn into a major epidemic and finally force widescale changes to medical practices.

Regardless of the outcome of this particular mutation, it is the strongest warning sign yet that we need to step back and evaluate our policies when it comes to using technology that affects biological ecosystems (on all scales) because the negative effects are bound to get worse and worse. It’s not just about human health either, for the overuse of herbicides is causing “superweeds” and increasing numbers of harmful insects are becoming pesticide resistant. I’m definitely in the camp that evolutionary selection will be able to thwart us long after we’ve run out of good ideas on how to improve the *cides.

On the flip side, if we choose to embrace systems oriented policies that respect the rules of evolution and ecosystems, we can reverse the trend and greatly lower the toxicity of our chemical/drug interventions as well as save hundreds of billions of dollars in R&D and expensive failures.

Let us hope that our collective wisdom will rise before our indiscretions cause the deaths of millions more.

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Shameless Self Promotion: Help Me Save The World http://themoderatevoice.com/shameless-self-promotion-help-me-save-the-world/ http://themoderatevoice.com/shameless-self-promotion-help-me-save-the-world/#comments Fri, 06 Aug 2010 20:32:00 +0000 http://themoderatevoice.com/?p=82208 abstract six line blue transparent vector

I’m someone that puts his brain where his mouth is, meaning that I actively try to work to address problems that I talk about. One of these days I’m going to do comprehensive posts about everything I’m involved with from health care to energy to food production to economic modeling, there may be some other [...]

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I’m someone that puts his brain where his mouth is, meaning that I actively try to work to address problems that I talk about. One of these days I’m going to do comprehensive posts about everything I’m involved with from health care to energy to food production to economic modeling, there may be some other stuff I don’t remember now. I’ve been wanting to do so, but until we’ve secured IP formally on all the stuff it’ll be hard to talk about in the depth that I’m sure TMVers will want to talk about it on.

That said, I am going to bring up one thing I’m working on very briefly because it’s part of a “contest.” I’m going to quote something I sent to a message board I’m on because I need to go camping in 15 minutes:

I’ve been working with some friends I went to school with to create a design that is a new spin on generating electricity from the sun called concentrated solar power. Basically, instead of converting directly from the sun like photovoltaics (solar cells) you collect all the energy and store it as heat, then generate electricity from the heat. There are several advantages and disadvantages, but I think it has a key role to play going forward. The biggest advantage is that you can generate power 24 hours a day, which means you can get by with a lot few batteries. It also will put out “waste heat” that can be used to heat your water or run a solar air conditioner (something that we’re going to work on designing next) so it’ll greatly cut down on energy needs too.

Utility level csp plants are starting to be built, but there isn’t any solution for small scale applications. That’s what we’re trying to do. We came up with some pretty creative ideas that take advantage of our expertise in understanding complex systems dynamics, and we have a design that based on initial talks with suppliers we can probably make as cheaply as grid power costs initially, and eventually make it far cheaper. We also can make a simplified version that will be very very cheap for tropical developing countries. Hopefully we’ll get it made because it’ll be the cornerstone of lots of stuff I want to make that will allow people to grow their own food, use much less energy and produce their own fuel.

We are collaborating with some professors at Case Western Reserve University and have made an SBIR grant proposal (government money to help develop new commercial products that are based on exploratory research) that we’re waiting to hear back on, but we also just found out about this GE contest called Ecomagination. The actual contest part is pretty lame because they don’t give you enough space to communicate the idea, and really it’s just a way for them to get lots of people to pitch their ideas so GE can see whether any ones are worth pursuing a relationship with, however if you like the idea then it’d be great if you clicked here and voted for it because I assume the more votes it has the better chance that the GE judges will look at it closely.

Oh yeah, also we want to do as much manufacturing as possible in domestically to provide as much economic benefit as possible [TMV note: We purposefully designed it to only use basic materials and as simple as manufacturing as possible in order to expand the regions where it can be produced. We are planning on licensing the technology to independent firms in each targeted country, so it’ll be more of a franchising model of production.]

So yeah, click here if you want to vote on it, it’s been demanded of me that I tell everyone I know. I’m not good at self promotion since originally when my coinventors asked me to tell people I said I didn’t know of anyone.

I’m going for the weekend but I’ll be up for explaining more when I get back.

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How Does Popular Opinion About Gay Marriage Compare To Interracial Marriage During Loving v. Virginia? http://themoderatevoice.com/how-does-popular-opinion-about-gay-marriage-compare-to-interracial-marriage-during-loving-v-virginia/ http://themoderatevoice.com/how-does-popular-opinion-about-gay-marriage-compare-to-interracial-marriage-during-loving-v-virginia/#comments Thu, 05 Aug 2010 05:48:13 +0000 http://themoderatevoice.com/?p=81988 abstract six line blue transparent vector

Obviously today’s ruling will bring about cries of judicial activism primarily from gay marriage opponents but also for conservative proponents that see judicial overreach. While comparisons to anti-miscegenation laws have been made by gay marriage supporters, I have seen no one actually compare public opinion during the 60s when Loving v. Virgina legalized interracial marriage [...]

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Obviously today’s ruling will bring about cries of judicial activism primarily from gay marriage opponents but also for conservative proponents that see judicial overreach. While comparisons to anti-miscegenation laws have been made by gay marriage supporters, I have seen no one actually compare public opinion during the 60s when Loving v. Virgina legalized interracial marriage across the land to gay marriage attitudes now.

This is precisely what I did in a post last year (without the emphasis on the Loving ruling in 1967) which you can click through to see the charts and give TMV more hits. The take away message is clear: in 1968 Gallup found that 73% “disapproved” of interracial marriage with 20% “approving.” By contrast 30% say they support gay marriage and 28% civil unions. The latter in most cases is an issue of marketing and the numbers don’t drop very much if you ask the binary “should homosexuals have their relationships formally recognized by the government” without the break down. Furthermore, you can look at the breakdown by age and see that in every group but the 65+ there are super majorities in favor of legal recognition. I’ll eat my shoes if the court doesn’t take that into account informally while making their decision.

OK so “approval/disapprove” isn’t exactly analogous to whether something should be legal (well in theory, in reality the vast majority of people are in stages 3 and 4 on Kohlberg’s moral development scale so they tend to equate morality with legality) so how does the more appropriate polling question compare? Well by the margin of 52-43, people think that homosexuality is “morally acceptable.” A far cry from 20-73.

Any way you break it down, more people agree that homosexual relationships should be formally recognized by the government than agree on nearly any issue, and the numbers are mind bogglingly in support compared to during Loving v. Virginia. Fellow TMVer Logan Penza has repeatedly said in his posts he thinks that they could be the next Roe v. Wade but there is no polling data to suggest that is the case.

Regardless of legal theory and what is “right” the reality is that the judicial branch has often expanded civil rights to minority groups when it felt there was enough popular support to do it without causing a major backlash. They have recognized that due to the nature of politics there are many issues where there is broad agreement across the spectrum but the law repeatedly goes against that (look at farming subsidies) and civil rights have a special place in legal history with the Justices that expand rights being applauded when history is written.

The only exception is Roe v. Wade but that involves a giant asterisk due to genuine disagreement on the definition of “personal” during pregnancy.

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Why The Media Needs More, Not Less, Bias http://themoderatevoice.com/why-the-media-needs-more-not-less-bias/ http://themoderatevoice.com/why-the-media-needs-more-not-less-bias/#comments Wed, 21 Jul 2010 17:26:00 +0000 http://themoderatevoice.com/?p=80325 abstract six line blue transparent vector

Everyone reading this knows that there are presently some raging media hullabaloos that in a month no one will talk about or remember. It’s just the latest round in a fight that should have been called long ago. I’m conflicted about these things because on one hand the specifics of the outrage du jour are [...]

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Everyone reading this knows that there are presently some raging media hullabaloos that in a month no one will talk about or remember. It’s just the latest round in a fight that should have been called long ago. I’m conflicted about these things because on one hand the specifics of the outrage du jour are almost always pointless and arbitrary, but on the other hand they are symptomatic of a failed press core in general. To me the greatest sin of the press is currently he said/she said stenography, with the refusal to provide any ideological context or critical thinking to any claims. A close second is the failure (and general ignorance in many cases) of history, to the point that all past events are talked about in the most dull passive voice possible in order to impart the notion that everyone agrees about it and it’s time to move on. The last main sin is hidden bias. All of these combined tend to interact to defend the status quo, create pointless bickering and reward laziness and timidity.

Often the call against this is for the news to be “more objective” and “factual” and all other sorts of paeans to the mythos of the Just Arbiter of Truth. However, as someone that reads primarily British news sources for world events, I couldn’t agree less: we need to adopt their model of outlets with explicit bias.

First of all, I’m critical of the concept of objective Truth in general, let alone in anything that has political shading. The commonly held idea that facts are analogous to Truth does much to destroy debate because inevitably facts then become synonymous with ideology. If someone walked up to you and said “did you know that the United States currently has the greatest wealth ineuality in its history” then you would immediately make assumptions about their political stance and beliefs about what should be done. On the other hand, complaining about government policy and specific regulations has caused people to assume I must be a dyed in the wool Republican. If only.

It is impossible to live without bias, as a collection of facts and data provides no guidance. Something that I wage a constant battle against is the idea that Science is the field of objectively looking at facts and then figuring out Reality. This notion is not only how it’s commonly presented in school, but also by many scientists themselves. In practice Science is a collection of hypotheses and experiments are done and interpreted in context of the hypothesis. Many experiments yield data that supports or rejects competing hypotheses that scientists vigorously take sides on. Some experiments by necessity are designed to only address one framework and their results have absolutely no bearing for a competing hypothesis. Research is not about calm analysis, it is about taking a position and then (honestly) defending that position by running experiments to collect data that supports it and carefully putting the context in which it is applicable. In general most fields have different camps that are often at war with each other trying to make their world view win out and become accepted, and in many cases they never do actually convince the other side: whomever wins wins because they can convince the young scientists that don’t yet have a stake. In day to day work there is emphasis on getting the facts (i.e. data) properly analyzed, but most of the emphasis is actually about the strength of the ideological arguments based on the data presented. As such the work is not about what is True, as honesty is implied, but about what is consistent and generalizable across many different states.

British newspapers tend to be much more reflective of this debating mentality than our press and they are better served for it. When you read the Telegraph or the Guardian you know what their general stance will be and that stance is used to select the topics of articles, the way they are written and the commentary. Even though it is rarely expressed, it is implicit that the newspaper edition as a whole is yet another piece in a never ending debate, trying not to say what is True, but argue what is Better. This bias allows them to use metaphors, historical context and shorthand that they know the audience will understand, enabling them to focus much more sharply on how recent events fit within the larger narrative. The he said/she said is no longer primarily present within an article that takes no side, but between papers that often take the same events and have different interpretations that they argue about within their framework. To me reading the different papers makes it much easier to try to get a grip on what I believe is most accurate, as the ease or strain to explain something often comes out and weak arguments are excised. It also forces the commentators to make explicit arguments about what they see going forward and provides a record to compare. For someone like myself, I often turn to different papers for information on different topics based on whether I am unsure about something and want to test it by looking for a counterargument, or whether I want to confirm my bias by having more supporting evidence. The British setup allows for that. Oh, and I’ve noticed that when someone distorts facts they get hammered by all sides, friend and foe alike.

I’m not going to pretend that this setup will be the savior of our politics, for as far as I can tell British politics are as insipid as ours; they certainly are competing step for step in country dysfunction. I have the generally pessimistic point of view (and the psychological references to back it up) that tribalism, active ignorance and tortured rationalization is the general state of Man, not the product of any failed system. However, I do think the group of people that are naturally skeptical and attempt to listen to others as judiciously as possible would be much better served if there was more bias and fight in the media. At the end of the day, TMV does that way better than any other place I can think of.

Update: For a great example of what I’m talking about, please read Ambrose Evans-Pritchard on an economic index.

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Warmest April, Jan-April On Record http://themoderatevoice.com/warmest-april-jan-april-on-record/ http://themoderatevoice.com/warmest-april-jan-april-on-record/#comments Thu, 20 May 2010 17:13:25 +0000 http://themoderatevoice.com/?p=73343 abstract six line blue transparent vector

Continuing in my series on the progress of my bet (with no one in particular) that this would be the warmest year on record, I am “pleased” to announce that April followed March for setting a monthly record in NASA’s dataset. I have referred to the bet as “taking candy from a baby” once it [...]

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Continuing in my series on the progress of my bet (with no one in particular) that this would be the warmest year on record, I am “pleased” to announce that April followed March for setting a monthly record in NASA’s dataset. I have referred to the bet as “taking candy from a baby” once it became obvious there was going to be a moderate El Nino, but the Icelandic volcano will make it more exciting.

In my bet I did have the condition that it could be nullified if a major volcano erupted, but I’m still winning so I won’t take that out yet.

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Oil Spill May Be 10x Larger Than Official Estimates http://themoderatevoice.com/oil-spill-may-be-10x-larger-than-official-estimates/ http://themoderatevoice.com/oil-spill-may-be-10x-larger-than-official-estimates/#comments Fri, 14 May 2010 17:25:38 +0000 http://themoderatevoice.com/?p=72564 abstract six line blue transparent vector

There have been rumors on the internet for several weeks that closer to 50,000 barrels of oil were leaking a day, but this article on NPR is the first official news source I’ve seen that suggests the same thing. The NY Times has an article with more details.

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There have been rumors on the internet for several weeks that closer to 50,000 barrels of oil were leaking a day, but this article on NPR is the first official news source I’ve seen that suggests the same thing.

The NY Times has an article with more details.

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Breaking: European Governments Agree To MASSIVE Intervention http://themoderatevoice.com/breaking-european-governments-agree-to-massive-intervention/ http://themoderatevoice.com/breaking-european-governments-agree-to-massive-intervention/#comments Mon, 10 May 2010 01:48:57 +0000 http://themoderatevoice.com/?p=71813 abstract six line blue transparent vector

European governments and the IMF have announced a $900+ billion arrangement to buy and/or guarantee sovereign debt. The European Central Bank has also specified it will buy securities in the secondary market (i.e. purchasing debt issued by countries and perhaps banks from investors). The details are incredibly sketchy at this point, and Calculated Risk has [...]

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European governments and the IMF have announced a $900+ billion arrangement to buy and/or guarantee sovereign debt. The European Central Bank has also specified it will buy securities in the secondary market (i.e. purchasing debt issued by countries and perhaps banks from investors). The details are incredibly sketchy at this point, and Calculated Risk has done the best job of following the drama, which as his posts attest reached near Mr. Bean levels of absurdity earlier today.

Only time will tell if this deal works economically and politically. Germany held a regional election today and Angela Merkel’s coalition suffered a setback wherein it lost the majority in the upper house. I really have little idea what this means operationally but it being touted as a major blow to her economic policies.

This deal smacks of TARP: they have an amount but know little about what to do with it. Over the coming months we shall see.

Update: As usual, Yves Smith at Naked Capitalism has a take that really cuts to the heart of the matter.

The ECB may be hoping that these rescue measures may prove sufficient to alleviate pressure on the banks, but my correspondents were skeptical. As one noted, “But it looks like it’s all coming from euro zone governments. I suppose since nobody is really questioning solvency of France or Germany, that might help, but how do Spain, Portugal and Italy contribute? And God will it be DEFLATIONARY if it’s not ECB money.”

The last point is key. If deflation kicks in within the countries at risk (forget Greece, the eurozone ought to be in triage mode) the debt burden become worse. All the rescue operation has done is buy breathing room while making the eventual outcome worse. While having the ECB support the operation may offend some tender sensibilities, it can offset the deflationary pressures and make Portugal and Spain more viable short term.

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Stock Market Undoubtedly Broken By Trading Algorithms http://themoderatevoice.com/stock-market-undoubtedly-broken-by-trading-algorithms/ http://themoderatevoice.com/stock-market-undoubtedly-broken-by-trading-algorithms/#comments Thu, 06 May 2010 19:52:02 +0000 http://themoderatevoice.com/?p=71420 abstract six line blue transparent vector

In the past year or so major Wall Street players have turned more and more to High Frequency Trading (HFT) algorithms, computer code which automatically buys and sells stocks based on price movements. These algorithms can trade stocks thousands of times a second and are highly profitable because they are designed to rip off all [...]

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In the past year or so major Wall Street players have turned more and more to High Frequency Trading (HFT) algorithms, computer code which automatically buys and sells stocks based on price movements. These algorithms can trade stocks thousands of times a second and are highly profitable because they are designed to rip off all the other market players.

The strategies of the different algorithms make for a very interesting intellectual exercise as they interact in complex and unpredictable ways, forming an electronic ecosystem. Like all ecosystems, there are predators and prey, parasites and symbiotes, evolution and — as I bet we will find out happened today — collapse. Systems experts and market insiders have been warning for months that the algorithms take up too much of the market (somewhere around 70% of all volume is now HFT) and that an unexpected major move could easily cause the market to plunge uncontrollably. The solution is to ban them by making execution time as “long” as a second or two.

Today the market fell around 5% in less than five minutes, most likely artificially caused by HFT in response to the very real stress in the global debt and currency markets. [The Street has identified a few of the individual stocks that broke down.] I happened to be looking at some real time feeds and they were shut down, in fact almost all the major financial sites and blogs were sporadically offline for about 30 minutes. In that time the market rebounded: my guess is that they shut down the trading computers and bid the market back up through floor traders.

The debt problems will last for years and are very complex to address, but the HFT meltdown is simple to fix. Until it is we will experience more occurrences like today and increase the risk of a prolonged meltdown.

Post mirrored on my blog.

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SEC Files Civil Fraud Charges Against Goldman Sachs http://themoderatevoice.com/sec-files-civil-fraud-charges-against-goldman-sachs/ http://themoderatevoice.com/sec-files-civil-fraud-charges-against-goldman-sachs/#comments Fri, 16 Apr 2010 16:13:11 +0000 http://themoderatevoice.com/?p=69550 abstract six line blue transparent vector

Wow, I never thought this day would come. It has long been an open secret that Goldman Sachs had a role in defrauding subprime mortgage investors, but due to their specific government connections and the general state of the financial sector it was assumed nothing would come of it. However the SEC has filed civil [...]

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Wow, I never thought this day would come. It has long been an open secret that Goldman Sachs had a role in defrauding subprime mortgage investors, but due to their specific government connections and the general state of the financial sector it was assumed nothing would come of it. However the SEC has filed civil (for now?) charges against Goldman to recoup their ill-begotten gains.

This could have far wider implications: for instance more details are emerging about a hedge fund named Magnetar that helped fuel massive demand for subprime mortgages in order to short them. Yves Smith claims that Magnetar alone accounted for 35-60% of subprime mortgage demand in 2006. She also details their financial contributions to Rahm Emanuel.

Bill Black, the lead regulator in cleaning up the Savings and Loan crisis, has long stated that fraud is endemic in our financial system, particularly in the mortgage arena. In this five part interview he explains how he believes hundreds of billions of dollars of fraud occurs and charges the megabanks with facilitating this at the highest levels. Congressional hearings on Washington Mutual support this view. In his expert opinion, the financial crisis is not as much about misguidance and ignorance as it is about willful criminality.

It is obviously too early to tell where this case will go, let alone whether it is a precursor to more suits, but hopefully it is the beginning of accountability and a necessary step for true economic recovery.

Yves Smith has a good post on details here.

Link for comments here.

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Does Multi-National Corporate Success Mean Anything To US? http://themoderatevoice.com/does-multi-national-corporate-success-mean-anything-to-us/ http://themoderatevoice.com/does-multi-national-corporate-success-mean-anything-to-us/#comments Wed, 14 Apr 2010 15:51:59 +0000 http://themoderatevoice.com/?p=69282 abstract six line blue transparent vector

I don’t want to harp on Dorian’s post of optimism (OK I do slightly) but I do find it telling that Daniel Gross’ breezy article argued for US economic success made up nearly entirely of anecdotes about major multi-national corporations. It is becoming less clear whether success of these corporations really helps the USA in [...]

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I don’t want to harp on Dorian’s post of optimism (OK I do slightly) but I do find it telling that Daniel Gross’ breezy article argued for US economic success made up nearly entirely of anecdotes about major multi-national corporations. It is becoming less clear whether success of these corporations really helps the USA in many ways other than the stock market.

Mish has a great post on this (even if you don’t agree with his political slant). Much has been made of labor being moved to overseas for wage reasons, but taxes are very important too:

In 2004, U.S.-based multinational corporations paid about $16 billion in U.S. taxes while earning about $700 billion offshore, an effective tax rate of about 2.3 percent, according to the administration statement…

Clinton administration officials realized they also had made it easy for multinationals to create entities whose only purpose was to shift profits into low-tax countries and out of reach of the tax authorities, according to a January Government Accountability Office report that found 83 of the 100 biggest companies had subsidiaries in tax havens.

Once the assets were in the haven, the U.S. parent company borrowed from the subsidiary. The interest payments were deductible in the U.S. and tax-free in the haven, the GAO said. The nonpartisan congressional Joint Committee on Taxation recommended in 2005 that the rules be repealed.

And:

As you work on your taxes this month, here’s something to raise your hackles: Some of the world’s biggest, most profitable corporations enjoy a far lower tax rate than you do–that is, if they pay taxes at all.

The most egregious example is General Electric (GE). Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.

How did this happen? It’s complicated. GE’s tax return is the largest the IRS deals with each year–some 24,000 pages if printed out. Inside you’ll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else–maker of engines, power plants, TV shows and the like–would have paid a 22% tax rate if it was a standalone company.

It’s GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. …

It only makes sense that multinationals “put costs in high-tax countries and profits in low-tax countries,” says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. “When you add in state taxes, the U.S. has the highest tax burden among industrialized countries,” says Hodge. In contrast, China’s rate is just 25%; Ireland’s is 12.5%.

Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.

Large corporations never did have much hiring during the last expansion, as they focused primarily on international growth. The majority of jobs and nearly all of the job creation is now at small businesses, which by all accounts are doing terribly. Multi-Nationals may indeed produce new innovation and products as Daniel Gross suggests, but I think he overlooks the reality of the situation: nearly all the materials, manufacturing and increasingly the design will be done overseas. In fact a lot of large companies are “American” as much for political protection and benefits as much as anything else. And for that, we see a pittance in tax collection. The companies where this is not an accurate characterization (e.g. Google and the like) not only have few employees in the scheme of things, but will increasingly move overseas. As Mish’s reader pointed out, good old IBM has reduced American worker headcount by 30% in the last five years and now has 70% of its workers in foreign locales. Low economic growth in the US and increased taxes will exacerbate this trend unless we change other policies.

Cross posted for comments.

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Is Our Economy Back? The Record Downturn Makes It Hard To Know http://themoderatevoice.com/is-our-economy-back-the-record-downturn-makes-it-hard-to-know/ http://themoderatevoice.com/is-our-economy-back-the-record-downturn-makes-it-hard-to-know/#comments Wed, 14 Apr 2010 15:22:36 +0000 http://themoderatevoice.com/?p=69274 abstract six line blue transparent vector

Dorian, the site’s (increasingly less lonely) optimist wrote a post earlier linking to Daniel Gross’ article in Newsweek. I have long been skeptical of “green shoots” talk as being bad statistics; for instance the economy grew 5.9% in the fourth quarter, but after inventory adjustment is stripped out the increase was only 2%. There are [...]

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Dorian, the site’s (increasingly less lonely) optimist wrote a post earlier linking to Daniel Gross’ article in Newsweek.

I have long been skeptical of “green shoots” talk as being bad statistics; for instance the economy grew 5.9% in the fourth quarter, but after inventory adjustment is stripped out the increase was only 2%. There are many measures showing that inventory adjustment is nearly complete and we will lose that contribution starting in Q2 or Q3 at the latest. I argued that GDP is constructed in such a poor way that it is nearly a useless statistic at this point in time, and that instead it was far better to look at the individual components. I still stand by that assessment, but the water is getting very murky on those points too.

Consumer spending increases are a must going forward and there was a great report released for March. In fact overall spending has been very strong in face of all the adversity we are seeing, something that has surprised me.

However, against that backdrop other things don’t make sense at all. For instance small businesses are really hurting a ton and are near record lows in their optimism, even tough traditionally they have been the first to benefit from an expansion. Meanwhile, Gallup’s self reported discretionary spending poll has been flat since Feb 09, seasonal events excepted. And lastly, state sales tax collections are abysmal, often around the same levels as last year.

How can we reconcile the topline reported increase in sales with all the other data? Well if you look at the methodology of the sales report, you will find that it estimates sales based on same store sales excluding price changes. As Mish points out in the prior link, many chains have gone bankrupt and many existing chains have severely cut back on the number of stores. Thus, if people are spending a similar amount of total money as last year then same store sales will increase and the consumer spending release will rise. Moreover, the small business survey reports very poor pricing power and a lot of price decreases. Again, with minimal total inflation and an increase in buying items on sale or with coupons, the total can not change very much but the official report will show increases.

The board responsible for dating recessions recently said it was too early to call an end to the recession. That doesn’t mean much, they often wait for a year and a half after a recession is over to date it. However, it did prompt Calculated Risk to have a great post showing the measures they use. I STRONGLY encourage everyone to check it out.

Not only does the depth of the downturn really shine through, but the dynamics of the recovery do as well. GDP fell a lot, but is now increasing at a historical rate, however income is lagging strongly. Industrial production fell a ton and is making a solid but under performing recovery. Employment is of course a mess, and income less transfer payments has made no recovery at all. It is very clear from the last two metrics that the government is the only thing holding together the economy at present.

I have a one word take away message: confusion. We are in such an ahistorical period that the entire way of looking at the economic world has changed and any argument can be made going forward. This is why banks can make record profits and yet still have trillions of dollars of losses; GDP can increase 6% but see employment losses; income can fall 7% sans transfer payments, but retail sales have been (or maybe haven’t been) strong. People can make nearly whatever argument they want as a strong possibility going forward, from complete collapse of the world economy to the strongest recovery in history, and the data will support it. It is no longer just about dollars and cents, but about mindset.

I personally feel that the risks are still very much strongly on the downside and that we will suffer from a surfeit of optimism instead of a deficit. I think that the statistics that show a strong recovery are based on flawed assumptions, and a sense of complacency will harm us going forward. The government is continuing to prop up the economy but it seems like all sense of urgency about making structural reforms as been lost, and that companies are more obsessed than ever at short term gain over long term wisdom. But that’s just a feeling, hopefully I’m wrong…I’ve felt this way for quite a while now and it hasn’t occurred, so maybe one day I will wake up and decide I was completely led astray.

Crosslinked at my blog for comments.

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One Last Thing http://themoderatevoice.com/one-last-thing/ http://themoderatevoice.com/one-last-thing/#comments Tue, 30 Mar 2010 22:42:51 +0000 http://themoderatevoice.com/?p=67828 abstract six line blue transparent vector

I’m not good at goodbyes (I literally have to make a conscious effort to say goodbye to people in order to not offend them) so in case comments and/or commenters don’t come back: uh goodbye. OK now with that out of the way I want to take advantage of the temporarily touchy feely environment for [...]

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I’m not good at goodbyes (I literally have to make a conscious effort to say goodbye to people in order to not offend them) so in case comments and/or commenters don’t come back: uh goodbye.

OK now with that out of the way I want to take advantage of the temporarily touchy feely environment for my own nefarious purposes. If you don’t mind could you leave a comment stating your profession and/or skillset/interests either here or on my cross linked blog. I say this because in reality the intent of my entire blogging career was a big long setup to make connections that I could then utilize for real world projects that are kick starting shortly and I’m seeking interest. Thanks.

Link to mirror.

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The Recession Still Hasn’t Ended According To My Favorite Indicator http://themoderatevoice.com/the-recession-still-hasnt-ended-according-to-my-favorite-indicator/ http://themoderatevoice.com/the-recession-still-hasnt-ended-according-to-my-favorite-indicator/#comments Tue, 30 Mar 2010 17:20:40 +0000 http://themoderatevoice.com/?p=67815 abstract six line blue transparent vector

Calculated Risk has a post showing the Philly Fed State Coincident Indicators which is my favorite aggregate metric because it is calculated on much more mainstreet data. “Twenty five states are showing declining three month activity. The index increased in 18 states, and was unchanged in 7.” It is yet another series that shows how [...]

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Calculated Risk has a post showing the Philly Fed State Coincident Indicators which is my favorite aggregate metric because it is calculated on much more mainstreet data. “Twenty five states are showing declining three month activity. The index increased in 18 states, and was unchanged in 7.” It is yet another series that shows how different this recession is: in the past the recession end date was always coincident with 25+ states increasing activity (except for 2001 which was delayed by a month or two), and now we are nine months since the recession will most likely be dated and yet still have a way to go. Fortunately February had 21 states increasing with 22 decreasing, which is closer to the real mark, but at best we can say that it is a highly uneven recovery.

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Internet Comments As Tragedy Of the Commons, Franklin Paradox, Society Writ Large http://themoderatevoice.com/internet-comments-as-tragedy-of-the-commons-franklin-paradox-society-writ-large/ http://themoderatevoice.com/internet-comments-as-tragedy-of-the-commons-franklin-paradox-society-writ-large/#comments Mon, 29 Mar 2010 16:46:45 +0000 http://themoderatevoice.com/?p=67650 abstract six line blue transparent vector

I am very happy to blog for TMV because I have cultivated a few online acquaintances and more importantly it makes me feel important to imagine thousands of people hanging on my every word. But yeah, pretty much the only reason I write posts is for comments, so I’m sad to see them go and [...]

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I am very happy to blog for TMV because I have cultivated a few online acquaintances and more importantly it makes me feel important to imagine thousands of people hanging on my every word. But yeah, pretty much the only reason I write posts is for comments, so I’m sad to see them go and which is why I am going to cross post everything at a blog with the sole purpose of having comment threads (http://mikkelattmv.blogspot.com/). A link to the post will be at the end of every post at TMV and I hope that at least some of you follow it to comment.

That said I don’t begrudge the decision and have a few things to throw out there. First of all, I think this is a classic example of tragedy of the commons. We all (including me) have benefited from the work of a very few and the disconnect between the effort and reward leads to changed behavior. I also think that the reaction on the post announcing the change shows the Franklin paradox. “The Ben Franklin effect is a psychological finding: A person who has done someone a favor is more likely to do that person another favor than they would be if they had received a favor from that person.” Instead of relationships being close to zero sum quid pro quo, in reality they tend to default into favor-receiver relationships where the favor side feels obligated to continue providing and if at some point they decide not to then the receiver side will be upset that they lost something they expected. In all the comments on the prior thread, only a few every had any shades of thanking the moderators that have spent countless hours to keep the site civil thus far. This isn’t an accusation, just an observation. Even though I am saddened by the decision my primary impulse is to give a big Thanks to the site moderators, especially Dr. E, because ever since I found out how much work she puts into the site I knew that it was allowing me to get something out of it I wouldn’t otherwise.

To me these two templates really go a long way in describing the social framework of what has happened and I (perhaps naively) look for them as a source in which to look for future correction. For instance work done on the tragedy of the commons has shown that the outcome is very dependent on the source of governing authority. When authority is centralized into a hidden source that passes down the rules then it tends to lead to negative outcomes, while if authority is localized and created amongst the people that use the shared resources then it tends to lead to positive outcomes. A recent Nobel winner used historical examples to build models explaining how decentralized authority with shared broad intent will lead to the best outcomes. When it comes to comments, this suggests that instead of having the burden be on a single individual or small group, that many authors and select long term commenters should share the burden of regulating comments by agreeing to general broad rules of intent and then sharing the task of actual policing.

When it comes to the Franklin effect, the key is to realize that both sides come into play: yes if you are a receiver in a relationship then it is wise and just to extend help when the giver expresses distress, but it’s also the giver’s responsibility to communicate their viewpoint and ask for help. Some relationships will break down because the receiver just wants to be a leech and that’s OK, in some relationships the receiver actually feels somewhat guilty about their role but doesn’t know what to do (or believes that the giver likes the job and would be upset if they couldn’t do it) and in some relationships roles will switch. It’s hard to know a priori, the key is to have open communication and see if resolution is possible. Only a few comments even hinted at valuing the comments enough to put any work into it (and in general I try to offer contribution if I’m the receiver and something has changed) but I also feel like TMV editors should have reached out sooner.

I do think that internet communities are good analogs of “real life” communities in many ways, and have noticed that comments are a particular sticking point that really mirror it. In general sites that are more general audience have a much harder time than sites that have arcane interests — there aren’t too many trolls that will visit 19th century basket weaving blogs. Sites that have explicit institutional order with different commenter roles and advancement up the ranks to moderator tend to form larger and longer lasting communities than those that don’t have this. Sites that have high purity tend to get more participants but at the tradeoff of losing interesting ideas and real engagement.

Anyway I want this post to sound pretty neutral and more observational and will leave it to you guys to say what you will. I look forward to having my delusions of elegant explanation torn to shreds once I’m the one that has to deal with the real life ugliness of moderation…and really appreciate the time that everyone at TMV has spent to shield me from that (and web design, hosting, so on and so forth) thus far and any work in the future.

Link to this post on my site.

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Two Amazing Graphs About Consumer Spending http://themoderatevoice.com/two-amazing-graphs-about-consumer-spending/ http://themoderatevoice.com/two-amazing-graphs-about-consumer-spending/#comments Mon, 29 Mar 2010 15:27:25 +0000 http://themoderatevoice.com/?p=67628 abstract six line blue transparent vector

Calculated Risk has a post that must be seen to be believed. First off, look at personal consumption in February, which is back at pre-recession highs. This is quite amazing, and I admit, I am completely flabbergasted. No way did I think that consumer spending would rebound and that is a big assumption in my [...]

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Calculated Risk has a post that must be seen to be believed. First off, look at personal consumption in February, which is back at pre-recession highs. This is quite amazing, and I admit, I am completely flabbergasted. No way did I think that consumer spending would rebound and that is a big assumption in my belief that we are going to have a double dip recession (well more to the point it still hasn’t ended) in the near term. This may look positive, but then look at the second graph: personal income minus transfer payments, which are direct payments by the government to individuals. That measure never rebounded and is still near the cycle low, even decreasing in February. This measure really captures the importance of government payments in trying to plug the consumer spending graph; it is about $800 billion (~8%) below the pre-recession high.

So what does this mean? Looking over time it is another measure clearly showing that the nature of recessions has changed in the past few decades. Every recession before the 2001 recession had the personal income minus transfer payment measure trough be coincident with the end of the recession and equaled or exceeded post recession highs within one year. The 2001 recession did not start increasing for nearly 16 months after the official end. Of course in that recession the measure was flat instead of dropping precipitously like we have seen. These measurements are demonstrative of the structural imbalances in a labor market that is growing increasingly unable to create jobs; indeed the post 2001 recession saw job creation begin in the middle of 2003, due to being in the middle of the biggest housing bubble in history.

It also means that government outlays are responsible for holding our economy in its current stagnant state, a situation that led to a combined deficit of nearly $3 trillion in the 2009 and 2010 fiscal years. I view it as a high stakes game of chicken with a catch 22 built in. The government cannot keep running such high fiscal deficits for very much longer, and as long as sustainable consumer demand is depressed then ending the high deficits will lead to another major recession; however if the government spends too much time trying to keep the system propped up then interest rates and debt loads will be so high that it will severely hurt us in the coming decades. On the other hand sustainable consumer demand can only grow based on secure job growth but companies won’t hire until they see it happening already. In the past increased short term government spending was enough to jumpstart the recovery, an outcome that seems far from certain now.

It reminds me of the most misused medical device on TV: the defibrillator. On the shows it is a magical device that is readily applied to everyone that has no pulse or looks like they are dead, miraculously saving or tragically failing based on the needs of the plot. In reality defibrillation only works when the heart is still beating, just not paying attention to the pacemaker or going through the cycles needed to pump blood. With the same symptom (i.e. no pulse) the treatment will be successful or not depending on state of the heart, if there is no rhythm (asystole) then defibrillation doesn’t work. My concern is that by ignoring the underlying state of the economy we are not giving the proper treatment and our current fibrillation will turn into asystole.

As wikipedia states:

Ventricular fibrillation is a medical emergency that requires prompt BLS/ACLS interventions because should the arrhythmia continue for more than a few seconds, it will likely degenerate further into asystole (a flat ECG with no rhythm- which is usually not responsive to therapy unless there is still some residual fine VF rhythm left or the patient is otherwise lucky AND is treated very quickly); after this, within minutes blood circulation will cease, and sudden cardiac death (SCD) may occur in a matter of minutes and/or the patient could sustain irreversible brain damage and possibly be left brain dead (death often occurs if normal sinus rhythm is not restored within 90 seconds of the onset of VF, especially if it has degenerated further into asystole).

To really stretch the analogy we can say that the response so far as been to give CPR by pumping the system with money, and I just hope that the focus turns to getting the rhythm back instead of declaring victory and letting asystole form.

In light of the new comment policy I am going to be cross posting everything on a blogspot blog so people can have a comment thread there. Link to post.

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Breaking: South Korean Ship Sinking After Explosion, Possibly Due To North Korean Torpedo Attack http://themoderatevoice.com/breaking-south-korean-ship-sinking-after-explosion-possibly-due-to-north-korean-torpedo-attack/ http://themoderatevoice.com/breaking-south-korean-ship-sinking-after-explosion-possibly-due-to-north-korean-torpedo-attack/#comments Fri, 26 Mar 2010 16:51:19 +0000 http://themoderatevoice.com/?p=67429 abstract six line blue transparent vector

Fox: The South Korean navy reportedly shot at unidentified ships near North Korea and is investigating whether a sinking ship in its navy was hit with a torpedo near the maritime border with the communist North. AP: Earlier Friday, North Korea’s military threatened “unpredictable strikes,” including a nuclear attack, in anger over a report that [...]

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Fox:

The South Korean navy reportedly shot at unidentified ships near North Korea and is investigating whether a sinking ship in its navy was hit with a torpedo near the maritime border with the communist North.

AP:

Earlier Friday, North Korea’s military threatened “unpredictable strikes,” including a nuclear attack, in anger over a report that South Korea and the U.S. were preparing for possible instability in the totalitarian country.

After the ship began sinking, President Lee Myung-bak convened an emergency meeting of security-related ministers, Yonhap said, citing presidential spokeswoman Kim Eun-hye. She said it wasn’t clear yet whether North Korea was involved in the ship’s demise.

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The Government Thinks That Major Wall Street Players Are Defrauding Municipalities http://themoderatevoice.com/the-government-thinks-that-major-wall-street-players-are-defrauding-municipalities/ http://themoderatevoice.com/the-government-thinks-that-major-wall-street-players-are-defrauding-municipalities/#comments Fri, 26 Mar 2010 16:37:03 +0000 http://themoderatevoice.com/?p=67426 abstract six line blue transparent vector

There has long been evidence to support the claim of collusion to rip off the taxpayers by treating municipal bonds far harsher than corporate (a few years ago the ratings agencies got a lot of heat for this and it looked like action was about to be taken by multiple AGs, but then the financial [...]

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There has long been evidence to support the claim of collusion to rip off the taxpayers by treating municipal bonds far harsher than corporate (a few years ago the ratings agencies got a lot of heat for this and it looked like action was about to be taken by multiple AGs, but then the financial crisis derailed it) but this is the first leak that the government has a criminal probe into specific banks on the investment side as well.

Noted without further comment.

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Thread On Peak Oil And Its Implications http://themoderatevoice.com/thread-on-peak-oil-and-its-implications/ http://themoderatevoice.com/thread-on-peak-oil-and-its-implications/#comments Wed, 24 Mar 2010 20:30:33 +0000 http://themoderatevoice.com/?p=67241 abstract six line blue transparent vector

Last fall I came across an article that I wanted to write about but I didn’t know what to say that would fit within TMV guidelines (I even talked to Joe about letting me break them). The world is much closer to running out of oil than official estimates admit, according to a whistleblower at [...]

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Last fall I came across an article that I wanted to write about but I didn’t know what to say that would fit within TMV guidelines (I even talked to Joe about letting me break them).

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves…

“Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,” he added.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was “imperative not to anger the Americans” but the fact was that there was not as much oil in the world as had been admitted. “We have [already] entered the ‘peak oil’ zone. I think that the situation is really bad,” he added…

A report by the UK Energy Research Centre (UKERC) last month said worldwide production of conventionally extracted oil could “peak” and go into terminal decline before 2020 – but that the government was not facing up to the risk. Steve Sorrell, chief author of the report, said forecasts suggesting oil production will not peak before 2030 were “at best optimistic and at worst implausible”.

But as far back as 2004 there have been people making similar warnings. Colin Campbell, a former executive with Total of France told a conference: “If the real [oil reserve] figures were to come out there would be panic on the stock markets … in the end that would suit no one.”

If peak oil is around the corner we are looking at an economic collapse (if nothing is done in the mean time) that makes the last few years look rosy. To understand why you have to understand that the economy is based on credit and for a credit based system to work it must continuously expand. Since there is a very high correlation between oil and economic expansion, then this logically shows that the economy won’t be able to expand until we change our technological/social structures to no longer have that correlation with oil output. Peak oil isn’t about running out of oil, it is about merely leveling of the rate of extraction.

Peak oil is starting to move more into the mainstream, Kuwait just released a prediction it will hit in 2014.

In the last thread there were many topics related to morality including environmental stewardship, personal growth, making sure others have basic security, etc. and the role of governance/company structures in those areas. I’m starting this thread because I think that peak oil (well peak energy) is going to destroy our current paradigm and dominant the discussion for the next few decades at all levels of society. This link gives a good overview of the expected implications of peak oil.

Anyway I have tons more to say but I don’t want to frontload it to allow people to say what they want.

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