The government is running out of ways to help the economy as the US faces major issues regarding credit and employment ahead, banking analyst Meredith Whitney told CNBC.
“I think they’re out of bullets,” Whitney said in an interview during which she reinforced remarks she made last month indicating she is strongly pessimistic about the prospects for recovery.
Primary among her concerns is the lack of credit access for consumers who she said are “getting kicked out of the financial system.” She said that will be the prevailing trend in 2010.
Despite being able to borrow at near-zero percent interest, banks are not taking that money and putting it back into the marketplace. The Federal Reserve said Monday that consumer lending dropped 1.7 percent on an annualized basis in October, the ninth straight monthly decline.
With consumer spending making up about 70 percent of gross domestic product, the inability of even credit-worthy consumers being able to be able to borrow could put a severe crimp in future growth.
“What’s so frustrating is you have an administration that is arguing such a populist (ideology) and not appreciating all the unintended consequences that the consumer and small businesses have far less credit,” Whitney said.
“You’re going to get a situation where you revert from a consumer standpoint,” she added, “where those that had bank accounts for the first time, credit cards for the first time, homes for the first time get kicked out of the system and then fall prey to real predatory lenders.”
The problems taken together also will pose difficulties for investors.
“I have 100 percent conviction that the consumer is not getting any better and there’s not more liquidity,” Whitney said. “So if everything touching the consumer is going to be represented in the S&P, then the S&P is going to be under pressure.”
The solution, she said, is for the government to take proactive steps that will give consumers more money to spend.
“I don’t think you can cut taxes enough to stimulate demand,” Whitney said. “For a 2010 prediction, which is so disturbing on so many levels to have so many Americans be kicked out of the financial system and the consequences both political and economic of that, it’s a real issue. You can’t get around it. This has never happened before in this country.”
I agree with Meredith Whitney. The growing lack of credit for many consumers will take its toll on the U.S. economy. Another stimulus bill will not solve this problem, so let’s not pretend that it will.
I don’t know what the Government has to do to free up bank credit for individuals and families earning less than X dollars, but the leadership had better determine how to get it done. Absent that change, I expect no major job growth for a few years unless the global economy carries the day.
I find it odd that econos and some government leaders are expressing concern about creating jobs without identifying solutions for the problems of lack of consumer credit and smaller bank implosions (including those which are likely to still go under). TARP didn’t solve the problems of the smaller banks; that was a major missed opportunity. Why cry wolf about jobs if you aren’t willing to point to and resolve the main problems holding back economic demand? It’s not more complicated than No bucks, No Buck Rogers.
We appear to be in more trouble than some may realize.
Well the US is now finding out the consequences of years and years of happy go lucky excess. The collapse of the USSR gave the US the sense that it was free to do anything and everything and need only wish for it to have to happen. In fact there were Neocons who talked about our “making reality.” Big laugh. “Reality” resisted and snapped back at us with a vengeance. Of course the rest of the world, except probably China and perhaps India and a few others, is in trouble too, but it is trouble that started in the USA. Dark days I fear are ahead. Americans are worried and Obama’s numbers are declining but they need to be even more worried, I think, than they are. Much more.
Paul Volcker, the chairman of President Obama’s Economic Recovery Advisory Board, stunned a business conference in Sussex yesterday, saying there is “little evidence innovation in financial markets has had a visible effect on the productivities of the economy”.
The former US Federal Reserve chairman told an audience that included some of the world’s most senior financiers that their industry’s “single most important” contribution in the last 25 years has been automatic telling machines, which he said had at least proved “useful”.
Echoing FSA chairman Lord Turner’s comments that banks are “socially useless”, Mr Volcker told delegates who had been discussing how to rebuild the financial system to “wake up”. He said credit default swaps and collateralised debt obligations had taken the economy “right to the brink of disaster” and added that the economy had grown at “greater rates of speed” during the 1960s without such products.
When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed “nothing at all”, he replied: “You can innovate as much as you like, but do it within a structure that doesn’t put the whole economy at risk.”
He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and “proprietary trading should be pushed out of investment banks and to hedge funds where they belong”.
Mr Volcker argued that banks did have a vital role to play as holders of deposits and providers of credit. This importance meant it was correct that they should be “regulated on one side and protected on the other”. He said riskier financial activities should be limited to hedge funds to whom society could say: “If you fail, fail. I’m not going to help you. Your stock is gone, creditors are at risk, but no one else is affected.”
Cantie, I suspect this administration is going to be the exception that disproves Cactus’ rule/projection of the differences between Prez policies. By 2012 we should see which policies actually work as this Prez is forced to try them all. Preleiminary findings are not too muddled at this point.
I was hoping to get the Tarp money back. Getting it back and perhaps with interest was the premise it was sold on to the American people. Now it appears they are going to spend the money on yet another stimulous. So they lied to us again. The president’s economic team don’t know what they’re doing and never have. It seems they keep on doing stuff in the oft chance that by coincidence when the economy recovers they will have one of their ad hoc policies out there that they can claim was the cure. But they with their socialism and return to statist failed government industrial policy are the problem.
Climategate and how it shows how the results were effected
Some fundamentals There is really only one source for the raw temperature data, the NOAA National Climate Data Center (NCDC). There ae nearly 200 sources of the raw data. Most are from the local country’s meteorological office. NCDC archives the raw data and then processes it to clean up obvious errors in what they call a homogenization process to create another dataset. Both data sets are then made available. The homogenization process has changed over time, taking the revised data further from the raw data.
There are four main sources of temperature data results from this “best” temperature data. They are East Anglia’s Univ, Climate Research Unit, NOAA, Gorddard Institute for Space Studies (GISS), and the Tokyo Climate Center a division of the Japan Meteorologic Agency. All of these agencies and others have areas of climate temperature specialization and/or specialize in areas of the world.
Climategate has shown Climategate has shown that there was a great deal of scientific cooperation within a small group of very influential scientists at these units. That is normal and to be expected, since science builds upon previous theories and findings. Somewhere along the history of this science the theory took them down a road that supported their political views. This is also not unexpected, good or bad.
What Climategate shows us that after the data started to diverge from their political views, that these same influential scientists began to select better data which continued the political support. They deliberately tried to stall scientific reports showing alternative results. They ridiculed those scientists by calling them skeptics and eventually “denialists” and claiming there was a “War on Science.” Which, BTW, is impossible if the scientific method is being followed. They circled the wagons to protect their scientific findings to support their political views.
Their political views resulted in changing graphics which werre reported in leading scientific journals and eventually the IPCC Reports. See below for the changes from the 1990 IPCC Report to how it changed in by the 2001 report. Chart 1 is based upon a historical look at written records of Europe, and the second is a proxy-based history taken from exotic places like the US Soutthwest.
Contd: It Starts With the Homogenized Data The Honomgenizing techniqures are not too well documented, and accordingly the results and processes leave questions. Here’s an article which begins to take the data apart using selected sites. It is from Australia, so their sites are used. It is here: http://wattsupwiththat.com/2009/12/08/the-smoking-gun-at-darwin-zero/
As the data gets reviewed other stations are showing some interesting adjustments. Alaska, one of the areas claimed to have unprecedented warming and/or warming faster is one such set of stations. So the question remains is it the science or the political views driving the warming?
The UK Meteorological Office has decided! It is going to recalculate the global temperature data for the past 160 years.
Transparency is the key/core of the scientific method. Without it there is no science only opinion.
Having been shown only one side of the Climate Change story we are making decisions taking us down a path of possible economic destruction.
You’re being dishonest here. You’re trying to imply that the 1990 chart was always the true story and that the later revisions represent deliberate corruption. You should at least be honest enough to point out that the source of the 1990 chart is uncertain at best, but appears to have been primarily based on some 1965 era temperature reconstructions of central England by Lamb. In 1990 it was largely an unsourced chart floating around in libraries and books. It may or may not have included some additional anecdotal information from other parts of the world. It may or may not match up to modern calendar reckonings of the years from other cultures. The vertical axis may or may not represent a temporally consistent unit of temperature. And the left half of the MWP curve is almost certainly entirely notional and guided by the demands of artistic symmetry rather than actual data. In other words, no one really has a clue what the true slope of the left half of the curve looked like. And the slope of the right hand side of the MWP curve does not really square with the implied temperatures based on granary records and granary storage costs from medieval England.
Here’s a better explanation for the 1990 chart: The IPCC was wrong to ever have included this cartoon version of history in its report. That was irresponsible. So go ahead and blame the IPCC for including a dubious chart in what should have been a scientific paper. That was sloppy research on their part. But just because the IPCC screwed up in 1990 does not mean that the IPCC is obligated to perpetuate past errors. Perpetuating past errors is what conservatives do.
Transparency is the key/core of the scientific method. Without it there is no science only opinion.
And technical competence is the core of scientific knowledge. Without it there is no understanding, only eyeball analysis. You should have actually read what Watts said, particularly with regard to the middle chart that you posted. Watts actuall agrees with the adjustments even though the adjustments are counterintutive to an eyeball analysis. Here’s what Watts said about the middle chart:
Fair enough, that all sounds good. They pick five neighboring stations, and average them. Then they compare the average to the station in question. If it looks wonky compared to the average of the reference five, they check any historical records for changes, and if necessary, they homogenize the poor data mercilessly.
And one of the adjustments that they do is to take first differences. And why? Because the data is not mean reverting, so using raw data will give you spurious “stochastic” trends.
My point is that we should probably expect a lot of people with Excel spreadsheets to suddenly think they’re experts in time series analysis. So instead of actual data analysis, what we’ll get are misleading spreadsheet charts put together by people that couldn’t even spell ARIMA if they had to.
2slugs, Yup! Lotsa questions re: Chart 1, but not one about chart2 which was largely dropped in later IPCC reports.
For those who have not been following the Climate Change discussion, Chart 2 is the infamous Hockey Stick chart. Chart 1, interestingly, is being reinforced by later proxy-based reports of climate, while Chart 2 is being challenged with later reviews. As 2slugs points out there are always questions about dates and high/low ranges, but as a world-wide phenomenon it is being more reinforced than demolished. Not so with the Hockey Stick chart.
So, wachya all think? Can you see how after nearly two years of daily study of the literature, I moved from on the fence and leaning to skepticism, to fully skeptical, and with Climategate cynicism?
We have been shown only one side. Are your views based upon the whole story?
2slugs also makes this claim: “So go ahead and blame the IPCC for including a dubious chart in what should have been a scientific paper. That was sloppy research on their part. But just because the IPCC screwed up in 1990 does not mean that the IPCC is obligated to perpetuate past errors.” He completely forgets that the IPCC authors of those sections are the very same Climategate miscreants. The IPCC does not do research. It accepts, reviews then prints its reports form the scientific community. Y’ano much of the IPCC review was and writing was done by that community of scientists under the spotlight in Climategate.
Capture the communication media, the IPCC Reports and the peer review process, control the dialog? Dunno, just saying.
So you agree that the 1990 chart should not have been included. Good. Then what was your point in comparing it to the 2001 chart? Should the 2001 chart be dropped if the IPCC no longer thinks it’s right? Yes. But I suspect that’s not what you were trying to convey. Correct me if I’m wrong, but the tone of your post was that we should trust the 1990 chart and that the 2001 report reflected deliberate fudging of the historical data.
I would hope and expect that the IPCC would continually revise charts as better data becomes available.
The Hockey Stick version of climate history has not been debunked, although it will almost certainly be continually revised as we get better data. M&M raised some valid concerns about Mann’s misuse of principal component weighting, but M&M did not recreate Mann’s procedure using the corrected weighting and full data set. M&M did show that it was possible to come up with an alternative version of the chart showing a very warm MWP and an implausibly warm 15th century. The Wegman report confirmed M&M’s criticism of Mann’s principal component weighting approach and the Wegman team was able to recreate M&M’s results using M&M’s data. The Wegman paper did not attempt to rerun Mann’s procedure and data using the correct weighting approach. And contrary to what many anti-GW sites claim, the Wegman report did not claim that global warming was a hoax. It didn’t even say that the Hockey Stick was wrong; it only said that Mann’s calibration weighting was wrong. Meanwhile, others (e.g., the NRC) have rerun Mann’s data using the correct calibration weighting for principal component analysis. And the NRC has criticized M&M’s reconstruction because of their reliance on Pearson’s “r” tests rather than evaluating models based on asymmetric weighting of Type I versus Type II errors. And the NRC also criticized some arbitrary data truncation that M&M did, which almost entirely explained their version of the “double Hockey Stick.”
Having said all that, I still don’t think the global Hockey Stick debate is all that useful. What’s really needed is something that you mentioned the other day: a temporal and spatial view of climate data, which is different from a purely temporal and aspatial (i.e., global) view.
My point is that we should probably expect a lot of people with Excel spreadsheets to suddenly think they’re experts in time series analysis. So instead of actual data analysis, what we’ll get are misleading spreadsheet charts put together by people that couldn’t even spell ARIMA if they had to.
I generally use SAS and sometimes Estima to do statistical work. However, now anyone without a budget can download R and start doing sophisticated statistical analysis.
You might want to go easy on what you think you can do in excel. I’ve been doing some translating of Fortran Algorithms to VBA including linear and nonlinear optimization programs. On top of this you can compile many of these algorithms in C++ or fortran and then write addins to move data between the spreadsheet and the C or fortran program. I think this means you can do just about anything in excel.
If your point is that the chart should not have been included in the 1990 report, then I completely agree. But you keep dodging my question about why you felt it was important to include it in your post alongside the 2001 chart. If both charts are junk, then why kill innocent electrons? You don’t seem to want to own up to the fact that what you were really trying to do was to undermine the integrity of the IPCC reports by leaving the reader with the impression that the 1990 chart was dropped out of a deliverate effort to deceive. And that ain’t true.
2slugs, why question what you already knew, by saying: “1990 chart and that the 2001 report reflected deliberate fudging of the historical data. “
You also said: “…but M&M did not recreate Mann’s procedure using the corrected weighting and full data set.“ M&M couldn’t recreate the process as it was never made publicly available. Y’ano that core/key aspect of the scientific method.
Most of the remainder of what you write is arguing with yourself. For instance: “And contrary to what many anti-GW sites claim, the Wegman report did not claim that global warming was a hoax. It didn’t even say that the Hockey Stick was wrong;…” Absolutely correct, since Wegman was neither qualified nor chartered to do that work. Your point?
2slugs, sigh! If the charts are in the IPCC Reports then they are historical. If the Climategate evidence is claimed by some to show fudging then the charts may support this history.
You think otherwise? OK! They are still reality based.
If a buyer and seller come together and decide its in their interest to engage in a derivatives contract then I think by defintion derivatives are socially useful. The fact they engage in trade is the proof.
2slugs, why stop where you did? Here is what follows: “I have some problems with what they do to homogenize it, but that’s how they identify the inhomogeneous stations. OK … but given the scarcity of stations in Australia, I wondered how they would find five “neighboring stations” in 1941 … So I looked it up. The nearest station that covers the year 1941 is 500 km away from Darwin. Not only is it 500 km away, it is the only station within 750 km of Darwin that covers the 1941 time period. (It’s also a pub, Daly Waters Pub to be exact, but hey, it’s Australia, good on ya.) So there simply aren’t five stations to make a “reference series” out of to check the 1936-1941 drop at Darwin.”
There is so much more to this report explaining how shonky the processes are. Can you think of a impoved process? That’s the level of science that 2slugs is trying to convince us is good.
One, two, three, four… Hrmm! One, two, (one, two, three, four!) Let me tell you how it will be; There’s one for you, nineteen for me. ‘Cause I’m the taxman, Yeah, I’m the taxman. Should five per cent appear too small, Be thankful I don’t take it all. ‘Cause I’m the taxman, Yeah, I’m the taxman. (if you drive a car, car 😉 – I’ll tax the street; (if you try to sit, sit 😉 – I’ll tax your seat; (if you get too cold, cold 😉 – I’ll tax the heat; (if you take a walk, walk 😉 – I’ll tax your feet. Taxman! ‘Cause I’m the taxman, Yeah, I’m the taxman. Don’t ask me what I want it for, (ah-ah, mister Wilson) If you don’t want to pay some more. (ah-ah, mister heath) ‘Cause I’m the taxman, Yeah, I’m the taxman. Now my advice for those who die, (taxman) Declare the pennies on your eyes. (taxman) ‘Cause I’m the taxman, Yeah, I’m the taxman. And you’re working for no one but me. Taxman!
I like the second to last line
“And you’re working for no one but me”
This is it. Its the big government reactionary sentiment in one line.
Running SAS or Estima or TSP or Microfit or Shazam or LIMDEP or JMulti or “R” or any of the hundreds of available programs isn’t the problem. The problem is that you have to understand the math as well. You have to understand the diagnostic tests. You have to know what a unit root is. You have to know what GARCH errors are. You have to have a sense of when to use an autoregressive parameter and when to use a moving average term. You have to understand the difference between a deterministic trend and a stochastic trend. You have to understand how to spot structurual breaks. Simply running programs and then doing eyeball assessments isn’t good research. A lot of the stuff I see on both sides of the global warming debate is just that, but it’s probably a bigger problem on the “denier” side because most are not…how shall I say this politely…not as technically trained.
Absolutely correct, since Wegman was neither qualified nor chartered to do that work. Your point?
My point is that it would be nice to know on what basis you claimed that the Hockey Stick graph was debunked. Wegman’s report did not do that; it simply confirmed M&M’s finding regarding the improper weighting of principal components. And you seem to agree that M&M’s analysis didn’t do that either because M&M claimed that the data was not available. M&M correctly pointed out some errors in the way Mann calibrated the principal component weights and Wegman’s team concurred with M&M (as did the NRC), but M&M and Wegman did not test the extent to which a correct weighting would have affected the bottom line result. So on what basis do you claim that the Hockey Stick has been debunked as a myth?
M&M couldn’t recreate the process as it was never made publicly available. Y’ano that core/key aspect of the scientific method.
The scientific method does not require that data be made publicly available. It only requires that data be made available to peers for testing and validation. Just being an interested member of the public does not entitle you to data.
You’re arguing in circles. In the above exchanges you agreed that the 1990 chart was just a cartoon version of history. It was unsupported, undocumented, unsourced, and clearly hand drawn. Then you try and pretend that there is something nefarious about not repeating the cartoon chart in a report 11 years later. Posting a different graph in 2001 is not evidence of fudging anything.
2slugs, you are being dishonest here. Blaming the messenger instead of taking it up with the original author/analyst. Go on over to Watts and leave amessage for the author, who BTW, was not Watts. Read a little more closely, please.
Regarding your statistical analysis, and toolsets which may or may not be needed depending on the trust factor of the raw data. Removing noise, smoothing, teasing out a signal is only necessary when the signal may not be obvious. But, then when the obvious signal does not match the preconception may require all those tools, especially the teasing tools, to get it to say what is desired.
Follow the data is a simple rule to follow. Don’t manage the data to show a story. Oh, and while you are using these methods/tools document how and why they were used.
2slugs said: “…but M&M and Wegman did not test the extent to which a correct weighting would have affected the bottom line result. ” Thei didn’t have to test for a bottom line. They used random data and still had HS created. Once that was proven all else was meaningless. Debunked. Thrown out, and everyonje associated should have been embarrassed, but for their hubris, they would have been.
Imagine some non-scientist, without a PHD in climatology nor statistics was able to successfully question their findings. Didn’t someone here mention that math background issue?
“Frederick Seitz asserts that the report on global warming released in Jun 1996 by the UN Intergovernmental Panel on Climate Change is not the same version that was approved by the contributing body of scientists listed on the title page. Seitz explains how the events that led to the IPCC report are “a disturbing corruption of the peer-review process” and says the deleted passages removed “hints of the skepticism” with which many scientists regard claims about global warming.” http://stephenschneider.stanford.edu/Publications/PDF_Papers/WSJ_June12.pdf
If you don’t know about the censorship that has been going on for a long time, I question the defense your putting up in favor of Climategate.
They used “red noise” data, which will almost always create a fake trend if you don’t smooth out the data and if you use inappropriate diagnostics to test the data. So this proves nothing. On the other hand, the NRC was able to recreate Mann’s Hockey Stock using Mann’s data after correcting for principal components. The correction had a very small effect and did not materially change the results. And even Yasmin Said (who was on Wegman’s team) agreed that the NRC statisticians performed the re-evaluation correctly. So all this time you’ve been claiming that the Hockey Stick was debunked when this simply isn’t true. The one thing that has been definitively debunked is M&M’s recreation of late 15th century temperatures. They committed some whopping errors there.
If you don’t know how why red noise data from a random walk creates a HS pattern, then you really have no business posting charts with time series data. This is time series 101 stuff. Really basic. Just for yucks you might want to go into Excel and generate a string of random numbers between 0 and 1. Then plot y = y(t-1) + e where “e” is the random term generated in Excel. Repeat this exercise many times using different sets of random numbers and count how many times the random data will generate a hockey stick pattern.
2slugs, good diversion, but that’s not what was done. We’re talking about Mann’s process, not yours. iI think Wegman and his staff knew enough to tell BS processes from BS. Take it up with him.
2slugs, no I did not agree with “In the above exchanges you agreed that the 1990 chart was just a cartoon version of history.” The was your position. As I remember I said nothing. That was all your position.
BTW, why the concentration on a single IPCC chart that I and you had nothing to do with? Seems a little strange. Some more of those straws?
Well let’s get smart and get rid of all taxes, right, Cantab. If taxes are so awful why have them at all? Just abolish them. Let the government wither and die or make it live from borrowing. You don’t mind if the government simply borrowed to pay its bills, do you?
Government services are a good thing when taken in moderation. I don’t see the justification for taking more thn 1/3 of what people earn to pay for them.
I also don’t see the justification for taxing the beetles at 70% plus in the mid 1960s. Can you justify a 70% percent tax rate.
A confused President, floundering about….
http://www.nakedcapitalism.com/2009/12/meredith-whitney-the-government-is-out-of-bullets.html
This deserves more attention. I will post the CNBC article.
“I think they’re out of bullets”
Government ‘Out of Bullets’; Consumers in Trouble: Whitney
Tuesday, 8 Dec 2009
http://www.cnbc.com/id/34325134
FULL TEXT
The government is running out of ways to help the economy as the US faces major issues regarding credit and employment ahead, banking analyst Meredith Whitney told CNBC.
“I think they’re out of bullets,” Whitney said in an interview during which she reinforced remarks she made last month indicating she is strongly pessimistic about the prospects for recovery.
Primary among her concerns is the lack of credit access for consumers who she said are “getting kicked out of the financial system.” She said that will be the prevailing trend in 2010.
Despite being able to borrow at near-zero percent interest, banks are not taking that money and putting it back into the marketplace. The Federal Reserve said Monday that consumer lending dropped 1.7 percent on an annualized basis in October, the ninth straight monthly decline.
With consumer spending making up about 70 percent of gross domestic product, the inability of even credit-worthy consumers being able to be able to borrow could put a severe crimp in future growth.
“What’s so frustrating is you have an administration that is arguing such a populist (ideology) and not appreciating all the unintended consequences that the consumer and small businesses have far less credit,” Whitney said.
“You’re going to get a situation where you revert from a consumer standpoint,” she added, “where those that had bank accounts for the first time, credit cards for the first time, homes for the first time get kicked out of the system and then fall prey to real predatory lenders.”
The problems taken together also will pose difficulties for investors.
“I have 100 percent conviction that the consumer is not getting any better and there’s not more liquidity,” Whitney said. “So if everything touching the consumer is going to be represented in the S&P, then the S&P is going to be under pressure.”
The solution, she said, is for the government to take proactive steps that will give consumers more money to spend.
“I don’t think you can cut taxes enough to stimulate demand,” Whitney said. “For a 2010 prediction, which is so disturbing on so many levels to have so many Americans be kicked out of the financial system and the consequences both political and economic of that, it’s a real issue. You can’t get around it. This has never happened before in this country.”
What is the likelihood that 50 percent of the following jobs will be restored within five years?
CHANGE IN TOTAL NONFARM EMPLOYMENT
December 2007 through October 2009
Jobs by Industry – Net Loss
Manufacturing -2,105,000
Construction -1,589,000
Prof. & Bus. Services -1,400,000
Retail Trade -948,000
Financial Activities -551,000
Leisure & Hospitality -420,000
Wholesale Trade -400,000
Transp. & Warehousing -399,000
Information -198,000
Other Services -125,000
Mining & Logging -38,000
Utilities +12,000
Government +12,000
Educ. & Health Services +855,000
Total Net Loss -7,184,000
Source:
Third Quarter 2009 Thrift Industry Report
Economic Data
Office of Thrift Supervision
November 24, 2009
http://files.ots.treas.gov/159300.pdf
H/T: Big Picture
I agree with Meredith Whitney. The growing lack of credit for many consumers will take its toll on the U.S. economy. Another stimulus bill will not solve this problem, so let’s not pretend that it will.
I don’t know what the Government has to do to free up bank credit for individuals and families earning less than X dollars, but the leadership had better determine how to get it done. Absent that change, I expect no major job growth for a few years unless the global economy carries the day.
I find it odd that econos and some government leaders are expressing concern about creating jobs without identifying solutions for the problems of lack of consumer credit and smaller bank implosions (including those which are likely to still go under). TARP didn’t solve the problems of the smaller banks; that was a major missed opportunity. Why cry wolf about jobs if you aren’t willing to point to and resolve the main problems holding back economic demand? It’s not more complicated than No bucks, No Buck Rogers.
We appear to be in more trouble than some may realize.
Well the US is now finding out the consequences of years and years of happy go lucky excess. The collapse of the USSR gave the US the sense that it was free to do anything and everything and need only wish for it to have to happen. In fact there were Neocons who talked about our “making reality.” Big laugh. “Reality” resisted and snapped back at us with a vengeance. Of course the rest of the world, except probably China and perhaps India and a few others, is in trouble too, but it is trouble that started in the USA. Dark days I fear are ahead. Americans are worried and Obama’s numbers are declining but they need to be even more worried, I think, than they are. Much more.
This makes it all a bit more real:
http://news.yahoo.com/s/ap/20091207/ap_on_bi_ge/us_unemployment_holiday_jobs
Volcker nails it…again
Ex-Fed chief Paul Volcker’s ‘telling’ words on derivatives industry
8 Dec 2009
http://www.telegraph.co.uk/finance/economics/6764177/Ex-Fed-chief-Paul-Volckers-telling-words-on-derivatives-industry.html
Paul Volcker, the chairman of President Obama’s Economic Recovery Advisory Board, stunned a business conference in Sussex yesterday, saying there is “little evidence innovation in financial markets has had a visible effect on the productivities of the economy”.
The former US Federal Reserve chairman told an audience that included some of the world’s most senior financiers that their industry’s “single most important” contribution in the last 25 years has been automatic telling machines, which he said had at least proved “useful”.
Echoing FSA chairman Lord Turner’s comments that banks are “socially useless”, Mr Volcker told delegates who had been discussing how to rebuild the financial system to “wake up”. He said credit default swaps and collateralised debt obligations had taken the economy “right to the brink of disaster” and added that the economy had grown at “greater rates of speed” during the 1960s without such products.
When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed “nothing at all”, he replied: “You can innovate as much as you like, but do it within a structure that doesn’t put the whole economy at risk.”
He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and “proprietary trading should be pushed out of investment banks and to hedge funds where they belong”.
Mr Volcker argued that banks did have a vital role to play as holders of deposits and providers of credit. This importance meant it was correct that they should be “regulated on one side and protected on the other”. He said riskier financial activities should be limited to hedge funds to whom society could say: “If you fail, fail. I’m not going to help you. Your stock is gone, creditors are at risk, but no one else is affected.”
“Tall Paul” reportedly left the stage to thunderous applause.
http://themessthatgreenspanmade.blogspot.com/2009/12/paul-volcker-on-financial-innovation.html
.
It seems this site should be updated with summary numbers more recent then 10/30/2009
http://www.recovery.gov
Cantie, I suspect this administration is going to be the exception that disproves Cactus’ rule/projection of the differences between Prez policies. By 2012 we should see which policies actually work as this Prez is forced to try them all. Preleiminary findings are not too muddled at this point.
I was hoping to get the Tarp money back. Getting it back and perhaps with interest was the premise it was sold on to the American people. Now it appears they are going to spend the money on yet another stimulous. So they lied to us again. The president’s economic team don’t know what they’re doing and never have. It seems they keep on doing stuff in the oft chance that by coincidence when the economy recovers they will have one of their ad hoc policies out there that they can claim was the cure. But they with their socialism and return to statist failed government industrial policy are the problem.
Climategate and how it shows how the results were effected
Some fundamentals
There is really only one source for the raw temperature data, the NOAA National Climate Data Center (NCDC). There ae nearly 200 sources of the raw data. Most are from the local country’s meteorological office. NCDC archives the raw data and then processes it to clean up obvious errors in what they call a homogenization process to create another dataset. Both data sets are then made available. The homogenization process has changed over time, taking the revised data further from the raw data.
There are four main sources of temperature data results from this “best” temperature data. They are East Anglia’s Univ, Climate Research Unit, NOAA, Gorddard Institute for Space Studies (GISS), and the Tokyo Climate Center a division of the Japan Meteorologic Agency. All of these agencies and others have areas of climate temperature specialization and/or specialize in areas of the world.
Climategate has shown
Climategate has shown that there was a great deal of scientific cooperation within a small group of very influential scientists at these units. That is normal and to be expected, since science builds upon previous theories and findings. Somewhere along the history of this science the theory took them down a road that supported their political views. This is also not unexpected, good or bad.
What Climategate shows us that after the data started to diverge from their political views, that these same influential scientists began to select better data which continued the political support. They deliberately tried to stall scientific reports showing alternative results. They ridiculed those scientists by calling them skeptics and eventually “denialists” and claiming there was a “War on Science.” Which, BTW, is impossible if the scientific method is being followed. They circled the wagons to protect their scientific findings to support their political views.
Their political views resulted in changing graphics which werre reported in leading scientific journals and eventually the IPCC Reports. See below for the changes from the 1990 IPCC Report to how it changed in by the 2001 report. Chart 1 is based upon a historical look at written records of Europe, and the second is a proxy-based history taken from exotic places like the US Soutthwest.
http://www.pbs.org/wgbh/commandingheights/lo/ideas/index.html
This is a good site where several famous people carry on the debate in more articulate way then I was doing with Cactus.
Contd:
It Starts With the Homogenized Data
The Honomgenizing techniqures are not too well documented, and accordingly the results and processes leave questions. Here’s an article which begins to take the data apart using selected sites. It is from Australia, so their sites are used. It is here: http://wattsupwiththat.com/2009/12/08/the-smoking-gun-at-darwin-zero/
As the data gets reviewed other stations are showing some interesting adjustments. Alaska, one of the areas claimed to have unprecedented warming and/or warming faster is one such set of stations. So the question remains is it the science or the political views driving the warming?
The UK Meteorological Office has decided! It is going to recalculate the global temperature data for the past 160 years.
Transparency is the key/core of the scientific method. Without it there is no science only opinion.
Having been shown only one side of the Climate Change story we are making decisions taking us down a path of possible economic destruction.
CoRev,
You’re being dishonest here. You’re trying to imply that the 1990 chart was always the true story and that the later revisions represent deliberate corruption. You should at least be honest enough to point out that the source of the 1990 chart is uncertain at best, but appears to have been primarily based on some 1965 era temperature reconstructions of central England by Lamb. In 1990 it was largely an unsourced chart floating around in libraries and books. It may or may not have included some additional anecdotal information from other parts of the world. It may or may not match up to modern calendar reckonings of the years from other cultures. The vertical axis may or may not represent a temporally consistent unit of temperature. And the left half of the MWP curve is almost certainly entirely notional and guided by the demands of artistic symmetry rather than actual data. In other words, no one really has a clue what the true slope of the left half of the curve looked like. And the slope of the right hand side of the MWP curve does not really square with the implied temperatures based on granary records and granary storage costs from medieval England.
Here’s a better explanation for the 1990 chart: The IPCC was wrong to ever have included this cartoon version of history in its report. That was irresponsible. So go ahead and blame the IPCC for including a dubious chart in what should have been a scientific paper. That was sloppy research on their part. But just because the IPCC screwed up in 1990 does not mean that the IPCC is obligated to perpetuate past errors. Perpetuating past errors is what conservatives do.
CoRev,
Transparency is the key/core of the scientific method. Without it there is no science only opinion.
And technical competence is the core of scientific knowledge. Without it there is no understanding, only eyeball analysis. You should have actually read what Watts said, particularly with regard to the middle chart that you posted. Watts actuall agrees with the adjustments even though the adjustments are counterintutive to an eyeball analysis. Here’s what Watts said about the middle chart:
Fair enough, that all sounds good. They pick five neighboring stations, and average them. Then they compare the average to the station in question. If it looks wonky compared to the average of the reference five, they check any historical records for changes, and if necessary, they homogenize the poor data mercilessly.
And one of the adjustments that they do is to take first differences. And why? Because the data is not mean reverting, so using raw data will give you spurious “stochastic” trends.
My point is that we should probably expect a lot of people with Excel spreadsheets to suddenly think they’re experts in time series analysis. So instead of actual data analysis, what we’ll get are misleading spreadsheet charts put together by people that couldn’t even spell ARIMA if they had to.
2slugs, Yup! Lotsa questions re: Chart 1, but not one about chart2 which was largely dropped in later IPCC reports.
For those who have not been following the Climate Change discussion, Chart 2 is the infamous Hockey Stick chart. Chart 1, interestingly, is being reinforced by later proxy-based reports of climate, while Chart 2 is being challenged with later reviews. As 2slugs points out there are always questions about dates and high/low ranges, but as a world-wide phenomenon it is being more reinforced than demolished. Not so with the Hockey Stick chart.
So, wachya all think? Can you see how after nearly two years of daily study of the literature, I moved from on the fence and leaning to skepticism, to fully skeptical, and with Climategate cynicism?
We have been shown only one side. Are your views based upon the whole story?
2slugs also makes this claim: “So go ahead and blame the IPCC for including a dubious chart in what should have been a scientific paper. That was sloppy research on their part. But just because the IPCC screwed up in 1990 does not mean that the IPCC is obligated to perpetuate past errors.” He completely forgets that the IPCC authors of those sections are the very same Climategate miscreants. The IPCC does not do research. It accepts, reviews then prints its reports form the scientific community. Y’ano much of the IPCC review was and writing was done by that community of scientists under the spotlight in Climategate.
Capture the communication media, the IPCC Reports and the peer review process, control the dialog? Dunno, just saying.
CoRev,
So you agree that the 1990 chart should not have been included. Good. Then what was your point in comparing it to the 2001 chart? Should the 2001 chart be dropped if the IPCC no longer thinks it’s right? Yes. But I suspect that’s not what you were trying to convey. Correct me if I’m wrong, but the tone of your post was that we should trust the 1990 chart and that the 2001 report reflected deliberate fudging of the historical data.
I would hope and expect that the IPCC would continually revise charts as better data becomes available.
The Hockey Stick version of climate history has not been debunked, although it will almost certainly be continually revised as we get better data. M&M raised some valid concerns about Mann’s misuse of principal component weighting, but M&M did not recreate Mann’s procedure using the corrected weighting and full data set. M&M did show that it was possible to come up with an alternative version of the chart showing a very warm MWP and an implausibly warm 15th century. The Wegman report confirmed M&M’s criticism of Mann’s principal component weighting approach and the Wegman team was able to recreate M&M’s results using M&M’s data. The Wegman paper did not attempt to rerun Mann’s procedure and data using the correct weighting approach. And contrary to what many anti-GW sites claim, the Wegman report did not claim that global warming was a hoax. It didn’t even say that the Hockey Stick was wrong; it only said that Mann’s calibration weighting was wrong. Meanwhile, others (e.g., the NRC) have rerun Mann’s data using the correct calibration weighting for principal component analysis. And the NRC has criticized M&M’s reconstruction because of their reliance on Pearson’s “r” tests rather than evaluating models based on asymmetric weighting of Type I versus Type II errors. And the NRC also criticized some arbitrary data truncation that M&M did, which almost entirely explained their version of the “double Hockey Stick.”
Having said all that, I still don’t think the global Hockey Stick debate is all that useful. What’s really needed is something that you mentioned the other day: a temporal and spatial view of climate data, which is different from a purely temporal and aspatial (i.e., global) view.
Slugs,
My point is that we should probably expect a lot of people with Excel spreadsheets to suddenly think they’re experts in time series analysis. So instead of actual data analysis, what we’ll get are misleading spreadsheet charts put together by people that couldn’t even spell ARIMA if they had to.
I generally use SAS and sometimes Estima to do statistical work. However, now anyone without a budget can download R and start doing sophisticated statistical analysis.
You might want to go easy on what you think you can do in excel. I’ve been doing some translating of Fortran Algorithms to VBA including linear and nonlinear optimization programs. On top of this you can compile many of these algorithms in C++ or fortran and then write addins to move data between the spreadsheet and the C or fortran program. I think this means you can do just about anything in excel.
http://gams.nist.gov/serve.cgi
http://plato.asu.edu/guide.html
So the global warming guys need to do better than throwing some fancy algorithms at us.
CoRev,
If your point is that the chart should not have been included in the 1990 report, then I completely agree. But you keep dodging my question about why you felt it was important to include it in your post alongside the 2001 chart. If both charts are junk, then why kill innocent electrons? You don’t seem to want to own up to the fact that what you were really trying to do was to undermine the integrity of the IPCC reports by leaving the reader with the impression that the 1990 chart was dropped out of a deliverate effort to deceive. And that ain’t true.
2slugs, why question what you already knew, by saying: “1990 chart and that the 2001 report reflected deliberate fudging of the historical data. “
You also said: “…but M&M did not recreate Mann’s procedure using the corrected weighting and full data set.“ M&M couldn’t recreate the process as it was never made publicly available. Y’ano that core/key aspect of the scientific method.
Most of the remainder of what you write is arguing with yourself. For instance: “And contrary to what many anti-GW sites claim, the Wegman report did not claim that global warming was a hoax. It didn’t even say that the Hockey Stick was wrong;…” Absolutely correct, since Wegman was neither qualified nor chartered to do that work. Your point?
2slugs, sigh! If the charts are in the IPCC Reports then they are historical. If the Climategate evidence is claimed by some to show fudging then the charts may support this history.
You think otherwise? OK! They are still reality based.
MG,
If a buyer and seller come together and decide its in their interest to engage in a derivatives contract then I think by defintion derivatives are socially useful. The fact they engage in trade is the proof.
2slugs, why stop where you did? Here is what follows: “I have some problems with what they do to homogenize it, but that’s how they identify the inhomogeneous stations.
OK … but given the scarcity of stations in Australia, I wondered how they would find five “neighboring stations” in 1941 …
So I looked it up. The nearest station that covers the year 1941 is 500 km away from Darwin. Not only is it 500 km away, it is the only station within 750 km of Darwin that covers the 1941 time period. (It’s also a pub, Daly Waters Pub to be exact, but hey, it’s Australia, good on ya.) So there simply aren’t five stations to make a “reference series” out of to check the 1936-1941 drop at Darwin.”
There is so much more to this report explaining how shonky the processes are. Can you think of a impoved process? That’s the level of science that 2slugs is trying to convince us is good.
An anti-tax song from the past
One, two, three, four…
Hrmm!
One, two, (one, two, three, four!)
Let me tell you how it will be;
There’s one for you, nineteen for me.
‘Cause I’m the taxman,
Yeah, I’m the taxman.
Should five per cent appear too small,
Be thankful I don’t take it all.
‘Cause I’m the taxman,
Yeah, I’m the taxman.
(if you drive a car, car 😉 – I’ll tax the street;
(if you try to sit, sit 😉 – I’ll tax your seat;
(if you get too cold, cold 😉 – I’ll tax the heat;
(if you take a walk, walk 😉 – I’ll tax your feet.
Taxman!
‘Cause I’m the taxman,
Yeah, I’m the taxman.
Don’t ask me what I want it for, (ah-ah, mister Wilson)
If you don’t want to pay some more. (ah-ah, mister heath)
‘Cause I’m the taxman,
Yeah, I’m the taxman.
Now my advice for those who die, (taxman)
Declare the pennies on your eyes. (taxman)
‘Cause I’m the taxman,
Yeah, I’m the taxman.
And you’re working for no one but me.
Taxman!
I like the second to last line
“And you’re working for no one but me”
This is it. Its the big government reactionary sentiment in one line.
New Democrat Political slogan,
You work for me, stupid.
CoRev,
Because the problem of identifying stations is about a different problem than the one you were trying to portray with your chart.
CoRev,
Running SAS or Estima or TSP or Microfit or Shazam or LIMDEP or JMulti or “R” or any of the hundreds of available programs isn’t the problem. The problem is that you have to understand the math as well. You have to understand the diagnostic tests. You have to know what a unit root is. You have to know what GARCH errors are. You have to have a sense of when to use an autoregressive parameter and when to use a moving average term. You have to understand the difference between a deterministic trend and a stochastic trend. You have to understand how to spot structurual breaks. Simply running programs and then doing eyeball assessments isn’t good research. A lot of the stuff I see on both sides of the global warming debate is just that, but it’s probably a bigger problem on the “denier” side because most are not…how shall I say this politely…not as technically trained.
CoRev,
Absolutely correct, since Wegman was neither qualified nor chartered to do that work. Your point?
My point is that it would be nice to know on what basis you claimed that the Hockey Stick graph was debunked. Wegman’s report did not do that; it simply confirmed M&M’s finding regarding the improper weighting of principal components. And you seem to agree that M&M’s analysis didn’t do that either because M&M claimed that the data was not available. M&M correctly pointed out some errors in the way Mann calibrated the principal component weights and Wegman’s team concurred with M&M (as did the NRC), but M&M and Wegman did not test the extent to which a correct weighting would have affected the bottom line result. So on what basis do you claim that the Hockey Stick has been debunked as a myth?
CoRev,
M&M couldn’t recreate the process as it was never made publicly available. Y’ano that core/key aspect of the scientific method.
The scientific method does not require that data be made publicly available. It only requires that data be made available to peers for testing and validation. Just being an interested member of the public does not entitle you to data.
You’re arguing in circles. In the above exchanges you agreed that the 1990 chart was just a cartoon version of history. It was unsupported, undocumented, unsourced, and clearly hand drawn. Then you try and pretend that there is something nefarious about not repeating the cartoon chart in a report 11 years later. Posting a different graph in 2001 is not evidence of fudging anything.
2slugs, you are being dishonest here. Blaming the messenger instead of taking it up with the original author/analyst. Go on over to Watts and leave amessage for the author, who BTW, was not Watts. Read a little more closely, please.
Regarding your statistical analysis, and toolsets which may or may not be needed depending on the trust factor of the raw data. Removing noise, smoothing, teasing out a signal is only necessary when the signal may not be obvious. But, then when the obvious signal does not match the preconception may require all those tools, especially the teasing tools, to get it to say what is desired.
Follow the data is a simple rule to follow. Don’t manage the data to show a story. Oh, and while you are using these methods/tools document how and why they were used.
2slugs said: “…but M&M and Wegman did not test the extent to which a correct weighting would have affected the bottom line result. ” Thei didn’t have to test for a bottom line. They used random data and still had HS created. Once that was proven all else was meaningless. Debunked. Thrown out, and everyonje associated should have been embarrassed, but for their hubris, they would have been.
Imagine some non-scientist, without a PHD in climatology nor statistics was able to successfully question their findings. Didn’t someone here mention that math background issue?
Slugs,
“Frederick Seitz asserts that the report on global warming released in Jun 1996 by the UN
Intergovernmental Panel on Climate Change is not the same version that was approved by the
contributing body of scientists listed on the title page. Seitz explains how the events that led to the
IPCC report are “a disturbing corruption of the peer-review process” and says the deleted passages
removed “hints of the skepticism” with which many scientists regard claims about global warming.”
http://stephenschneider.stanford.edu/Publications/PDF_Papers/WSJ_June12.pdf
If you don’t know about the censorship that has been going on for a long time, I question the defense your putting up in favor of Climategate.
CoRev,
They used “red noise” data, which will almost always create a fake trend if you don’t smooth out the data and if you use inappropriate diagnostics to test the data. So this proves nothing. On the other hand, the NRC was able to recreate Mann’s Hockey Stock using Mann’s data after correcting for principal components. The correction had a very small effect and did not materially change the results. And even Yasmin Said (who was on Wegman’s team) agreed that the NRC statisticians performed the re-evaluation correctly. So all this time you’ve been claiming that the Hockey Stick was debunked when this simply isn’t true. The one thing that has been definitively debunked is M&M’s recreation of late 15th century temperatures. They committed some whopping errors there.
2slugs, uh huh! Keep saying it, you might even come to believe that random data causes HSs.
CoRev,
If you don’t know how why red noise data from a random walk creates a HS pattern, then you really have no business posting charts with time series data. This is time series 101 stuff. Really basic. Just for yucks you might want to go into Excel and generate a string of random numbers between 0 and 1. Then plot y = y(t-1) + e where “e” is the random term generated in Excel. Repeat this exercise many times using different sets of random numbers and count how many times the random data will generate a hockey stick pattern.
2slugs, good diversion, but that’s not what was done. We’re talking about Mann’s process, not yours. iI think Wegman and his staff knew enough to tell BS processes from BS. Take it up with him.
Slugs,
The problem is that you have to understand the math as well.
Is that suppose to be a big deal? All the stuff you’re talking about is like cooking — and good cook has intuition.
Anyway, here comes the big one. Ready? maybe 1 out of 20 of the global warming scientists understand statistics with any level of sophistication.
2slugs, no I did not agree with “In the above exchanges you agreed that the 1990 chart was just a cartoon version of history.” The was your position. As I remember I said nothing. That was all your position.
BTW, why the concentration on a single IPCC chart that I and you had nothing to do with? Seems a little strange. Some more of those straws?
Well let’s get smart and get rid of all taxes, right, Cantab. If taxes are so awful why have them at all? Just abolish them. Let the government wither and die or make it live from borrowing. You don’t mind if the government simply borrowed to pay its bills, do you?
Margery,
Government services are a good thing when taken in moderation. I don’t see the justification for taking more thn 1/3 of what people earn to pay for them.
I also don’t see the justification for taxing the beetles at 70% plus in the mid 1960s. Can you justify a 70% percent tax rate.
Even a sixth grader can define why and how much our US temps are rising. No joke! See the video here: http://wattsupwiththat.com/2009/12/09/picking-out-the-uhi-in-global-temperature-records-so-easy-a-6th-grader-can-do-it/
2slugs, your analysis of the approach?