The Daily Parker

My last post ("Warmest May in 131 years") got some reaction on its cross-posting to Facebook:

YK: 131 years is a drop in the ocean in geological time. Why is this drop so significant? Never seen any satisfactory answers to that question except maybe some looks of intimidation about how 'obvious' the answer was. Poor communication or maybe nothing compelling to communicate?

The Daily Parker: The sharp rise in global temperatures over the past 150 years is unprecedented in the planet's history. Yes, the earth has been warmer, and it's been colder—but (a) the evidence is clear that a 2-5°C rise in this short amount of time has never happened before barring asteroid impact or supervolcano eruptions; and (b) there is a statistically significant correlation between human-caused gas emissions and the temperature rise.

YK: What science can go back 4 billion years and offer that level of precision over a 150 year period of time? Sorry, I don't buy it. Show me the evidence.

TDP: That's just it: looking at 150 years over even a few million, the spike would be vertical. There have been large rises in temperature, but over millennia. We've got ice cores going back half a million years, and geological evidence for a few hundred million before that. I think we can exclude from the argument the time when the planet was a molten rock without an atmosphere through the time it had an oxygen-nitrogen atmosphere capable of supporting air-breathing life. So, for the last 500 million years, there have been swings up to 9°C, but never so fast, and never (with the exception of the K-T extinction) so devastating to life. What level of evidence do you require to recognize human-caused climate change, short of palm trees in Saskatchewan?

YK: I don't claim to be an expert in climate change, because I don't believe you can gain that 'knowledge' by reading or hearing people talk about it informally. Here is an example of something I looked for and read to learn more about it. Let me know if you can point me to something as equally well researched that can refute or at least cause me to question the observations and/or conclusions in this.

TDP: OK: UNFCCC, NASA, USGS, National Academies...again, what's the threshhold for you? What level of evidence will be sufficient to convince you?

YK: Read my article. You throw your stuff my way and don't bother to reciprocate the effort. Scientists who don't agree at least look at each other's evidence, and not just promote their own. (I write [that] with confidence because I know you couldn't have read the link I posted in 8 minutes.)

TDP: In fairness, you're right I haven't read it, but I'm downloading it now. While we're digesting each others' documents, consider this: If we shift resources to combatting climate change, for example by moving away from petroleum, reducing energy consumption overall, limiting meat production, etc., we could take a 1-2% GDP hit over the next century. Maybe 3% of GDP. If the consensus is wrong, and we've spent that 3% of GDP, we'll still have better resource use, healthier people, and fewer farting cows—all of which may very well boost GDP.

But if the consensus is right, and we do nothing, then we'll lose Miami, Bangladesh, and (truly a catastrophe) Jones Beach, Long Island.

What do you think about doing a thorough, evidence-driven risk analysis and then acting on it?

YK: If it can be proven or shown as a viable theory that we're f'ing up our planet and that we could do something to improve the situation, of course I'd be all for it. I just don't believe in any 'noble lie' scenario a la Plato. Show me the evidence or a reasoned theory and I'll come to my own conclusion on the matter. But I am against 'forcing' people to act against their will 'for their own good.' I am not a statist or a totalitarian or a believer in tyranny. If the best our 'leaders' can do is point guns at the populace to 'make them do the right thing' then I'm afraid we need to re-evaluate our status as citizens in this country.

My real reaction to the warmest May is: "Man, this May was so much more pleasant than last year in Chicago. Last year's late spring/all summer was the most disappointing in my 10 year experience living here."

The debate continues.

As I checked email for one last time before going to bed, I found out who won the Republican primary in North Carolina's 13th district, in which I've spent considerable time this year. Meet Bill Randall, who will challenge incumbent Representative Brad Miller (D) on November 2nd:

As Talking Points Memo said last week, "But surprisingly, as oil poured into the gulf and Obama threw resources and rhetoric at the problem, the 'it's all a giant conspiracy' theory didn't catch on."

Perhaps when people talk about "tea parties" they refer to a different kind of tea than they serve at Starbucks? Just a thought.

Finally, a reminder to all my friends in the district: please, don't take it for granted Brad Miller will get re-elected. Sanity still needs your vote in November.

Via Beth Filar Williams, a new documentary on the environmental damage caused by single-use bottles of water—30m of them per day:

"We want to drink the purest water we can. So why would you put that water into a substance that has the potential to leak chemicals into the water?"

It's worth a look. Watch the trailer.

The Vice President on BP:

After a Strategy exam, Finance exam, Strategy team paper, project estimate for work, and...well, that's really all I did the last four days, come to think of it...I'm more or less back.

Herewith a quorum of things I noticed but didn't have time to note:

• The Washington Post reported yesterday that MC 900 Ft. Jesus—sorry, I meant an actual 30 m statue of Jesus—got struck by lightning Monday night and burned to the ground. Signpost to Armageddon? Probably not, but it has an element of Apocalyptic whimsy to it, don't you think?.
• Via Sullivan, the Vision of Humanity project's Global Peace Index puts New Zealand at the top and Iraq at the bottom. We're 85th (of 149); Britain is 31st; and Finalnd and Russia, countries I'm visiting in two weeks, are 9th and 146th, respectively. Check out the interactive map.
• The Economist's Gulliver blog linked to a Sunday Times (reg.req.) article about the beauty of window seats. I always get the window, if possible; so does Gulliver, apparently, and the Times author who wrote: "My favourite window-seat ride is crossing America — with the asphalt labyrinth of the crammed east coast giving way first to ceaseless Appalachian forest, then to the eerie geometric perfection of the farm-belt fields, then to the intimidating, jaw-dropping emptiness of the west, before the smog starts lapping at your window as California sprawls into view." Yep.
• Today has tremendous significance to my small and fuzzy family which I will relate later.

Back to the mines.

Terry Barr, president of Colorado-based Samson Oil and Gas, wrote in to the Wall Street Journal today explaining point by point how BP personnel, not BP equipment, caused the worst environmental disaster in U.S. history:

Mr. Hayward and BP have taken the position that this tragedy is all about a fail-safe blow-out preventer (BOP) failing, but in reality the BOP is really the backup system, and yes we expect that it will work. However, all of the industry practice and construction systems are aimed at ensuring that one never has to use that device. Thus the industry has for decades relied on a dense mud system to keep the hydrocarbons in the reservoir and everything that is done to maintain wellbore integrity is tested, and where a wellbore integrity test fails, remedial action is taken.

This well failed its casing integrity test and nothing was done. The data collected during a critical operation to monitor hydrocarbon inflow was ignored and nothing was done. This spill is about human failure and it is time BP put its hand up and admitted that.

It turns out, BP's estimates of the oil billowing into the gulf may have been off by a factor of two, or greater:

The new calculation suggested that an amount of oil equivalent to the Exxon Valdez disaster could have been flowing into the Gulf of Mexico every 8 to 10 days.

This assessment, based on measurements taken before BP cut the riser pipe of the leaking well on June 3 to cap some of the flow, showed that approximately 25,000 to 30,000 barrels of oil could have been gushing into the Gulf each day. That is far above the previous estimate of 12,000 to 19,000 barrels a day.

And this:

"It is technically not [Obama's] job as president to console families of men who died off shore," said Keith Jones, a Baton Rouge lawyer whose 28-year-old son, Gordon, a mud engineer, died in the explosion. “But he made it his business and we’re grateful for it."

"I don't know what people expected the president to do exactly, if they want him to go out there and wash pelicans," Jones said. "He's the president. He's not someone who cleans beaches. It's important for us Louisianans to know that we have his support and I think he's communicated that."

We won't know for months how bad this is, but you remember all those "worst-case" scenarios? Those might have been underestimates, too.

Via Talking Points Memo:

From Slate, The Only Political Article You'll Ever Have To Read:

Obama now faces some of the most difficult challenges of his young presidency: the ongoing oil spill, the Gaza flotilla disaster, and revelations about possibly inappropriate conversations between the White House and candidates for federal office. But while these narratives may affect fleeting public perceptions, Americans will ultimately judge Obama on the crude economic fundamentals of jobs numbers and GDP.

Chief among the criticisms of Obama was his response to the spill. Pundits argued that he needed to show more emotion. Their analysis, however, should be viewed in light of the economic pressures on the journalism industry combined with a 24-hour news environment and a lack of new information about the spill itself.

The whole article is spot-on.

Mondays are Economist days over here. I've got myself into a rhythm of travel, school, work, and keeping sane that requires me to put things in small boxes of time; on Mondays I read the latest Economist. This week had two unusually interesting (and short) articles in the "Finance and Economics" section[1].

First, a report that numeracy predicts mortgage defaults better than any other variable:

Even accounting for a host of differences between people—including attitudes to risk, income levels and credit scores—those who fell behind on their mortgages were noticeably less numerate than those who kept up with their payments in the same overall circumstances. The least numerate fell behind about 25% of the time. For those who did best on the test, the number of payments they missed was almost 12%. A fifth of the least numerate group had been in foreclosure, but only 7% of those who were more numerically adept had.

Surprisingly, the least numerate were not making loan choices that differed much from their peers. They were about as likely to have a fixed-rate mortgage as the more numerically able. They did not borrow a larger share of their income. And loans were about the same fraction of the house’s value.

They've even got a handy quiz of the type the researchers used. Two pages on, in the "Economics Focus" column, the newspaper reported on the FCC's decision two weeks ago to treat ISPs as common carriers for their last-mile service. This is a big deal:

A medieval innkeeper, for example, often offered the only lodging in town; a boatman could cross only with the king’s writ. Second, the state sometimes offers favours of its own to transporters—public lands and roads, say, or the seizure of private property to make way for new infrastructure—and expects a certain level of public service in return. Third, transport is essential to commerce. It represents an input cost to almost all businesses, and to restrict access or overcharge is to burden the entire economy.

All these arguments applied in spades to 19th-century rail. Like a medieval town’s sole inn, a railway line is a perfect example of a natural monopoly: it is tremendously expensive to build and it is difficult to justify more than one set of tracks on any route just to guarantee competition. ...

Telecoms operators argue that America does not need common carriage for internet access, because the country’s unique network of local cable monopolies competes against its last-mile copper-wire monopolies. ... The FCC’s current plan—to ask last-mile providers to subsidise rural service, and to ensure equal treatment of packets of information—is a mild intervention by global standards.

Time now to review, once again, the team's finance assignment due tonight, and then collapse in a heap. The Daily Parker will probably continue to have slightly less velocity than usual for a week or so as I twist myself into a small knot of anxiety over my finance midterm. If only it could be as engaging as a class as it is in a newspaper.

[1] Yes, the topic interests me in the abstract, but at the same time I can't wait until the end of doing concrete finance—e.g., working out CAPM calculations—once my finance class ends next month.