Monthly Archives: December 2009

China Warns of Gold Bubble

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The Telegraph reports that China warns of a gold bubble:

“Experts say that China is putting a floor under the gold price but does not chase rallies once they are under way.

There is also a double-edged twist to news that Barrick Gold, the world’s biggest gold mining company, has closed the final 3m ounces of its notorious hedge book ahead of schedule. While the move is a bet that prices will continue to rise, it also means that Barrick has been a big buyer of gold lately. These purchases have now stopped. One of the key drivers behind the spike this autumn has been removed.”

This article is one of the few out there that takes into account the time lag between an announcement and an action. Many of the events that reporters tout as proof that the gold price will spike much higher right way are actually events that have taken place in the past – for eg., purchases at lower prices – or are hedges that have a more complex function than the usual retail investor has in mind, with the siren call of “gold´s going to the moon, jump in now or you´ve lost it forever” sounding in his ears.

Take trader  John Paulson´gold purchase.  It took place in January, apparently. And remember that it was a position taken by his hedge-fund, with his clients money. Paulson gets his fee no matter how that trade turns out long term, and if his fee is a percentage of the assets under management, a purchase when the price is high is better than one at rock bottom, even if his clients´profits are not maximized that way. (sorry: thoughtless blunder there)

Notice finally that Paulson´s own fortune is in gold to a much lesser extent – only about $250 million of his reported $6 billion net worth. That comes to about 4% of his assets….(Correction: that´s 6.8 billion and less than 4%)

Not an earth shaking proportion by any means.

So, what gives?

Climategate: Freakonomics Author Says Climate Models Driven By Funding

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“Freakonomics” co-author, Stephen J. Dubner weighs in on Climate-gate in The New York Times:

“The current generation of climate-prediction models are, as Lowell Wood puts it, “enormously crude.” … “The climate models are crude in space and they’re crude in time,” he continues. “So there’s an enormous amount of natural phenomena they can’t model. They can’t do even giant storms like hurricanes.”

There are several reasons for this, [Nathan] Myhrvold explains. Today’s models use a grid of cells to map the earth, and those grids are too large to allow for the modeling of actual weather. Smaller and more accurate grids would require better modeling software, which would require more computing power. “We’re trying to predict climate change 20 to 30 years from now,” he says, “but it will take us almost the same amount of time for the computer industry to give us fast enough computers to do the job.”

That said, most current climate models tend to produce similar predictions. This might lead one to reasonably conclude that climate scientists have a pretty good handle on the future.

Not so, says Wood.

“Everybody turns their knobs” — that is, adjusts the control parameters and coefficients of their models — “so they aren’t the outlier, because the outlying model is going to have difficulty getting funded.” In other words, the economic reality of research funding, rather than a disinterested and uncoordinated scientific consensus, leads the models to approximately match one another. It isn’t that current climate models should be ignored, Wood says — but, when considering the fate of the planet, one should properly appreciate their limited nature.”

Dubner´s piece reads Climate-gate as a kind of Rorscharch test for pundits. If you´re pro AGW, then all this is a tempest in a tea-cup (Paul Krugman). If you´re anti AGW, (James Delingpole), then it´s the greatest scientific scandal of the century.

Krugman:

“All those e-mails — people have never seen what academic discussion looks like. There’s not a single smoking gun in there. There’s nothing in there. And the travesty is that people are not able to explain why the fact that 1988 was a very warm year doesn’t actually mean that global warming has stopped. I mean, that’s loose wording. Right? Everything is about — we’re really in the same situation as if there was one extremely warm day in April. And then people are saying, well, you see, May is cooler than April, there’s no trend here. And that’s what — the travesty is how hard it has been to explain…”

Delingpole:

“If you own any shares in alternative energy companies I should start dumping them NOW.”

Well, I think of myself as a critic, but I don´t see the scandal right now as definitively one or the other — either game, set and match…..or a fizzle. It´s obviously a well-timed and massive hit to AGW, but I can think of worse things done in the name of science….from experiments in mind-control on unsuspecting patients… to Lysenko…..

As for its impact on AGW, I´m afraid the spin-machine will quickly rewrite the significance of some of the language used by the rogue scientists.

Still, at the end of the day, it all helps to erode people´s trust in expert authority..and that is always a good thing.

The “Enough Already” Factor

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From AP, Americans signal they´ve had enough of the imperial state:

“WASHINGTON – Americans are turning away from the world, showing a tendency toward isolationism in foreign affairs that has risen to the highest level in four decades, a poll out Thursday found.

Almost half, 49 percent, told the polling organization that the United States should “mind its own business” internationally and let other countries get along the best they can on their own, the Pew Research Center survey found. That’s up from 30 percent who said that in December 2002.

Results of the survey appear to conflict with President Barack Obama‘s activist foreign policy, including a newly announced buildup of 30,000 U.S. troops in Afghanistan to fight Taliban and al-Qaida extremists.

“Isolationist Sentiment Surges to Four-Decade High,” the nonpartisan research center headlined its report on the poll about America’s role in the world.”

Muslims Should Withdraw Money from Swiss Banks..

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Teheran Times:

“Turkish State Minister and Chief Negotiator for EU talks Egemen Bagis has urged Muslim nations to withdraw their money from Swiss banks.

Bagis’ comments came in response to a recently approved ban on the construction of new minarets in Switzerland.

Following a weekend referendum, the construction of any new minaret was declared illegal in Switzerland, a move which drew sharp criticism from Muslim and European countries, as well as the UN and the Vatican.”

Coincidence In Nabokov´s “Lolita”

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Anthony Uhlman on Vladimir Nabokov

“Brian Boyd, in his magnificent biography, shows how Nabokov developed an aesthetic method which at once focuses meticulously on unrepeatable particulars, and stresses the importance of pattern. Coincidences, apparently meaningless details, when examined, are shown to be linked by gossamer threads to something other, some still more complex pattern. Clearly, Nabokov could not have known, when he published Lolita, that a then three year old boy called Brian Boyd would grow to become Dr Boyd, author of numerous works on Nabokov, including the definitive biography. Yet, when Humbert first takes Lolita to a hotel after her mother has died and she is at last at his mercy, he meets a conference attendee in the Men’s Room who ‘inquired of me how I had liked Dr. Boyd’s talk, and looked puzzled when I (King Sigmund the Second) said Boyd was quite a boy’ (125).

What can we can say about a pure coincidence like this, one which shows little respect for chronological or logical plausibility? At present, through science, philosophy, sociology, and religion, we are able to say very little: only artists, like Nabokov, somehow help us to consider this, offering a shudder of recognition, allowing us to apprehend how apparently finite lives might achieve an intuition of the infinite.“

My Comment

Coincidences have fascinated me since childhood..probably because I always seem to walk into them..

I seem to evoke synchronicity quite mysteriously. So much so that it turned into an intellectual interest that led me to study Jung´s writing for a number of years and then many forms of symbolic language, mythology and analysis.

Is Amartya Sen Good For Poor People in India?

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Sauvik Chakravarti on Amartya Sen:

“If we observe poor Indians going about making their economic achievements, we see that they are hugely gifted. In Indian markets, it is the poorest who scout around for the best buys and bargain most energetically – while the rich get easily conned! A joke is told about Indians in England – once known as ‘a nation of shopkeepers’: Why can’t Indians play soccer? Because, whenever they get a corner, they put a shop on it! A bania (an Indian trader) is rumoured to be able to buy from a Scot and sell to a Jew and still emerge with a profit! Economists like Myrdal and Sen do not see these gifted people: they see flaws in the people and perfection in their rulers……

Sen, of course, is always on the side of the poor and the marginalised. He believes in the doctrine of redistributive justice; and his most famous work is on famines. However, soft hearts can do a lot of harm; hard heads are far better. A renowned hard head, Lord Bauer, in 1961, in his first book on India, commented that beggary on the streets of India and Pakistan is not a proof of poverty; rather, this widespread beggary exists only because the dominant communities in both these countries, Hindus and Muslims respectively, believe they earn spiritual merit by giving alms to the poor. In these very countries, there are no Parsee, Sikh or Jain beggars because these communities practice collective charity, discourage beggary as a blot on the entire community, and encourage self-help. Today, India has 60,000 tonnes of foodgrain rotting in state godowns. Famine is a thing of the past. And ‘poverty’ needs to be meaningfully understood.

Indeed, notions of ‘redistributive justice’ should be unceremoniously buried……The Law cannot be Robin Hood – and, no matter what, Robin Hood was a thief. Notions of ‘redistributive justice’ have made democracy an ugly game by which some groups gain at the expense of others…..

A majority of the world’s people, all of them desperately poor, need freedom from their predatory states. For their sake, we need economists who genuinely value freedom. Amartya Sen is not one of them.”

UN Funds Missing Billion Plus in Climate Change Donations

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The Telegraph reported a few days ago that UN Funds were missing over a billion dollars contributed to tackle climate change in developing countries:

“A total of 20 nations pledged up to 410 million dollars (£247m) a year in 2001, resulting in a pot that should be worth well over 1.6 billion dollars (£963m).
But only 260m dollars (£157m) has been paid into two United Nations funds earmarked for the purpose according to the latest figures, the BBC World Service investigation said.
The EU told the broadcaster that the money was collected in ”bilateral and multilateral deals”, but was unable to provide data to back up the claim.
The sums were pledged in the 2001 Bonn Declaration, which was signed by the 15 countries that then made up the European Union, plus Canada, Iceland, New Zealand, Norway and Switzerland.

As of the end of September this year, the two UN funds – called the Least Developed Countries and Climate Change Funds – contained 155.4m dollars and 104.1m dollars respectively, the BBC said.
Boni Biagini, who runs the funds, told the broadcaster: ”These numbers don’t match the 410m per year. Otherwise, we’d be handling billions of dollars by now.”

More Fall Out From Dubai On Indian Market

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Business Standard:

“Segments of the economy such as consumer durable and core industrial growth that are driving the current recovery in the Indian economy are purely a function of domestic stimulus initiatives and remain to that extent relatively insulated,” HDFC Bank said in a report today.

However, areas such as exports, remittance, banking and construction as well as real estate are likely to see further damage, the report added.

Exports are going to be the most affected by Dubai woes, as the UAE region is now India’s largest export destination toppling the United States.

Besides, bullion trading in Dubai is likely to be impacted, which may have ripple effect for India as around $29 billion of gold from the country is being traded in Dubai.”

Marginal Redefinitions…

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Tyler Cowen seems to be getting a tad confused in his moral reasoning, as he tries to shove the poop back up the fear-mongerers  who fatally compromised science, genuine environmentalism, and genuine conservation:

“Good vs. evil thinking causes us to lower our value of a person’s opinion, or dismiss it altogether, if we find out that person has behaved badly.  We no longer wish to affiliate with those people and furthermore we feel epistemically justified in dismissing them.

Sometimes this tendency will lead us to intellectual mistakes.

Take Climategate.  One response is: 1. “These people behaved dishonorably.  I will lower my trust in their opinions.”
Another response, not entirely out of the ballpark, is: 2. “These people behaved dishonorably.  They must have thought this issue was really important, worth risking their scientific reputations for.  I will revise upward my estimate of the seriousness of the problem.”
I am not saying that #2 is correct, I am only saying that #2 deserves more than p = 0.  Yet I have not seen anyone raise the possibility of #2.  It very much goes against the grain of good vs. evil thinking:  Who thinks in terms of: “They are evil, therefore they are more likely to be right.”

My Comment

This is so idiotic confused

(in the spirit of Humble Libertarian´s post, I want to start ratcheting down any stridency on my own part, before expecting others to)

I can´t believe I´m reading it.

I don´t believe the very intelligent Professor Cowen wrote it.

Let´s see. Point by point.

1. Hitler did several rather evil things…would Cowen be happy if we tried to take another look at Hitler, because, gee, we´re all counterintuitive an’ all..

Of course, see what happens when anyone dares to make the morally far saner argument that although Hitler did many evil things, he might have been right about some other things…say, like vegetarianism. The howls of neo-Nazism would drive him from respectable (and unrespectable) society forever.

But it´s quite OK for a liberal to argue from the morally insane position that because Hitler did many evil things, he was therefore right.

I can only imagine what would have happened if someone from the south had ever said that….or someone from the third world….or any other benighted place where our superiors haven´t already planted the flag of moral imperialism (I coined that one just now)….

It never occurs to the supercilious center-liberals (I´m not sure the positions taken by Cowen or Powell are really libertarian) that their lectures admonitions are best directed at themselves.

2. Cowen calls Austrian theory a religion, when it´s not even a theory. It´s a set of principles that can be applied quite broadly to arrive at very different conclusions, even conclusions diametrically opposed to many positions that Austrians actually hold.

3. He uses the phrase ¨good versus evil thinking” — which seems to be a reference to Glenn Greenwald´s book on Bush and how good versus evil thinking got his administration into trouble. As a matter of fact, I made that analysis of Bush´s reasoning in my first book (“The Language of Empire”) as well as in an article, “The Pharisee´s Fire Sermon” (Dissident Voice), …and I can assure you that “good versus evil” thinking permeates every aspect of American thought…from Christian fundamentalism to liberalism universalism. Lew Rockwell has the least of it.

And one of the underlying reasons for why this kind of polarised thinking is pervasive is a very simple one.

Citizens in an imperial state can get away with it.

In no other corner of the world is there a state with so much space in its back yard, so many armaments to back up its lightest word and so much clout to twist every arm that can be twisted to get reality to bend to its own solipsistic vision of how things should be.

Mr. Cowen has mistaken an imperial problem pervasive in the US for a local ideological problem.
Only one of a number of errrors.

Here´s more of Cowen´s cogitations via EconomicPolicyJournal.com:

“Cowen began his comments, and almost immediately differentiated between what he called “Ron Paul-Lew Rockwell libertarianism” and “realistic” libertarianism. He said that like Palmer, he fell into the “realistic” camp.

During the Q&A, I asked Cowen to amplify on the differences between what he deemed “Ron Paul-Lew Rockwell libertarianism” and “realistic” libertarianism. He pointed to a view on immigration and “too much” conspiracy theory that he claimed the “Ron Paul-Lew Rockwell libertarians” held. He said they were moving toward the extreme right wing Republican camp. He contrasted this with what he called realistic-secular libertarianism. He said he expected that a full split between the two camps will occur.”

Outside the right-wing Islamophobe militarati, the place where you´ll see the most “good-versus-evil” thinking is not Lew Rockwell (where you can find even liberal-left thinkers like Glenn Greenwald and Naomi Wolf). It´s the liberal-left center.

And that split that´s coming up between LRC and secular libertarianism?

Baloney.

Lew Rockwell has plenty of atheist and secular libertarians. I happen to be a secularist and a Christian agnostic. Both the Christianity and the agnoticism are important to me. Equally. If Cowen can´t get his head around a position like that and lumps it in together with some loony farfetched idea he has about “Austrian religion” that really is his problem, not LRC´s.

Actually, the only split that´s coming up is the split of libertarian progressives and sensible environmentalists…from the left…and into the Ron Paul camp..which is also, much more prosaically, the just-the-facts, ma´am camp.

Cowen:

He then told me I could google, Austrian theory and financial crisis, and half the results would be “religious Austrians.”

Nice try at scare-mongering.

This is simply scare-mongering.

The real ayatollahs of thought are Olympian liberal-leftists who believe that anyone who argues against any of their most precious sacred cows — subsidized illegal immigration, thought police, the immaculate purity of the government on 9-11, the imminent end of planet earth on account of Republicans, and a host of other dim-bulb positions — must automatically be a wicked, greedy racist.

Economist, audit thine own intellectual books before trashing anyone else´s.

And for more juicy tomatoes flung at the good professor by fellow libs, read this .