Monday, July 31, 2006

Prince Albert Gets Into the Act

Prince Albert and the Environment

No, not another post about Al Gore.
In his latest attempt to highlight the environment as an issue to be addressed by fellow world leaders, Prince Albert of Monaco has stepped up his campaign by launching a new foundation to stop the rise in global warming.

It is just over a year since Prince Albert succeeded his father Prince Rainier to become Monaco’s leader, and in that year Prince Albert has changed his image from that of a Playboy Prince to one of a leader concerned for the future of not only Monaco - the second smallest country in the world - but for the world as a whole.
And let's don't forget about the required carbon-neutral event. Oh what could it be?
Monaco has shown her commitment to reducing greenhouse gas emissions by making the Monaco Yacht show, due to be held in September, to a carbon-neutral event by paying for enough wind turbines in New Zealand to generate power for 45,000 homes.
This makes me cynical on the topic of carbon neutrality. Really, a yacht show, carbon neutral. How rich!

Comments, we got Comments

Everyone, listen up. This blog is a new experience for me. If you think my blog does not cut the mustard, give me feedback in the comment section. I read each and every one (all three of them so far)!

I am a self-taught economist so if you want to hear about some economic topic let me know. I pay attention to the Fed and am a data stud. I can chart or graph just about anything if it has meaning.

Let me hear from you!

A Little Eco-Nomics Never Hurt

This from Roy Spencer over at TCS:

TCS Daily - A Little Eco-Nomics Never Hurt

Fear of the ultimate environmental threat, global warming, is now striking at the very heart of modern life, casting doubt upon the future availability of inexpensive energy that is necessary to keep society running. Al Gore's movie 'An Inconvenient Truth', Discovery's recent special 'Global Warming: What You Need to Know with Tom Brokaw', and a deluge of media stories and editorials are all dedicated to convincing you that we need to be saved from ourselves.

And while it is true that there are potential negative side effects of our use of fossil fuels (as well as most other natural resources), little attention is ever paid to the practical question: what should be done about it? It is much easier to point out a problem than it is to actually fix it....and 'fixing problems' too often leads to unintended negative consequences.
I think this is a valid question: should we reach a consensus as a society that global warming is indeed real and is a threat to life on earth, what can and should be done?

And we indeed should do those things that make the most economic and scientific sense -- for instance national investments in energy research.

But when the pundits push for solutions that will not work (the Kyoto Protocol, or the rapidly failing EU carbon trading scheme), one begins to wonder about either their intelligence or their motives. In the end, these efforts do little more than redistribute wealth and let their proponents feel good about themselves.

Could redistributing wealth be the true motive? Disdain for 'wealth' and 'big business' arises when people neglect the fact that these conditions only occur when someone figures out a better way to provide more desirable goods and services, at a lower cost, that people want. Economic transactions benefit the seller and the buyer, otherwise they would not occur.

This is a concern of mine. I see the Kyoto Protocol and these carbon trading schemes and the skeptic in me asks if they are just another method to redistribute wealth without really solving the problem.

Once again, once we come to a consensus and reach critical mass on Global Warming, what are the solutions?

Global Warming Link to Hurricane Intensity Questioned

Global Warming Link to Hurricane Intensity Questioned

An expert with the U.S. National Oceanic and Atmospheric Administration (NOAA) is questioning the connection between climate change and the appearance of more intense hurricanes in recent years. Historical data on hurricanes is too crude to determine long-term trends in intensity, says Christopher Landsea, a science and operations officer with NOAA's National Hurricane Center in Miami, Florida.
This will always be the problem with global warming: DATA. It is hard to have good data on the past to predict what is going to happen in the future. In the case of hurricanes, the data only goes back 200 years or so and intensity measurements were not uniformly done until the time of satellites.

I say we should keep hurricanes out of the debate due to the poor data availability. Unfortunately, high profile global warming proponents have already linked hurricanes directly to global warming. Al Gore even went so far as to say: "Mother Nature has spoken". I ask, what will happen if this hurricane season is calm with few high-intensity storms and none that severely impact land? The pundits will say "Mother Nature has changed her mind." You heard it here first.

Global warming-5: The emergence of a paradigm

Mane Ginghams Web Journal: Global warming-5: The emergence of a paradigm

Gingham writes about the emergence of consensus and a new paradigm of global warming:
The need to take global warming seriously is not slam-dunk obvious to most people. In my own case, over time I have slowly became convinced that there was an emerging consensus among scientists studying the issue that planetary warming was a serious matter. Like most people, I do not have the time or the expertise to have studied the question in detail, but I have enough respect for the scientific process and the way that scientists make collective judgments as a community that when I see a scientific consensus emerging on anything, I tend to take it seriously. In fact the global warming issue is a great example of seeing, before our very eyes, a transition in science from a pre-paradigmatic state to a paradigmatic state.

It should emphasized that adoption of a paradigm does not mean that scientists think that everything has been solved and that there are no more open questions. What it does mean, among other things, is that the methods used to investigate those questions are usually settled.
As to this last part, I don't think the methods to investigate global warming are settled. There are few tests and historical data is hard to come by. We cannot design an experiment to prove or disprove global warming. I know that many people are building climate models in an attempt to do just that (prove/disprove), but I have yet to see one that accurately predicts the present given the available data of the past. Those models are probably out there, but I would like to see them become available for scrutiny by the public at large - by people like me who have an interest in comprehending the science behind the paradigm.

Anyway, interesting reading on Ginghams blog. Take a look around as he has good stuff on global warming.

Sunday, July 30, 2006

Global Warming Right/Left Divide

I could not have said it better: Cheat Seeking Missiles: Oh, And By The Way ...

Some radical commentors on this site have recently taken the stand that the debate on human influence over global warming is over and only "rubes" don't realize it. I offer this to these global warming fanatics with the suggestion that they grow up. Science is a place for research, debate, diverging views. The science of long-term global heating and cooling cycles is no different.


Easy Ethics - Just Buy From Us!

Meta Trend: Easy Ethics

See, it is easy being environmentally ethical:

In the age of religious wars, environmental disasters and globalization, consumers are turning to products that offer ethical and environmental benefits, we call this "Easy Ethics"”. These benefits can be ecological, social visionary and are comprehensively communicated to the consumers.

For example, you probably won't leave your car in the garage and take your bike to commute to work. Yet, to support the environment you might drive a hybrid car to contribute to the environment. Consumers won'’t have to change their behavior overnight, but with convenient small steps. We have termed this trend "Easy Ethics"”.

This is the kind of stuff that turns me off. Ethics aren't easy. We have tough choices to make and those that use Global Warming to market their products better be careful. One scandal with tree planting or offsets not going where they should and the entire effort gets a black eye. I am not saying don't develop and market environmentally sensitives products, just don't shove it down my throat as a moral issue. That is all.

Questions to be Answered in 20 Years

There are many questions that I would like to have answered over the next 2o years. These are big picture questions that face humankind.

1) How will Muslims and the West deal with radical Islam?
2) How will the western world deal with an aging population and every-increasing social security and medical costs?
3) How will humanity transition away from fossil fuel use to alternate energy sources?
4) Is global warming in fact reality and, if so, how will it affect the world and all its inhabitants?
5) Will capitalism continue to be in decline in the US and the world in favor of socialist tendencies?
6) Will AIDS be cured? What about cancer?

I am sure there are other big questions. Let me hear yours.

Blogging the Bono

I got this DVD for my birthday and finally sat down to watch it last night. As a big fan of U2, I really enjoy their live performance DVD's.

There were some bizarre moments when Bono delved off into politics by putting on a head band with a Muslim crescent, Jewish star and Christian cross. It took me a couple of times to understand it, but it spelled out co-exist with the crescent being the "C", the star being the "X" and the cross being the "T". He donned the head band while playing the song for Love and Peace or Else:

Lay down
Lay down your guns
All your daughters of Zion
All your Abraham sons

Baby don't fight
We can talk this thing through
It's not a big problem
It's just me and you
You can call or I'll phone
The TV is still on
But the sound is turned down
And the troops on the ground
Are about to dig in

And I wonder where is the love?
Where is the love?
Where is the love?
Where is the love?
Love and peace

I noticed that he pointed to the crescent, star and cross with his longest finger and singing "Jesus, Jew, Muhammad". The 2nd time through, I think he realized he just flipped off three major religions and used his index finger instead. For those that have the DVD, this is during Sunday, Bloody Sunday almost exactly one hour into the concert. He then either had the bandana on his head or around his arm for the most of the concert.

Granted U2 is a very political band. Sometimes, I wish they would just shut up and sing. They have to be the best song-writing and performance band of my generation - hands down, bar none. Here is an example from One:

Did I ask too much?
More than a lot.
You gave me nothing,
Now it's all I got
We're one
But we're not the same
Well we
Hurt each other
Then we do it again
You say
Love is a temple
Love a higher law
Love is a temple
Love the higher law
You ask me to enter
But then you make me crawl
And I can't be holding on
To what you got
When all you got is hurt

One love
One blood
One life
You got to do what you should
One life
With each other
One life
But we're not the same
We get to
Carry each other
Carry each other

Of course, One is about the AIDS crisis, but the lyrics are unmistakable humanism at its best. Pride celebrates Dr. King's legacy during which Bono made a pitch for Africa relief. He dedicated Running to Standstill to the "brave men and women of the United States military." Running has the three best lyrical lines of all time:
You got to cry without weeping
Talk without speaking
Scream without raising your voice

The only songs I did not like on the whole DVD were Zoo Station and The Fly. Overall, it is a very good DVD. However, Go Home is better. Bono in front of his home crowd beats Bono in Chicago. Plus, this DVD did not have Kite or Walk On. Don't get me wrong, I would still buy it and watch it out of shear love of U2 and their music. I'll still import the songs to my iPod and listen to it repeatedly.

330 MPG hybrid car with 3 wheels for under 20K

330 MPG hybrid car with 3 wheels for under 20K!


H/T EuroYank News.

Michael Shermer The Flipping Point

Michael Shermer: The Flipping Point -- How the evidence for anthropogenic global warming has converged to cause this environmental skeptic to make a cognitive flip

H/T Temporal Apocalypse

This article by someone I respect tremendously, makes a point about demonizing any dissent.
"There is no debate," one spokesperson told me. "We don't want to dignify that book," another said. One leading environmentalist warned me that my reputation would be irreparably harmed if I went through with it. So of course I did.

Environmental groups who cry doom and gloom to keep donations flowing only hurt their credibility. As an undergraduate in the 1970s, I learned (and believed) that by the 1990s overpopulation would lead to worldwide starvation and the exhaustion of key minerals, metals and oil, predictions that failed utterly. Politics polluted the science and made me an environmental skeptic.
I guess that is where I am right now. The more I hear "the debate is over", the more I reflexively pull back from whichever side proclaims such. Shermer makes a point that I just love:
Nevertheless, data trump politics, and a convergence of evidence from numerous sources has led me to make a cognitive switch on the subject of anthropogenic global warming.
Exactly! Data trumps politics. Data trumps ideology. Data trumps the left/right divide on the issue.

Show me the evidence. Make the case. So, Shermer provides several sources that changed his mind.
-The movie Inconvenient Truth
Four books eventually brought me to the flipping point. Archaeologist Brian Fagan's The Long Summer (Basic, 2004) explicates how civilization is the gift of a temporary period of mild climate. Geographer Jared Diamond's Collapse (Penguin Group, 2005) demonstrates how natural and human-caused environmental catastrophes led to the collapse of civilizations. Journalist Elizabeth Kolbert's Field Notes from a Catastrophe (Bloomsbury Publishing, 2006) is a page-turning account of her journeys around the world with environmental scientists who are documenting species extinction and climate change unmistakably linked to human action. And biologist Tim Flannery's The Weather Makers (Atlantic Monthly Press, 2006) reveals how he went from being a skeptical environmentalist to a believing activist as incontrovertible data linking the increase of carbon dioxide to global warming accumulated in the past decade.
I can be persuaded in both directions. Can you?

Capital Pollution Solution?

Capital Pollution Solution? (NYTimes - reg required)

H/T Air Pollution News
......the trading of greenhouse gas allowances, also known as carbon trading, may be capitalism’s best answer to the problem of global warming. To avoid a dangerous degree of climate change, many scientists say, greenhouse gas emissions worldwide will have to be cut by 50 to 70 percent over the next 50 years. The only hope of achieving that, short of an unforeseen technological breakthrough or the passage of draconian environmental laws, is to inspire radical change in the economic system. In a carbon-trading scheme, you must pay to pollute: price tags are placed on greenhouse gas emissions and then the market (not the government) essentially figures out the cheapest, most efficient way to reduce them. "The beauty of carbon trading,"” Dan Dudek, chief economist at Environmental Defense, a nonprofit advocacy group, explained to me, "“is that it takes a primal human impulse,— greed,— and redirects it toward saving the planet rather than destroying it."
As I posted before here, and here skeptical of these carbon trading schemes. It seems to me that two things are wrong with this:
1) The government set arbitrary, allowable pollution amount.
2) Companies (and theoretically countries and individuals) can then trade the carbon credits on an open exchange.
3) The cost of that credit is then passed on to consumers as a cost of production.

I understand that this scheme is meant to factor the carbon replacement cost into energy consumption. But a scheme is exactly what it is. The bottom line is if you have money, you can consume energy. If you don't have money, you cannot. If this is done on a global scale, it will turn into a wealth transfer from the industrialized nations to the non-industrial nations. Such a wealth transfer to the kleptocracies in Africa will not help them achieve economic growth. Also, I can see all sorts of cheating and corruption going on that will renders such a program null and void. Who is going to monitor emissions? Will an entirely new government agency spring up to administer such a thing?

The only thing this will accomplish is create another way to move money out the hands of the people and into the hands of these traders and the government.

Global warming: Signed, sealed and delivered

Global warming: Signed, sealed and delivered
Not a single paper in a large sample of peer-reviewed scientific journals between 1993 and 2003 refuted the consensus position, summarized by the National Academy of Sciences, that "most of the observed warming of the last 50 years is likely to have been due to the increase in greenhouse gas concentrations."

In 1988, the World Meteorological Association and the United Nations Environment Program joined forces to create the Intergovernmental Panel on Climate Change to evaluate the state of climate science as a basis for informed policy action. The panel has issued three assessments (1990, 1995, 2001), representing the combined expertise of 2,000 scientists from more than 100 countries, and a fourth report is due out shortly.

Its conclusions -- global warming is occurring, humans have a major role in it -- have been ratified by scientists around the world in published scientific papers....
I have no problems with this so far. However, then the article takes a nasty turn at demonizing any who dare dessent.

Those few who refuse to accept it are not ignorant, but they are stubborn. They are not unintelligent, but they are stuck on details that cloud the larger issue. Scientific communities include tortoises and hares, mavericks and mules.

A historical example will help to make the point. In the 1920s, the distinguished Cambridge geophysicist Harold Jeffreys rejected the idea of continental drift on the grounds of physical impossibility. In the 1950s, geologists and geophysicists began to accumulate overwhelming evidence of the reality of continental motion, even though the physics of it was poorly understood. By the late 1960s, the theory of plate tectonics was on the road to near-universal acceptance.

Yet Jeffreys, by then Sir Harold, stubbornly refused to accept the new evidence, repeating his old arguments about the impossibility of the thing. He was a great man, but he had become a scientific mule.

For a while, journals continued to publish Jeffreys' arguments, but after a while he had nothing new to say. He died denying plate tectonics. The scientific debate was over.

So, to those who even care to examine the evidence, the scientific debate is over. Dare discent and you are compared to Sir Harold or, in Freethought circles, those who believe in Intelligent Design.

To me, we could have a little less demonizing and a little more talking about the facts and discussing the issue. In order to convince me, on either side of the Human-Caused Global Warming debate, consensus means little - reason, logic, facts, observations and analysis do. Make your case. Don't hype or exaggerate to get attention to the cause. Stick to facts, not emotion. Don't rely of fear or attempt to make it a moral issue. Play by the rules of science. Declaring the discussion over like some petulant child is not helpful, in my opinion.

Carbon Neutrality Via Guilt

Consumers Offer Penance For Pollution

I am starting to see this sort of tactic a lot in the media.
The average American generates 23 tons of it every year, says Eric Carlson of, a non-profit based in Maryland. It's $99 "zero carbon" package will karmically wipe away those tons for you. For this, you could opt to have trees planted (type and number of trees depends on your choice of location, but the formula is generally three trees per ton).
"Karmically wipe"?!?!

Please stop the guilt trips that sound as if they come from my Catholic grandmother who has long since passed away. I want facts, not hype and guilt. I guess I cannot help but post some more of this article:
Yale's School of Forestry and Environmental Studies is a good example of what word-of-mouth can do for an idea.Knowing that a graduation ceremony can generate a fair amount of pollution, the graduating students did some calculations. Between family and friends traveling to and from the graduation, by car or by plane, they estimated the event would produce 325 tons of carbon. Figuring that this was hardly the example that a forestry school should set, they raised among themselves $800 and purchased "renewable energy credits."

These credits ensured that, even as their family and friends fouled the air with conventional fuel, environment-friendly projects were keeping the ecological balance intact somewhere else in the world.
Get that: "friends and family fouled the air". That is rich.
Jeanne Troy, another graduate of the forestry school, and her husband-to-be were expecting 110 guests for their wedding last year.

"Once we had the guest list set, we figured out who was flying and who was driving cars," she says - and then they set the stage for their carbon-neutral nuptials.

They contacted NativeEnergy, an energy company privately held by Native Americans in Vermont.
Hmmmmmmmm.....NativeEnergy, now why does that sound familiar. Al Gore and Inconvenient Truth perhaps? (more on this much later).

Listen, I am not panning carbon neutrality. I just want to separate the science from the hype, the carbon-neutrality culture phenomenon from the business of offsets.

Global Warming Right/Left Divide

I found this blog writeup at Main St. USA which demonstrates the clear right/left divide over global warming. Both sides of the issue cannot even talk to each other anymore. If you are on the left, global warming has reach such a status it is like an article of faith that must be sworn to. On the right, global warming is automatically dismissed as a conspiracy to transfer money from rich nations to poor. When I announced in a conservative email discussion group that I was interested in taking a fresh look at global warming and carbon neutrality on my new blog, I was completely panned.

Since Main St. USA appears to be one of those shrill voices on the left who links to the even more shrill voices at Think Progress., I have a question for Main St. USA:

Are there any scientist being funded by government money that offered a grant proposal to study natural global warming and the cyclical warming and cooling phases of the earth? Would such a study even be funded? If not, why not? I am not saying that global warming is a product of natural processes. The ice core data on the subject is intriguing and needs more study. Since the scientific community's inertia is totally on human-caused global warming, I doubt much research is being funded in this area.

As to the coal industry funding research. Why the hell not? They are free to use their money just like the leftist organizations like George Soros and the Ford Foundation are free to use their money to push their leftwing agenda. That is what America is about: the use of money in the debates of our time.

Saturday, July 29, 2006

Inverted Yield Curve

Above is a big graph showing the yield spread between the 20 Year Treasury and 10 Year Treasury (Green Line), the 10 Year and 5 Year (Red), and 10 Year and 1 Year Treasury (Black). Click on the graph for a larger (readable) graph. On the graph, the yellow shaded area represents a bull (declining) market whereas the black bars along the bottom represent economic recessions. Yes, I have adapted Joseph Ellis' graphical method to my analysis.

Obviously, as the spreads reach zero, the bond curve is flat. If the spread is negative, then the yield curve is negative. For instance, in 1989 and 2000 the yield curve was negative and a bear market and recession followed.

Currently, despite the Federal Reserve's attempt to raise long-term interest rates, they have only been successful in raising the short end of the curve. As a result, the yield curve is slightly negative.

Does this predict a bear market and/or recession? Who knows, but I am really concerned that a slowing economy, rising inflation and the flat yield curve cannot be taken as anything but indication of bad economic times ahead.

Friday, July 28, 2006

Economy Slows in 2Q, Inflation Heats Up

Economy Slows in 2Q, Inflation Heats Up - Yahoo! Finance

The economy throttled back in the second quarter as consumers and companies turned cautious amid surging energy prices. Wall Street rallied on the hope that a break in two years of interest-rate pain may be in sight.

The nation's gross domestic product advanced at an annual rate of just 2.5 percent in the April-to-June period, less than half the pace of the previous three months, according to Friday's economic snapshot released by the Commerce Department.

An inflation gauge closely watched by the Federal Reserve showed that core prices -- excluding food and energy -- advanced at a 2.9 percent pace in the second quarter -- far outside the Fed's comfort zone. That was up from a 2.1 percent growth rate in the first quarter and marked the highest inflation reading since the third quarter of 1994, when core inflation rose at a 3.2 percent pace.

The inflation reading was taken before the latest run-up in energy prices. Oil prices, which had hit a record high in late April, soared to a new closing high of $77.03 a barrel in the middle of July.

What I find interesting is that the stock market rallied on (bad) news of economic slowing and totally discounted the fact that inflation is here. The Fed is not going to stop raising interest rates with inflation going up like it has. If you include food and energy, inflation is even worse.

I am not in the fortune telling business, but it is sometimes fun to make predictions to see how they come out. Everyone likes to be right once in awhile. I have been saying for some time that we are in an environment of a slowing US and global economy. Inflation is a fact of life as a result of higher raw material costs and higher energy costs that are working its way through the economy. Although this is anecdotal, the chemical industry is staring to see pricing power come back which will only push through the entire economy. Granted, the price of chemicals is only a small portion of final consumer prices (how much, I do not know beyond it is small). However, if what is happening in my industry is any indication of the economy as a whole, the consumer will be seeing higher prices soon - that is if it has not already happened.

I can only conclude that the Fed will continue to tighten until inflation is under control. They will be unable to tame the beast given their total inability so far to affect interest rates even after 17 rate hikes. The economy will continue to slow and the stock market will be in decline over the next 12 months. Those that are optimistically buying stocks now are setting themselves up for pain.

That is my prediction. Check back with me in six months to see how I did!

Carnival of Carbon (Neutrality)

Here are several articles on Carbon Neutrality that I found today. Two regard the cultural phenonenon, one the a company and one skeptical of offset efficacy.

San Francisco's Carbon Neutral Opportunity

But the bottom line is that even if we as individuals sacrifice and cut back and sell our cars and stop air traveling and wear natural fibers and go vegan and just take a damn breath and enjoy life, governments at all levels will still be overconsuming, with no responsibility for their roles in climate change.

Individuals, families, and organizations can currently purchase carbon offsets. What if San Francisco passed a law to mandate purchase of carbon offsets for all our municipal carbon use, to make us America's first carbon neutral city?

The average American produces 10 tons of CO2 emissions per year. 25% of the total carbon emissions come from individuals, although that figure does not include consumer goods. The process of carbon offsets is simple: one pays a fee to nonprofits like, SELF, or the Carbon Neutral Company. The money goes to support renewable energy resources and projects to encourage energy efficiency.

Be green - everybody's doing it

San Francisco (Fortune) -- Eco-consciousness appears to be hitting the mainstream. For years, it was only the truly committed, the painfully hip and the guiltily ashamed who were willing to stand up in public and say they were willing to do something for the environment.

Now environmentalism has gone way beyond the sandal-ista crowd. We just may be entering a time when everyone from average individuals to giant corporations to politicians of all ideologies agree that the evidence of environmental degradation is so overwhelming that it's finally time to act.


Carbon neutrality is going to be the next big thing. Movie star Al Gore had promised to personally become carbon neutral and he is urging others to follow his lead.

How to be carbon neutral, though? It turns out it's as easy as writing a check. Various organizations will take your money and then go invest in planting trees, developing wind farms and other activities that "offset" the carbon dioxide you're responsible for creating.

It sounds a little nutty, and there is disagreement as to how well such a system works. But if you think about it, it's kind of a cool idea. Not all of us are cut out for driving Priuses, carrying burlap sacks to the market or putting on a sweater in our cold living rooms.

First Carbon Neutral Car Jul 20, 2006

DaimlerChrysler UK is working on a plan which means that all carbon dioxide (CO2) emissions generated through the production process and the logistics chain of the smart ev, will be measured, reduced where possible and the remaining unavoidable emissions offset through a mixture of renewable energy, energy efficiency and forestry projects which will save and absorb 1 tonne of CO2 for every tonne the smart ev produces. The offset projects will be located around the world, with one based in France, where the smart ev starts its life, and in the UK, where final assembly is undertaken by technology partner, Zytek Group.

The measurement of the CO2 emissions created by the production and logistics of the smart ev, or its ‘carbon footprint’, will be undertaken prior to the first customer deliveries in November 2006. The CarbonNeutral Company and DaimlerChrysler UK expect the smart ev will be confirmed as the world’s first CarbonNeutral car, as well as being powered by green electricity and having zero emissions.

UK using carbon offsetting instead of reducing emissions

UK companies need to measure and manage their carbon emissions more effectively, according to new research* published today.

Many claim to be moving towards carbon "neutrality", often by investing in tree planting schemes aiming to reduce the level of carbon dioxide in the atmosphere. But there is concern that companies may be using these offsetting schemes for public relations purposes, and to disguise a failure to reduce emissions through energy efficiency measures.


Then there are offsetting schemes, which include Kyoto-compliant and voluntary schemes. The former are useful for companies regulated by the EU ETS, but subject to restricted supply and relatively high set up costs.

The voluntary schemes, which often issue carbon credits in return for planting trees, have become increasingly popular but there is debate about their effectiveness in reducing carbon emissions.

The report notes that absorbing the UK's annual greenhouse gas emissions "would require planting an area the size of Devon and Cornwall every year".

Landis says testosterone levels are natural

Landis says testosterone levels that triggered drug test are natural - Cycling - Yahoo! Sports

In his first public appearance since a positive test for high testosterone cast his title into doubt, the American said his body's natural metabolism -- not doping of any kind -- caused the result, and that he would soon have the test results to prove it.

"We will explain to the world why this is not a doping case but a natural occurrence," Landis said from the Spanish capital.

I am left to wonder how Landis will prove that the testosterone was naturally produced as part of his unique physiology. Not only that, what evidence will the Tour de France and doping authorities accept to prove his innocence?

If you recall, it took Lance Armstrong years to fight off doping allegations. Armstrong has never even tested positive for banned substances whereas Landis has.

I say the odds are stacked against Landis. The burden of proof is on his shoulders during a time when a hated American has won the Tour eight straight years.

Floyd - good luck to you buddy. If you are innocent and can prove it with science, then I stand with you. If you cheated, then shame on you. I would rather have a Spaniard win the Tour than have an American cheater win.

Carbon neutrality - Big Business?

Carbon neutrality

There is even a company named Carbon Neutral. Key grafts from the news story:

Holidaymakers, worried that jet fuel emissions are warming the planet, and firms such as Europe’s biggest bank HSBC are also seeking to reduce damage to the environment.

“The market has ... exploded in the past 12 months,” said Jonathan Shopley, managing director of The Carbon Neutral Co in London whose clients include carmaker Honda and British broadcaster BSkyB.

Once limited to a hard core of green activists, carbon neutral projects are winning wider favour. “We’re talking about millions of tonnes a year (of carbon dioxide offsets) instead of perhaps 100,000 a couple of years ago,” Shopley said. Still, the amounts are a pinprick in world emissions from human activities of more than 25 billion tonnes a year.

“Carbon neutral” schemes typically invest in non-polluting wind, solar or hydropower projects in Africa, Asia and Latin America to offset emissions of heat-trapping carbon dioxide released by burning fossil fuels such as coal, oil or gas. Or they pay to plant trees, which soak up carbon by growing, or invest in renewable energy or energy-efficiency projects. The aim is for governments, individuals or companies to prevent as much carbon emissions as they produce.

The buzz surrounding "carbon neutrality" is increasing. I guess I am coming late to the game on this phenomenon.

Not Carbon Neutral, Be Prepared to Be Sued

As world warms, legal battles loom�

Why stop with companies and countries, let's extend legal liability down to individuals who are not carbon-neutral. Who knew that offsets could be ammo in defense of lawsuits?

Scientist: Inject Sulfur into Air to Battle Global Warming

Scientist: Inject Sulfur into Air to Battle Global Warming

I wonder if this would count as an offset to "carbon neutrality"?

Thursday, July 27, 2006

Four Engines of Global Warming

Four Engines of Global Warming

Big Engines, Light Weight Hippy Car. Gotta Love It.

H/T Ace

Al Gore: All "Carbon Neutral", All the Time

Everywhere he goes, Al Gore must say "carbon neutral". I challenge anybody from this point onward to produce an Al Gore interview that do not use those words. The latest from Der Speigel: H/T GM Truck Info:
Gore: About a year ago we bought a hybrid, but I don't drive very much. We've changed our entire lifestyle. We made the decision to be carbon-neutral and eliminate any net CO2 contribution to the environment. Even "An Inconvenient Truth" was produced in part using carbon-neutral, alternative energies. Paramount also made the decision to ensure that the tour and the promotional activities would be done in a carbon-neutral way.
I have been trying to dig into this "carbon neutral" claim of Al Gore's. Surprisingly enough, I have been unable to locate a public email address for anyone associated with Al Gore's office. I do have a couple of strings out there, however, and hope to get some answers.

Chicago - The Price Of Government intervention

H/T to Cafe Hayek:

The Chicago City Council wants companies that operate in the Chicago area with more that a billion in sales and stores greater than 90,000 square feet to pay workers in those stores at least $10 an hour and provide $3 in benefits.

It appears to me that the city councilmen are trying to economically destroy their city in much the same way that Japan does by discriminating against large retail stores (called "big box stores"). In fact, the big box stores are frequently credited with being the major source of productivity growth in the US over the last 20 years.

An excellent source for information on this subject is a book called The Power of Productivity by William W. Lewis whose premise is that excess government interference like propose wage floor in Chicago are a source of underperforming productivity. For instance:
A combination of misguided zoning laws, taxes, and subsidies have distorted competition and allowed the smallest, most inefficient retailers still to account for slightly over half of all retailing employment in Japan.

The Japanese format mix is so different from the one in the United States because it is virtually impossible for a Japanese or, for that matter, foreign business to open a large supermarket or a big box general merchandise store in Japan, and tax laws and government subsidies favor traditional stores.

The Japanese don't [chose to spend at Wal-Mart] because of the Large-scale Retail Store Law in Japan. For many years, this law simply prohibited the building of stores larger than 1,000 square meters.
The result:
Japan's productivity in retailing is only half that of the United States because the mix of store formats in Japan has evolved much less towards the modern, specialized (and high-productivity) type store. Moreover, the traditional mom-and-pop stores in Japan are especially small-scale, with productivity only one-third of that of the traditional stores left in the United States.
So, to the Chicago City Council I say this: If you want to kill economic productivity in your city, I think this effort will do nicely.

Update: The City Council passed the law. H/T again, Cafe Hayek

Knowledge and the Wealth of Nations

I have just finished reading Knowledge and the Wealth of Nations by David Warsh. I'll give a H/T to The Edge Perspectives for introducing me to the book.

This book traces the economic theory of growth from a historical perspective all the way from Adam Smith's pin factory to Paul Romer's journal article Endogenous Technological Change. For someone who is not a trained economist nor mathematician, much of the book was beyond my ability to understand. However, that did not stop me from reading all 408 pages of it. Not comprehending convexity or non-convexity, infinite-dimensional spreadsheets, rival and non-rival goods (which I do understand now; I think!) does not detract from the overall message of the book: the accumulation of knowledge is the engine of economic growth.

On one level I agree with the author that technology, knowledge and invention are a key to economic growth. The case is made very convincingly by Warsh. However, it is my belief that even with the spread of technology to poor countries, economic growth has not followed. Even in countries that have made stunning leaps in growth, like Japan and Korea, their economies trail the US in growth. Another interesting book, The Power of Productivity by William W. Lewis argues that a bigger determinant of economic growth is political enabling (or disabling) as well as strong competition. What is striking about Knowledge and the Wealth of Nations is that it touts theory, mathematics and models over validation with real world data. Very little discussion is given to matching real-world outcomes to the mathematical models developed by knowledge growth theory. To be fair, quantifying technology and the accumulation of knowledge within any economic system is likely impossible. Further measuring the absorption and use of that technology is even harder. However, it is striking to look at the empirical results of Lewis matched with the mind-stretching models and mathematics used by Warsh's protagonist Romer. What I would conclude from reading both Knowledge and Productivity is that both government structure and the accumulation of knowledge are drivers of economic performance and growth. The degree to which government establishes the rule of law and proper competition is the degree to which knowledge will drive economic growth.

Another implication of Warsh, if I understand it correctly, is serious governmental policy decisions regarding intellectual property need to be considered. Since knowledge generation is indivisible (that is, the entire amount of knowledge is needed or it is worthless, just like the entire bridge is needed or it worthless) and the cost to produce knowledge is a huge fixed cost, some protection of intellectual property is needed. Unless intellectual property generation is rewarded with government protection, it will not be undertaken.

There are those who wish to deny the right of those who generate knowledge or easily copied material (movies and music) right to control that material. Without some sort of mechanism to protect IP, it would not exist. An outcome of Warsh is that with no knowledge accumulation, no economic growth. My conclusion from that, not Warsh, is that those that steal IP rob society of growth opportunity.

So would I recommend reading Knowledge? Yes, for those with some previous economics education. No, for those who are just learning about economics. For me, the value added was borderline as 50% of the book was over my head. That is my failing, not Warsh.

Landis: Steriods?

Floyd, say it isn't so:
Team says Landis tested positive during Tour de France

July 27, 2006

LONDON (AP) -- Floyd Landis' stunning Tour de France victory just four days earlier was thrown into question Thursday when his team said he tested positive for high levels of testosterone during the race.

The Phonak team suspended Landis, pending results of the backup "B" sample of his drug test. If Landis is found guilty of doping, he could be stripped of the Tour title, and Spain's Oscar Pereiro would become champion.
If it is true, why did Floyd think he had a chance to get away with it? If there is a viable explanation, I would welcome it.

Wednesday, July 26, 2006

Carbon Neutrality......what is it?

Being a new buzz term made famous most recently by Al Gore, carbon neutrality really has no standard definition. First off, I must comment that it really is a misnomer to start. In this context, carbon really means carbon dioxide or the chemical formula C02. Carbon dioxide is generated when organic material burns or undergoes complete oxidation. Depending upon the efficiency of the combustion, carbon monoxide (CO) can also be generated. Carbon dioxide is a green house gas and the target of the "Carbon Neutrality" campaign. Since he buzz words "carbon neutrality" omit "dioxide", I will use the common terminology as well. Everyone will know that we are really talking about carbon dioxide.

Since I am no expert on the subject, I started by searching the web and blogs. I found a good source here, that discusses carbon neutrality:

What makes a lifestyle "carbon neutral"?

We did some research and learned that there is no generally accepted definition of "carbon neutrality," but the premise is simple. For every ton of carbon you emit, whether directly by your actions or indirectly by your consumption decisions, you undertake a compensating action or consumption decision that reduces carbon emissions by the same amount. In principle, your ledger of carbon debits would equal your ledger of carbon credits.

In other words, when you consume energy either with your car, via electricity or consumer purchases, that consumption emits carbon to the atmosphere. The entire premise of the carbon neutrality effort is to offset those emissions via some mechanism. Should the offsets equal the emissions, then you will be so-called "carbon neutral".

Next post.....calculating your carbon emissions.

Carbon-Neutrality, Carbon-Neutrality, Carbon-Neutrality.......

Everywhere I look, the buzz phrase of the day is "carbon neutrality". The only problem is people like Michelle Malkin and Polipundit can't get past partisan sniping of Al Gore to even understand what the issue is about. True, I must give both a h/t for bringing up Al Gore's claim of a carbon neutral lifestyle plus the added claim of The Inconvenient Truth's production being carbon neutral. Truth be told, I got into a debate over global warming on my local subdivision's email list after Al Gore came to Houston with his traveling road show. That was my first exposure to "carbon neutrality".

So, since there are few people who are actually talking about the substance of a carbon neutral lifestyle, I had to do my own digging. Over the next weeks and days, I'll get down to the real analysis behind carbon neutrality. What I hope to uncover is:
-What does "carbon neutral" mean?
-How do you calculate your carbon footprint?
-What are offsets?
-Is carbon neutrality a business plan or reality?
-Is it better to reduce carbon emissions or purchase green credits?
-Can Al Gore and the production of Inconvenient Truth rightfully claim carbon neutrality?

Of course, as I go along, I'll likely have more questions to answer.

Claiming My Spot on Technorati

I guess some fancy techno-stuff must go on to claim a spot on Technorati. Here goes that fancy html thing-a-ma-gig.

Technorati Profile

Tuesday, July 25, 2006

Pollution Credits.

The deeper I dig, the more this whole issue of trading emissions stinks to high heaven"

EU trading of pollution credits fails on goals - Business - International Herald Tribune

Five years later, the EU is failing to meet the Kyoto Protocol's carbon dioxide emission standards. Rather than help protect the environment, the trading system has led to increases in electricity prices of more than 50 percent and record profits for RWE and other utilities.
"I don't suppose the environment has noticed the European emissions trading scheme," said William Blyth, director of Oxford Energy Associates in Oxford, England, and a former International Energy Agency official who advises businesses on energy and climate change policy. The utilities and emissions traders, in contrast, "have done very well."

So basically, I am back to concluding that the Kyoto Protocol is just another source of wealth transfer from rich nations to poor nations as well as the intermediaries who take their cut.

More on Carbon Neutrality

A similar game is played in Harris County, Texas with emission reductions. Since Harris County is an environmental non-attainment zone, any new plants that want to be built must obtain environmental air emission credits from other companies who will shut down polluting units. So instead of paying more to use the latest environmental technology or reduce pollution from existing units, a company can pay another for credits and then make a similar claim of "carbon neutrality" (emissions neutrality).

I guess one could claim net reductions in air emissions via this process. However, it is kind of fake because companies that shut down old units are not doing it for the sake of the environment. More often, they are uneconomical money losers. This way, they get some extra bucks and the environment is worse off due to this trading process.

Of course, the same thing will happen eventually with the Kyoto Protocol. Rich industrialized nations will pay poor non-industrialized nations for their environmental credits so they can pollute more. In fact, there are already carbon trading programs in many countries.

I guess this way, we can all write a check to make ourselves feel better.

"Carbon Neutrality"

Ever since the Al Gore's movie _An Inconvenient Truth_ opened, there has been a lot of rhetoric flowing regarding living a "carbon neutral" lifestyle. In fact, Al Gore makes repeated claims that Tipper and he live such a lifestyle.

He said he was "carbon neutral" himself and he tried to offset any plane flight or car journey by "purchasing verifiable reductions in CO2 elsewhere".

So, in other words, he takes private jets, rides in SUV motorcades, and
probably maintains several homes, and writes a check to offset those emissions.

First of all, I would like to see the documentation on this. Al Gore flies all around the country on private jets which equate to a hell-of-a lot of emissions. I can only imagine the size of the check written for each NY to LA private plane trip. But I do not want to imagine it, I want to see and scrutinize the calculations.

At the same time, I wonder if writing a check for excessive C02 emissions is really solving the problem. One could theoretically trace back the source of that money to CO2 emissions so that the overall C02 generation (income generation plus life style choices) are still excessive.

For instance, I work in the chemical industry for which all of my income originates. I also drive a SUV that gets 16 MPG. Taking the Al Gore approach, I should take income from my chemical industry job which belches out an undetermined amount of C02 (and other) emissions and write a check so someone can plant trees to offset my SUV and house size. Those trees paid for by my chemical industry employer really do not result in a carbon neutral lifestyle for me as a whole individual.

Then again, one could also question the amount of CO2 generated by planting those trees. I mean, someone has to grow the trees which uses fertilizer, pickup trucks, etc, and then there is transportation to the site where they are planted, etc.

Overall, I think Al Gore would have a better chance of persuading me to adopt his point of view if he flew commercial jets and was transported in hybrid cars so that his overall carbon footprint was reduced. To me, it is fake to claim carbon neutrality via a check book rather than reduce actual emissions.

Sunday, July 23, 2006

Fewer Treasuries, More Stocks

Fewer Treasuries but More Stocks on Foreigners's U.S. Shopping Lists - New York Times

h/t Cafe Hayek

One of my favorite blogs is Cafe Hayek where I found a link to the NYTimes article linked above. I thought it was interesting so I wanted to explore the economic analysis of foreign purchases of US treasuries by foreign entities.

Therefore, I went to the US Treasury web page and downloaded all the data that can be found here. From the NYTimes:

The charts show totals over rolling 12-month periods, smoothing out what can be volatile monthly figures. In the 12 months through May, foreign official institutions, mostly central banks, bought a net $137 billion of long-term American securities, including Treasuries, government agency bonds, corporate bonds and common stocks. That number, while sizable, is well below the record of $245 billion purchased in the 12 months through September 2004.
Since the web version of the Times does not have any graphs, I made my own. The first graph shows the historical net purchases of US Treasuries by Foreign Entities. The data is year-over-year to smooth out monthly variations:

This graph (click for a bigger, readable view) indicates to me that foreigners have cut their purchases of US Treasuries starting in June, 2004. The trend is two years old. As Cafe Hayek noted, there was some concern that foreign central banks were buying too many treasuries which, as the argument went, presented a risk to monetary stability. Here is the graph of foreign central bank net purchases:

The trend is similar (click for a bigger, readable view). That is, in late 2004, foreign central banks turned away from treasuries in both absolute dollars, but percentage of purchases as shown below:

What conclusions can we draw from this data:

1) Foreign entities (banks and individuals) are financing less and less of the government debt.
2) Foreign banks have shifted their preference from treasuries to government backed mortgage and US corporate debt.

Another argument was made at Cafe Hayek (not by the authors of that blog):
...most of the foreign investors who buy dollar-denominated securities are foreign central banks.
I do not think this is a correct assertion. If I understand the data correctly, only 13% of the foreign purchases of US securities is central banks. Not only that, the percentage peaked at 29.7% in August, 2004 and has been declining ever since.

I apologize for the poor graphics, but I cannot quite master moving charts from Excel to a format to post on the web. If there are any technical geniuses who can give me tips, I would appreciate it.

The purpose of this blog is to flush out the thoughts and views that I believe to be vital for accurate thinking about the world. As mentioned in my profile, I am a 30-something male with education and experience in Chemical Engineering and the chemical industry. Although I have not professional training in economics, the subject has grown into a passion for me. Economics and markets became a passion when I lost a large amount of money in the bear market of March 2001 through March 2003. I started to examine the myths and downright lies that I had been fed regarding the stock market and investing. That question for knowledge led to examining classic economics in the attempt to find out how things really work. I must credit a local Houston radio station that at that time was called Business Radio 650 and is now Business Radio 1320 for giving me a jumpstarted into my education. I then started to read and read and read and then read some more. In the past three years, I have probably read a dozen or so books on economics and have a stack of six more in the queue.

Another think that drastically affected my life was my late discovery of Excellence Literature. What I mean by Excellence Literature is the genre generally called "Self Help". It is my belief that "Self Help" does not accurately describe the narrow cut of the writings that I describe as Excellence education - that is, how to improve yourself and become a more effective person in all aspects of your life. It is not that I am not successful, because by most measures I was before picking up the 7 Habits of Highly Successful People by Dr. Stephen Covey, but I realized that I was not being the best person I could be. I realized I had ineffective habits that were limiting my growth and progress. So, in addition to reading economics literature, I began to read books on Excellence - some good, some bad, some downright cultish. In this blog, I will be reviewing some of this literature for you as I believe it is important to live a fulfilling life.

So, what should I post for my 2nd post? We'll see!!