Category Archives: Economics

Russia’s Ruble Problem is Temporary… And not Just THEIR Problem

Vladimir_Putin-6

Russia’s been in something of a spot of bother lately. The decision by OPEC to continue elevated levels of oil production (in order to deliberately suppress oil prices, and drive higher production cost competitors out of the market), in addition to American sanctions, have caused the Russian ruble to plummet against the American dollar. Steps taken by Russian President Vladimir Putin and the Central Bank of Russia to halt this decline have not been effective, causing Putin to call what’s happening a “catastrophe”.

These reduced oil prices of course have many benefits to the US, beyond schadenfreude at Russias predicament. Fuel prices are the lowest they’ve been in almost ten years; which has had a positive effect on consumer prices overall, travel, and holiday spending during retail’s heaviest season.

So with prices at the pump going lower, and Putin struggling, everything’s all good, right??

Not really.

Here are a few reasons why we should be concerned at what’s happening right now:

* There’s a lot of arm-twisting going on both inside and outside OPEC – What’s really happening, is Saudi Arabia is effectively in a staring contest with weaker members of OPEC, and no one has the strength to end the standoff. These low prices are harming oil producers everywhere. The price can only be so low, for so long, before there’s so much pressure (both internally, and from other oil producing nations); that the Saudis will cut production, and allow the price of oil to rise.

* We’re due for an energy market correction – As I said above, this action isn’t just hurting Russia. It’s hurting Venezuela, Mexico, Norway, and all other oil-exporting countries, and it’s not sustainable. Speculation, aggregate demand increases, and softening of the Saudi position, are likely to bring the price back up within a few months, which benefits Russia in the long term.

* Vladimir Putin’s support is, and will remain, solid – Breathless articles in the Western press about Putin’s “challenge” possibly leading to his downfall are vastly overblown at best. For one, Putin knows who his key allies are, and they – the oligarchs in Russia – will be taken care of first. Furthermore, he is virtually synonymous with the once again powerful Orthodox Church, and his domestic policies (which basically amount to keeping the buses running on time and eradicating homosexuals) are still extremely popular. If push comes to shove, the Russian people will stick with him; partly because he’s their best chance against the west (and more importantly, China), and partly because if they do protest, they stand a good chance of not making it home (Putin’s history is clear in this). It’s just as well, because…

* There are no legitimate alternatives to Putin – Simply put, Russia’s liberals (and in fact all political factions other than Putin, and those even more hardline) are broken; either irrelevant and ineffectual, or small, hardcore sects, that hold little appeal for a nation that still remembers bread lines. Financial transparency? Human rights? These are things which, in the mind of a hardened nation, don’t pay the bills; and in the opinion of many Russians, may not be desirable, as they would benefit currently disfavored people (such as gays, and those of religions other than Russian Orthodox).

* When you poke the bear… – Russia has shown that they will act with violence when it suits their desires; ask Georgia, Chechnya and the Ukraine about that… if they can pick their heads up long enough to speak. I’m not entirely sure we want to see the Russians become desperate, or feel truly threatened, economically or politically. At best, many lives may be lost or destroyed in small scale conflict, and the disruption of that inevitably comes with it. At worst we could see war with Russia and “the west” (under whatever pretext or theater in which it may begin); perhaps including support from China, splinter eastern Europeans, “enemy-of-my-enemy” Islamic groups; and governments around the world, who would have to pick a side in a war between the United States, and “anyone other than the United States”.

That’s a wild scenario, but not wild enough to be completely discounted.

In the end, I predict that Russia will ride this out, and wait for mutual interests in the oil industry to start wearing down the U.S. and Saudi Arabia. There could be some retaliation, leading some to guess at a second Cold War. However, ultimately, Russia doesn’t have sufficient economic clout to meaningfully damage the United States and its allies, without also causing greater damage to themselves.

Enjoy the gas prices (and laughing at Putin) for now, but understand that, most likely; prices (and the ruble) will swing back closer to their recent medians, by the end of February (March at the latest), with little or no long-term damage to Putin.

Christopher Bowen covered the video games industry for eight years before moving onto politics and general interest. He is the Editor in Chief of Gaming Bus, and has worked for Diehard GameFan, Daily Games News, TalkingAboutGames.com and has freelanced elsewhere. He is a “liberaltarian” – a liberal libertarian. A network engineer by trade, he lives in Derby CT.

Ethanol not only isn’t Green… It’s Blacker than Coal

Mother Jones Ethanol Problem Breakdown

Image credit: Mother Jones (oh… and that was 7 years ago. it’s worse now)

 

A new total environmental impact metastudy has been published, rating the environmental impact of electric cars, with results for each type of electric car and the types of power generation used to fuel them; comparing them against conventional gasoline, and ethanol fueled vehicles.

http://www.nbcnews.com/science/environment/your-all-electric-vehicle-may-not-be-so-green-study-n268961

Their basic conclusion, is that electric cars are in fact no better, and are often worse for the environment, than conventional cars (because of their manufacturing inputs, waste outputs, and the impact of electricity generation).

Of course, anyone who has been paying attention to the actual technologies and manufacture of electric cars has known this for years… They’re essential philosophical symbols, rather than any real benefit to the environment.

… but that’s a different argument for another day…

What I find most interesting though, is the conclusions and comparisons they drew between different energy sources… particularly ethanol:

“The study finds that overall, all-electric vehicles cause 86 percent more deaths from air pollution than do cars powered by regular gasoline. But if natural gas produces the electricity? Half as many deaths as gasoline cars. Wind, water or wave energy? One-quarter. Hybrids and diesel engines are also cleaner than gas. But ethanol isn’t, with 80 percent more deaths.”

… 80 percent more damage (expressed here as deaths) than regular gasoline, just direct damage, not second order effects and the like. Nearly as much as straight coal.

When you add the damage ethanol causes from starvation, increased food costs, food insecurity, and additional transportation costs, as well as damage to vehicles and distribution infrastructure… it’s FAR worse than coal.

Resource Media - Ethanol, Food or Fuel

Image Credit: Resource Media

Then there’s the subsidies it soaks up and therefore the additional tax burden it creates… Ethanol is far FAR worse than coal.

Oh and then there’s the fact that ethanol is actively preventing better greener technologies from being developed; both by consuming resources which would otherwise be more productively used, as well as directly, because the ethanol industry lobbies against competing technologies, and for mandatory ethanol use.

… And of course, that’s ignoring the damage it does to our political process, dominating the early primary process, in effect acting as a filter for presidential candidate selection.

Ethanol is quite possibly the worst fuel in common use.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

Government Spending Has Been Flat The Past 5 Years. No, Really!

Revenue and Spending 2000-2019 (estimated)

Back in 2011, I looked at some CBO projections, and said that the country was in dire straits financially. Spending seemed to be on an absolute tear, and revenue–even if it lived up to wildly optimistic projections–wasn’t going to come close to keeping up.

Essentially, the CBO projections pointed to spending occurring at absolutely unprecedented levels, and relied on completely unrealistic projections of economic growth to [not quite even] pay for it. At the time, I said:

Even with those assumptions, where does spending fall historically? Even at these rosy projections, it never falls under 22% of GDP (on par with the highest spending the country has seen since WWII), and those rosy projections came in January 2010. A year later, in January 2011, the CBO outlook got worse. It now shows spending never falling under 23% of GDP during the decade 2011-2020. Historically, spending has not exceeded 23% of GDP for a single year between 1946 and 2008.

Where has revenue been over the last few decades? Well, for the years 1991-2000, during which time we suffered one mild recession followed by the tech bubble, total government revenue averaged 18.75% of GDP. For the years 2001-2010, where we dealt with the tech bubble collapse followed by the subprime bubble and then crash, total government revenue averaged 17.07% of GDP. A sizeable drop, to be sure (the worst spots being 2009 & 2010, where the financial crash slammed revenue below 15% of GDP). But fundamentally not that far out of line with historical precedent.

Now, I hadn’t gone back to look at the numbers since then. So I was very surprised to read a Cato post suggesting that spending was stagnant and was sitting at a mere 20.3% of GDP, not the 23%+ area that the CBO was projecting. As Daniel Mitchell from Cato puts it (emphasis added):

Here are some specific numbers culled from the OMB data and CBO data. In fiscal year 2009, the federal government spent about $3.52 trillion. In fiscal year 2014 (which ended on September 30), the federal government spent about $3.50 trillion.

In other words, there’s been no growth in nominal government spending over the past five years. It hasn’t received nearly as much attention as it deserves, but there’s been a spending freeze in Washington.

I was frankly shocked. So I ended up going straight to the OMB data (note: it’s an .xls file) to confirm.
Revenue and Spending 2000-2019 (estimated)
Looks pretty legit. Spending was pushing well above 23% GDP for a few years due to the economic meltdown, the stimulus, and the continuing effects of global war.

What’s interesting, and I pulled this out of the graphic for clarity (go download the original source data if you want to confirm) is that this is NOMINAL spending. Considering there has been inflation since 2009, it’s actually fair to say that spending has decreased in real dollars over the last 5 years.

Spending is well below the CBO projections from 2010 that I used in my previous post. And frankly, revenue is WELL below their projections as well. But the spending restraint is sufficient to keep both spending as a percentage of GDP and deficits as a percentage of GDP in reasonable territory.

Now, there are always devils in the details. Mitchell points out a few in his post at Cato, and has even more to say on the subject here. But either way you slice it, the fiscal meltdown that many (including me 3 1/2 years ago) were predicting hasn’t come to pass.

Some on the left will credit Obama (even though they’ve never seen spending they didn’t like). Some on the right will credit the Tea Party (even though they spent the 8 years prior to Obama spending like a Kardashian wedding).

As for me, I’m just going to say that I’m glad my predictions–based on CBO projections–didn’t come to pass.

Climate Change… The New Inquistion

I was searching for something else, and I came across this piece I wrote back in 2007…

…And perhaps unsurprisingly, not much has changed today, except that now catastrophists are saying EVERYTHING is proof of climate change.

Climate change can apparently do anything whatsoever, including mutually exclusive and contradictory things, because “science”.

It’s absolutely unfalsifiable.

I decide to republish it here, to point out, that while the science against the catastrophists has only accumulated and strengthened; their stridency and grasping demands have only increased.

I say again, the concept of catastrophic anthropogenic climate change, except in the case of localized micro-climates, holds absolutely no scientific water.

Honest scientists will tell you the same thing if pressed (and if their funding doesn’t depend on it), but the agenda politics of todays science (admittedly on both sides of the political spectrum, but generally on different subjects), prevents real, honest, science from occurring anymore; or from being reported if and when it is (the record of suppressing science which disproves catastrophic anthropogenic climate change is long and shameless at this point).

The mere language used by catastrophists against those who seek to use actual science rather than sociopolitical ideological faith, calling us “deniers” in an attempt to paint an equivalence with holocaust deniers, should make it clear that their concern is not truth.

The honest numbers are simple.

Global temperatures have risen an average of less than 1 degree centigrade since measurements started being taken (“adjusted measurements”, which have been conclusively proven to be inaccurate and possibly deliberately manipulated say it may be as much as 1.8 degrees, but that is the absolute maximum).

There is no “sudden and precipitous increase”. There is no hockey stick. It was a lie, and even many of the climate change people have admitted it. The ice caps aren’t melting, in fact in most areas they are thickening slightly. The sea level isn’t rising any more than it would have naturally.

Oh and in case you didn’t know… Polar bears are excellent swimmers.

More damning to the catastrophists faith; even by their own admission, there has been NO rise (and there may in fact have been a slight decline) in global average temperatures, SINCE 1996.

Since temperature recordings have begun, volcanic eruptions have put more carbon into the atmosphere, and caused more temperature change, than all of human industry and activity since the beginning of the human race; but it wasn’t by increasing temperatures with carbon, it was by decreasing them with dust in the air… much of which was in fact carbon particulates.

The world has been far colder than today at times when there was far more carbon in the atmosphere; even without more dust. The world has been far warmer than today with far less carbon in the air, even WITH more dust.

The amount of anthropogenic carbon dioxide and carbon particulates in the atmosphere are FAR less than one half of one percent of total carbon dioxide, and far less than one half of one percent of total carbon particulates (the vast majority of CO2 is released by soil, rotting vegetation, oceanic microorganisms, and seafloor offgassing. The vast majority of particulates, are released by forest fires, and volcanic activity ). Considering how small a percentage of our atmospheric carbon and carbon compounds (between 0.03 and 0.06 percent. Not between 3% and 6%, 3 one hundredths of a percent), that amount is completely insignificant to global climate change.

This is not to say they don’t effect local microclimates, they certainly do. But in those local microclimates, these concentrations are literally hundreds to thousands of times higher.

These levels of anthropogenic CO2 in the atmosphere are not a temperature driver, or a climate forcing.

In fact, historical records show that overall CO2 levels (which, remember, human inputs make up only a tiny fraction of) TRAIL global climate change by anywhere from a few hundred years, to a few thousand.

All currently existing GLOBAL climate change can be fully and scientifically explained by natural endothermic cycles (atmospheric oceanic interaction combined with volcanic and other geothermal activity, and large particulate emissions such as forest fires, plus natural greenhouse component and other climate forcing component emissions), and the fluctuation in output of the sun (because earth is an exothermic system). The suns output has varied greatly over the course of human history (and of course long before), and periods of warming and cooling have tracked right along with that output.

Models using average sunspot activity as an indicator of solar thermal forcing, have proven to be accurate within a few percentage points at predicting historical temperatures.

Some models (those used by catastrophists) predict that there may be FUTURE global climate change based on a theory that human generated carbon inputs, even though they are far lower than historical levels which did NOT cause these things to happen, will somehow cause the entire climate system to change the way it has always functioned.

These models are ridiculous on their face. The way you test a model is to run if forwards and backwards without adjustment, and see if it can accurately predict what actually happened in the past, using the data from further back in the past; then verifying against actual future results over time.

None of the models that predict significant global climate change due to human carbon inputs, come anywhere close to predicting the historical record.

They always consistently overestimate warming by SEVERAL HUNDRED PERCENT, as in estimating 4 to 8 times the actual warming.

And NONE of them came anywhere close to predicting the variability of the historical record, always showing a consistent warming trend over time, even for CENTURIES that had a significant cooling trend.

The models were not made to predict the actual climate… they were specifically made to predict massive warming, no matter the input. And that’s what they do, as non-catastrophists have proven, running data which any rational model should predict steady or cooling temperatures through the models… and they STILL predicted significant warming.

I leave it up to you to decide whether the models were just designed badly, or whether the distortion was intentional. Either way, these models cannot be trusted, and decisions should certainly not be made based on them.

The climate IS changing, and has since the moment the earth formed a climate. As near as we can tell (through ice core samples and the like) there has never been a period of more than 200 years without at least a 1 degree change in global average temperatures.

The climate will continue to change on its own, and no NORMAL human activity will change global climate significantly one way or the other… unless it’s something that actually would kill us all (which would by definition not be normal… Incredibly massive particulate pollution over a high percentage of the earths surface – including the oceans – would do it. It would initially trigger warming from trapped thermal radiation, followed by extremely rapid cooling from blocking out the sun, and then a sudden ice age; and likely kill all crops and food animals in the process, along with at least 80% of humanity in the first two years, if not more, and ultimately followed by mass global extinction).

That isn’t to say we shouldn’t attempt to develop better sources of energy, we should. We aren’t going to “run out” of oil… ever in fact; a basic understanding of economics would show that. But, eventually hydrocarbon fuels are going to get more and more expensive as time goes on, and petroleum fueled combustion engines are relatively inefficient, and do contribute significantly to micro climate pollution.

In many ways, doing things greener IS in fact better. Saving energy is generally a very good thing. Not polluting is generally a good thing. When it isn’t, is when it destroys economies, prevents job growth, reduces food production, increases food prices, and all the other ways that forced greenism (I won’t even call it environmentalism, because it isn’t doing the environment much good), causes pain, suffering, misery, and general reductions in peoples health, quality of life, standard of living, and basic liberties.

“Climate change” isn’t about the environment… It’s about giving financial and political control to anti-western, anti-capitalists…. Or just the cynical opportunists who would use peoples good intentions and fears to increase their own power.

It’s about punishing those rich capitalist nations and people, for not being poor socialists… Or just for “not doing things the RIGHT way”…. whatever that particular person or group happens to think the “right” way is.

It isn’t science, it’s a pseudo-scientific sociopolitical ideological movement, and near religion. The adherents don’t need any proof, because they have faith; and any who challenge that faith must be burned as heretics in their new inquisition.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

Do Rich High School Dropouts Do “As Well” As Poor College Grads?

Poor Grads & Rich Dropouts

That’s the claim of Matt O’Brien at Washington Post’s Wonkblog, in a post titled (unsurprisingly), “Poor kids who do everything right don’t do better than rich kids who do everything wrong.” His main point:

Even poor kids who do everything right don’t do much better than rich kids who do everything wrong. Advantages and disadvantages, in other words, tend to perpetuate themselves. You can see that in the above chart, based on a new paper from Richard Reeves and Isabel Sawhill, presented at the Federal Reserve Bank of Boston’s annual conference, which is underway.

Specifically, rich high school dropouts remain in the top about as much as poor college grads stay stuck in the bottom — 14 versus 16 percent, respectively. Not only that, but these low-income strivers are just as likely to end up in the bottom as these wealthy ne’er-do-wells. Some meritocracy.

So the anger is that some rich dropouts still succeed and make it to the top, and some poor college grads remain on the bottom. Or, to annotate a graph as O’Brien did:

Poor Grads & Rich Dropouts

This, however, is a terrible analysis.

First and foremost, it doesn’t live up to his title. Poor kids who do everything right do quite a bit better than rich kids who do “everything” wrong. Only 20% of rich kids who don’t graduate high school make it into the top 40% of income earners. 41% of poor college grads make it into those upper quintiles. Almost 70% of poor college grads make it into the top 60% of income earners. Only 49% of rich HS dropouts do so. The other half of rich high school dropouts end up in the bottom two quintiles, as you’d expect from high school dropouts.

Now, nobody will argue that poor kids don’t have an uphill battle from day 1. And nobody will argue that rich kids have a multitude of advantages in front of them. Their path to success is easier. There are many reasons for this, and I’m not going to go into them here, but suffice to say that I agree with the simple premise that it’s harder to succeed when you start out poor.

But what the graph that O’Brien uses to prove his point is actually proving that putting your nose to the grindstone, pushing yourself to enter and complete college, is important whether you’re rich or you’re poor. If rich HS dropouts were successful at a higher rate than poor college grads, I might agree with this analysis. But they’re not. Poor college grads do measurably better than rich HS dropouts.

Yes, some poor college grads still end up on the bottom, and some rich HS dropouts still succeed. But how many, and why? Compare the above chart with the below (also from the Reeves/Sawhill paper):

Overall mobility

Social Mobility Matrix, US Overall

In this chart, you can see that the bottom quintile–60% of them, in fact–stayed in the bottom two quintiles. Only 23% made it to the top two quintiles. And the top quintile–56% of them–remained in the top two quintiles. Only 25% fell to the bottom two quintiles. So overall, completely outside of any educational data whatsoever, the bottom remained on the bottom and the top remained on the top.

But if you’re poor, and you graduate college, you flip the script. Your odds are very good to go from the bottom quintile to middle class or better. And if you’re rich but don’t graduate college, your odds are better that you’re going to end up in lower middle class or worse. It won’t hold true for everyone, as there are strong cultural factors in play. But those cultural factors are not overwhelming. Demography DOES NOT equal destiny.

That’s meritocracy.

1 2 3 4 160