Coyote Blog

Arizona State has climbed back into the top 10 party school rankings.

This is the same institution that is opposing Grand Canyon University's entry into Division I athletics because, as a for-profit university, they are apparently not academically serious enough.  For some reasons GCU's accountability to shareholders isn't as pure and wonderful as ASU's accountability to former customers who will never use their product again except perhaps to attend a football game (e.g. alumni).

Via Kevin Drum

Dave Weigel notes a conundrum today: according to a new poll, 54 percent of the public disapproves of Barack Obama's handling of the deficit. And yet, as the chart on the right shows, the deficit is shrinking dramatically. Last year it dropped by $200 billion, and this year, thanks to a recovering economy, lower spending from the sequester, and the increased taxes in the fiscal cliff deal, it's projected to fall another $450 billion.

Weigel notes that this has deprived conservative yakkers of one of their favorite applause lines: "You don't hear Republicans lulz-ing at Obama for failing to 'cut the deficit in half in my first four years,' because he basically did this, albeit in four and a half." That's true. It's also true that contrary to Republican orthodoxy, it turns out that raising taxes on the rich does bring in higher revenues and therefore reduces the deficit.

The logic here is that Obama has been diligent about cutting the deficit, so therefore Republicans are wrong to try to use the debt ceiling and continuing resolution as a vehicle for forcing more cuts.

It is just possible that a person from another planet landing today might buy this story, but how can anyone who has lived through the last 5 years read this without laughing their butts off?  Every one of Obama's budgets have been dead on arrival, even within his own party, because they have raised spending to such stupid levels.  There has not been even a hint of fiscal responsibility in them.  And the Democratic Senate has passed one budget in something like five years**.

The only fiscal discipline at all has come from the Republican House, and they have only had success in keeping these deficit down by ... using continuing resolutions and debt ceilings as bargaining chips.  This is the President that treated the almost insignificant sequester as if it were the end of the world, and now these sycophants from team Donkey are giving Obama the credit for the deficit reduction?

PS-  This is not an advocacy for Republicans as much as for divided government.  The Republicans when they had years of controlling the Presidency and both houses of Congress under Bush II did zero to get our fiscal house in order and in fact with the Iraq war and Medicare part D, among other things, showed a profligacy that belies their current pious words.

PPS- Kevin Drum needs to have the balls not to play both sides of the street.  He has made it clear in other articles that he thinks it is an economic disaster that the government is spending so little right now.  When he shows a deficit reduction chart, if he were consistent, he should be saying that Republicans suck for forcing this kind of deficit reduction against Obama's better judgement and we need the deficit to go back up.  Have the courage of your convictions.  Instead, he plays team loyalty rather than intellectual consistency, crediting Obama for deficit reduction while at the same time hammering Republicans for austerity.  Dude, its one or the other.

PPPS-  For the first time during this Presidency, both the President and both house of Congress offered a budget:

[The] House passed a budget calling for spending $3.5 trillion in 2014, the Senate passed one calling for $3.7 trillion, and Obama submitted one calling for $3.77 trillion

So the actor that submitted the highest budget gets the credit for deficit reduction?

In a hard-hitting, incredibly researched piece of journalism entitled "Me & Ted", Josh Marshall polled his progressive friends at Princeton and found that they all thought Ted Cruz was an asshole.

Well, it turns out Ted and I went to college together. And not just we happened to be at the same place at the same time. We were both at a pretty small part of a relatively small university. We both went to Princeton. I was one year ahead of him. But we were both in the same residential college, which basically meant a small cluster of dorms of freshmen and sophomores numbering four or five hundred students who all ate in the same dining hall.

As it turned out, though, almost everyone I knew well in college remembered him really well. Vividly. And I knew a number of his friends. But for whatever reason I just didn't remember him. When I saw college pictures of him, I thought okay, yeah, I remember that guy but sort of in the way where you're not 100% sure you're not manufacturing the recollection.

I was curious. Was this just my wife who tends to be a get-along and go-along kind of person? So I started getting in touch with a lot of old friends and asking whether they remembered Ted. It was an experience really unlike I've ever had. Everybody I talked to - men and women, cool kids and nerds, conservative and liberal - started the conversation pretty much the same.

"Ted? Oh yeah, immense a*#hole." Sometimes "total raging a#%hole." Sometimes other variations on the theme. But you get the idea. Very common reaction.

Wow, so this is what famous journalists do?  Hey, I can do the same thing.

I went to Princeton with Eliot Spitzer.  He was a couple of years ahead of me but had a really high profile on campus, in part due to his running for various University Student Government offices.  So I checked with many of my friends back in college, and you know what?  They all thought Spitzer was an asshole.  I was reminded that we all disliked him so much that when one person (full disclosure, it was me) drunkenly asked who wanted to go moon Spitzer and the governing council meeting next door, we got 30 volunteers.  He was so irritating that he actually inspired a successful opposition party cum performance art troupe called the Antarctic Liberation Front (Virginia Postrel also wrote about it here).

Wow, am I a big time journalist now?  Will GQ be calling for me to do an article on Spitzer?

Look, this is going to be true for lots of politicians, because they share a number of qualities.  They tend to have huge egos, which eventually manifest as a desire to tell us what to do because they know better than we do.  They are willful, meaning they can work obsessively to get their own way even over trivial stuff.  And they are charismatic, meaning they generally have a group of people who adore them and whose sycophancy pisses everyone else off.  In other words, they are all assholes.

This article from the LA Times confused me greatly:

Advocates for borrowers took such comments to mean that the banks would prioritize debt write-downs on first mortgages, which banks resisted before the [$25 billion] settlement. Now, with nearly all the promised relief handed out, it is clear that the banks had other ideas.

The vast majority of the aid to borrowers, it turns out, came in the form of short sales and forgiveness of second mortgages. Just 20% of the aid doled out under the national settlement went to forgiveness of first-mortgage principal, the kind of help most likely to keep troubled borrowers in their homes. In terms of borrowers helped, just 15% of the total received first-mortgage forgiveness.

The five banks collectively delivered twice as much aid using short sales, in which owners sell their homes for less than the amount owed and move out, with the shortfall forgiven.

In all, the lenders sought credit for nearly $21 billion related to short sales and $15 billion related to second mortgages. That compares with $10.4 billion in write-downs on first mortgages.

Critics on the Left (example) are calling this a failure of the program, that most of the relief went to short-sales and 2nd mortgage forgiveness rather than first mortgage forgiveness.  The original article has this quote:

"It just shows you that the banks are running the government," Marks said. "There's virtually no benefit to borrowers, and yet you give the banks credit for short sales and getting second liens wiped out — something they were going to have to do anyway."

Hmm, well I am not the biggest fan of bankers in the world, but short sales and second lien forgiveness are principle forgiveness as well, just of a different form.  If they wanted a settlement that was first-lien forgiveness only, they should have specified that.

In fact, both short sales and second lien forgiveness have tremendous value to individuals if one considers individual well-being one's goal rather than just this obsessive fixation on home ownership.  

For many people, the worst part of their negative equity is that it created a barrier to their moving.  Perhaps they could find a job in another part of the state or country, or they wanted to move into a home or apartment with less expensive payments but were stuck in their current home because they could not afford to bring tens of thousands of dollars to closing.  In such cases, a short sale is exactly what the homeowner needs and facilitating and expediting this likely helped a ton of people  (It is also an example of just how unique our mortgage rules are in the US -- in almost any other country in the world, the amount of the negative equity in a short sale would get hung on the seller as a lien that must be paid off over time.  Only in the US do buyers routinely walk away clean from such situations).  Given that first mortgage loan forgiveness more often than not does not save the loan (ie it eventually ends in foreclosure anyway), short sales are the one approach that lets lenders get away clean for a fresh start.

As for second mortgages, I can tell you from personal experience that it is virtually impossible in the current environment to restructure or refinance a first mortgage with a second lien on the house -- even in my case where everything is performing and the underlying home value is well above the total of the two liens.  Seriously, what is the point in reducing principle in the first mortgage if there is a second mortgage there, particularly when the second mortgage is likely far more expensive?  For people with a second mortgage, forgiveness of that is probably the first and best gift they could get.  They may end up still losing their home, but they can't even begin to discuss a restructure or refinance without that other mortgage going away.

A while back I wrote about how hard it was to get in to see an ENT here in Phoenix.  I finally got my ear infection diagnosed by one of those local walk-in emergency clinics that are popping up in malls.  They prescribed antibiotic pills and drops, which I took diligently for 10 days.

My ear stopped hurting, but the hearing did not clear up.  Eventually, it started hurting again and my hearing was really blocked.  Fortunately I had held onto my appointment I made weeks ago with an ENT, and went in yesterday.  Apparently, I had an enormous fungal infestation.  The bacteria competes with the fungus normally and keeps it in check.  Once the bacteria were temporarily wiped out, the ecosystem in my ear canal was out of whack and the fungus went crazy.

The doctor vacuumed out an absolutely disgustingly large chunk of, uh, gross stuff from my ear and it was immediately better.  He put some topical cream on it, and it feels great this morning and my hearing is back.

Update:  I am not trying to make any point about the health care system.  I got perfectly good service from both doctors, though I was frustrated it took so long to see an ENT.  I find the whole microscopic ecosystem on and in our bodies fascinating, so I overshared on this experience.  I saw something the other day about twins, one of whom was fatter and one of whom was thinner, with the differences attributed to differences in the bacteria in their gut.

From our favorite politically-blinkered economist who used to be smart:

Chait stresses the youth aspect:

Fortunately for Obama, this field of battle favors his side. To pass the law, he needed to win over skeptical senators. To defend it in court, he needed conservative jurists. But identifying and persuading young people is a battle Obama does not expect to lose to Republicans, and in place of the federal outreach funds, the administration is deploying a campaignlike array of weapons: microtargeting, including door-to-door outreach, and all forms of media. (A few weeks ago, Katy Perry tweeted out a link informing her 42 million followers that health care was available beginning October 1.)

Yep, when it comes to reaching hipsters, or young people in general — I know, Katy Perry — Dems have big advantages; all that coastal cultural elite hatred suddenly turns into a big disadvantage for the right.

A couple of thoughts:

• Katy Perry is part of the cultural elite?  We have sure dumbed down that concept.
• As to Ms. Perry, whose music is actually a guilty pleasure of mine, health care has been available to your twitter followers all their lives, not just beginning October 1.  A better way to put this is that, as of October 1 you will be forced to buy some amount of health care whether you want it or not.  
• The whole campaign aimed at young people is simply obscene.  I understand that folks like Ms. Perry honestly believe that young people are getting a better deal, and that she is doing them a service.  Fine, millionaires can be low information voters too.  But people in the Administration have a much more cynical purpose, which explains the magnitude of the campaign described by Chait:  For Obamacare to work and not be a fiscal disaster, it depends on young people overpaying for health insurance.  The Administration knows that young people are overpaying -- the whole system depends on it -- and yet they are telling them it is in their interest to sign up.   A private company that did this would be in jail.
• I think this whole campaign is going to fail due to a basic fallacy of Progressive thinking.  Progressives are convinced that consumers are helpless dupes of advertising.  They in fact criticized health care advertising expenses in the private world for years for this reason, making this whole campaign incredibly ironic.  Obama and company are convinced that with enough advertising, average consumers will buy anything, even if it is a bad deal, because they are convinced that this is how consumer capitalism works (it got him elected, didn't it?)  I think they are going to be disappointed.

This morning I received yet another mandatory survey from the US Census Bureau.  I have written about these before.  We have to fill out the Census lodging survey (a long and tedious detailed financial report) as well as a myriad of other Department of Labor and Commerce surveys.  Where I can legally, I throw them away.  If I risk prison not filling it out, I do so reluctantly.**

So this morning I got the Survey of Business Owners and Self-Employed Persons (SBO).  Apparently the SBO comes out every five years.  It's got a big MANDATORY stamped on it so with a sigh I started it up online to get it over with.

The survey was mercifully short, but it was bizarre.  After asking me my address, it asked how many owners there were, and then for each owned asked his or her race and gender.  And that was it.  Suddenly the survey was over, particularly quickly for me because I always refuse to answer race questions on surveys.

But that is the sum total of what the government wants to know about business owners - race and gender and nothing else matters I guess.

** I know I always engender outraged comments over this.  I refuse to supply the government with data that they will use to pass new laws to make my life harder or take more of my money.  As for economists and academics, they are welcome to pay me for the effort of filling this out but I should not be obligated to labor for their benefit.

I find Republican strategy in the recent Obamacare and budget fight to have been insanely aggravating, and that is coming from someone who hates Obamacare.

Yes, I understand why things are happening as they are.  From a re-election strategy, their approach makes total sense.  A lot of these House guys come from majority Republic districts where their biggest re-election fear comes from a primary challenge to the right of them.  I live in one of these districts, so I see what perhaps coastal media does not.  In everyday conversation Republicans are always criticizing their Congressmen for not rolling back Obamacare.  Republicans need to be able to say in a primary, "I voted to defund Obamacare".  Otherwise I guarantee every one of them will be facing a primary opponent who will hammer them every day.

But from the perspective of someone who just wants the worst aspects of this thing to go away, this was a terrible approach.  Defunding Obamacare entirely was never, ever, ever going to succeed.  Obama and Democrats would be happy to have a shutdown last months before they would roll back his one and only signature piece of legislation.  They may have caved in the past on other issues but he is not going to cave on this one (and needs to be seen not caving given his recent foreign policy mis-steps that has him perceived as weak even in his own party).  And, because all the focus is on Obamacare, we are going to end up with a budget deal that makes no further progress on containing other spending.

The Republicans should have taken the opportunity to seek targeted changes that would more likely have been accepted.  The most obvious one is to trade a continuing resolution for an elimination of the IPAB, one of the most undemocratic bits of legislation since the National Industrial Recovery Act.  Another strategy would have been to trade a CR for a 1-year delay in the individual mandate, a riskier strategy but one the Administration might leap at given that implementation problems in exchanges are giving them a black eye.  Finally, an even riskier strategy would have been to tie a CR to a legislative acknowledgement that the PPACA does not allow subsidies in Federally-run exchanges.  This latter might not have been achievable (and they might get it in the courts some day anyway) but if one argues that any of these is unrealistic, then certainly defunding Obamacare as a whole was unrealistic.

I think as a minimum they could have killed the IPAB, but now they will get nothing.

Update:  This line from All the President's Men seems relevant:

You've done worse than let Haldeman slip away: you've got people feeling sorry for him. I didn't think that was possible. In a conspiracy like this, you build from the outer edges and go step by step. If you shoot too high and miss, everybody feels more secure. You've put the investigation back months.

Normally this would be a good Friday story, but you can't always control when Washington is going to bring the crazy.

The Obama administration on Tuesday defended its effort to regulate the tax return preparation business for the first time in U.S. history, basing its case largely on a 19th century law dealing with horses lost or killed in the Civil War....

[the Obama Administration attorney] explained that the administration sees the "Horse Act of 1884" as providing ample authority for the U.S. Internal Revenue Service to regulate the tens of thousands of preparers who fill out millions of Americans' federal tax returns.

Here is the logic, such that it is

A post-war industry emerged of agents who would press war loss claims for a fee, usually a percentage of the claim collected. Soon, claim values were being fraudulently inflated.

In response, the government started regulating these intermediaries, barring unscrupulous ones and certifying honest ones as "enrolled agents," a title that is still used today by people who represent clients in matters before the IRS.

The IRS is arguing that tax return preparers represent their customers in much the same way that enrolled agents do, so the agency should be able to expand regulation to include preparers.

Note that tax preparers are not actually IRS enrolled agents, they just argue they are kind of sort of like them (in that they both deal with tax returns, I suppose).  But enrolled agents explicitly act as an intermediary between citizens and the government in disputes and claims.  This is not the role of tax preparers.  They merely charge a fee to fill out time-consuming and confusion paperwork.  My tax accountant has never once had any conversations with the IRS on my behalf, nor should he.  I would engage an attorney for that.

Since I have posted positively about Teach for America, it is only fair I post this article from the Atlantic of a Teach for America alum who felt she was unprepared for what she faced in the classroom.

Over the years, I have met many TFA teachers and have been in their classrooms, and have never gotten this vibe from them, but perhaps one of our samples (mine or the author's) are flawed**.

I guess my reaction to the article is this:  TFA is the best program I have encountered to try to improve education within the framework of our deeply flawed public education system***.  However, understanding the flaws of public education, and being someone who would much rather see competition introduced into the k-12 education system, I suppose I am not surprised that putting really talented people in a bad system can only do so much.

The education establishment, which is implicitly backed by most of the media, really wants to kill TFA, which just goes to show, perhaps, the impossibility of making change happen within the system.  Think of it this way:  TFA is everything liberals have wanted in teaching reform.  It brings the brightest of the bright from America's colleges and diverts them from Wall Street and Harvard Law to teaching schoolkids.  It is modeled roughly on the Peace Corps.  It is the most establishment-friendly way I can think of to try to make public schools better and still the public school system immune system rejects it.  If TFA cannot work, then we should take that as proof that it is time for a radically new system that eliminates the government monopoly on education.

** I confess it may be my sample.  When we pay to sponsor a teacher, we specify that we will only sponsor one in a charter school.  Consistent with my comments in the rest of the article, I despair of throwing even really good people into typical public schools, and want to send them where they might have a chance.  The school where we have sponsored a teacher the last couple of years is doing great, with a population of kids nearly 100% eligible for the Federal school lunch program and most of whose parents do not speak English as a first language (or at all) significantly outperforming their peers.

*** I also think it is a great program for the young adults in it.  I have seen many of the not-for-profit and NGO jobs smart kids go into out of college, and they are awful.  They teach bad organizational lessons that will make these folks less employable in the future by productive enterprises and they at best do nothing (at worst spend their time lobbying to make my life harder and more expensive).  Against this backdrop, it is a much better experience for folks who want a service type of job out of college - the life skills taught are more relevant and the work has a higher impact.

I have been taking a course in World War I, something I know little about relative to the rest of the 20th century.

We often think of WWI as a horrible, wasteful, pointless war that solved nothing and WWII as an expensive yet "good" war that achieved positive aims.  But as we approach the 75th anniversary of the Munich conference, it is interesting to note that if you ask someone in Eastern Europe, you are likely to get the opposite answer.  Most Eastern European countries can date their modern statehood from the end of WWI, while WWII led to 50+ years of Soviet subjugation.  WWI was their good war.

A reader sends me a story of global warming activist who clearly doesn't know even the most basic facts about global warming.  Since this article is about avoiding appeals to authority, so I hate to ask you to take my word for it, but it is simply impossible to immerse oneself in the science of global warming for any amount of time without being able to immediately rattle off the four major global temperature data bases (or at least one of them!)

I don't typically find it very compelling to knock a particular point of view just because one of its defenders is a moron, unless that defender has been set up as a quasi-official representative of that point of view (e.g. Al Gore).  After all, there are plenty of folks on my side of issues, including those who are voicing opinions skeptical of catastrophic global warming, who are making screwed up arguments.

However, I have found over time this to be an absolutely typical situation in the global warming advocacy world.  Every single time I have publicly debated this issue, I have understood the opposing argument, ie the argument for catastrophic global warming, better than my opponent.   In fact, I finally had to write a first chapter to my usual presentation.  In this preamble, I outline the case and evidence for manmade global warming so the audience could understand it before I then set out to refute it.

The problem is that the global warming alarm movement has come to rely very heavily on appeals to authority and ad hominem attacks in making their case.  What headlines do you see? 97% of scientists agree, the IPCC is 95% sure, etc.  These "studies", which Lord Monkton (with whom I often disagree but who can be very clever) calls "no better than a show of hands", dominate the news.  When have you ever seen a story in the media about the core issue of global warming, which is diagnosing whether positive feedbacks truly multiply small bits of manmade warming to catastrophic levels.  The answer is never.

Global warming advocates thus have failed to learn how to really argue the science of their theory.  In their echo chambers, they have all agreed that saying "the science is settled" over and over and then responding to criticism by saying "skeptics are just like tobacco lawyers and holocaust deniers and are paid off by oil companies" represents a sufficient argument.**  Which means that in an actual debate, they can be surprisingly easy to rip to pieces.  Which may be why most, taking Al Gore's lead, refuse to debate.

All of this is particularly ironic since it is the global warming alarmists who try to wrap themselves in the mantle of the defenders of science.  Ironic because the scientific revolution began only when men and women were willing to reject appeals to authority and try to understand things for themselves.

** Another very typical tactic:  They will present whole presentations without a single citation.   But make one statement in your rebuttal as a skeptic that is not backed with a named, peer-reviewed study, and they will call you out on it.  I remember in one presentation, I was presenting some material that was based on my own analysis.  "But this is not peer-reviewed" said one participant, implying that it should therefore be ignored.  I retorted that it was basic math, that the data sources were all cited, and they were my peers -- review it.  Use you brains.  Does it make sense?  Is there a flaw?  But they don't want to do that.  Increasingly, oddly, science is about having officially licensed scientists delivery findings to them on a platter.

Via Reason

A Paris appeals court this week ordered the French cosmetics chain Sephora to close its flagship boutique on the iconic Champs Élysées boulevard at 9pm, angering salespeople who say they have freely accepted to work until midnight for years and now risk losing their jobs.

Following a trend among other businesses on Paris's most celebrated street, Sephora began extending its opening hours in 1996. Its designer perfumes, makeup and other cosmetics were, until this week, sold until midnight between Monday and Thursday, and as late as 1am on Friday and Saturday.

Citing labour laws that restrict night-time work, France’s largest unions collectively sued the shop. An administrative court sided with Sephora on December 6, 2012, allowing the cosmetics giant to keep its exceptionally late hours on the Champs-Élysées.

However, the appeals court overturned that decision on Sunday, agreeing with unions that the store’s “normal activity” does not “make night-time work a necessarity,” as the law states.

This photo is kind of cool of a disassembled VW (via Twisted Sifter)

But this response from the from a user at the Club GTI forum is simply awesome.  An excerpt:

They left the 3/4 sync hub pressed onto the input shaft, and captured by that would have to be 3rd gear, because 3rd isn't on the floor.

The selector detent bolt is missing as well.

They're short one roller bearing, unless it is in the case still.

They're missing the 13mm nut to hold the selector bracket to the selector assembly.

They show 12 of the 14 bolts used around the trans casing, missing the 2 shorter ones under the selector area.

5th gear circlip and washer are missing.

5th gear retention bolt and washer are missing.

They're short one 17mm drain/fill plug too.

etc. etc.  This is exactly the guy I want in charge of the engine overhaul on the next aircraft I fly in.

Yesterday I challenged a graph by Kevin Drum in Mother Jones as being a disingenuous attempt to paint US government spending as some sort of crazed austerity program which is making the recovery worse.  He uses this graph to "prove" that our fiscal response to this recession is weak vis a vis past recessions.  The graph is a bit counter-intuitive -- note that it begins at the end of each recession.  His point is that Keynesian spending needs to continue long after (five years ?!) after the recession is over to guarantee a good recovery, and that we have not done that.

For anyone not steeped in the special reality of the reality-based community, it is a bit counter intuitive for those of us who have actually lived through the last 5 years to call government spending austere.

The key is in the dates he selects.  He leaves out the actual recession years.  So by his chart, responses that are late and occur after the recession look better than responses that are fast and large but happen during the recession.  This seems odd, but it is the conclusion one has to draw.

I took roughly the same data and started each line two years earlier, so that my first year is two years ahead of his graph and the zero year in my graph is the same as the zero point in Drum's chart.  His data is better in the sense that he has quarterly data and I only have annual.  Mine is better in that it looks at changes in spending as a percentage of GDP, which I would guess would be the more relevant Keynesian metric (it also helps us correct for the chicken and egg problem of increased government spending being due to, rather than causing, economic expansion).

Here are the results (I tried to use roughly the same colors for the same data series, but who in the world with the choice of the entire color pallet uses two almost identical blues?)

You can see that Drum makes spending look lower in the current recession by carefully dating the data series to the peak of the spending, rather than comparing it to pre-recession levels.  The right hand scale is the difference in government spending as a percentage of GDP from the -2 year.  So, for example, in the current recession government spending was 34.2% in 2007 and 41.4% in 2009 for a reading of 7.2% in year 0.

Even with the flat spending over the last three or four years in the current recession (flat nominal spending leads do a declining percent of GDP) the spending increase from pre-recession levels is still about twice as high as in other recent recessions.

Does this look like austerity to anyone?

We will see the final version of the IPCC's Fifth climate assessment soon.  But here is something interesting from the last draft circulated.  First, here is there chart comparing actual temperatures to model forecasts.  As you can see, all the actuals fall outside the published ranges from all previous reports (with a couple of the most recent data points added by Steve McIntyre in red).

A problem, though not necessarily a fatal problem if the divergence can be explained.  And the IPCC is throwing out a lot of last minute explanations, though none of them are backed with any actual science.  I discussed one of these explanations here.  Anyway, you see their data above.  This is what they actually write in the text:

the globally-averaged surface temperatures are well within the uncertainty range of all previous IPCC projections, and generally are in the middle of the scenario ranges”.

This is completely absurd, of course, given their own data, but it has lasted through several drafts, so we will see if it makes it into the final draft.  My guess is that they will leave this issue out entirely in the summary for policy makers (the only part the media reads).  Steve McIntyre discusses the whole history of this divergence issue, along with a series of studies highlighting this divergence that have been consistently kept out of publication by climate gatekeepers.

The frustrating part is that the IPCC is running around saying they can't have a complete answer on this critical issue because it is so new.  By "new" they mean a frequent skeptics' observation and criticism of climate models for over a decade that they have only recently been forced under duress to finally consider.

Via the Hill

Former vice president Al Gore on Monday called for making climate change "denial" a taboo in society.

“Within the market system we have to put a price on carbon, and within the political system, we have to put a price on denial,” Gore said at the Social Good Summit New York City.

Incredibly, the suggestion of introducing taboos and penalties in a scientific debate is coming from the side that claims to be the great defenders of science.

I don't really have a horse in this race, but I found it interesting to look at the deal Blackberry has made to sell itself to a Canadian insurance company.  The part of the business we all know and used to love -- the famous Blackberry handset business -- apparently is worth zero.

In a WSJ article, they cite the following valuations:

• Cash on hand:  $2.6 billion
• Patent portfolio:  $1 billion +
• Blackberry secure phone network:  $1 billion

Given that the price for the transaction is $4.7 billion, that implies the handset / smartphone business is worth zero.  Which comes as no surprise, given Blackberry's eroding position over the last 5 years or so.

The last item on the list above seems to cause a lot of debate.  I don't know enough to participate in that debate, but it appears to me that Blackberry's one last market bastion is the enterprise market where their enterprise servers and more proprietary network gave enterprises more control over their employees devices and how they used them.  Which made their decision in 2012 to apparently obsolete their installed base of enterprise servers with Blackberry 10 all the more bewildering.

I have wondered why Microsoft didn't try to use the enterprise market as a way to get into the tablet and handset market.  It would seem to play to its strengths and neither Android nor iOS are particularly enterprise-friendly.

Update:  OK, I pulled together the data and did what Drum should have done, is take the graph back to pre-recession levels.  Shouldn't it be even better if the increase in spending came during the recession rather than after?  See update here.

Kevin Drum complains about US government austerity (I know, I know, only some cocooned progressive could describe recent history as austerity, but let's deal with his argument).  He uses this chart to "prove" that we have been austere vs. other recessions, and thus austerity helps explain why recovery from this recession has been particularly slow.  Here is his chart

This is absurdly disingenuous.  Why?  Simple -- it is impossible to evaluate post recession spending without looking at what spending did during the recession.   All these numbers begin after the recession is over.  But what if, in the current recession, we increased spending much more than in other recessions.  We would still be at a higher level vs. pre-recession spending now, despite a lack of further increases after the recession.

In the time before this chart even starts, total state, local, Federal spending increased from 2007 to 2008 by 10.2%.  It increased another 11.1 % from 2008 to 2009.  So he starts the chart at the peak, only AFTER spending had increased in response to the recession by 22.5%.  Had he started the chart at the correct date and not at a self-serving one, my guess is that it would have shown that in this recession we increased spending more than any other recent recession, not less.  So went digging for some data.

I actually have a day job, so I don't have time to create a chart of total government spending since 1981, so I will look at just Federal spending, but it makes my point.  I scavenged this chart from Factcheck.org.  The purple bars are the year that each of Drum's data series begin plus the year prior (which is excluded from Drum's chart).  Essentially the growth in spending between the two purple lines is the growth left out just ahead of when Drum started each data series in his chart.  The chart did not go back to 1981 so I could not do that year.

Hopefully, you can see why I say that Drum is disingenuous for not going back to pre-recession numbers.  In this case, you can see the current recession has an unprecedented pop in spending in the year before Drum starts his data series, so it is not surprising that post recession spending might be flatter (remember, the pairs of purple lines are essentially the change in spending the year before each of Drum's data series).  In fact, it is very clear that relative to the pre-recession year of 2008 (really 2007, but I will give him a small break), even after 5 years of "austerity" our federal spending as a percent of GDP will be far higher than in any other recession he considers.  In no previous recession in this era did post recession spending end up more than 2 points higher (as a percent of GDP) than pre-recession levels.    In this recession, we are likely to end up 4-5 points higher.

By the way, isn't it possible that he has cause and effect reversed?  He argues that post-recession recovery was faster in other recessions because government spending kept increasing over five years after the recession is over.  But isn't it just possible that the truth is the reverse -- that government spending increased more rapidly after other recessions because recovery was faster, thus increasing tax revenues. Congress then promptly spent the new revenues on new toys.

Let's look at the same chart, highlighted in a different way.  I will circle the 4-5 years included in each of Drum's data series:

You can see that despite the fact that government spending in these prior recessions was increasing in real terms, it was falling in two our of three of them as a percentage of GDP (the third increased due to war spending in Afghanistan and Iraq, spending which I, and I suspect Drum, would hesitate to call stimulative, particular since he and others at the time called it a jobless recovery).

How can it be that spending was increasing but falling as a percent of GDP?  Because the GDP was growing really fast, faster than government spending.  This does not prove my point, but is a good indicator that recovery is likely leading spending increases, rather than the other way around.

This is kind of clever.  Surprised no one has tried to make a movie based on the board game.  Though perhaps since this gentleman is a Hollywood location scout, someone may be.

Over the last year, I have learned that those of us who took economics back in the 1980's with textbooks written in the 1960's and 1970's are not very well prepared to understand the modern banking system.  This was a pretty good article that whetted my appetite for understanding what has changed.  A couple of interesting bits from the piece:

One cannot think straight about the future impact of different exit strategies without understanding of the role of bank reserves in today’s financial markets.

• Banking and money creation has not worked for at least two decades in the way that most people learned in school.

The old system was rather simple in the textbooks. The basic assumptions were (i) all credit was provided by banks; (ii) all bank credit (assets) were funded by the issuance, or creation, of depository liabilities (money) subject to a reserve requirement; and (iii) central banks controlled credit/money/inflation by rationing bank reserves. A stable 'money multiplier' was hypothesised to allow central banks to accurately predict the eventual impact of changes in bank reserves on money and credit.

The problem with the old theory of monetary operations is that none of the three assumptions has been true for at least a generation.
Most credit in the US is created by nonbanks; virtually all bank lending is funded by the creation of liabilities that are not subject to reserve requirements,³ and central banks do not ration reserves. In fact they take great pains to provide banks with the amount of reserves they desire. Central banks influence credit not by rationing the quantity of reserves but by altering the interest rate that banks must pay to obtain the quantity of reserves they desire.

• Today, credit creation in general and money creation in particular are no longer tied to the stock of reserves (i.e. the stock of banks’ deposits at the Fed).

This gets to the heart of the question of why over $2 trillion in excess bank deposits built up at the Fed over the last 4 years are not really moving the needle on bank lending  (of course, this is a supply AND demand problem, and part of the issue with flat bank lending is tie to lack of demand as many businesses deleverage).  But in terms of supply, I am increasingly coming to terms with the following statement which seems counter-intuitive to someone who studied banking 30 years ago

One of the unintended consequences of Fed LSAPs has been the withdrawal of high quality liquid collateral such as US Treasuries from the financial markets paid for by crediting commercial bank reserve accounts. As discussed above, the banking system as a whole cannot dispose of these assets (reserves). At the same time, banks are under massive pressure world-wide to deleverage. This can take place either by increasing capital (a bank liability), which is costly to shareholders, or by reducing assets. Thus banks’ massive holdings of reserves at the Fed are ‘deadwood’ as far as the banks and their credit-creation capacity are concerned. They may crowd out credit.

The deadwood problem will get worse if the US tightens regulatory leverage ratios – that is, reduces the maximum ratio permitted between a bank’s total assets and capital.⁶

There is a great irony in the journalistic history of monetary policy. What many are calling central bank “money creation” “helicopter money” or “rolling the printing presses” may – in combination with tighter leverage ratios – lead to a tightening of bank credit and deflationary pressures.  And all this is occurring while the spectre of uncontrolled credit expansion and monetary debasement are being decried countless times by those who have not recognized that yesteryear’s monetary paradigm is defunct.

Interesting.  I hear this from a lot of people in the know about the system.  The author suggests one solution is having the Fed begin to do reverse repos with non-banks, which would drain excess reserves while adding high quality collateral back to the banking system which would allow more lending.  Which appears to be exactly what the Fed is considering.

I am reading this article next to see if I can get a better handle on how all this works.  I will let you know if I find it useful.

Via Icecap (I still don't think they have permalinks that work)

In his Dec. 10, 2007 “Earth has a fever” speech, Gore referred to a prediction by U.S. climate scientist Wieslaw Maslowski that the Arctic’s summer ice could “completely disappear” by 2013 due to global warming caused by carbon emissions.

Gore said that on Sept. 21, 2007, “scientists reported with unprecedented alarm that the North Polar icecap is, in their words, ‘falling off a cliff.’ One study estimated that it could be completely gone during summer in less than 22 years. Another new study to be presented by U.S. Navy researchers later this week warns that it could happen in as little as seven years, seven years from now.”

Maslowski told members of the American Geophysical Union in 2007 that the Arctic’s summer ice could completely disappear within the decade. “If anything,” he said, “our projection of 2013 for the removal of ice in summer...is already too conservative.”

The former vice president also warned that rising temperatures were “a planetary emergency and a threat to the survival of our civilization.”

However, instead of completely melting away, the polar icecap is at now at its highest level for this time of year since 2006.

The Phoenix New Times blog had a fairly remarkable story on a record-hot Phoenix summer.  The core of the article is a chart from the NOAA.  There are three things to notice in it:

• The article actually acknowledges that higher temperatures were due to higher night-time lows rather than higher daytime highs  Any mention of this is exceedingly rare in media stories on temperatures, perhaps because the idea of a higher low is confusing to communicate
• It actually attributes urban warming to the urban heat island effect
• It makes no mention of global warming

Here is the graphic:

This puts me in the odd role of switching sides, so to speak, and observing that greenhouse warming could very likely manifest itself as rising nighttime lows (rather than rising daytime highs).  I can only assume the surrounding area of Arizona did not see the same sort of records, which would support the theory that this is a UHI effect.

Phoenix has a huge urban heat island effect, which my son actually measured.  At 9-10 in the evening, we measured a temperature differential of 8-12F from city center to rural areas outside the city.  By the way, this is a fabulous science fair project if you know a junior high or high school student trying to do something different than growing bean plants under different color lights.

The Arizona Republic today reviews a speech given by Yellen in January, 2007 in Phoenix:

It was January 2007 when Yellen, then head of the Federal Reserve Bank of San Francisco, spoke here about financial literacy before transitioning into comments about the economy — comments that now look remarkably unperceptive.

Back then, months before the real-estate and banking crisis took down the economy, Yellen expressed concern that inflation was uncomfortably high while job gains were coming too swiftly.

“If labor markets are as tight as the unemployment rate suggests, then there may be reason for concern about building inflationary pressures,” she said according to my Jan. 18, 2007, article.

Subsequent events showed that inflation was the last thing we had to worry about, while the lack of jobs has emerged as a central drag on the economy. Back then, U.S. unemployment was around 4.5 percent. But after the recession took hold, it more than doubled, peaking at 10 percent in late 2009. At 7.3 percent currently, it remains well above where it should be this far into an economic recovery.

In contrast, core consumer inflation (which excludes food and energy costs) of 1.8 percent today has hardly budged from the 2.2 percent rate that had Yellen all worked up back then.

In another comment during her Phoenix talk that now looks wildly off-base, Yellen, who later was named vice chair of the Fed’s board of governors, said recession risks had receded despite lingering weakness in housing. She cited the Valley as a place where home-price appreciation had come down from unsustainably high rates of increase.

The Great Recession, as we all now know in hindsight, began later that year, triggered by a home-price slide of epic proportions.

I don't want to beat her up too bad for missing the bubble burst, since most everyone did.  They also all missed the last bubble burst, and the one before that, etc.

This is what makes me crazy:  not that these folks were wrong, even consistently brutally wrong, but that they display absolutely no modesty in their actions given that they were so wrong.  They propose policy steps, such as seemingly eternal QE, that are astoundingly risky unless one assumes that they have a very, very good grasp on exactly where the economy is going.  Which they clearly never have had in the past.  If they acted like they had been wrong most of the time, then I would have little to criticize.  But to be consistently wrong and then make huge risky bets as if you have reliable predictive powers is hubris of the worst sort.

In this post, I want to discuss my just-for-fun model of global temperatures I developed 6 years ago.  But more importantly, I am going to come back to some lessons about natural climate drivers and historic temperature trends that should have great relevance to the upcoming IPCC report.

In 2007, for my first climate video, I created an admittedly simplistic model of global temperatures.  I did not try to model any details within the climate system.  Instead, I attempted to tease out a very few (it ended up being three) trends from the historic temperature data and simply projected them forward.  Each of these trends has a logic grounded in physical processes, but the values I used were pure regression rather than any bottom up calculation from physics.  Here they are:

• A long term trend of 0.4C warming per century.  This can be thought of as a sort of base natural rate for the post-little ice age era.
• An additional linear trend beginning in 1945 of an additional 0.35C per century.  This represents combined effects of CO2 (whose effects should largely appear after mid-century) and higher solar activity in the second half of the 20th century  (Note that this is way, way below the mainstream estimates in the IPCC of the historic contribution of CO2, as it implies the maximum historic contribution is less than 0.2C)
• A cyclic trend that looks like a sine wave centered on zero (such that over time it adds nothing to the long term trend) with a period of about 63 years.  Think of this as representing the net effect of cyclical climate processes such as the PDO and AMO.

Put in graphical form, here are these three drivers (the left axis in both is degrees C, re-centered to match the centering of Hadley CRUT4 temperature anomalies).  The two linear trends (click on any image in this post to enlarge it)

And the cyclic trend:

These two charts are simply added and then can be compared to actual temperatures.  This is the way the comparison looked in 2007 when I first created this "model"

The historic match is no great feat.  The model was admittedly tuned to match history (yes, unlike the pros who all tune their models, I admit it).  The linear trends as well as the sine wave period and amplitude were adjusted to make the fit work.

However, it is instructive to note that a simple model of a linear trend plus sine wave matches history so well, particularly since it assumes such a small contribution from CO2 (yet matches history well) and since in prior IPCC reports, the IPCC and most modelers simply refused to include cyclic functions like AMO and PDO in their models.  You will note that the Coyote Climate Model was projecting a flattening, even a decrease in temperatures when everyone else in the climate community was projecting that blue temperature line heading up and to the right.

So, how are we doing?  I never really meant the model to have predictive power.  I built it just to make some points about the potential role of cyclic functions in the historic temperature trend.  But based on updated Hadley CRUT4 data through July, 2013, this is how we are doing:

Not too shabby.  Anyway, I do not insist on the model, but I do want to come back to a few points about temperature modeling and cyclic climate processes in light of the new IPCC report coming soon.

The decisions of climate modelers do not always make sense or seem consistent.  The best framework I can find for explaining their choices is to hypothesize that every choice is driven by trying to make the forecast future temperature increase as large as possible.  In past IPCC reports, modelers refused to acknowledge any natural or cyclic effects on global temperatures, and actually made statements that a) variations in the sun's output were too small to change temperatures in any measurable way and b) it was not necessary to include cyclic processes like the PDO and AMO in their climate models.

I do not know why these decisions were made, but they had the effect of maximizing the amount of past warming that could be attributed to CO2, thus maximizing potential climate sensitivity numbers and future warming forecasts.  The reason for this was that the IPCC based nearly the totality of their conclusions about past warming rates and CO2 from the period 1978-1998.  They may talk about "since 1950", but you can see from the chart above that all of the warming since 1950 actually happened in that narrow 20 year window.  During that 20-year window, though, solar activity, the PDO and the AMO were also all peaking or in their warm phases.  So if the IPCC were to acknowledge that any of those natural effects had any influence on temperatures, they would have to reduce the amount of warming scored to CO2 between 1978 and 1998 and thus their large future warming forecasts would have become even harder to justify.

Now, fast forward to today.  Global temperatures have been flat since about 1998, or for about 15 years or so.  This is difficult to explain for the IPCC, since about none of the 60+ models in their ensembles predicted this kind of pause in warming.  In fact, temperature trends over the last 15 years have fallen below the 95% confidence level of nearly every climate model used by the IPCC.  So scientists must either change their models (eek!) or else they must explain why they still are correct but missed the last 15 years of flat temperatures.

The IPCC is likely to take the latter course.  Rumor has it that they will attribute the warming pause to... ocean cycles and the sun (those things the IPCC said last time were irrelevant).  As you can see from my model above, this is entirely plausible.  My model has an underlying 0.75C per century trend after 1945, but even with this trend actual temperatures hit a 30-year flat spot after the year 2000.   So it is entirely possible for an underlying trend to be temporarily masked by cyclical factors.

BUT.  And this is a big but.  You can also see from my model that you can't assume that these factors caused the current "pause" in warming without also acknowledging that they contributed to the warming from 1978-1998, something the IPCC seems loath to do.  I do not know how the ICC is going to deal with this.  I hate to think the worst of people, but I do not think it is beyond them to say that these factors offset greenhouse warming for the last 15 years but did not increase warming the 20 years before that.

We shall see.  To be continued....

Update:  Seriously, on a relative basis, I am kicking ass