Relevant and even prescient commentary on news, politics and the economy.

Sea ice and beach front property

The NYT reminds us of continuing concern of ice melt.

The Arctic ice cap shrank so much this summer that waves briefly lapped along two long-imagined Arctic shipping routes, the Northwest Passage over Canada and the Northern Sea Route over Russia.

Interactive Graphic
Sea Ice in Retreat
The Big Melt: A Series From The New York TImes

McKenzie Funk
Arctic Study Researchers haul a buoy across the Arctic sea ice in August, led by two Coast Guard crew whose job was to ward off polar bears or rescue anyone who slipped into the sea.
Over all, the floating ice dwindled to an extent unparalleled in a century or more, by several estimates.
Now the six-month dark season has returned to the North Pole. In the deepening chill, new ice is already spreading over vast stretches of the Arctic Ocean. Astonished by the summer’s changes, scientists are studying the forces that exposed one million square miles of open water — six Californias — beyond the average since satellites started measurements in 1979.
At a recent gathering of sea-ice experts at the University of Alaska in Fairbanks, Hajo Eicken, a geophysicist, summarized it this way: “Our stock in trade seems to be going away.”
Scientists are also unnerved by the summer’s implications for the future, and their ability to predict it.

Complicating the picture, the striking Arctic change was as much a result of ice moving as melting, many say. A new study, led by Son Nghiem at NASA’s Jet Propulsion Laboratory and appearing this week in Geophysical Research Letters, used satellites and buoys to show that winds since 2000 had pushed huge amounts of thick old ice out of the Arctic basin past Greenland. The thin floes that formed on the resulting open water melted quicker or could be shuffled together by winds and similarly expelled, the authors said.
The pace of change has far exceeded what had been estimated by almost all the simulations used to envision how the Arctic will respond to rising concentrations of greenhouse gases linked to global warming. But that disconnect can cut two ways. Are the models overly conservative? Or are they missing natural influences that can cause wide swings in ice and temperature, thereby dwarfing the slow background warming?
The world is paying more attention than ever.
Russia, Canada and Denmark, prompted in part by years of warming and the ice retreat this year, ratcheted up rhetoric and actions aimed at securing sea routes and seabed resources.

Reports on Great Lakes thinning or lack of winter ice due to increasing water temperatures being responsible for greater evaporation comes to mind as well. Real impacts if continuing, although yearly fluctuations occur for any one lack. Superior has regained a few centimeters, but other are lowering levels.


“The pace of change has far exceeded what had been estimated by almost all the simulations used to envision how the Arctic will respond to rising concentrations of greenhouse gases linked to global warming. But that disconnect can cut two ways. Are the models overly conservative? Or are they missing natural influences that can cause wide swings in ice and temperature, thereby dwarfing the slow background warming?”

I think people missed reading this part in that we had no coffee this morning.

Update 2:

Put a hold on investing in the Larson B area!!

The western Antarctic Peninsula has showed the biggest increase in temperatures observed anywhere on Earth over the past half-century.
Stronger westerly winds are forcing warm air eastward and over the natural barrier created by the Antarctic Peninsula’s 1.25 mile-high mountain chain.
During the past 40 years the average summer temperatures in this region of the north-east peninsula has been 2.2 degrees Celsius, but on days when warm winds top the mountains of the peninsula, temperatures rise by 5 to 10 degrees Celsius, the researchers said.

Changes in wind patterns and weather patterns in a complex system, with no mention o CO2. (On the other hand, methane volume has been shown to correlate with…)

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Fox News

Fox News carries a story you will be interested in as intelligent descriptive reporting. I did not know they could. Sweeeeeeet.

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BLS, Businessweek, and phantom GDP

Business Week carried an article by

Are You a Victim of ‘Phantom’ GDP? Here are four signs to help you determine whether your industry’s output and productivity are being overstated According to government statistics, output in almost every major manufacturing industry expanded between 2001 and 2005. That seems a little surprising since manufacturing employment dropped by more than 2 million jobs over that period, and nonpetroleum imports rose by roughly 35%.

In reality, some of those apparently healthy manufacturing industries are probably suffering from “phantom” gross domestic product. That is, as we show in this week’s cover story, miscounting of import prices is causing domestic production to be overestimated, perhaps significantly. Here are some tips on how to figure out if an industry’s output and productivity is being overstated by phantom GDP. They use publicly available import price data and industry productivity data from the Bureau of Labor Statistics (BLS) (; trade data from the Census Bureau (; and industry output data from the Bureau of Economic Analysis ( It must be stressed that these signs are not conclusive—but they do point you in the right direction.

Sign 1: Prices of imports are rising, even as offshoring is accelerating. The main reason why production is moving overseas is cost: It’s cheaper. So if the BLS is reporting that the price of imports in your industry is rising—but the imports keep coming—that’s a good clue that something is askew with the numbers. For example, reported import prices for furniture have risen by 6.7% since 2003, despite a massive move in the industry to produce goods in China. That’s a sign that the industry’s output, as measured by the government, is probably overstated.

Sign 2: Products are rapidly replaced by new and improved models. For consumers, having the latest generation of cell phone or other electronic gadget can be a marvel. But for the folks at the BLS trying to track import prices, it can be a nightmare….The best example: Televisions, where reported import prices have dropped by 15% over the past three years while retail prices have plummeted by almost triple that amount. That’s not very likely.

Sign 3: Back-office operations and other services are being moved to lower-cost countries. So far we’ve concentrated on manufacturing and imports of goods—but offshoring of back-office operations and other services can create phantom GDP as well. We don’t have good tools to track it, but a very approximate rule of thumb is that when a service is first offshored, it will create phantom GDP equal to about one-half the cost savings. (Phantom GDP, as described in the cover story, arises when cost cuts and productivity improvements outside the country are mistakenly booked as coming from domestic production.)

Sign 4: Sharp increases in reported productivity and output coincide with increases in imports .

(Edited for length and boldings are mine)

Additional explanation in another article is provided.

Since the accuracy and quantifiability of such a phantom measurement is up for grabs, I have no analysis to offer except:

As global trade increases, the ability of current measures such as GDP become less relevant. Cactus has posted on this topic as well.

The accuracy of corporate reported numbers, who have little incentive to reveal accurate information to begin with in terms of their own internal interest, suffers some more.

Reporting on GDP as a measure of economic progress since the ever larger increases in outsourcing (especially the last few years) is fast becoming less useful in explaining the so-called other parts of the economy like wage stagnation, profits, productivity, and wealth.

Where the money goes is ever harder to determine, so claims to the contrary about trickles become even more irrelevant.

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To compare or to contrast

Dahr Jamail and Michael Totten are reporting on the same war, the same groups of people, the same country, the same armies. Both are also photographers.

Can both be reporting true things? Yes.
Can both be offering a perspective that has some value? Yes
Can both be useful in our personal evaluation of the occupation? Partly.

Can both be unbiased in reporting…ahhh, now that is hard to answer. Since we all filter information a second before reading information, how does one avoid shooting oneself in the foot with ‘knowledge’ filtered for our own persuasions (survival imperatives) and self-interest? Out of billions of bits of data, we tend to notice only a few at a time, one at a time.

Best not to talk to one’s own reflection all the time.

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O’Reilly says about Edwards

Bill laments the lack of moral spine of the Far Left.

Remember, no coerced interrogation, civilian lawyers in courts for captured overseas terrorists, no branding the Iranian guards terrorists, and no phone surveillance without a specific warrant.

His statement brought to mind this quote:

A person will worship something, have no doubt about that. We may think our tribute is paid in secret in the dark recesses of our hearts, but it will out. That which dominates our imaginations and our thoughts will determine our lives, and our character. Therefore, it behooves us to be careful what we worship, for what we are
worshipping we are becoming.

– Ralph Waldo Emerson:

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Qwest for the truth

CEO Nacchio of Qwest has a write up in WAPO:

A former Qwest Communications International executive, appealing a conviction for insider trading, has alleged that the government withdrew opportunities for contracts worth hundreds of millions of dollars after Qwest refused to participate in an unidentified National Security Agency program that the company thought might be illegal.

Former chief executive Joseph P. Nacchio, convicted in April of 19 counts of insider trading, said the NSA approached Qwest more than six months before the Sept. 11, 2001, attacks, according to court documents unsealed in Denver this week.
Details about the alleged NSA program have been redacted.

The newly released court documents say that, on Feb. 27, 2001, Nacchio and James Payne, then Qwest’s senior vice president of government systems, met with NSA officials at Fort Meade, expecting to discuss “Groundbreaker,” a project to outsource the NSA’s non-mission-critical systems.

The men came out of the meeting “with optimism about the prospect for 2001 revenue from NSA,” according to an April 9, 2007, court filing by Nacchio’s lawyers that was disclosed this week.

But the filing also claims that Nacchio “refused” to participate in some unidentified program or activity because it was possibly illegal and that the NSA later “expressed disappointment” about Qwest’s decision.

“Nacchio said it was a legal issue and that they could not do something that their general counsel told them not to do. . . . Nacchio projected that he might do it if they could find a way to do it legally,” the filing said.

Mike German, policy counsel for the American Civil Liberties Union, said the documents show “that there is more to this story about the government’s relationship with the telecoms than what the administration has admitted to.”

Kurt Opsahl, senior staff attorney for the Electronic Frontier Foundation, said: “It’s inappropriate for the government to be awarding a contract conditioned upon an agreement to an illegal program. That truly is what’s going on here.”

The foundation has sued AT&T, charging that it violated privacy laws by cooperating with the government’s warrantless surveillance program.

Thinking about the issue raises several possiblities for me if reasonably true:

1. Efforts against terrorism were already underway before 9/11 and have come to light to bolster the Administration’s reputation.

2. The wiretapping is part of a different plan not yet revealed and was begun coincidentally with the terrorist threat as an extra incentive or cover.

3. It takes a crook to catch a crook.

4. Secret programs can be coercion, collusion, or a way to gain market share without the opportunity costs normally associated with new programs.

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Rules of the Markets = Free?

Rules of the market is the mantra I have always advocated, rather than lumping everything together as ‘free’.

Cost reduction was the key benefit claimed by privatization. We conduct a meta analysis of all published econometric studies of water and waste production in cities since 1965. Little support is found for a link between privatization and cost savings. Cost savings are not found in water delivery and are not systematic in solid waste collection. Theoretical expectations for cost savings arise from the benefits of competition and the incentives of private ownership. However, empirical results show the importance of market structure, industrial organization of the service sector, and government management, oversight and regulation.

Most of the academic literature shows government contracting is a sensitive business that requires diligence, planning and management resources, and that it may be unsuited to certain goods and services. Additional rules for overseeing contracting processes may be necessary to ensure agencies prepare properly for contracting, and weigh all options for service provision. In Massachusetts, for example, a commission evaluates proposals for using private contractors prior to implementation.
In a separate paper, Sclar found the commission saved money in Massachusetts by preventing inefficient contracting. He concluded:

The privatization law has created an atmosphere where state agencies are forced to think like private firms as opposed to assuming that a private provider working under contract will automatically solve any problem at a lower cost. It compels state agencies to think through the pitfalls that lie ahead and prods them to be sure they are making the highest and best use of scarce resources in difficult fiscal times. It avoids the squandering of public funds on untested ideas that has plagued privatization efforts in so many other places.

When agencies do not take it for granted that contracting is always efficient, they should be better prepared to manage contracts and may be more willing to reform service delivery systems by more effective means than privatization. At the very least, this research shows that policymakers have good reason to examine the cost-efficiency of the rapidly expanding federal contracting industry — which has doubled in size in the last five years. Any review of contracting practices should determine the conditions under which privatization is a viable way of improving government performance.

A businessman uses rules of the market only, except when selling a product to increase volume of sales. Then he may rely on marketing, which is devised to sell anything. What or who is preventing rationality in government buying, even if one removes from the table the product is worth buying? No one appears able to tackle the issue?…or is it that procurement procedures are well insulated and protected? And why is this not more of an issue from all sides of the partisan divide?

A GAO analysis of DOD medical service consolidation includes the following:

However, based on the working group’s methodology, the group intended to conduct a more detailed cost-benefit analysis of whichever of the three options senior DOD leadership selected, but the group’s work ceased once the fourth option was formally approved. While DOD approved the fourth option, DOD has not demonstrated that its decision to move forward with the fourth option was based on a sound business case. Based on GAO’s review of DOD’s business case, DOD has described only what it believes its chosen option will accomplish. The business case does not demonstrate how DOD determined the fourth option to be better than the other three in terms of its potential impact on medical readiness, quality of care, beneficiaries’ access to care, costs, implementation time, and risks because DOD does not provide evidence of any analysis it has performed of the fourth option or a sound business case justifying this choice.

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Slow arm of the law

The slow arm of the law in relation to the grand scale of privitization of government bureaucracy stands in sharp contrast to rules about wiretapping and such. Some of this is understandable, but I have seen no proposals. If this is to be the practice, are’nt we a little slow?

As recently as Oct. 3, Defense Secretary Robert M. Gates indicated that no decision had been made on how to apply the new language. In other statements, Pentagon officials have suggested that they would apply the military code to Defense Department contractors. That could leave contractors working for other agencies, such as Blackwater, outside military law.

Neither the Pentagon or the U.S. Embassy in Baghdad responded to requests for comment.

In any case, military lawyers have yet to determine how to put the new language into effect. Among the questions they are wrestling with are these: What categories of crimes should it cover? How should it treat employees who are not American citizens? What are the chances that the provision would be upheld by the Supreme Court?

“There’s also a very open constitutional question about whether we can try civilians in military courts,” said Laura Dickinson, a professor of law at the University of Connecticut and an expert on laws that govern private contractors in conflict zones. Traditionally, there has been resistance to doing so, but Ms. Dickinson said she believes a case could be made that private security contractors authorized to use force would be covered by the code of military justice.

The options under civilian law are little better. The most likely way to prosecute would be through the Military Extraterritorial Jurisdiction Act, which allows the extension of federal law to civilians supporting military operations. Mr. Horton, the Columbia lecturer, said he believed that “a sound basis” existed for using the act to prosecute security contractors.

However, trying a criminal case in federal court requires guarantees that no one has tampered with the evidence. Because a defendant has the right to cross-examine witnesses, foreign witnesses would have to be transported to the United States.

Robert Litt, a former federal prosecutor and deputy assistant attorney general in the Justice Department’s criminal division, said that if anything like the Blackwater shootings occurred in the United States, “within minutes you would have police there securing the crime scene, interviewing witnesses.”

“You’ll have a secure chain of evidence,” he added. “All that requires people on the scene almost simultaneously.”

Several legal experts said that evidence gathered by Iraqi investigators and turned over to the Americans, even within days, would probably be suspect.

Another law that might be applicable is one covering contractors in areas that could be defined as American territory, such as a military base or the Green Zone. But the Blackwater security contractors in the Sept. 16 shootings were in neither place.

It appears the Blackwater ‘issue’ makes for a small proxy skirmish for Maliki, and a possible wedge to actually gain some independence for the sovereign government. Tactical moves for them, but what of US law and order?

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Free market demands rational choice making

WebMD carried this warning about certain foods.

Oct. 10, 2007 — Check your freezer for Banquet or generic store-brand turkey or chicken not-ready-to-eat pot pies with “P-9” printed on the side of the package.

If you have any those pot pie products, the U.S. Department of Agriculture (USDA) says to throw them out or don’t eat them as health officials investigate a multi-state salmonella outbreak.

Salmonella bacteria can cause diarrhea, fever, and abdominal cramps. Most people recover within a week without treatment, but serious complications can occur. Infants, elders, and people with weak immune systems are more likely to become severely ill from salmonella.

The USDA, CDC, and state health officials are investigating at least 139 cases of salmonella in 30 states that were reported this year and that may be related to the pot pies. At least 20 people have been hospitalized in connection with the outbreak, according to the CDC.

There have been shouting headlines about recalls in the press concerning various products. Assuming we are in a trickier environment now in determining safety of products, how is information to be handled to help the consumer know a problem exists?

Home Depot advertizes eco-products but also had to recall spray product that stayed on the shelves after the company recalled product because of the link to respitory problems when used as directed, and accepted the supplier (American) claim it had re-configured the active ingredient, which was actually not accurate. But old product also remained on shelves. Other examples include oscillating fans.

So inventory safety can be tough to monitor even within the US. What of global markets when the same product could have been made in two or three counties (generic drugs).

My apologies to Home Depot for picking on them. This is a global issue.

Not every recall is earth shattering news, but how is a consumer in a free market economy to make the rational decisions to conform to the rational behavior that market theory demands?

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