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Thursday, April 22, 2010 It's time to panic. That's the thrust of an article by J. Bradford DeLong, Professor of Economics at the University of California at Berkeley. His article, "Hot Today, and Tomorrow,", was in today's LA Times, and while I can't find it on line, substantially the same thing is here. I found that link on his rather confusing web page. The major point is according to NASA’s Goddard Institute for Space Studies, we have just experienced the hottest twelve-month period in at least a thousand years.



If global temperatures continue rising at the rate they have risen for the past generation, then the world of 2100 will be 2.3 degrees Celsius – that’s 4.1 degrees Farenheit [sic]-- hotter than the world of the 1970s. If global warming accelerates, however, as industrializing China, India and other countries pour more greenhouse gases into the atmosphere, and as Indonesia, Brazil, and others cut and burn their forests, the world in 2100 will be 5 Celsius -- 9 Farenheit -- degrees hotter than the world of the 1970s. He goes on to list the horrors of such a world*, although it's not clear to me what his sources are. Perhaps he doesn't need any, being a professor of economics at a major US university. He also makes it clear that we probably won't find any technological remedies: the prudent thing to do is to form what amounts to a world government that will force us to use less carbon. Oddly enough, this economist, who appears to be very familiar with the effects of climate change, has little to say about the economic effects of his carbon taxes and reduced energy production, although you'd think that as an economist he'd know a little about that. In any event, if you're saving up to send your kids to a major university, understand that this is what they'll be learning, and if you live in California you're paying taxes to pay Professor DeLong and his colleagues to spread the word. I do have a question. While I don't know how NASA knows that we've just had the warmest year since 1009 AD, it does seem reasonable to ask why it was so warm in 1009 AD when there weren't any automobiles, and how the Earth managed to get from 1009 AD to present without overheating, and what happened to bring about the cooling of the Little Ice Age. I will say that DeLong seems to be sympathetic to nuclear power, but he doesn't spend a lot of time talking about it; at least a search of "Brad DeLong Nuclear" turns up several bits about nuclear weapons, but he doesn't seem to have written much about power plants. I hasten to add that the piece above is exactly on target. One wonders why promoting nuclear power isn't part of his panic proposals? While we're on the subject of what they're teaching in our colleges, this morning's LA Times has an article by CCNY Sociology Professor Frances Fox Piven entitled "Lamenting Acorn" which is exactly what the title says it is: a lamentation of the death of Acorn and the hope that it will be back, stronger, as the voice of the people. (I can't find a link to it yet, but it hardly matters: it's not particularly noteworthy.) Perhaps Acorn can answer the question of how NASA Goddard knows that 2009 was the warmest year for a thousand years, and how we managed to avoid the warming trend that must have preceded the Year 1009. Or at least how NASA Goddard managed to compute the temperature of 2009 so that we can all see how that was done. === * The horrors include tornados in Los Angeles, the California Central Valley turning into Death Valley, famines all through Asia, and general disaster. ================ One of the best parts of being me is that if I'm wrong someone will tell me soon enough. Subj: Congressional interest in rating agencies It turns out not to be quite the case, that Congress has taken no interest. I'm too lazy to look it up, but I remember seeing video archives of hearings in which the SEC Chaircritter said her agency is in the process of writing the rating agencies out of SEC rules, and I think I remember Barney Frank saying he was going to write them out of the law. Alas, I also remember hearing some testimony -- perhaps from a ratings-agency-critter? -- about how it's really hard to do much more than refrain from granting the agencies official recognition in law or regulation, because courts have ruled that their opinions fall under "free speech". A little Googling did yield these links: http://www.house.gov/apps/list/press/

financialsvcs_dem/pressCRA_102809.shtml http://www.house.gov/apps/list/hearing/

financialsvcs_dem/pressCM_093009.shtml http://www.house.gov/apps/list/press/

financialsvcs_dem/press_120309.shtml thomas.loc.gov seems to indicate that the bill announced in the first link apparently stalled in the House after being reported out of committee. The bill announced in the third link covers lots more topics besides rating agencies, and I can't tell whether the "credit rating agencies" the bill dealt with are the securities rating agencies or consumer-credit-rating agencies, or both. thomas.loc.gov seems to indicate that it passed the House and is now before a Senate committee. There's also the Financial Crisis Inquiry Commission at fcic.gov. I've viewed archived videos of several of their hearings, and at least one Commissioner promised a witness that the rating agencies would be roasted in due course. This link says they've just subpoenaed Moody's "for failing to comply with a request for documents in a timely manner": http://fcic.gov/news/pdfs/2010-0421-Advisory.pdf Rod Montgomery==monty@starfief.com So apparently there has been discussion, but I don't see much of it. I do know that Barney Frank got a 1000+ page House Bill on consumer protection through regulation passed, and Chris Dodd is working on a 1000+ page Senate version, and I wasn't aware that either had anything to do with the ratings agencies. There may be something in there -- in 1000+ pages that no one has read in its entirety, who knows what may be in there -- but there's been little to nothing in the debates. I would think myself that anything so complex that it takes 1000 pages and the creation of new agencies to solve would be done very carefully; and that it's obvious to me that the big crash came because the ratings agencies allowed pension funds and other such institutions to invest in crazy derivatives by giving those derivatives ratings of sound risk when at least one of the derivatives was created so that someone could bet against its success. The crisis came when too big to fail organizations got involved, and most of them can't invest in stuff without ratings, or so I understand. I don't claim to be an expert on high finance, but it does seem to me that those who look to reform Wall Street by protecting investors and consumers might want to start with a reform of the ratings system. People who want to invest in Blue Chips ought to have a reliable way to determine just what is a Blue Chip -- and the Blue Chip designation ought not be for sale. We're in an almighty hurry to reform Wall Street. Perhaps we ought to slow it down until Moody's gets around to compliance. It's not like there's all that money out there just straining to get at strange derivatives. Were I in charge, I'd be looking at a different matter: how can we set up Wall Street so that it doesn't matter to us whether a Big Bank fails? If there were 50 major banks instead of just the Big Seven (or Big Five depending on who you read) then the failure of one or two wouldn't be devastating to everyone, and we wouldn't need so much regulation. The problem with Big Capitalism is that it tends to concentrate power. This was Marx's observation, and it's true. Adam Smith observed that capitalists tend to conspire to use government in their favor, and that has been going on forever. Some big bubbles and crashes of the 19th Century were blamed on speculators, and Andy Jackson killed the Bank of the United States as one remedy. An institution that is too big to fail is one that must either be prevented from taking certain risks -- i.e. to have regulators substitute their judgment for that of the institution's controllers -- or be allowed to take crazy risks but then be bailed out when they go sour. This is gambler's heaven: I make the bet and keep the winnings, but you pay for my losses. Honest ratings and institutions we can allow to take high risks and suffer the consequences of failure. Those seem to me a better remedy than the competing 1000+ page Frank and Dodd bills. Instead of 1000 pages of new law creating new agencies and new regulations, perhaps we ought to look into reforming the ratings agencies, and applying anti-trust law to breaking up institutions so they are not too big to fail. At least we ought to be talking about that. ============ The public employees union bussed in thousands to Springfield Illinois to protest any adjustments to state employee pensions and wages. Our Masters show their strength. This will continue. Rush Limbaugh gives us the image of a tick demanding that you feed the dog more... ================ Not of general interest yet, but a glimpse of things to come. Windows 7 PCs with multitouch screens now have a new series of apps focused on play. http://news.cnet.com/8301-10805_3-

20003155-75.html?tag=nl.e70 3 And the beat goes on. Hi Jerry, The article is available online now, and will be in the 4/26 print edition. The article covers the courting--or lack thereof--of book publishers by Amazon, Apple and Google for their support in the e-book platform wars http://www.newyorker.com/reporting/

2010/04/26/100426fa_fact_auletta?currentPage=all All the best, Jim Woodinville, WA If you are interested in the publishing business and have not read this you probably should read it. ================= Thursday TOP Current Mail