Thursday, October 10, 2013 - Goodbye Jamaica

Goodbye Jamaica

by Sinclair Noe

DOW + 323 = 15,126
SPX + 36 = 1692
NAS + 82 = 3760
10 YR YLD + .03 = 2.68%
OIL + 1.35 = 102.96
GOLD – 20.60 = 1287.40
SILV - .21 = 21.78

Over the past few days we've been hearing that a government default wouldn't be a big deal; that a default wouldn't actually mean default. But it turns out that avoiding a default is a very good thing indeed. Hope over a deal in Washington put the bid back in stocks; and for right now it is just hope for a deal on the debt ceiling, not an actual deal yet; and quite possibly no deal on the government shutdown. We may not get the government running again but the politicians finally realized that they can't strap a suicide bomb vest on US Treasuries.

We may have a bunch of idiot politicians in Washington...,

Yeah, we do have a bunch of idiot politicians in Washington. And they still have a lot of work to do. Republicans in the House of Representatives offered a plan to postpone the default for 6 weeks; President Obama has indicated that if a clean debt limit bill is passed, he would sign it, even if the government remains shut down. That might be a stumbling point. In another potential wrinkle, the GOP plan might permanently ban the Treasury Department from using extraordinary measures to avoid default; so in some ways it isn't a truly clean bill; plus it is very short-term, meaning we get to go through this again around Thanksgiving.

The possible extension means there is the possibility of broader budget talks, including possible deficit reduction. The prospect of broad budget talks is reviving worries among some liberals that Mr. Obama would agree to steps to trim Social Security or Medicare benefits to win Republican concessions, and one area in particular seems ripe – the chained CPI. That remains to be seen.

Bloomberg is reporting on a conversation between Obama and John Podesta, an informal adviser and former chief of staff to President Clinton; just before Obama was re-elected, he vowed to Podesta that he would never again bargain with Republicans to extend the debt limit. The precedent, set in the agreement that ended a 2011 budget standoff, “sent a signal that this was fair game to blackmail over whether the country would default.” According to Podesta, “He feels like he has to end it and end it forever.”

The stand Obama has taken on the latest fight over the government shutdown and borrowing limit -- refusing to tie policy conditions to raising the debt ceiling -- is an attempt to repair some of the damage that he and his aides believe he sustained by making concessions to Republicans to avert a default two years ago.

The Republicans will renew their attack on Obamacare. Heritage Action, the Koch brothers funded, conservative group leading the charge against the health care law has agreed to raising the debt limit but maintains that any measure re-opening the government would be met by demands for killing Obamacare. Just in case you were wondering why something is happening now, it's because the big money players from Wall Street and Big Oil were getting worried, and they started pulling the strings. We may have a bunch of idiot politicians in Washington, but they're the best idiot politicians money can buy. And this is why it is too early to say the deal is in the bag. Conservative Republicans might not throw their support behind Boehner's plan. Boehner made no mention of Obamacare this morning during his remarks.

So, we get a possible, temporary impasse on the debt ceiling, and no movement on the government shutdown, and the Dow industrials jump 300 points. Just imagine the temper tantrum Wall Street would have thrown if we had defaulted.

And then the cherry on top is that all of the fiscal dysfunction means the Federal Reserve FOMC is less likely to take action when they meet October 29-30, especially in light of the damage done by the shutdown. Then you also can consider the nomination of Janet Yellen, a dove, likely to prefer monetary stimulus to backsliding. Yesterday, the Fed released minutes of the September FOMC meeting and one of the concerns dealt with the “considerable risks surrounding fiscal policy.”

There are risks to fiscal policy. Today, a report that initial claims for unemployment benefits jumped 66,000 last week to 374,000. Exactly how much economic damage results from the shutdown will be hard to determine. Pollster Nate Silver, the guy who actually got the numbers right on the election, says the media is probably overstating the magnitude of the shutdown's political impact. Remember Syria? The fiscal cliff? Benghazi? The IRS scandal? The collapse of immigration reform? All of these were hyped as game-changing political moments by the news media. Yeah, not so much. Of course, if the not-yet-done deal doesn't get done and we go into default or if the shutdown lasts a long time, then the magnitude of the impact is being understated.

And all those polls you're seeing suggesting that the GOP is cratering with regards to public approval, and pulling the Democrats down with them, well all those polls probably won't translate in changes in the re-election efforts of incumbents, or the makeup of the House or Senate. And according to Silver's analysis the degree of polarization in Congress is higher than at any point since the Great Depression by a variety of measures, and is possibly at its highest point ever. It is very partisan, and that means there is a great amount of uncertainty. And so the Fed FOMC minutes were correct, there are risks to fiscal policy.

So, the markets bounced today, but it's not a done deal.

Something else I wanted to cover today. With all the political insanity, you might have missed an important story in the journal Nature. Try to think back to the hot days of summer. Now try to remember the hottest summer of the past 20 years. It's tough to put the exact date on it but we can all remember some brutal heat in the desert southwest; a hot spell where temperatures topped 110 or 115 for several days in a row. Well, there will come a time when we'll look back on those days as the good old days. Within a generation, whatever climate we were used to will be a thing of the past. The hottest, most extreme weather will be the average.

According to the new study, the mean annual climate of the average location on Earth will slip past the most extreme conditions experienced during the past 150 years and into new territory by between 2047 and 2069, depending on the amount of climate-warming greenhouse gases that are emitted during the next few decades. Once a location reaches the transition point, the average temperature of its coolest year will be greater than the average temperature of its hottest year for the past 150 years. Even more strikingly, the study found that the oceans, which have absorbed about half of the man-made carbon dioxide (CO2) emissions since the dawn of the industrial revolution 250 years ago, exceeded their historical bounds of pH measurements back in 2008. In other words, the oceans are becoming highly acidic.

Even with aggressive cuts in greenhouse gas emissions, the study found, the projected near-surface air temperature of the average location on Earth will move beyond historical variability in about 56 years from now. A business-as-usual scenario in which emissions continue on their current upward trajectory would see an unprecedented climate occurring 20 years sooner than that, in 2047. And they even break it down by city. New York will reach a tipping point by 2048; Los Angeles will get to the point of no return in 2048; Mexico City in 2031; Phoenix is 2043; and Kingston Jamaica will be there in 10 short years.

The boundary of passing from the climate of the past to the climate of the future really happens surprisingly soon. The study shows that tropical areas, which contain the richest diversity of species on the planet as well as some of the poorest countries, will be among the first to see the climate exceed historical limits — in as little as a decade from now — which spells trouble for rainforest ecosystems and nations that have a limited capacity to adapt to rapid climate change.

According to the study, conducted by a team from the University of Hawaii, about 1 billion people currently live in areas where the climate will exceed historical bounds of variability by 2050. This number would rise to 5 billion people under a business-as-usual emissions scenario, which is the emissions path the world is currently on. We could slow down, by cutting emissions we might buy more time until we hit the tipping point, but according to the new study, we will hit it.

The study is hardly the first to document the steady march toward hotter temperatures around the globe. Less than two weeks ago,the Intergovernmental Panel on Climate Change (IPCC) released its fifth report, describing a planet that is warming at an accelerated pace because of human activity. The past three decades have been the hottest since 1850, according to the panel established by the United Nations, which added that warming and sea-level rise will continue through the 21st century.

But by predicting the tipping point when traditional climates will be replaced by hotter futures, the new study provides a fresh way to look at the problem. There are several things we can start to look for, including changes in food production, especially from the tropics; water scarcity due to drought; and the prices will be affected as big agriculture responds, and much more, right down to specific locations.

Sorry Jamaica.

Tuesday, November 6, 2012 - I Voted Today

I Voted Today

by Sinclair Noe

DOW + 133 = 13,245
SPX + 11 = 1428
NAS + 12 = 3011
10 YR YLD +.06 = 1.74%

OIL + 2.80 = 88.45
GOLD + 31.90 = 1717.90
SILV + .84 = 32.12

Normally, I spend the first couple of hours of each day throwing back some coffee and reading, maybe a little writing. Not today. I still had a cup of mud, but I showered fast and headed out the door. I drove to the local high school and I voted. I like going to the polls on election day. It's more satisfying than mailing the ballot in early. And I like going to the local school to vote. Even though it was early morning, there were several young students on the campus. They saw people going into the polling place, and I hope it made them think about the process. I missed the crowds. I think many voters were dropping off kids at the school and then going inside to vote, but I beat the rush, if there was a rush. I didn't see any lines. Maybe that means something about the outcome or the voting patterns; I don't know what. I put my ballot into a ballot scanning machine, and a poll worker said “thank you” and he handed me a sticker that reads: “I Voted Today”. I stuck it on my shirt and told the fellow “thank you.” I felt good, I felt like a citizen.

Yes, I know my one little vote doesn't count for much, but I like going through the motions. The whole idea of voting has been drummed into my head for so long that I really believe it makes some kind of difference. I'm not crazy enough to imagine that any one election hinges on my vote. I'm part of a mass collective, a big pot of bubbling citizenry: messy, neat, stupid, brilliant, natty, informed, clueless, proud, bigoted, cruel, compassionate, hardworking, lazy, simple, complex, determined, and easily led astray. And we all go into voting booths and try to force one another to create a world that we would prefer. And we all go into voting booths and negate one another's delusions. That's the card we have to play, and we play it. And my card is as strong as yours, and yours is as strong as the billionaire’s, and the billionaire's is as strong as retiree, which is as strong as..., pick anybody.

And somehow, it seems to work. Go figure.

It's not perfect. The two major parties get their pockets stuffed by monied interests, and the list reads different but the interests aren't. Even if a person sneaks into political office with a pure heart, I doubt they can escape without heavy baggage. It all seems like a big, expensive game. Even if I think I'm voting for right and light and goodness, all I'm really doing is expressing my preference that it is better than wrong and darkness and evil. But I don't think it is really a game, and certainly not a race. So, I don't always try to pick a winner when I vote. Sometimes it turns out that way; sometimes not. I try to vote my conscience and the result is that I never feel like I've wasted my vote.

If you are looking for the horse race aspect of the election, here it is. A guy named Nate Silver has been running a website called fivethirtyeight.org. He looks at all the polls and pools them all together.

The national polls now range from showing a 1-point lead for Mr. Romney to slightly more than a 4-point advantage for Mr. Obama. The FiveThirtyEight forecast of the national popular vote is within this range, projecting Mr. Obama’s most likely margin of victory to be two or three percentage points, approximating the margin that George W. Bush achieved in defeating John Kerry in 2004.

Averaging polls together increases their sample size - making them much more powerful statistically than any one poll taken alone. But the errors in the polls are sometimes correlated, meaning there are years when most of them miss in the same direction. Mr. Romney remains close enough to Mr. Obama that he could fairly easily win the popular vote if there is such an error in Mr. Obama’s favor this year. Mr. Romney’s chances are less, however, of winning the Electoral College. The large majority of polls in battleground states over the past three days have shown leads for Mr. Obama. On Monday, for example, 19 battleground state polls found leads for Mr. Obama, as compared with just three for Mr. Romney.

Among 12 national polls published on Monday, Mr. Obama led by an average of 1.6 percentage points. Perhaps more important is the trend in the surveys. On average, Mr. Obama gained 1.5 percentage points from the prior edition of the same polls, improving his standing in nine of the surveys while losing ground in just one.

Mr. Romney’s chances of winning the Electoral College have slipped, and are now only about 8 percent according to the forecast model - down from about 30 percent 10 days ago.

I don't know if the odds will play out as predicted. It will be interesting. I'll be watching the news reports tonight, maybe even late into the night. The major networks probably are going to take their time in declaring a winner; once bitten, twice shy. The odds-makers and prognosticators have made their calls but anything could happen.

I read Der Spiegel this morning, the German newspaper has already called the election; they say America lost the election:

“Regardless of who wins the election, total capitalism is America's true ruler, and it has the power to destroy the country. Romney, the exceedingly wealthy business man, and Obama, the cultivated civil rights lawyer, are two faces of a political system that no longer has much to do with democracy as we understand it. Democracy is about choice, but Americans don't really have much of a choice.

The German newspaper goes on to say: “The truth is that we simply no longer understand America. Looking at the country from Germany and Europe, we see a foreign culture. The political system is in the hands of big business and its lobbyists. The checks and balances have failed. And a perverse mix of irresponsibility, greed and religious zealotry dominate public opinion. The downfall of the American empire has begun. It could be that the country's citizens wouldn't be able to stop it no matter how hard they tried. But they aren't even trying.”

I know my one vote doesn't determine any election but I know that elections are determined by the people who show up to vote. The only way the politicians know what's important to me is if I tell them and the only time they have to actually listen is when I tell them with the ballot.

And so, on the first Tuesday in November we all vote. If you're fed up with politics and you don't vote, you have still voted. There is no such thing as not voting. If you prefer to spend the day cleaning lint out of your navel rather than casting a ballot, you have effectively doubled the value of someone else's ballot. The powers that be realize that if you don't vote, it doubles their vote. Maybe someday everybody will be so disgusted and ill-informed and cynical that you just throw up both your hands and quit voting. Bad politicians get elected by people who don't vote.

I think my vote has value. If it doesn't then why has there been $6 billion dollars spent on this election to try and influence my vote? There have been efforts to suppress votes, and they inevitably fail. People will stand in lines for hours; people will wade through flood-waters, and we've seen that people around the world are willing to risk their lives to have their voices heard by way of the democratic process that we seem to take for granted.

I think your individual vote is more important than ever. There have been millions and billions spent this past year in a cynical pursuit of power and influence. So far, the money seems to have purchased lies, smears, mud-slinging, distortions, counter-lies, manipulation, and more than a healthy dose of cynicism, but it's still a better alternative than violence to determine a government. Unfortunately, that seems to be the choice. We either make democracy work or things turn really nasty. We know that bullets can change the course of history; we've seen it played out in World Wars, Civil Wars, and in all sorts of gruesome deaths.

Ballots can change history, too. It's this crazy, radical idea that we can change things without destroying everything. And everyone is included; we can all throw our ideas and dreams and visions in a box, shake it up and live with the results until such time as we have the chance to vote again. It is a crude, imperfect process and sometimes I'm personally displeased but it has produced the most prosperous civilization in history; if we can hold onto it.