Monday, September 29, 2014

Innumerates of the World, Unite

The People’s Climate March celebrated recently in New York City was a joyous union of many disparate views on the environment and a need to do something.  To do what is not clear nor the proper venue to effect change.  For the movement to succeed it must coalesce around two propositions.  One is that CO2 in the atmosphere is rising and two that any plan to reduce it meet a rigorous mathematical proof.


A video presentation on Reason TV by Matt Ridley showed a satellite photo of the Caribbean Island with two countries, Haiti and The Dominican Republic.  From the sky one country appeared brown and barren and the other lush and green.  One country is so poor that its only fuel is wood and the other country is rich enough to subsidize propane gas to be used as a fuel for cooking to save its forests.  Many in the Climate March aspire to a life in a simple biofuel consuming economy, but unfortunately for them, Haiti is a good example of what you get from a backward system that is very little affected by petroleum, globalisation and corporate greed.


The contrast between Haiti and The Dominican Republic also indicates how ill suited the United Nations is as a forum for deciding issues on climate.  Imagine a world wide solution to climate change mandating less use of coal and petroleum forcing more poor people to forage in the woods for fuel.  Climate Marchers would feel slighted if the energy deprived of the world accused them of the royal quip “let them cook with dung.”  In the quest for reducing CO2 in our atmosphere, first and foremost, keep the world’s poor countries out of the supposed solution.  They are an insignificant part of the carbon problem yet a global response would affect them the most.  Counterintuitively the world’s rich democracies with governments responsive to the will of its people for a clean and safe environment and with economies that can transform themselves with market messaging are cleaning up.


If reducing carbon in our atmosphere is the problem to be solved, then biofuels have to be discarded as a solution since a truly rigorous energy audit shows that its commercialisation increases CO2 in the air as well as use of petroleum assets. Unless, ostrichlike, you keep your head in the sand  about the diesel fuel used to cultivate, process and transport the biomass turned to fuel.  The other issue with biomass is that its cultivation competes for the farmland to feed the world.  It’s grotesque to put an automobile in the same line as the poor at the local food pantry.  Finally more farmland for cars means less rain forest in the world storing carbon and cleaning our air.  All and all bio appears not to be an answer to CO2 reduction and should not be subsidized as ethanol is today in the U.S.


Sun and wind energy have strong support as renewable energy sources because they are early in their development and have an expectation of reduced costs as the technology gets better.  Unfortunately these two sources of energy have low yield to acreage,  in other words they both require a lot of area to generate little power.  Secondly the intermittency character as described by Professor Paul Joskow of MIT of on and off production when the wind don’t blow and the sun don’t shine requires backup systems that counter the goal of CO2 reduction. Solar on roofs and windows is a positive source that uses the acreage of buildings already in place and it is a great supplement for peak air conditioning loads when the sun is out and is a worthy of the subsidy it currently has.  A solar farm out in the desert is less compelling economically when considering intermittency and distance.  Even less compelling are windmill farms.  Recently Germany has been receiving good press regarding their full on effort to convert to solar and wind,  but what is not talked about is that cheap coal powered utilities used to provide energy at night and when the wind is becalmed makes a well meaning green policy into a costly polluter with Germany slipping back on its goal of reducing CO2 in the atmosphere.  So why the reliance on dirty coal to cover intermittency?  A possible answer is the political solution of subsidizing green energy on the backs of utilities with a large asset base of traditional power sources. This unexpected cost has created real losses to utility share and bond holders but which are papered over by uninterested deniers of the numbers.  Under such a loser circumstance those forced to provide the intermittent power choose to do so as cheaply possible and dam the pollution emitted.  The answer for these losses requires a market based solution that correctly prices power according to supply and demand and would make wind farms uneconomic, which is okay because the world can only stand so much of this acreage hungry system before NIMBA (not in my backyard) syndrome stops its growth. Think of the resistance of locating wind farms off the coast of Cape Cod which was probably resisted by some who marched in New York.


Hydropower is also an acreage hungry source that reached its tipping point recently as ecologist reassess what damming rivers does to the ecosystem.  Geothermal currently is too insignificant to consider so in the end we have to consider the hateful to climate marchers, nuclear energy.  Unfortunately for them nuclear has the best power to acreage yield and emits no CO2.   Curiously there was a Climate March in Paris as well.  This in a country that embraced nuclear full on and is a leader in low carbon emissions.  It is an elitist bet promoted by bureaucrat and engineering graduates of France’s famous Grande Ecoles whereby they went all in.  The result is that France is clean and beautiful and with travel in their electric powered TGV fast trains a vision of a future with concentrated energy efficient cities surrounded by pristine farms, forests and mountains.  Contrast France’s calculation with Germany which let its green movement chaotically create policies that increase CO2 emissions, energy costs and vulnerability to petroleum energy despots and whose political slogan appears to be:  “Innumerates of the World, Unite.”

Sunday, September 28, 2014

Kurdish Independence.

"Turkey inching Toward Alliance with U.S. in Syria Conflict" highlights Turkey's conflict with the Kurdish people.  Kurd's are fleeing northern Syria into the arms of their Turkish brethren. Both Turkey and Iran have large Kurdish populations who are seeking independence.  The Iraqi unity government is doomed to fail because of the beyond repair split between Shia and Sunni fostered by Maliki's politicization of the Iraqi Army.  Expect the independence of the Kurdistan region of Iraq. Also expect its expansion northward. Turkey had better learn to accept an eventual accommodation as a consequence of degrading ISIS.

Thursday, September 25, 2014

GOP Dysfunction on Immigration and what Latinos can do about it

"Jeb Bush Returns to the Fray and Finds Going Rough" is a beaut just for the skeptical look of Thom Tillis, North Carolina' Republican candidate for the Senate, who Jeb is campaigning for while educating his party on the need for immigration reform.  Its apparent that the 2014 midterm election will not turn on this issue and Latinos feel very left out as the President and Democrats in general assume their support and put the issue on the back burner.

If Latinos have any political sense they should target Representative Kevin McCarthy of California's 23rd Congressional district which has a 35% Hispanic constituency.  Knocking out the second Majority Leader in Congress in a matter of months ought to rock the GOP off its perch so they confront the issue more magnanimously no matter how the Senate goes this midterm.

Tuesday, September 23, 2014

Refugees are the Solution to ISIS and Assad

In the northern Syria the Kurdish along the Turkish border are cascading across the border seeking asylum from ISIS.  Turkey ought to let them coalesce with their Kurdistan, Iraq brethren. That in combination with building a Sunni moderate government in exile in Jordan is the long term solution where the swamp is drained of a moderate populace leaving a wasteland for ISIS and Assad to rule allowing moderates to develop a toehold and with the help of the west protecting the expanding perimeter, degrade and finally extinguish them.

Amen

Monday, September 22, 2014

Proposal for a New Fed Window

The tools that the Federal Reserve Bank has to manage the supply and cost of money have proved to be weak during this time of the Great Recession where there is too much saving and  interest rates are at practically zero.  After years of work restarting the economic flame we are beginning to see it expand and grow so that we can reduce the amount of kindling provided by the bond buying program called “quantitative easing” and consider restricting some air flow to the flame with  increased interest rates in the coming year.  Janet Yellen, Chairman of The Federal Reserve Bank, is now dancing with the concern over distortions to the financial system these many years of zero yield creates with the will not to blow out the tenuous flame that the economy has achieved with an upward movement of interest rates.  Employment is a mandate given to the Federal Reserve Bank by the Congress where there has been no real movement by the Fed  because it has no arrow or idea of one. The other tool for economic management is Congress voting for a stimulus or a significant deficit. The problem is that Washington is always months late, billions short and unfocused. How can we get some of this stimulus tool into the Fed’s quivir?

As we work our way out of the Great Recession, albeit slowly and with spotty result, there are many decrying the wasted opportunity to build and rebuild America’s infrastructure at a time when there is slack in our productive capacity. While reading in the New York Times “E.P.A. Cuts Size of Loan New York Sought for Tappan Zee Bridge” and Martin Wolf’s The Shifts and The Shocks the thought occurred that possibly there is a bond buying variant of former Chairman Ben Bernanke’s quantitative easing program that the Fed could develop for it’s jobs mandate. Wolf’s conclusion is that the austerity policies as practiced by the Euro Zone is a prescription for a decades long depression in Southern Europe.  Nobel Laureate Paul Krugman’s economic prescription of a strong stimulus is correct and unfortunately The Congress was incapable of passing the blowtorch with sufficient heat needed to ignite the fuel that quantitative easing provided.  What if the Federal Reserve had a municipal bond buying facility that would fund projects it determines are for a productive investment and at a time needed to stimulate the economy?

Currently the Federal Reserve maintains a federal funds window with which banks use to cover their liquidity needs in exchange for acceptable collateral.  The system has proved to be useful in the maintenance of a well operating economy. The proposed Municipal Window of First Resort could prove to be a special instrument that the Fed would use as an accelerator to stimulate the economy and create jobs when it deems it necessary.  A proposal to issue bonds for a project, such as the rebuilding of the Tappan Zee Bridge, is examined by the Fed directly and given a quick yeah or neah in a similar manner that the Supreme Court decides what cases to adjudicate. A go decision funds the project quickly and economically while a neah vote puts the project through the usual commercial bank channels. When the Fed decides a stimulus is needed it lets the word out it is looking for good projects to fund.  Those state legislatures with an engaged public may have many shovel ready projects to offer the Fed for economical funding. Those who don’t, won’t.

At times First Resort accepts many projects to improve our roads, ports and rail services as a means to increase economic activity and job creation and when the economy gets overheated the Fed makes its disinterest in funding more projects known and leaves it to commercial banks to fund or not.  Under this system the Fed could maintain the normal four to six percent interest rate economy in general and yet buy the full issuance of projects at zero or even, and this requires a turn in thinking, below zero subsidy rates where the Fed actually pays for the port, road or rail facility in question!  It would not be a two tier market because by buying the full issuance there is no market, just an event.  Nor is there a right that a properly constructed and tested project has to be approved.  These unique funding events are to be at the whim of the Federal Reserve Bank when using its judgment on how best to manage the economy and thereby make it more responsive.

Saturday, September 20, 2014

A Brick by Brick Reconstruction of Syria

Ahmad Samih Khalidi’s editorial “To Crush ISIS, Make a Deal With Assad” requires a realpolitik answer to the Faustian proposition he makes.  Principally what good would any arrangement with Bashar al-Assad bring?  Certainly not as a policing force as he proves his ineffectiveness to bring order with desperate use of chemical and barrel bombs on his citizens.  These indiscriminate attacks make enemies out of Sunni moderates wishing for some semblance of law and order and out of this witches brew a small band of vicious operators takes over with a combination of fearsome actions and intelligent takings of funds and arms.  A deal made with Assad would be welcomed by ISIS  to paint the U.S. with the devil’s brush.

Assad can’t police Syria nor can his military conquer or retain territory, as proved by the recent loss of a Syrian Air Force base to ISIS in the north just a few weeks ago and with Damascus about to fall last year Iran had to bring their proxy, Hezbollah, to come to his aid. Clearly Assad adds nothing to the military equation.

Finally there is the usual duplicitous nature of most actors in the Middle East where a realignment of convenience is considered every other day.  Assad is in pure survival mode and will do anything to prolong his rule.  Eventually any coalition that uses Assad has to deal with his certain betrayal.

So what is to be done in Syria?  First take a deep breath and think about what is needed, which is a political entity that can govern with some semblance of law and order. Lashing out at ISIS without a moderate effective force to fill the void is a prescription for perpetual chaos.  An armchair analysis shows a huge Syrian refugee camp in Jordan causing economic and political consternation in that country.  Why not convert a  problem into an asset by focusing on these camps as the base of a moderate Sunni Syrian government in exile?  Fund the development of this group into a viable political entity with a police and militia.  Take several years to expand the camps to accept refugees that are now fleeing to Europe and elsewhere and let a popular and motivated government develop so that it has some semblance of unity similar, albeit much less mature, to what the Kurds have in Iraq. This Syrian government in exile eventually enters the southern border with the assistance of the Jordanian Army and U. S. air power and establishes a toehold and becomes the moderate Sunni Republic of Syria.

With protection in the air from Assad’s easily neutralized forces the repatriated can grow and police themselves.  As the migration of Sunni moderates flow southward the Republic expands and slowly squeezes Assad to his Alawite stronghold in the middle west.  Eventually the Republic expands northeastward securing the Iraqi border and with good luck and effort finally takes over a degraded ISIS.  This whole operation will require years and patience. But the slow deliberate brick by brick building of a sane ally should be the most enduring and one not easily blown down by the region’s mercurial storms.

Scotland Votes No Thanks

Bully for the U. K. Yes I mean it, good for them and as for my Catalan cousins in Spain, don't even think of it.  But on the other hand, Spain should consider getting out of the Euro zone forthwith, that is unless they believe 25% unemployment, outward migration of their best and brightest and a stagnant economy is a good thing. The other factor to consider is that doing it first is better, just like in a bank run; the first to withdraw gets his money and the the later ones may not.

Friday, September 19, 2014

Industry's Tiresome response to Carbon Pricing


My response to Paul Krugman's editorial in today's New York Times:

Krugman is absolutely right about the tiresome response from industry that real carbon pricing will slow economic growth. We had this argument twenty years ago when getting rid of acid rain. I don't see any less industry today because some added costs were put on to eliminate acid from smokestack emissions and on the other hand I do see the green having come back to trees in Vermont mountains.

Thursday, September 18, 2014

New Economic Order

"EPA Cuts Size of Loan on Tappan Zee Bridge" brings a thought that needs fleshing out as I read Martin Wolf's The Shifts and the Shocks. I believe that Ben Bernanke's Fed bond buying spree has been effective and that it should continue in the years ahead even as interest rates are pushed up.  The bonds to be bought are newly issued municipal bonds such as the one for the Tappan Zee Bridge, but these new issues are sold exclusively to the Fed at one quarter of one percent coupon rates that subsidize needed infrastructure investment for ports, roads and rail  and thus help the economy and fulfill the Fed's mandate to increase employment.  

Tuesday, September 16, 2014

Response to Crush ISIS, Make a Deal with Assad


There is no effective help that Assad can provide. His police actions put the ingredients together for the witches brew that formed ISIS proving that not only is he the devil but incompetent as his indiscriminate use of chemical and barrel bombs attacks as means of policing his citizens proves. His military lost a Northern outpost to ISIS just a few weeks ago because it is useless. Just ask why Iran had to ask Hezbollah in Lebanon to help him out last year. Working with Assad has negative real consequences without need of listing the moral objections as well.

Sunday, September 14, 2014

What is the Plan?

Thomas Friedman's editorial "Obama's Strategy for Fighting ISIS" in today's New York Times requires that the administration do some out of the box thinking.  First and foremost is to get comfortable with the idea that Syria is to be split up.  Use the Sunni refugee's in Jordan as the basis of a new moderate government in Exile.  After some preparation and with the help of a combined Jordanian Army and U. S. Air Force this new political entity invades southern Syria and defends and polices the area.  Hopefully this new entity develops in a positive way so that it could be the basis of a local Syrian force similar to the pesh merga in Kurdistan to displace Assad back to his Alawite region and then begin the slow slog northward to counter ISIS.  In the meantime U.S. Air power should knock out the oil fields in the north funding ISIS's operations.

Saturday, September 13, 2014

The Bum's rush

A caller to an NPR program I was listening to yesterday that included Joyce Kearns Goodwin mentioned how Truman and Johnson were both was rushed into their wars by a confident military and how Eisenhower and Kennedy distrusted military solutions enough to avoid Armageddon.  I rather like Obama's cool approach.  Sure he took a chance with the military when hunting down Osama Bin Laden but otherwise he seems to know when they are blowing smoke up his ass.

Fundamentalist

Paul Krugman's "The Inflation Cult" editorial in the New York Times hints at a problem with all fundamentalist; their complete inability to take in contrary evidence. Medicine tests and confirms Darwin's theory of evolution every day.  Economics is not getting the same sort of continual and correct feedback from the likes of Rick Santelli, Peter Schiff and Ludwig von Mises.  Milton Friedman on the other hand was open to refining economic theory so that it would explain reality correctly.

Wednesday, September 10, 2014

Duplicitous

Thomas Friedman's editorial "Ready, Aim, Fire, Not Fire" mentioned "duplicitous," a really important descriptor for the Middle East when forming alliances.

Sunday, September 7, 2014

A GOP House and a Democrat Senate

The Upshot's "Why Democrats Can't Win the House" brings up the point that urban areas in very red states are usually Democrat and progressive.   Since these urban areas have a high concentration of such voter that Congressional election wastes their votes while Senate votes are state wide and give the Senate more balance. This deadlock that this dynamic creates in Washington is a good.  Repeated below is this blog's June 25 2013 posting

Local Officials Lead Revolution to Make America

An essential element to Libertarianism is to bring decision making to as local a level as possible. I have blogged previously that the Amish are as about as an ideal example of a local self reliant community as there can be.

Watched PBS News Hour's interview with the authors of  The Metropolitan Revolution which appears to me to be an anti federalist love letter to local control and initiative.  If this is the result of Washington political deadlock and sequestration,  then I love it.

The Metropolitan Revolution

Thursday, September 4, 2014

GOP Impoverishes not Enriches

John Heilemann on Charlie Rose mentioned Congressman Paul Ryan as having a compelling GOP message in development so that I watched his CPAC presentation from last spring where I failed to see anything to save the Republican party from disappointment this fall and obliteration in 2016; specifically because their focus on austerity will be contrasted by good economic news.
Surprise: Per Capita Medicare Spending is Falling as reported in The New Times' Upshot is part of the lie that Republicans are good stewards of our economy. How will it play if it is Hillary Clinton up against Paul Ryan in 2016 when that October the Treasury declares the first budget surplus since the Bill Clinton administration. As I recall, Clinton increased taxes and brought forth a huge economic boom and tax receipts paying off the national debt at to some on Wall Street was at an alarming rate (Oh my God we are going to run out of bonds to sell) ! Republicans, on the other hand, have George W. Bush cutting taxes and starting a war, a devastating economic combination which brought us The Great Recession. It appears that a hand off will take place between one competent, thoughtful and decisive Democrat in President Obama to another, Hillary, while the GOP is left to whine.

Tuesday, September 2, 2014

Playing Nice to Iran

It was reported last week that U.S. air strikes in Iraq were done in coordination with anti-American Iran backed Shia militias.  Not a surprise.  In the fight against ISIS these friendships of convenience between those with a common enemy realign and Obama should use it to come to an agreement in the Nuclear negotiations currently ongoing with Iran, but in no way does this realignment mean that there is a chance for Iraq to come out of this as a unified country.

Rules of Civilization

Tarnishing a Reputation as Storied Warriors reports on the weakness of pesh merga forces resisting the ISIS assault last month on the territorial capital of Erbil in Iraq. It's weakness that is being identified and dealt with by the Kurds and is an example of the resilient type of ally we require on the ground in the middle east. Never the less, geopolitical chess players thinking that such a local ally would be useful in expanding the rule of civilization much beyond the borders of Kurdistan in Iraq would be wrong in thinking that their fight for statehood can be converted to one of empire building.