August 24, 2014

Satyajit Das

Green Army: Persons of Interest

Jay Gould [Financier]:
[The trick is to hire] one half of the working class to kill the other half.
(March 1841)

Alan Greenspan:
What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so.
(Quoted by Robert Manne in Is Neoliberalism Finished?, Goodbye To All That?, Black Inc, 2010, p 27)

Kenneth Galbraith (1908–2006):
The salary of the chief executive of the large corporation is not a market award for achievement.
It is frequently in the nature of a warm personal gesture by the individual to himself.

Adam Smith (1723–1790):
All for ourselves, and nothing for anyone else, seems, in every age, to have been the vile maxim of the Masters of Mankind.
(The Wealth of Nations, 1779)

The Masters of Mankind

Empty words like governance and oversight masked a lack of adult supervision of business and markets.
[It was management by neglect: a business culture that] presided over increasing debt, greater leverage, higher risk, lower capital, and accounting fudges. …
(p 290)

[In 2006, the] average weekly wage of investment bankers was $8,367, compared to $841 for all private sector jobs.
(p 313, emphasis added)

In Fairfield County, Connecticut, where many hedge funds were based, the average pay was $23,846 a week.
{[In 2007, the] leading 20 hedge fund and private equity managers earned … $12.6 million a week [— equivalent to] the $29,500 average annual income in the US in just over 8 minutes [or] the President's salary (around $400,000 per year) in less than 2 hours.}
[The] combined remuneration at the five major Wall Street investment banks alone exceeded the world's total foreign aid budget [for 2007] of $850 billion. …

… CEO of Macquarie Bank Allan Moss … earned $35.5 million in a single year …
(p 314)

Larry Summers believed that the market allowed skilled talent to capture their fair share of returns, consistent with productivity and contribution to economic outcomes.
Between government jobs, Summers earned $5 million at hedge fund DE Shaw & Co, playing down his role a mere part-time job. …

Large bonuses were based on high profits, the product of excessive risk and leverage.
Some of the earnings were imaginary, based on mark-to-market accounting, not true cash profit. …

In 2006 [Dow Kim, head of Merrill Lynch's] fixed income business, including mortgages, received a bonus $35 million on top of his salary of $350,000. …
Merrill ultimately lost vast sums when the basis of the profits, mortgage investments, fell sharply in value. …
(p 315, emphasis added)

Merrill was taken over by [Bank of America,] after a short and troubled period with John Thain at the helm. …
(p 201)

[Thain, distinguished himself by spending] $1.2 million redecorating his office [as] Merrill slipped closer to insolvency.
(p 330)

Joining CitiGroup after his term as Treasury secretary, Robert Rubin was paid $20 million a year as a non-executive board member with poorly defined duties.
During the tenure of Rubin and CEO Chuck Prince, Citi lost over $50 billion and its market value fell by more than $60 billion, ultimately requiring a government bailout.
(p 315)

[Prince,] a lawyer appointed to deal with regulatory problems, lacked the requisite risk skills. …
Prince's nickname was "one Buck Chuck," a reference to the fact that Citi's stock price barely moved $1 under his leadership.
Losses on mortgages drove Citi's stock price perilously close to the one-buck figure as the bank struggled to survive.
(p 201)

[On leaving Citi, Prince] was paid an exit bonus of $12.5 million, additional to $68 million already received in stock and options, a $1.7 million annual pension, as well [as] an office, car, and driver for up to 5 years.
Prince signed a 5 year noncompete agreement.
Citi may have benefited more by allowing their former CEO to manage a competitor, give the results of his tenure at the bank.
(p 315)

The top five executives of Bear Stearns and Lehman [Brothers] pocketed cash bonuses exceeding $300 million and $150 million respectively (in 2009 US dollars) [even though] the earnings on which the remuneration was based were reversed in 2008 …
(p 316)

… Lehman's Richard Fuld and Bear Stearns' James Cayne, took nearly 2 decades to become multimillionaires and finally billionaires. …
[By contrast,] Brian Hunter, responsible for energy trading at hedge fund Amaranth before it imploded, earned between $75 million and $100 million [in one year,] ranking him a middling 29th highest paid in his profession [for 2005.]
Several hedge fund managers routinely earn $1 billion each year.
(p 318)

[Remarkably, Richard Fuld] did not use a computer and did not have the ability to open attachments on his BlackBerry.
(p 290)

In 1994 Warren Buffett tried to stop bonus payments until Salomon Brothers' profitability returned to satisfactory levels.
Buffet was forced to abandon the proposal when many senior staff left, joining competitors.
(p 319)

In 2009, Lloyd Blankfein, chairman of Goldman Sachs … who earned $54 million for a year's work just before the crisis, remained unapologetic about the firm's behavior.
In [an Orwellian] piece of of historical revisionism … Goldman Sachs claimed that it never needed government assistance and would have survived the crisis without it.
(p 364)

(Extreme Money: Masters of the Universe and the Cult of Risk, 2011)

Ponzi Prosperity

Economics is not a science.
At best, it's an ideology.
And, at times, a very dangerous one. …

Generally these people are influenced by one of two novels.
There are two novels that can change a bookish 14 year old's life, like Ben Bernanke.
Tolkien's Lord of the Rings, and Ayn Rand's, Atlas Shrugged.

One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes; leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world.

The other, of course, involves orcs. …

(The End of Ponzi Prosperity, Big Ideas, ABC Radio National, 23 May 2012)

A Financial Singularity

James Kunstler [17 October 2005]:
The mortgage industry, a mutant monster organism of lapsed lending standards and arrant grift on a grand scale, is going to implode like a death star under the weight of these nonperforming loans and drag every tradeable instrument known to man into the quantum vacuum of finance that it creates.
(p 203)

Alan Greenspan:
[Government] regulation cannot substitute for individual integrity
[The] first and most effective line of defense against fraud and insolvency is counterparties' surveillance [eg] JP Morgan thoroughly scrutinizes the balance sheet of Merrill Lynch before it lends. …
(p 279-280, emphasis added)

Alan Greenspan was mistaken …
Creditors can be just prone to greed as the latest wizard of Wall Street [and] they are often the last to understand the risks that would ordinarily help fear counterbalance greed.
(Quoted by Peter Temple, Hedge Funds: The Courtesans of Capitalism, John Wiley & Sons, 2001)
(p 282)


The Masters of Mankind

The Cult of Risk

Debt Slavery

One Shitty Deal

(LIBOR^2 x 1/LIBOR) — (LIBOR^4 x LIBOR^-3) = ?

Inside Job

August 20, 2014


Free Market of Ideas

Date Post / Link Title


30 Link Lisa Wilkinson
23 Link How Adolescents Make Decisions
10 Post Sugar Man
Ethnic minorities in China, India and the US
9 Post The Honored Dead
Link The Palestinian Struggle for Self Determination and the Ordeal of Occupation
7 Post The Last Tree
Link Is Australia still the land of the fair go?
6 Link Epidemic of ink
Roads for Trees
Deep Sea Mining
Can democracy survive a disappearing middle class?
4 Post Local (Mal)Adapatation
3 Post (LIBOR^2 x 1/LIBOR) — (LIBOR^4 x LIBOR^-3) = ?
Link Greenway votes
How Does A Person Go From Believer To Atheist?
2 Post Supernatural — Natural
1 Link Making Climate-Science Communication Evidence-based — All the Way Down
What Does It Mean To Be A Teenage Feminist Today?


30 Post Culture of Greed
Debt Slavery
Link Is Conflict Good For Progress?
29 Post Economic Irrationality
Link Can Hacking The Stratosphere Solve Climate Change?
Can Hacking The Brain Make You Healthier?
What Are The Dangers Of A Single Story?
What Makes A Good Story?
What Are The Clues To A Good Story?
What Do China And The Banjo Have In Common?
28 Post Killing our way to Perfection
Link Afterlife
27 Link WA traditional sites lose protection
Assessing water resources
26 Post Cultural Theory
The Foundation of Civilization
24 Post The Righteous and the Wicked
Andrew Harper, UN operations leader in Jordan
Greed, Ideology and Antiscience
Are Engineered Foods Evil?
24 Link Albinisim in Tanzania
23 Link Col Allan returns to Australia
Kim Williams leaves News Corp
Kristi Mansfield, philanthropic fundraiser
Paul Davies, physicist and cosmologist
Alison Wolf, Author of The XX Factor
22 Post Freedom of Communication
Link Science and Global Warming
20 Link Faith leaders demand commitments on climate change
Churches condemn Opposition and Government asylum seeker policies
Pope Francis says church should not be "obsessed" with abortion, birth control and gays
The upsurge in Islamist violence
16 Link Spider Woman
The early years of the mobile phone in Australia
Patents are only inventive sometimes
Attributions to climate change
Innovation policy
Media in India
Quid Pro Quo: News Corp and the 2013 election
Speaking for the Dead
15 Post Climate Change 2013: The Physical Science Basis
Link Change and the Integrity of Science
14 Post The Fallback
Link Mongrel Nation
13 Link Russia and the middle east
Legacy of Swami Vivekananda
Philip Nitschke's memoir
Pink Sari Revolution
The moral case on Syria
Child jihadis and other threats to childhood
Do the middle class want democracy?
Should the West intervene in Syria?
8 Post Food Security: Availability, Access, Utilization and Stability
Link Migration in the 21st century
Women and sexuality in global conflicts
The war on female sexuality
Middle East meltdown?
China and the world's environment
JFK's last year
6 Link Australian Apartheid
5 Post Fighting the GM Food Scare
Link The storms of James Hansen
4 Post Simplistic Ideological Solutions
The Love of Power
Link The Political Economy dispute at Sydney University
Great Australian political speeches
Bennelong Sings
3 Post Moral Codes
The Future of Work
Say No to Crime!
2 Post George W Bush: Gentleman
George W Bush: Ethical Failure
Link You're never too young to be targeted
1 Post The Folly of Manicheism
George W Bush: An Honest Man?
A Path
Link David Cameron, Lynton Crosby and Philip Morris International

The Physical Science Basis

Intergovernmental Panel On Climate Change: AR5 Working Group I

Detection and Attribution of Climate Change

Human influence has been detected in warming of the atmosphere and the ocean, in changes in the global water cycle, in reductions in snow and ice, in global mean sea level rise, and in changes in some climate extremes (Figure SPM.6).
This evidence for human influence has grown since AR4.
[There is 99% confidence] that human influence has been the dominant cause of the observed warming since the mid-20th century.
(p 12)

There has been further strengthening of the evidence for human influence on temperature extremes since the SREX.
It is now very likely that human influence has contributed to observed global scale changes in the frequency and intensity of daily temperature extremes since the mid-20th century, and likely that human influence has more than doubled the probability of occurrence of heat waves in some locations. …

There is high confidence that changes in total solar irradiance have not contributed to the increase in global mean surface temperature over the period 1986 to 2008, based on direct satellite measurements of total solar irradiance.

No robust association between changes in cosmic rays and cloudiness has been identified.
(p 13)

Future Global and Regional Climate Change

Relative to the average from year 1850 to 1900, global surface temperature change by the end of the 21st century is projected to …
  • likely … exceed 2°C for RCP6.0 and RCP8.5 (high confidence) …
  • as likely as not … exceed 4°C for RCP8.5 (medium confidence).
(p 15)

Cumulative CO2 Emissions (b) (GtC)Surface Temperature (c) (°C)Sea Level Rise (d) (m)
Scenario (a)
(ppm CO2e)
Mean (Range)
Global Mean Increase (likely range)
(Relative to 1986-2005)
RCP2.6 (475)270 (14-410)1.0 (0.4-1.6)1.0 (0.3-1.7)0.24 (0.17-0.32)0.40 (0.25-0.55)
RCP4.5 (630)780 (595-1005)1.4 (0.9-2.0)1.8 (1.1-2.6)0.26 (0.19-0.33)0.47 (0.32-0.63)
RCP6.0 (800)1060 (840-1250)1.3 (0.8-1.8)2.2 (1.4-3.1)0.25 (0.18-0.32)0.48 (0.33-0.63)
RCP8.5 (1313)1685 (1415-1910)2.0 (1.4-2.6)3.7 (2.6-4.8)0.30 (0.22-0.38)0.63 (0.45-0.82)

(Adapted from Table SPM.2, Table SPM.3 and Box SPM.1)

Representative Concentration Pathways (RCP) (a) are identified by their approximate total radiative forcing in year 2100 relative to 1750:
  • 2.6 W m-2 for RCP2.6,
  • 4.5 W m-2 for RCP4.5,
  • 6.0 W m-2 for RCP6.0 and
  • 8.5 W m-2 for RCP8.5.

Cumulative CO2 emissions for the 2012–2100 period (b) compatible with the RCP atmospheric concentrations simulated by the CMIP5 Earth System Models.
  • Most of the CMIP5 and Earth System Model (ESM) simulations were performed with prescribed CO2 concentrations reaching 421 ppm (RCP2.6), 538 ppm (RCP4.5), 670 ppm (RCP6.0), and 936 ppm (RCP 8.5) by the year 2100.
  • Including also the prescribed concentrations of CH4 and N2O, the combined CO2-equivalent concentrations are 475 ppm (RCP2.6), 630 ppm (RCP4.5), 800 ppm (RCP6.0), and 1313 ppm (RCP8.5).

Projected change in global mean surface air temperature (c) and global mean sea level (d) rise for the mid- and late 21st century relative to the reference period of 1986–2005.
  • The total increase [in combined land and ocean surface temperature] between the average of the 1850–1900 period and the 2003–2012 period is 0.78 [0.72 to 0.85] °C, based on the single longest dataset available.
    (p 3)
  • Based on current understanding, only the collapse of marine-based sectors of the Antarctic Ice Sheet, if initiated, could cause global mean sea level to rise substantially above the likely range during the 21st century.
    There is medium confidence that this additional contribution would not exceed several tenths of a meter of sea level rise during the 21st century.

[The decrease in surface ocean pH due to ongoing ocean acidification] by the end of 21st century is in the range of
  • 0.06 to 0.07 for RCP2.6,
  • 0.14 to 0.15 for RCP4.5,
  • 0.20 to 0.21 for RCP6.0 and
  • 0.30 to 0.32 for RCP8.5 (see Figures SPM.7 and SPM.8).
(p 19)

Carbon budget required to limit global surface temperature rise to less than 2°C
(531 [446 to 616] GtC was already emitted by 2011)
LikelihoodMaximum cumulative CO2 emissions since 1861-1880 (GtC)

Climate Change Research Centre:
In 2000-2009, about 350 [GtC of CO2 were] emitted …
(Abrupt Change, Tipping Points and Past and Future Climate, The Copenhagen Diagnosis, 2009)

[Annual emissions of CO2 alone] have grown between 1970 and 2004 by about 80%, from 21 to 38 gigatonnes (Gt), and represented 77% of total anthropogenic GHG emissions in 2004.
(Climate Change 2007, Synthesis Report, p 36)

A large fraction of anthropogenic climate change resulting from CO2 emissions is irreversible on a multi-century to millennial time scale …
{[Up] to 40% of emitted CO2 will remain in the atmosphere longer than 1,000 years.}

Surface temperatures will remain approximately constant at elevated levels for many centuries after a complete cessation of net anthropogenic CO2 emissions.
[Ocean] warming will continue for centuries.

It is virtually certain that global mean sea level rise … due to thermal expansion [will] continue for many centuries.
[For] scenario RCP8.5, the projected rise [by 2300] is 1 m to more than 3 m (medium confidence).

Sustained mass loss by ice sheets would cause larger sea level rise …
There is high confidence that sustained warming greater than some threshold would lead to the near-complete loss of the Greenland ice sheet over a millennium or more, causing a global mean sea level rise of up to 7 m.
Current estimates indicate that the threshold is greater than about 1°C (low confidence) but less than about 4°C (medium confidence) global mean warming with respect to pre-industrial.
(p 20, emphasis added)

Abrupt and irreversible ice loss from a potential instability of marine-based sectors of the Antarctic Ice Sheet in response to climate forcing is [also possible.]

[With respect to geoengineering, there] is insufficient knowledge to quantify how much CO2 emissions could be partially offset by [Carbon Dioxide Removal] on a century timescale.

[Solar Radiation Management, if realizable, has] the potential to substantially offset a global temperature rise, but they would also modify the global water cycle, and would not reduce ocean acidification.
If SRM were terminated for any reason, there is high confidence that global surface temperatures would rise very rapidly to values consistent with the greenhouse gas forcing.
(p 21)

Would you like to know more?

(Working Group I, Summary For Policy Makers, 27 September, 2013)



Observed Changes in the Climate System

Drivers of Climate Change

Understanding the Climate System and its Recent Changes

Future Global and Regional Climate Change

Jonathan Haidt

Green Army: Persons of Interest

Marcus Aurelius (121-180):
The whole universe is change and life itself is but what you deem it.

Siddhartha Gotama:
What we are today comes from our thoughts of yesterday, and our present thoughts build our life of tomorrow: our life is the creation of our mind.

William Shakespeare (1564–1616):
There is nothing either good or bad but thinking makes it so.
(Hamlet, ~1600)

Jonathan Haidt:
An ideology of extreme personal freedom can be dangerous because it encourages people to leave homes, jobs, cities, and marriages in search of personal and professional fulfillment, thereby breaking the relationships that were probably their best hope for such fulfillment.
(The Happiness Hypothesis, 2006, p 133)

The Happiness Pill

Suppose you read about a pill that you could take once a day to reduce anxiety and increase your contentment.
Would you take it?

Suppose further, that the pill has a great variety side effects, all of them good: increased self-esteem, empathy and trust.
It even improves memory.

Suppose finally, that the pill is all natural and costs nothing.
Now would you take it?

The pill exists.
It is meditation. …

(The Happiness Hypothesis, 2006, p 35)


The Righteous Mind
The Happiness Hypothesis