Free Markets, Free People

Daily Archives: December 15, 2009

An Inconvenient Mess

Copenhagen has settled into what can only be characterized as an embarrassment for those who had hoped to see a historic treaty limiting greenhouse gases signed.

World leaders — with Gordon Brown arriving tonight in the vanguard — are facing the humiliating prospect of having little of substance to sign on Friday, when they are supposed to be clinching an historic deal.

Yesterday, a bloc of third world nations walked out of the negotiations in a squabble about the lack of legally binding emissions targets for the richer countries. And, of course, the squabble about how much of the wealth to transfer to the developing countries continues to be a contentious subject.

Last night key elements of the proposed deal were unravelling. British officials said they were no longer confident that it would contain specific commitments from individual countries on payments to a global fund to help poor nations to adapt to climate change while the draft text on protecting rainforests has also been weakened.

Even the long-term target of ending net deforestation by 2030 has been placed in square brackets, meaning that the date could be deferred. An international monitoring system to identify illegal logging is now described in the text as optional, where before it was compulsory. Negotiators are also unable to agree on a date for a global peak in greenhouse emissions.

Meanwhile, Al Gore managed to embarrass himself in Copenhagen as well:

Mr Gore, speaking at the Copenhagen climate change summit, stated the latest research showed that the Arctic could be completely ice-free in five years.

In his speech, Mr Gore told the conference: “These figures are fresh. Some of the models suggest to Dr [Wieslav] Maslowski that there is a 75 per cent chance that the entire north polar ice cap, during the summer months, could be completely ice-free within five to seven years.”

However, the climatologist whose work Mr Gore was relying upon dropped the former Vice-President in the water with an icy blast.

“It’s unclear to me how this figure was arrived at,” Dr Maslowski said. “I would never try to estimate likelihood at anything as exact as this.”

Mr Gore’s office later admitted that the 75 per cent figure was one used by Dr Maslowksi as a “ballpark figure” several years ago in a conversation with Mr Gore.

Or, in common parlance, what Mr. Gore used was a SWAG (a “Scientific” Wild-Assed Guess). In fact, given the CRU scandal, much of AGW “science” is now considered a SWAG.

The good news is Copenhagen is shaping up to be a “disaster.” I put disaster is scare quotes because for those of us who’ve fought this nonsense for so long, “disaster” is a good thing.

Instead of the American public being thrown under the bus, it looks like the wheels are coming off the bus. You have to wonder what will meet Obama when he shows up on the 18th.

~McQ

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Inflation: The Lurking Beast

Despite all the happy talk from the Fed about its ability to manage the money supply and wring the excess out of the economy at the proper time, avoiding inflation, when and if the economy ever takes off, is going to be a lot tougher than advertised. And we’re beginning to see rumblings that inflation is trying to find it’s footing:

Inflation at the wholesale level surged in November, reflecting price jumps in energy and other products.

The bigger-than-expected increase is certain to get the attention of Federal Reserve policymakers beginning a two-day meeting on interest rates.

The Fed has been able to keep interest rates at record-lows to bolster the shaky recovery, but if inflation pressures begin to mount, the central bank could be forced to start raising rates sooner than expected to cool the economy and keep prices in check.

That’s the trade-off: raise interest rates to hold off inflation. The tricky part is knowing how much to raise them to do that without killing the recovery. And, with the massive amounts of cash pumped into the system, I’m not sure that’s possible. Which means it is probable, at some point, that the Fed is simply going to have to make a choice – inflation or high recovery killing interest rates. My guess is they’ll choose the latter (while the politicians holler foul and try to spend more money). That’s why many don’t see economic recovery in the cards any time soon despite the “green shoots” so many politicians continue to spot among the economic ruin of the present economy.

~McQ

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