Posted on April 15th, 2013 2 comments
As Herman Melville might have put it, the precious metals are spouting black blood and floating fin up. No doubt the astute readers of this blog are all short gold on the commodity exchanges, but I shudder to think of the gloom among the goldbugs today.
Gold spot close last Monday: $1574
Gold spot close today: $1335
The reason given for today’s drop of over $140 an ounce was “weakness in the Chinese markets.” Lame. The guys who come up with that stuff are just one step above editorial writers.
Posted on February 25th, 2013 1 comment
Apropos the baby bust discussed in my last post, an interesting article on the subject by Joel Kotkin and Harry Siegel recently turned up at The Daily Beast via Newsweek entitled, “Where have all the Babies Gone?” According to the authors, “More and more Americans are childless by choice. But what makes sense for the individual may spell disaster for the country as a whole.” Their forebodings of doom are based on a subset of the reasons cited in Jonathan Last’s “What to Expect when No One’s Expecting,” and are the same as those that usually turn up in similar articles. The lack of babies, “….is likely to propel us into a spiral of soaring entitlement costs and diminished economic vigor, and create a culture marked by hyperindividualism and dependence on the state as the family unit erodes.” As I pointed out in my earlier post on the subject, if all these things really will result absent a constantly increasing population, they are not avoidable outcomes, for the simple reason that, at some point, the population of the planet must stop growing. The only question is, how many people will be around to experience those outcomes when they happen, and what fraction of the planet’s depleted resources will still be around at the time to deal with the situation. Many of the commenters on the article do an excellent job of pointing that out. For example, from Si 1979,
At some point the population has to stop growing, space on the earth is finite. As such there is going to come a generation that needs to ‘take the hit’ and the earlier that hit is taken the easier it will be. The larger the population gets the worse an ageing population each generation will experience. We can take the hit now or leave future generations a much worse problem to deal with.
To deal with the “problem,” the authors propose some of the usual “solutions”;
These include such things as reforming the tax code to encourage marriage and children; allowing continued single-family home construction on the urban periphery and renovation of more child-friendly and moderate-density urban neighborhoods; creating extended-leave policies that encourage fathers to take more time with family, as has been modestly successfully in Scandinavia; and other actions to make having children as economically viable, and pleasant, as possible. Men, in particular, will also have to embrace a greater role in sharing child-related chores with women who, increasingly, have careers and interests of their own.
As a father of children who has strongly encouraged his own children to have children as well, I am fully in favor of all such measures, as long as they remain ineffective.
The baby promoters have remarkably short historical memories. Are they unaware of the other side of this coin? One need go no further back than the 20th century. What spawned Hitler’s grandiose dreams of “Lebensraum in the east” for Germany, at the expense of Russia? Hint: It wasn’t a declining German population. Why did the Japanese come up with the “Greater East Asian Co-prosperity Sphere” idea and start invading their neighbors? It happened at a time when her population was expanding at a rapid pace, and was, by the way, only about half of what it is now. In spite of that, in the days before miracle strains of rice and other grains, it seemed impossible that she would be able to continue to feed her population. Have we really put such fears of famine behind us for all times? Such a claim must be based on the reckless assumption that the planet will never again suffer any serious disruptions in food production. These are hardly isolated examples. A book by Henry Cox entitled The Problem of Population, which appeared in 1923 and is still available on Amazon, cites numerous other examples.
Needless to say, I don’t share the fears of the Kotkins and Siegels of the world. My fear is that we will take foolhardy risks with the health of our planet by spawning unsustainably large populations in the name of maintaining entitlements which mankind has somehow incomprehensibly managed to live without for tens of thousands of years. In truth, we live in wonderful times. I and those genetically close to me can procreate without limit on a planet where the population may soon begin to decline to within sustainable limits because increasing numbers of people have decided not to have children. It’s a win-win. I’m happy with their choice, and presumably, they’re happy with mine, assuming they want to have some remnant of a working population available to exploit (or at least try to) once they’ve retired. My only hope is that people like Kotkin and Siegel don’t succeed in rocking the boat.
Posted on October 7th, 2012 No comments
As I noted in another post a couple of months ago, Benjamin Franklin wrote the following to his friend, the great financier of the Revolution, Robert Morris, in December 1783, while Minister Plenipotentiary of the infant United States in Paris,
The remissness of our people in paying taxes is highly blameable, the unwillingness to pay them is still more so. I see in some resolutions of town meetings, a remonstrance against giving Congress a power to take, as they call it, the people’s money out of their pockets, though only to pay the interest and principal of debts duly contracted. They seem to mistake the point. Money justly due from the people is their creditor’s money, and no longer the money of the people, who, if they withhold it, should be compelled to pay by some law. All property, indeed, except the savage’s temporary cabin, his bow, his matchuat, and other little acquisitions absolutely necessary for his subsistence, seems to me to be the creature of public convention. Hence the public has the right of regulating descents, and all other conveyances of property, and even of limiting the quantity and uses of it. All the property that is necessary to a man for the conservation of the individual, and the propagation of the species, is his natural right, which none can justly deprive him of; but all property superfluous to such purposes, is the property of the public, who, by their laws, have created it, and who may, therefore, by other laws, dispose of it whenever the welfare of the public shall desire such a disposition. He that does not like civil society on these terms, let him retire, and live among the savages! He can have no right to the benefits of society, who will not pay his club towards the support of it.
Today such a comment would position Franklin as a radical well to the left of Paul Krugman, but, so far as I can tell, neither Morris nor the editor of the American Quarterly Review who published the letter along with a number of other interesting pieces of diplomatic correspondence 50 years later, thought the comment in the least extreme. That may be because it seemed so out of the question at the time that anyone would be seriously inconvenienced by such a doctrine. The U.S. government, both in Franklin’s day and 50 years later, was both miniscule and frugal by today’s standards. As Franklin put it in another letter written in 1778 to a couple of Englishmen who had sent him an insulting missive ridiculing the very possibility that the American colonies could survive as an independent republic,
The weight, therefore, of an independent empire, which you seem certain of our inability to bear, will not be so great as you imagine; the expense of our civil government we have always borne, and can easily bear, because it is small. A virtuous and laborious people may be cheaply governed, determining, as we do, to have no offices of profit, nor any sinecures, or useless appointments, so common in ancient or corrupted states. We can govern ourselves a year for the sum you pay in a single department, for what one jobbing contractor, by the favour of a minister, can cheat you out of in a single article.
Obviously, he was not looking ahead to the day when we, too, would become an “ancient and corrupted” state with a budget that dwarfs anything ever heard of in 1778. An interesting aspect of Franklin’s first quote above is his discussion of rights. He believes that the state, or at least a democratic state, has a right to take at need whatever property a person has over and above that necessary to preserve life and support the family. I doubt that many citizens of the United States today would agree that such a right exists. This begs the question of how and if rights may acquire legitimacy.
In fact, rights are like good and evil, in that they can never acquire objective legitimacy. They have no independent existence other than as the perception of phenomena that occur in the brains of individuals. As such, it makes no sense to ask whether they are legitimate or illegitimate, justified or not justified. There can be no basis for making such a judgment for things that are the outcomes of mental processes of individual brains. There is no way that they can jump out of those brains and become things in themselves. It is no more possible to assign qualities such as legitimate or illegitimate to them than to a dream. Franklin was therefore wrong to claim that “the people” have a right to confiscate wealth without qualification, and his modern day opponents would be equally wrong to claim that individuals have a right to keep a greater share of their wealth than Franklin admits. Such claims assume the independent existence of rights. However, they have no such existence. The drawing up of lists of rights, whether human or animal or otherwise, are efforts in futility unless the nature of rights is properly understood. It is impossible for them to be self-evident. To the extent that they exist at all, they exist as conventions within groups, and they are effective only to the degree to which they are accepted and defended.
When people are asked to explain why they believe some right or moral judgment is legitimate, they commonly respond either by citing the authority of a God, or by claiming that they would serve some greater good. In the first case, one is simply arguing that absolute power and legitimacy are interchangeable. The second amounts to basing one good on another good, which, in turn, can only be justified by citing yet another good beyond it. One can continue constructing such a daisy chain of goods ad nauseum, but no link in the chain can ever stand by itself. The qualities “legitimate” and “illegitimate” are irrelevant to the moral intuitions of individuals because it is impossible for those intuitions to acquire such qualities.
I do not claim that human societies can exist without such concepts as “good,” “evil,” and “right.” I merely suggest that they are likely to be most effective and useful in regulating our societies if they are properly understood.
Posted on September 19th, 2012 1 comment
I must admit that I felt a certain malicious glee on reading E. O. Wilson’s defense of group selection in his latest book, The Social Conquest of Earth. After all, Richard Dawkins dismissed the life work of men like Konrad Lorenz, Robert Ardrey, and Irenaus Eibl-Eibesfeldt in his The Selfish Gene because, in his words, they were “totally and utterly wrong” in defending group selection. I happen to admire all three of them because they were the most influential and effective defenders of the existence of such a thing as human nature during the heyday of the Blank Slate. It was good to see Dawkins hoisted on his own petard. However, my glee has been dampened somewhat of late by what I see as an increasing tendency of some evolutionary biologists, and particularly those who have come out most strongly in favor of group selection, to adulterate their science with a strong dose of ideology. Apparently, they have learned little from the aberration of the Blank Slate, or at least not enough to avoid repeating it.
Consider, for example a paper that recently turned up on the website of the Social Evolution Forum with the somewhat incongruous title, “Joseph Stiglitz. The Price of Inequality. Cultural Evolution. The Evolution Institute,” by Peter Turchin, professor at the University of Connecticut in the Department of Ecology and Evolutionary Biology and the Department of Mathematics. A good part of it was a review of The Price of Inequality by Joseph Stiglitz, which, Turchin informs us, he was about two-thirds of his way through. He notes that “Stiglitz is sympathetic to Leftist ideas. Actually, he is way out on the Left end of the political spectrum.” This doesn’t seem to raise any red flags at all, as far as Turchin is concerned. One wonders, “How can this be?” Haven’t we just been through all this? Were not the Blank Slaters who derailed the behavioral sciences for several decades also “way out on the Left end of the political spectrum?” Did they not villify anyone who disagreed with their puerile notions about human nature as arch-conservatives, John Birchers, and fascists? Did they not have powerful motives for making the “scientific facts” come out right so that they didn’t stand in the way of the drastic political and social changes they planned for us “for our own good?” There is no reason that anyone on the extreme left or the extreme right of the political spectrum can’t do good science, but it goes without saying that, when one has strong ideological motivations for having the answers come out one way or the other, that bias must be taken into account and carefully controlled for. That is particularly true when the answers always just happen to agree nicely with one’s ideological preconceptions.
None of this seems to occur to Turchin, who points out that Stiglitz “inveighs against the ‘Right’ on numerous occasions throughout the book.” Apparently, we are to believe this is somehow remarkable and heroic, for he continues, “This is unusual for an economist, especially such an accomplished one who is (or, at least, has been) part of the ruling elite. Most economists know very well which side of their bread is buttered. It is curious how economic theories that yield answers pleasing to the powerful and wealthy tend to be part of the mainstream, while those yielding uncomfortable answers are relegated to the fringe…” To this one can only say, “Surely you’re joking, Professor Turchin!” Did not Paul Krugman, hardly noted as a conservative wingnut, just win the Nobel Prize in economics? Has there been a sudden revelation that the economics professors at our great universities have issued a pronunciamiento in favor of the Republican ticket, with the exception of an insignificant “fringe.” Where is the hard data demonstrating that “most economists” favor the rich elites? Have all the leading economics journals suddenly gone hard over in favor of supply side economics while I wasn’t looking?
Citing a theme of bête noire of the left Ayn Rand’s Atlas Shrugged, Turchin continues,
It is interesting to note that when the wealthy ‘defect,’ they actually not only make the overall situation worse, but it is actually a suboptimal outcome for them, too. At least that is the message of The Spirit Level: Why More Equal Societies Almost Always Do Better by Richard Wilkinson and Kate Pickett. Among other things, Wilkinson and Pickett make a striking observation that the expectation of life among the wealthier segment of Americans is less than the median for many European societies that are much more egalitarian – and spend much less per capita on health.
“Much more egalitarian”? Evidently the authors never lived in Europe. I lived in Germany, and if they think that the society there is much more “egalitarian” than the United States just because the top 1% take home a smaller percentage of the national income, they’re dreaming. The country is far more stratified according to social rank and power than the US, and the same families tend to control positions of power in government and industry year after year. The presence of minorities in positions of political and economic influence is virtually imperceptible. Think the situation is different in France, another nation that beats the US in terms of income equality? Just ask any black in Paris whether they think their chances would be better there than here. Other than that, where is the data on countries where the rich “defect”? Has such a thing ever actually happened in the sense described in Rand’s novel? What evidence is there that the health of the top earners in the US, whether better or worse than their European peers, has anything to do with “egalitarianism”?
What, you might ask, does all this have to do with evolutionary biology? According to Turchin, one of Stiglitz major “shortcomings” is that he “is apparently unaware of the great progress that cultural evolution and cultural multilevel selection theory made in the last decade or so.” One wonders what, exactly, he is referring to when he speaks of “cultural” multilevel selection theory. One of the authors he cites in support of this contention, David Sloan Wilson, is certainly well known for his work on multilevel selection. However, his most cited work is on genetic, and not cultural evolution. Regardless, Turchin’s point is that science is to be used as a tool to support preconceived ideological truisms. That tendency to assume that “science” would always get the “right answer” contributed heavily to the debacle of the blank slate.
I had a similar experience in the conference the Evolution Institute organized last December in Stanford on Nation-Building and Failed States. One of the participants was Francis Fukuyama, who had recently published a book, The Origins of Political Order, in which he was clearly interested in engaging with evolutionary thinking. Yet he had to resort to appeals to the two tired (and badly wrong) models of human sociality – reciprocal altruism and kin selection.
Here we’ve come back to the point I made at the beginning of this article; the recent marked tendency of group selectionists to adulterate their science with ideology. As readers of this blog are aware, I’m not particularly fond of Dawkins, Pinker, and some of the other major advocates of reciprocal altruism and kin selection. However, when Turchin claims that they are “tired and badly wrong” he is just blowing smoke. The jury is still out, and he has no basis on which to make such a judgment. On what knowledge does he base this assurance that these theories are “badly wrong”? Nowak’s “complex mathematical models”? I was a computational physicist for much of my career, and while Nowak’s models are interesting, the idea that they account for all of the relevant data so thoroughly that they can serve as a basis for the conclusion that inclusive fitness theory is “badly wrong” is laughable.
Turchin is hardly the only one publishing such stuff. I’ve read several others authors recently who argue in favor of group selection without giving any indication that they have even an inkling of the complexity of the subject, and who rain down furious anathemas on the supposedly “debunked” proponents of inclusive fitness, associating them with evil ideological and political tendencies in the process. Their tone is typically one of outraged virtue rather than scientific detachment. Do we really need to go through all this again? Perhaps instead of declaiming about the philosophy of Kropotkin and crying up the moral superiority of their version of “equality,” advocates of group selection would do well to make sure they have the science right first.
Posted on July 29th, 2012 No comments
Before implementing radical social theories as the Communists tried to do in Russia in 1917, its always a good idea to try them out on a modest scale that doesn’t involve murdering anyone. That goes double if the radical social theory in question has a strong appeal to those whose tastes run to saving the world. The speed at which human reason runs off the track varies in direct proportion to the complexity of a hypothesis and the lack of repeatable experiments to confirm it. Unfalsifiable hypotheses are born off the track. Data in support of the above may be found in a letter Benjamin Franklin wrote to Robert Morris in 1783, when he was serving as our Minister Plenipotentiary in France. Referring to some resolutions against taxation adopted in town meetings he wrote,
Money justly due from the people, is their creditor’s money, and no longer the money of the people, who, if they withhold it, should be compelled to pay by some law. All property, indeed, except the savage’s temporary cabin, his bow, his matchuat, and other little acquisitions absolutely necessary for his subsistence, seems to me to be the creature of public convention. Hence the public has the right of regulating descents, and all other conveyances of property, and even of limiting the quantity and uses of it. All the property that is necessary to a man for the conservation of the individual, and the propagation of the species, is his natural right, which none can justly deprive him of; but all property superfluous to such purposes, is the property of the public, who, by their laws, have created it, and who may, therefore, by other laws, dispose of it whenever the welfare of the public shall desire such a disposition. He that does not like civil society on these terms, let him retire, and live among the savages! He can have right to the benefits of society, who will not pay his club towards the support of it.
Of course, in the meantime we’ve carried out numerous repeatable experiments that seem to demonstrate quite conclusively that government policies intended to implement such ideas are undesirable because they don’t work. In the end, they don’t serve the “welfare of the public” because they fail to take the behavioral idiosyncracies of our species into account. Does that mean that Franklin was stupid? Far from it. As his experiments with electricity demonstrate, he had the mind of a true scientist. The comments in his autobiography about influencing others to accept new ideas might have been lifted from a 21st century textbook on moral psychology. More importantly, his combination of brilliance and common sense were an invaluable guide and support to our Republic in its infancy.
The point is that even the most brilliant human beings can easily delude themselves into believing things that are not true, and even things that in the light of later experience seem palpably silly. We are not nearly as smart as we think we are. The next time some wildly popular messianic scheme for saving the world inflicts itself on mankind, it’s “enlightened” proponents would do well to keep that in mind.
As for old Ben, the quote above was more the product of exasperation than sober thought. Robert Morris was the great financier of our Revolution. Read the fine biography of him by Charles Rappleye, and you’re bound to wonder how we ever beat the British. Morris used all of his great intelligence, experience, and personal credit to somehow keep Washington’s army fed and clothed, in spite of the fact that the states whose independence he was fighting to win refused to be taxed. His reward for all his tireless work was to be viciously vilified by pathologically pious super-revolutionaries like Arthur Lee and his brothers, men who deemed themselves great defenders of liberty, but who actually provided more “aid and comfort” to the British than Benedict Arnold ever dreamed of. Franklin was well aware of their mendacious attacks on Morris, and their bitter resistance to any attempt to create an effective national government capable of collecting the taxes necessary to support the war effort at a time when the paper money we had relied on in the early years of the Revolution had become nearly worthless. Their type should be familiar, as there are still ample examples among us today. The fact that they provoked such a cri de Couer from Franklin should come as no surprise.
Posted on June 18th, 2012 No comments
Victor Davis Hanson’s specialty is ancient history, and he’s quick to notice parallels with modern times. In an essay entitled “The New American Helots,” he suggests that the student loan scam has reduced many young Americans to the status of the Greek Helots of old, who were held in a state of semi-slavery by the Spartans so they could concentrate on warfare. As he puts it,
Over the last few decades, we’ve created our modern version of these Helots — millions of indebted young Americans with little prospect of finding permanent well-paying work, servicing their enormous college debts, or reaping commensurate financial returns on their costly educations.
Annual tuition keeps rising, as it has over the last 50 years, usually at close to twice the rate of inflation. It must, if colleges are to pay for a vast new administrative class that is excused from teaching to monitor sensitivity and diversity, raise money, and comply with ever more race/class/gender federal mandates.
In addition, students support a new grandee class of professors who teach lighter loads, enjoy better benefits, retire earlier — and now offer instruction in a vast array of courses and disciplines that simply were never part of the traditional curriculum.
I couldn’t agree more. Student loans are one of the cruder forms of exploitation in American society. Their easy availability seduces many young people into assuming massive debt to finance educations that many of them consider essential. Most of them have never experienced what it’s like to bear such a debt, even if they are lucky enough to land a job. Instapundit has been posting links to a lot of similar articles about what he calls the “higher education bubble.” Recent examples may be found here, here, and here.
I can think of few things more mendacious than allowing a generation of young people to start their careers with a millstone of unsustainable debt around their necks, and one which they can’t even shed by bankruptcy. We’ve been flattering ourselves about how “free” we are for so long that we’ve come to accept this form of slavery-lite with barely a murmur. There is currently a debate over whether student loan interest rates should be allowed to increase from 3.4 percent to 6.8 percent on July 1. By all means! Double and triple it! The sooner the whole, rotten system comes crashing down, the better. If it were up to me, student loans would be illegal. Then the universities could jack up tuitions to their hearts content, but there would be no one around who could afford them. Eventually, they would be forced to shed all the non-essential fluff, and the cost of higher education would descend from the stratosphere to affordable levels.
If you want to get an idea of what I mean by fluff, look at the curriculum vitae of an average young associate professor. If you haven’t published scores of papers, you’re not even in the running for a job, not to mention tenure. Beyond that, you’ll need to go to lots of academic conferences and schmooze with your colleagues, because you’ll need a respectable number of citations to go with the papers. Beyond that, you’ll need to spend much of your time writing proposals, because if you can’t attract research dollars, you’re out of the running. Finally, you’ll need a fistful of academic honors, plenty of outside activities to show your public spirit, hours of unpaid work reviewing other peoples papers, etc., etc., etc. You have to hand it to these young professionals. The level of effort and dedication they bring to their jobs is astounding. It would be better if they could devote more of that commitment to what they’re actually supposed to be doing; teaching.
Posted on December 6th, 2010 1 comment
Great shades of 1979-80 dear reader, when the Hunt brothers cornered the silver market, only to have the government change the rules on them in mid-stream. Have you ever read Mark Twain’s Roughing It? The times were just like that. Money was lying in the street. I was a graduate student at the time, and financed my education by collecting silver from the small dealers in town and running it to the big dealers who were paying top dollar. It was worth it to the little guys, because they were able to keep their shops open while I did the leg work for them.
One time I took a load of scrap gold to a dealer in Flatbush. It took us all day to “clean” the gold. We had to remove any small bits of foreign material, and then the dealer would check the gold with his “stone.” It took us until about 1:30 A.M. to go through it all. I was paid in cash: over $100,000. The dealer called a cab to take me to the airport, but I had missed my flight by then. I walked into one of the airport hotels in my scruffy student garb, with a beat up backpack containing over 100 large in cash. The guy in the lobby quoted the room price, looking at me dubiously, as if I couldn’t afford it. Little did he know.
In those days the dealers used to ignore diamonds when they were buying gold, so you could pick them up for a song. I became a “diamond dealer” on the side, and learned to appreciate the beauty of D color flawless stones. They’re awesome. After you’ve seen a few hundred of the off-color, carbon-spotted rocks they put in jewelry, looking into the perfect heart of one of them with a loupe is a spiritual experience. One time a dealer gave me a stone to irradiate in my university’s experimental nuclear reactor. He was happy with the results, as it turned out a beautiful chartreuse green after neutron bombardment. I had to caution him to set it aside for a few days until the activated gold that the diamond had absorbed had decayed.
In January 1980 the rules were changed so that you couldn’t insist on delivery of physical silver to cover your longs in the futures market. For a while, the market didn’t seem to realize what happened, and charged ahead on momentum. Then it went down limit every day for about two weeks. That meant that, if you were caught holding a long, you were wiped out. It was the greatest thing that ever happened to the little guy. They were standing in big queues, waiting to sell their silver coins, sterling, etc., in front of all the coin shops. They all got top dollar, and then the big dealers were left holding the bag. A lot of them went belly up.
A lot of beautiful pieces were melted down for their silver in those days. I remember one in particular that a local coin dealer had somehow managed to purchase. It was a massive inkwell with beautifully sculptured angels, all in .835 Latin standard silver, commemorating the union of Austria and Hungary in the compromise of 1867. How it ever got to this country I’ll never know. An antique dealer who knew its significance was trying to buy it, but the silver value was so high that it was touch and go. Eventually, he managed to save it, but took a huge hit in the bullion value in the process.
After several months, the gravy train was over. I went back to my studies, and silver sank to about $5 per ounce, where it stayed for many years. It’s finally risen from the grave. Who knows when the bubble will burst this time around?
Posted on October 28th, 2010 2 comments
What is it about Germans? Somehow I get the feeling that many of them would still complain if they were hung with a new rope. The German economy is booming. Unemployment has never been lower since 1992. There are currently over 400,000 unfilled job openings in the country, and a shortage of workers, not jobs. According to recent projections, the number of unemployed will drop from just under 3 million now to about 2 million in 2012. The economy is currently expanding at a robust 3.4% per year, and Germany leads western industrialized countries in the speed of its recovery from the recession. In spite of it all, the country isn’t exactly “dizzy with success.” It seems that the Germans, or at least the German media, can see a dark cloud behind every silver lining.
The news magazine Focus, for example, agonizes about the “Dangerous Attraction of Prosperity,” in an article warning about increased government debt, in spite of tax receipts in excess of the rosiest projections, and a deficit in the noise compared to that of the United States. In another article entitled “Five Risks to Prosperity,” we learn that, “A cloud of uncertainty is hanging over the good prognoses. Experts don’t trust the good signals.”
Der Spiegel, too, focuses on the negative. In an article entitled, “Capitol City of the Unemployed,” it describes the situation in the city of Demmin, passing on the lugubrious news that “Nowhere is unemployment so high as in the district in the northwest of the republic… Those who can leave for the West, and those who stay experience the daily deterioration.” The “pulse” of the city is “beating ever more slowly.” Another Spiegel article highlights the visit of none other than our own Paul Krugman. Under the headline “Crisis Oracle Krugman Fulminates against the Germans,” the Nobel laureate is quoted warning the Germans that “the crisis isn’t close to over.” He condemns all the talk about a recovery, suggests that demand for German exports will soon collapse, and internal consumption is too low, and hints darkly about renewed pressure on the Euro.
Not to be outdone, the magazine Stern begins an article about the unexpectedly robust German economic expansion reflected in the latest figures with the counterintuitive headline, “The Recovery Weakens,” because projected growth in 2011 is somewhat less. In a word, to say that the Germans aren’t cocky about their recovery is an understatement.
Former Chancellor Gerhard Schröder: It’s all about me
In spite of all that, former Chancellor Gerhard Schröder knows a good thing when he sees it. In keeping with the old saying, “Success has a thousand fathers; failure is an orphan,“ he is claiming that he should be credited with the current recovery, because “it’s a result of his policies.“ In an interview for a local newspaper, he suggests that, “(Chancellor) Angela Merkel should be thankful to him for his reforms.“ No doubt tears of gratitude are falling down her cheeks. One can understand his glee, given the less happy fate of George W. Bush, who continues in the role of scapegoat of choice for all the failings of the Obama administration.
German Greenpeace: Fighting Global Warming with Coal
Meanwhile, even as German coal-fired power plants belch millions of tons of CO2 into the atmosphere, and more are planned in the immediate future, German activists posing as “environmentalists” have occupied the roof of the headquarters of the center-right Christian Democrat party in what Der Spiegel calls a “spectacular action” to protest the party’s support for nuclear power. Never mind that coal represents a significantly greater radioactive hazard than nuclear power, without even taking into account the tens of thousands that die each year from breathing the particulates from coal-fired plants, or the fact that such plants contribute mightily to global warming, which these same “environmentalists” have claimed is the number one threat facing the planet. So powerful is the craving of these activists to strike pious poses as noble saviors of humanity that they’re incapable of even making the connection. In their fevered imaginations, the nuclear plants they propose to shut down will all be replaced by non-polluting (and non-existent) “green” energy sources. It’s very simple, really. There are still coal plants in Germany, and there will continue to be coal plants in Germany into the indefinite future. Each nuclear plant that is built or remains in operation can replace the need for a coal plant of comparable size. Therefore, what the German “environmentalists” are really doing by opposing nuclear is promoting the continued burning of coal. As usual, the pose is everything and the reality is nothing.
Posted on October 13th, 2010 No comments
Something over a year ago, the US government announced that four companies out of 17 that had applied for over a hundred billion dollars worth of federal loan guarantees for 21 proposed nuclear reactors had made what the Wall Street Journal called its “short list.” At the time, Carl from Chicago, who occasionally writes for ChicagoBoyz, penned an article expressing his “confusion” at the choices. Several seemingly logical candidates had been passed over, and, of the four picked, three were underfunded and had an assortment of legal and financial issues that made them dubious choices for coming up with the kind of capital needed to fund new construction. As it turns out, the feds should have listened to Carl. NRG, one of the two companies he picked as “least likely to succeed,” effectively dropped out of the game some time ago. Now, as he puts it, “the other shoe has dropped.” The other weak sister, Constellation Energy Group, just announced it is pulling out of negotiations to build the build the Calvert Cliffs 3 reactor in Maryland.
Separately, administration officials said they had approved a $1.06 billion loan guarantee for an Oregon wind farm, the world’s largest, after project developers waged a vigorous lobbying campaign to bring the year-long application process to a conclusion.
Rod notes the gross disparity in the terms and conditions of loans offered to the two industries:
Just in case anyone wonders why the wind farm project accepted its loan guarantee while Constellation refused, the key is in understanding the terms and conditions.
For a project that would have produced 4,000 jobs for 4-5 years in Maryland, the companies involved were being told that they had to PAY the US government a non refundable fee of $880 MILLION dollars in order to BORROW $7.5 billion for a project where they would have to invest at least 20% of the project cost as their own equity, thus giving them at least $2.0 billion in reasons to make sure the project succeeded.
In contrast, the wind farm, which will produce 400 jobs for a relatively short period during construction, was able to obtain a $1.06 billion dollar loan with NO CREDIT SUBSIDY COST at all. The ARRA has provided all of the money required for the credit subsidy cost for politically defined “renewable” energy via a change in section 1705 of the Energy Policy Act. In addition, section 1603 of the ARRA provides a CASH GRANT in lieu of a production tax credit of 30% of the cost of the project via a check within 6 months after the project closes. The wind project thus gets a $1.06 billion loan with no closing cost and the sponsors have no equity in the project at all since they get their 20% down payment back with a 50% kicker less than a year after the project starts.
In a word, hype about a “nuclear renaissance” can be taken with a grain of salt, at least until the government gets its act together. Meanwhile, the coal industry has reason to cheer. New coal gasification plants are being built in the US even as we speak. Among other things, they produce hydrogen, a long shot candidate as a non-polluting vehicle fuel to replace petroleum. Ideas for getting the stuff out of coal without releasing tons of CO2 in the process remain sketchy. Even more intriguingly, a firm is seriously looking into the possibility of building a coal liquefaction plant in Indiana. Whether they decide the new plant is financially feasible or not, the fact that such a project has made it this far along in the planning process demonstrates how close coal has come to becoming a viable replacement for petroleum. Given that the United States has over a quarter of the proved coal reserves in the entire world, and that those reserves are more than twice the size in terms of energy as the world’s remaining oil, that is a fact of no small significance.
Posted on July 1st, 2010 No comments
Far be it from me to claim any insight into the gyrations of the currency markets, but I couldn’t help noticing an article that appeared on the website of Business Week a while back warning readers against putting too much faith in the Euro, which had just recovered a couple of cents in value against the dollar. Although carefully hedged about with if, buts, and maybes as such financial articles always are, it suggested that the rally would be short-lived, and the European currency would soon test new lows. At the time, it stood at 1.2229. Bad call, Mr. Expert! As I write this, the Euro is bid at 1.2522. Meanwhile, both the Canadian dollar and the Swiss franc are worth more than the U.S. dollar, at 1.0586 and 1.0590, respectively. Not to worry, though, gold and silver both fell off a cliff today, so our dollar still managed to appreciate in value against “hard currency.” Go figure. I’ll be in Canada if you need me.