-Submitted by David Drumm (Nal), Guest Blogger
A recent article in the Daily Mail, and picked up by other media, claims an increase in Arctic ice foretells a cooling trend. The article boasts of a 60% increase in sea ice over the minimum that occurred in 2012. While the actual numbers from IARC-JAXA Information System (IJIS) show, as of yesterday, only a 50% increase, this is still a significant expansion.
Professor Judith Curry, climatologist and chair of the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology, referred to the title as melodramatic and said of the content of the article: “the ‘cooling’ aspect has been overplayed.” Last year, University of Reading climate scientist Ed Hawkins predicted that “there would be MORE Arctic sea-ice in 2013, compared to 2012.”
An important tool used in analyzing random data is the statistical phenomenon known as reversion to the mean, or regression to the mean. The extent of sea ice at the end of the annual melt, mid to late September, set a extreme minimum in 2012. Using reversion to the mean, it is more likely that the the extent in 2013 will be larger. Exactly what happened. The following graph indicates the variability of sea ice extent and the clear downward trend.
Cherry picking short-term results while ignoring long-term trends is a hallmark of misleading climate reporting. Long-term data needs to be analyzed to average out cyclical dependencies. There is a strong natural variability in sea ice extent and separating the natural from the greenhouse gases requires decades long timescales.
Climate science is an undertaking fraught with complex interactions and unknown cycles with unknown effects. It will take time and money to improve our understanding. However, improvement is mandatory if we are to be responsible conservators of our world.
Climate scientists estimate the amount of sea ice loss due to greenhouse gasses is between 50-70%.
H/T: Dana Nuccitelli, Steven Novella, Climate Dialogue, Alexis Sobel Fitts, Phil Plait.
There is a post dealing with Climate Trolls, sort of categorizing them into personality types:
2013 Arctic Ice Extent Was The Sixth Lowest On Record
Bron,
You better believe it’s possible. The arbitrage economy affects real world numbers like GDP, but in the end, it’s illusory money. The only real measure of economic strength isn’t banking. It’s manufacturing and agricultural capacity. Arbitrage and to a lesser extent the service economy aren’t “really real”. We didn’t win WWII because we had bigger banks. We won WWII because we could build and ship equipment and supplies faster than the Reich. This is why China is poised to kick our ass. They are building and buying manufacturing infrastructure and our economy is regulated to create financial incentives to off-shore because bankers and owners can make more profit that way.
bigfatmike:
if that is true, we are doomed. 60% of GDP? That doesnt seem possible, what with farming, construction, manufacturing, oil, gas, mining, etc.
if you always bail them out, there is no incentive to change. In that environment, regulation is ineffective.
Recently we have had some comments on the economy, competition, and regulation. It would seem that by any standard that is a bit off topic for this thread. But I would argue one of the good things (among many) about this web page is the freedom and willingness to pursue topics of interest, even when they take us beyond the original subject.
Today Klein in the WAPO at:
http: //www.washingtonpost.com/blogs/wonkblog/wp/2013/09/21/summers-lost-because-liberals-dont-trust-obama-on-financial-reform/?hpid=z6
(I have inserted two spaces in the URL here in the hope that this comment will get through. The interested reader can easily copy, past, edit the URL, and link to the article.)
has a piece on why Summers will not be the FED chairman. In the article are some really interesting remarks regarding the White House approach to regulation of Wall Street, ‘too big to fail’, and whether it is useful to separate consumer and investment banking.
One minor but jarring fact is:
“Seventeen years ago the six largest banks made up around 18 percent of GDP. Now it’s more than 60 percent.”
I still want to check that statistic just to be sure. I think I have a pretty good idea of what GDP is. Imagine the finance industry represents 60% of all the goods and services produced in the US in an entire year.
It makes the US sound like a banana republic or one of those third world nations with their economies tied to a single or a few products. The main result in those countries is that elites linked to those few products run the political apparatus that controls the country.
Other gems include:
“The Obama administration simply disagrees that this concentration is, in and of itself, a problem.”
and
““The proof that these banks are still too big to fail are the advantages they have in the capital market,” Brown said. “There’s no reason they can borrow money at significantly less cost if the capital markets didn’t believe we’d rescue them. ”
Regulation of the finance industry is complex. The issues and arguments require some attention and sometimes some effort to work through.
But right now there are few other areas that will do as much to determine the shape of our society over the next few decades.
This is important stuff.
Joe Blow’s dad, Matt Ridley, called on his BS:
(Wall Street Journal).
“In any case lots of regulation is meaningless in effect and likely inefficient if it does not touch on the right things. Good regulation has to control the right issues.”
Again, it comes back to the question “What Makes a Good Law, What Makes a Bad Law?
All regulation must be 1) as narrowly tailored as possible 2) towards a quantifiable end – even if that quantifiable end is an unquantifiable benefit, and 3) tailored to what’s best for the public over the private.
We have a lot of regulation that is simply anti-competitive gibberish pushed through by Big Business to stifle competition. Concurrently, the very Big Business that can do the most damage to the economy has pushed to have themselves deregulated in any meaningful fashion. What we have isn’t too much regulation. It’s mis- and mal-regulation sponsored by Big Business. And how do they control Congress in this maladaptive manner?
Campaign finance and lobby.
Take the money out of politics and force Congress to work for their average constituent and not the narrow monied special interests and the regulatory landscape changes enormously. Barriers to small and medium sized business would largely disappear and the much need constraints on Big Business (like Glass-Steagall) would be put back in place and/or strengthened to have some real teeth instead of just fines.
Until we as a nation tackle the fundamental problem of pay for play – which is nothing more than systemized graft – we won’t only be plagued with malfunctioning government but we are guaranteeing the steady march into ever deeper and deeper fascism.
The actions of Big Business, particularly Big Oil, Big Banks and Big Insurance show us that deregulation is a recipe for disaster and in the cases of Big Oil and Big Insurance they make a strong case for socializing those market sectors because what they do in pursuit of profits kills innocent people. Big Banks, in contrast, show us that upper limits are required on some kinds of businesses to keep the economy healthy along with narrowly constraining those businesses activities. There was a reason commercial banking and financial banking were segregated after 1929. Now we are being reminded why.
bigfatmike:
interesting points. I guess what we saw was a perfect storm of government social policy and lack of derivative regulation [as you mentioned]. Allowing for the unethical sale and purchase of homes to and by people who could not afford the payments.
I certainly agree some on wall st are snakes and need ethical instruction but not all do and wall st plays an important part in our economy.
I truly believe a free market is good for all of us, and I say that as a very small businessman.
In my opinion we have far too much regulation which does nothing but address a specific problem. Regulation never seems to look at the big picture and ends up causing other problems not necessarily connected with the original problem.
I freely admit there are bad actors who try and manipulate the system with no thought as to how it will harm other people. But there are many more people who behave ethically, these people should not be punished by regulations.
In a city of honest men, no locks on doors are needed. In a city of crooks, no locks will prevent theft.
bigfatmike:
Yes, some regulation is justified. But the banking industry is one of the most heavily regulated industries we have.
In my opinion too big to fail was to scare the hell out of Main Street. When what would have happened, in my opinion, is a reallocation of assets to superior performers. The market was doing just that in the beginning until Bush and Paulson said the government would provide money. That was the end of market reaction/correction.
I don’t know enough to say whether or not market corrections would have reduced economic losses but I have read that AIG should have been allowed to fail based on the subsequent results of government intrusion.
@Bron ” But the banking industry is one of the most heavily regulated industries we have.”
I don’t know enough to take a position on AIG or any individual institution.
However I think your belief that corporate failure would have led to asset reallocation is too optimistic and takes too limited a view of the resulting damage.
I recognize your point regarding fear of ‘too big to fail’. But I accept the claim that we were facing the prospect of a second depression. What we are talking about is a difference in view regarding timing and magnitude.
There is no doubt that the market would have eventually brought down weak players, created new investment opportunities, and lead to new growth. The question is how far the carnage would have spread and the impact on smaller, but otherwise sound participants – eg the small business on main street.
In the case of the finance industry, I think there is a pretty good argument that the problems would have spread – eventually there would have been no superior performers left among the major financial institutions on Wall street. And the economic damage beyond the financial institutions would have been a disaster.
But your remark regarding regulation is true enough, The problem is that the regulation has to do the right thing.
For example consider your remark regarding ” people who knew they could not afford the house they were buying.” or the infamous NINJA loans.
There are actually two sides of the question here. Individuals may have a moral obligation or in the most egregious cases a legal obligation.
But the lending institutions also have a due diligence responsibility as well.
As I understand it, and please correct me if I am wrong, deregulation of derivatives allowed securitization of mortgages.
Securitization of mortgages implied that lending institution could be far less concerned with the credit worthiness of borrowers than in the past when the institution actually held the paper.
As a result lending institution could make a loan to almost anyone confident in the knowledge that they could pass the paper on to some other sucker. Credit evaluation became a perfunctory – by the numbers – game at best and a sometimes little more than a scam.
Lots of people, including me, bought into the arguments to deregulate derivatives – the idea being that the buyers and sellers of derivatives are the most sophisticated investors of all. If investors with that level of skill and knowledge cannot make good decisions who could possibly advise them or otherwise direct their efforts.
But it is that deregulation that had the unintended consequence of changing the mortgage industry to the detriment of us all.
In any case lots of regulation is meaningless in effect and likely inefficient if it does not touch on the right things. Good regulation has to control the right issues.
I would argue that by the turn of the century, however much regulation there was, it just did not control the right aspects of the business. On the contrary it created a system the even the best did not understand – at least not very well.
And we are all – well maybe not the top 1% – still paying the price for that lack of regulation.
Not only that, but Wall Street has the money and the short term incentive to try to continue to avoid meaningful regulation – to the detriment of all of us.
OS:
I agree that too big to fail is a joke, if you cannot survive on your ability, then off with your financial head.
But correct me if I am wrong, wasnt the telephone system a government sanctioned monopoly?
“Alexander Graham Bell patented the telephone in 1876, and formed Bell Telephone which licensed local telephone exchanges in major US cities. AT&T was formed in 1885 to connect the local Bell companies. Their logo read “The Bell System: AT&T and Associated Companies.”
The network grew rapidly with the slogan “one system, one policy, universal service.” In 1913 AT&T agreed to become a regulated monopoly. Their monopoly would be allowed, but they had to connect competing local companies and let the Federal Communication Commission (FCC) approve their prices and policies. We rented our phones from AT&T, and no other equipment could be attached to the network for fear of “breaking” it.”
Which gives credance to my long held contention that a monopoly, which is non-responsive to consumers, can only exist with government support.
No, Arctic Sea Ice Has Not Recovered:
(Climate Central).
Bron,
Government regulations were not the culprit. It was lack of sufficient regulations, and the old boy network in charge of what diminishing regulations were in place. Fox guarding the chicken coop. If there had been adequate regulations, and those regulations enforced, we would not have had the Countrywide fiasco, and the banks would not have needed to be bailed out.
“Too big to fail” is a joke. If it is too big to fail, then it is too big to exist. Recall how Bell Telephone was broken up into “baby Bells?” That is a model for breaking up monopolistic giant companies that are non-responsive to customers like you and me.
” It was lack of sufficient regulations”
From the end of the depression till maybe the seventies we had strong regulation and few problems with the financial industry.
Then came deregulation that began with some things like branch banking, that seems to have worked pretty well, and ultimately deregulation of derivatives markets, which seems to have created real problems.
“Too big to fail” would seem to be the opposite side of the coin for “regulation required”. The point being that “too big to fail” indicates we all have a stake in the outcome.
If we have no choice whether we intervene to save failing institutions then prudence and common sense dictate that we require reasonable policies that reduce risk before they fail.
It is one thing to argue for free markets. It is quite another to argue for the freedom to take us all over the cliff.
Regulation is a two edged sword. It likely reduces efficiency. But markets can create conditions that potentially affect those far beyond the owners and managers. In those situations some regulation is justified.
Bob/OS:
John Allison is an honorable man. He isnt some nut.
Henry Paulson forced banks to take money even though they were financially sound, and BBT was sound. Paulson did it so people would have no idea which banks were in trouble.
BBT was threatened with government retaliation if they did not take the money. As were many other banks which were financially sound.
I respect your opinions on many things, but on this I must disagree.
If you really look into the problems with the banking industry, honestly and without a bias, I think you will see things differently.
In my opinion there were 5 actors in all of this:
1. government social policies
2. government regulations
3. the federal reserve
4. banks which used the government social policy/regulations to line their pockets
5. people who knew they could not afford the house they were buying. Granted some were taken advantage of by unethical banks and builders.
Climatologists predicted this year’s ongoing Colorado Floods years ago in 2006 on the series “It could happen Tomorrow” on the Weather Channel:
(Wikipedia). It happened just like they said it would.
It is good to have climatologists working to warn us of what is going to continue to happen if we continue to fear Oil-Qaeda.
Bron,
Do you really think that the guy with the dirtiest hands would be the best and most credible source of information?
Bron,
What else would a former president of BB&T bank, and the current president of the Cato institute, say?
BB&T accepted $3.1 billion of our tax money to bail it out, in 2007.
In 2009, the bank chairman “claimed to show how government regulation caused the 2007-2009 financial collapse.”
http://en.wikipedia.org/wiki/BB%26T
Now THAT’s gratitude!
Weakening of, and non-enforcement of, government regulations caused the financial collapse.
The pigs blame everyone except themselves.
Please don’t try to blow smoke up my butt. It doesn’t go in there.