Archive for December, 2008

Falsifiability falsified

Prof Briggs uses the question Just what are falling temperatures evidence of? to describe the implications of theories that result in probable outcomes. Anthopogenic (human caused) global warming is one such theory.

The key is that you can’t falsify these theories because some outcome does not meet the probability predicted. This is why, for instance, a string of cold years is not considered to invalidate theories about global warming.

We have to explore what it means for evidence to be “consistent with” of “inconsistent with” a theory, what it means for a theory to be wrong or right, and what it means to be probably right or probably wrong.

One problem is that AGW ideas are a rather broad collection of theories that address a number of general questions.

There is only one claim of certainly in the AGW theory and it is that “Mankind influences climate.” … Since this is trivially true, the only interesting questions are (1) “How much does this or that organism influence climate?”, (2) “In what part are these influences helpful or harmful?”, and (3) “Can the helpful aspects be magnified and can the harmful effects be mitigated?”

There are a number of other issues besides the vagueness of the predictions that Briggs describes. These are important to understand both why the AGW theories are important but also how their properties can be used to skirt immediate realities.

Perhaps one way to look at this is how a gambler sees a casino. The business requires that the gambler is expecting a big payoff despite the reality that, in the long run, the house wins. When it comes to AGW, the question is who is the gambler and who is the house.

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The money pool – in perspective

Can we awaken from the dreams of recent years? provides a bit of insight for perspective worthy of consideration.

Some signal facts of our progress in the last century. If you were born in 1900, your life expectancy was in the forties, and GNP per capita was about $4000. If you are born today, your life expectancy in about eighty, and statistically, as an average American, you are ten times richer. In reality you are a hundred or a thousand times richer, if you factor in your ability to be in Paris tomorrow for $500, your ability to watch events from fifty years ago as they actually happened, etc. – not to mention that your toddler’s severe pneumonia can be reliably cured in 48 hours or so. …

Mostly it is because perhaps more than 50% of everything ever invented in the history of humanity was invented in the last 130 years, and perhaps 50% of that was invented by Americans.

We are at the end of an era; soon, there will be no one in America who remembers what life was like without telephones, running water, indoor plumbing, cars, airplanes, central heating, or electric lights

The essay also notes that, since the invention of the transistor (really the integrated circuit), you can no longer take things apart and see how they work. This point of view tends to illustrate not only the change in technologies but also the problem of seeing that change.

The whole idea of hacking is based on the new way of understanding how to take apart things. It is no longer a mechanical process of looking at gears and mechanisms but rather a process of watching behavior and examining software. The mechanical computer in a carburetor could be disassembled with screwdriver and wrench and all of the control and feedback mechanisms were visible as linkages and mechanical devices. In a modern vehicle, you have numerous sensors all over the engine (and elsewhere) connected to a computer that then controls fuel injectors. To see how this works, you have to examine the software that is in the computer. What is happening can be seen in detail by monitoring the On-board diagnostics with a plugged in terminal.

Things are not what they were. That makes trying to use the past as a guide or referent difficult, especially when pulling single data points for comparison of then versus now as is often done with economic data. Take care and do not be deceived.

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Moral equivalencing

Rick Moran falls for it in his Pajamas Media essay Yes, Virginia, There Is Obama Derangement Syndrome. He conflates the tin hat brigade with more mainstream delusions to create a “but Mama, everybody does it” type of argument.

This is the same approach that those who try to equate the attacks on Clinton with those on Bush use.

It is just as dishonest.

Krauthammer defined a Bush Derangement Syndrome to describe observable behavior amongst political partisans who didn’t quite fit into the tin hat brigade. The difference may be a matter of degree but that degree is an important distinction. The tin hat brigade does not care for facts or reality and is usually marked by paranoia and severe distress. They live that way.

Those suffering a derangement syndrome do not live that way and are suffering something closer to a case of psychiatric denial – the kind of thing that Dr. Santy has described so well.

There are borderline cases that could be studied to help understand the differences. Dan Rather and the TANG debacle comes to mind. The key is that to paint the tin hat brigade attacks as the same category of delusion as the assault on Bush is to ignore and paint over the very real and very important reality of the facts behind the Clinton impeachment and the treasonous implications of some behaviors. It is similar to the problem in whether to define a terrorist as a common criminal with all pertinent citizen’s civil rights or as an enemy soldier with Geneva Convention rights or as a foreign brigand and pirate worth only immediate dispatch.

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Gloom & Doom: calling the recession, even if odd

It provides a number of people a “I told you so” moment so they were quite happy to see the NBER call a recession for 2008. It was a rather odd, call, though. Mark Perry says in Carpe Diem

In our view, despite the dating of the start of the recession to December 2007, the current recession would not have been a recession at all without the “risk aversion hysteria” that struck the financial system and broader economy in September 2008.

Another commenter (Hoven) has noted that only 2 of the past 11 economic recessions have not fit the simple pattern related to GDP. The other one was in 2001.

The rebound in consumer spending so evident in this holiday shopping season, an apparent stabilization in initial unemployment claims, a huge drop in gasoline prices, a strong rebound in mortgage applications, and the placement of new corporate bond issues, suggest that risk aversion is abating.

It is confusing. The stock market is definitely taking a wallop. But employment is still good, inflation is low, mortgage rates are very low, – perhaps enough fear will trickle down and we can get to where all the fud mongering says we are now.

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The money pool: leveraged buyouts case study

Business Week takes a look at How Private Equity Strangled Mervyns and provides a case study of the money pool as the blob with a voracious appetite growing every bigger.

Private equity firms buy companies with the goal of improving them and then selling them for a profit. To pay for their deals, they often take on debt, hence the term leveraged buyout. In recent years the buyout shops went wild, taking advantage of unusually low interest rates and easy borrowing terms. … When the credit crunch hit, lenders pulled back and dealmaking ground to a halt. Debt-heavy companies were left unable to refinance just as the economy was slowing. The optimism and confidence of the buyout boom gave way to fear—and massive layoffs.

Part of what the equity was looking for was Mervyns real estate. Buy the company and get the real estate. Plan on massive growth in real estate value and forget the store. And then that house of cards fell apart.

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