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Weekend reflections

March 14th, 2009

It’s time once again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.

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  1. Michael of Summer Hill
    March 14th, 2009 at 14:38 | #1

    John, according to the latest scientific research modelling a temperature increase of just two degrees would result in 20 to 40 per cent of the Amazon dying off, releasing yet more CO2 into the atmosphere. The worst case scenario is that any temperature above two degrees celcius could trigger a runaway climate change impacting life on earth.

  2. Alice
    March 14th, 2009 at 16:12 | #2

    #1. Watch out Micheal – this will trigger a lengthy automatic response from a particular GW sceptic…..

  3. Socrates
    March 14th, 2009 at 16:23 | #3

    Barry Brook gave a clear but sobering update on the IPCC science in Adelaide last week. All available CC data tracking and future climate projeections have gotten markedly worse since IPSS4 was published. Atmospheric CO2, ocean temperature, sea level and arctic ice melt are all increasing faster than the worst case scenario in IPCC4. Current modelling is that the business as usual scenario would result in global warming of +5.9C by 2100. This is the average; the heating in the artic would be +26C – the ice cap would inevitably melt.

    A better understanding of lags means that even if there was rapid action and CO2 was stabilised quickly the temperature will stil rise aother 2.3C. We may well see Greenland beging to melt anyway. Updates of sea level rise are now 1 to 2m by 2100. James Hansen thinks it may be more.

  4. philip travers
    March 14th, 2009 at 17:54 | #4

    I am glad I am stupid enough to recognise not only are there Australian Global Warming Skeptics,but, any number of pro Global Warming Scientists in Australia…are actually more than out numbered by World number of scientists who are very skeptical of the science.They might not have the same personal problems Australians as Scientists have among themselves and others.I am not a troll.It is raining quite heavily over this small place near Dorrigo N.S.W. right now.I am listening to a video of a speech in the U.S.A. by David Irving.The only implied reality between these events is ..that I am not outside with a lap top!

  5. Alice
    March 14th, 2009 at 18:40 | #5

    #4 It may have something to do with the fact thats its raining in Dorrigo though. Id like to see a comparison of the lists with the number of antis versus the number of pros. I doubt whether the antis outnumber the pros unless you want to count the anti science media snowstorm articles by coal and other fuel industry funded lobbyists.

  6. Alice
    March 14th, 2009 at 18:46 | #6

    It may be appropriate to remember, Philip, if it stops raining in Dorrigo, the lobbyists still have the resources to drop little white sheets of paper telling residents that, it isnt really global warming – its just an unusally long drought.

  7. SeanG
    March 14th, 2009 at 21:39 | #7

    Here is an interesting graph:

    http://dshort.com/charts/bears/four-bears-large.gif

    (courtest of Calculated Risk)

    What is interesting is the impact on the S&P on the Lehman’s collapse.

  8. Ian Gould
    March 14th, 2009 at 23:59 | #8

    Remember the Baltic Dry Index? it’s tripled From its recent lows.

    http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

    Meantime. Australian iron ore exports rose 14% in January and Chinese iron ore imports in February were up 43% from January and 22% from February 2008.

    http://www.ssyonline.com/News_and_Events/index.html?view=3048

    http://steelguru.com/news/index/2009/03/14/ODYwODI%3D
    /Chinese_iron_ore_import_in_February_peaks.html

    Not to sound obsessive on the topic but the timing of the Chinese New Year holidays probably had a lot to do with that. In 2008, CNY fell in February, in 2009 it feel in January. So both the MoM and YoY comparisons are being measured on fairly weakly past periods.

    I don’t think many people in the west quite understand, CNY is virtually the only time most Chinese workers get vacation time – and employers take advantage of that to simply shut plants down for 1-2 weeks.

    A more reliable comparison may be year to date – which still shows a 6% rise between 2008 and 2009.

  9. Kevin Cox
    March 15th, 2009 at 08:06 | #9

    Obviously Chinese exports will drop but the Chinese are not stupid enough to leave their money supply in the hands of a dysfunctional money market.

    The Chinese also have enough foreign money to purchase all the imports they need for a considerable length of time.

    We can expect the Chinese to divert their energies from factories that sell to foreigners to factories that sell to Chinese, and that builds productive internal infrastructure. There will be a lag and some inefficiencies but it will only marginally effect the Chinese economy. It will not greatly effect Australia except that the prices of our commodities (not the volume) will drop because of less demand from elsewhere.

    A problem may be all those US educated economists who may yet foul up the system – but I suspect they are smart enough to take the good bits and discard the parts that do not work. A more serious problem may be that those in power may wish to get more for themselves and so distort the system. Another problem may be that as the Chinese look to find things on which to devote their energies they might start building weapons and other similar technologies. Let us hope they divert their energies to ways of producing renewable energies not destructive energy of the nuclear kind.

  10. March 15th, 2009 at 20:32 | #10

    Just watching 60 minutes. Story on the Mexican Cult of St Death. Nick Cave used to feature this morbid icon on his posters. I thought it was a big joke until my sister went to Mexico and witnessed the Day of the Dead.

    Apparently that interesting country also has a Drug Saint. It all ties in rather well with their current mayhem occurring over drug routes.

    Cortes did his best. But I’m afraid he just wasnt strict enough to knock the Mayans out of Mexic.

  11. Donald Oats
    March 16th, 2009 at 03:10 | #11

    Anyone had to use the health system (I use the term advisedly) lately? What a mishmash of the dysfunctional. There just isn’t any coherency in patient history as the inevitable cohort of specialists gets their turn. Ironic how the last person to know what is on record (and whether it is even remotely close to the facts) is the patient, and the second last person is the current treating doctor.

    While specialisation is obviously essential it seems that the fragmentation of patient history – including destruction of hospital records – is an unnecessary additional burden.

    While the AMA is proclaiming loudly that its members will go to jail rather than hand over patient records to Medicare (fraud) investigators, and this is to protect patient confidentiality so they say, they are only too willing to pass potentially inappropriate material between each other because of the lack of a proper record keeping system. In this day and age we have the data storage and transfer capability of handling everything up to and including CT scan data, so it is not a question of technology any more. By creating a logical layer of private views for specialists, it is possible to enforce data privacy while still retaining the capacity to share necessary data among the appropriate parties.

    As a final point on this, the reconciliation of Victorian hospital surgery waiting times against individual patient records would then be a doddle…

  12. Socrates
    March 16th, 2009 at 10:43 | #12

    This is a US story but raises an issue I hope Australian tax officials are watching closely. In the US AIG is still paying millions in bonuses ($250 million to top 400 executives) despite its massive losses. The CEO says they are legally obliged to pay them:
    http://www.abc.net.au/news/stories/2009/03/16/2516759.htm

    The obvious point is that if they are legally obliged to pay bonuses when the performance was so poor they needed federal aid to avoid bankruptcy, then they will always be paid. In that case, they are not a bonus for exceptional performance, but part of expected income. That means they should be taxed as income. This raises another issue about executive compensation that has not been adequately addressed – tax avoidance. The bonus system is not so much used to encourage performance to benefit shareholders, but to hide large CEO incomes and avoid tax.

    There may also be an enforcement opportunity here. If it is difficult to legally limit the incomes, can we use tax law to pursue the individuals who haven’t paid tax on their real income as income. Surely there must be some definition of income that a bonus received 100% of the time would meet? Directors too, might be guilty of assisting executives to hide income and avoid taxes, by agreeing to the deals.

    Obviously we can all think of recent Australian cases where the same principals would apply.

  13. Bruce Littleboy
    March 16th, 2009 at 13:46 | #13

    Socrates 12

    Do you know whether bonuses in the US are also tax free? Certainly US traders think they are entitled to them regardless.

    I found your post rather jaw-dropping.

  14. nanks
    March 16th, 2009 at 13:57 | #14
  15. PeterM
    March 16th, 2009 at 14:36 | #15

    Socrates 12,

    There was an article in Noel Whittaker’s Column in the Sunday Mail yesterday on a related subject.

    http://www.news.com.au/couriermail/money/story/0,26844,25181407-5015829,00.html

    Unfortunately the bonus was in share options that were then were converted to shares. It appears under Australian Tax law, the Executive is deemed to have received income of the value of the shares at the time the options where converted. Subsequently, the share value has tanked so the Exec now has a tax liability and no asset to sell to pay the tax.

    It appears in at least one case an Executive has suffered from the downside of the poor performance of the organisation that employed him. This appears to be a rare case of a management rewards actually being aligned with the long term shareholder value they create. (It may be my German heritage but I get a certain degree of schadenfreude from reading this article. The manger concerned seemed have been trapped between the Tax law that treated the bonus as income and a market that treated it as an asset.)

  16. Socrates
    March 17th, 2009 at 07:26 | #16

    PeterM

    Thansk for teh link. Given that the rest of us are liable to be sacked for such poor performance a financial penalty does nto seem unreasonable.

    This illustrates the lie in claims for large executive pay. If Execs are really responsible for a firm’s performance and deserve large reward when times are good, then they are to blame when times are bad and should be penalised or sued for damages. I don’t believe that is true but thats the point – they never earnt the large salaries when times where good, and both theya nd the peopel who agreed to the deals (directors) should be dismissed sans golden parachute.

  17. Socrates
    March 17th, 2009 at 07:54 | #17

    Actually having read the Noel Whittacker articel, I disagree with it quite a bit. It is a bad example of using anecdotal evidence to reach a false general conclusion. He states
    “Unfortunately the behaviour of a few always gives the majority a bad name. Despite the controversy, it’s a fact of modern business that there are many decent, hardworking executives who have taken bonuses in the form of shares or options.”
    Then he quotes one person to demonstrate this. He doesn’t mention the sector or type of work that peson did. Why did the stock crash so far? Was it high risk? Many of these guys have gotten so used to their inflated pay that they think its reasonable. This is the real problme. Exampes of bad practice in executive pay aren’t the exception – they are the norm. The AVERAGE level of exec pay in ASX top 200 firms is in the millions. Yet the only study of relative performance I have seen (Shields) shows that the correlation between pay and performance is negative. That is, the higher the pay, the lower the return to shareholders.

  18. March 20th, 2009 at 19:36 | #18

    GRAND UNIFYING THEORY OF US PRESIDENTS: PERSONAL AND POLITICAL

    THESIS: Clinton had a sleazy personality with mostly sensible policies.

    ANTITHESIS: Bush had a decent personality with mostly stupid policies.

    SYNTHESIS: Obama has a decent personality with mostly sensible policies.

    So there is dialectical progress after all.

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