Monthly Archives: July 2012

The Obama Debt Plan

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John Hinderaker, of Power Line, commented on President Obama’s plan to pay down the national debt, as demonstrated by Obama’s mid-year budget plan update.  Obama also is campaigning on his plan to “pay down the debt in a balanced way.”

Here’s what his “balanced plan” does to our national debt, illustrated by the following graph from Power Line, and The Washington Times.

That’s a rather startling increase in the size of this paid-down debt.  “But wait,” some of you might object.  “What about the debt as a per cent of our GDP, a perhaps better way to assess the size of our debt?”

Our 2011 GDP was some $15 trillion, and it’s projected to be in the neighborhood of $24 trillion by 2021 (my calculation based on data in Table 1-6 of the CBO’s report “Budget and Economic Outlook: Fiscal Years 2011 to 2021.”

That makes our national debt 98.7% of GDP in 2011, and 105.8% of GDP by 2021.  This is how Obama intends to “pay down the debt in a balanced way” via Obamanomics’ New Math.

Some Thoughts on Climate

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There seems to be a problem with the location of the surface stations that are used to assess  (global) temperatures across a wide geographic area and over long periods (as “climatologists” see it) of time.  In particular, the US Historical Climatology Network, which has major contributions to the data sets used by “climatologists,” seems to have been giving invalid readings for quite a number of years, and at least one US agency involved in driving Federal climate policy seems to have badly “adjusted” the data these stations have been doing a bad job of providing. 

Specifically, as Anthony Watts, the lead author of the paper that investigates the implications of this error (“An area and distance weighted analysis of the impacts of station exposure on the U.S. Historical Climatology Network temperatures and temperature trends”), put it in an earlier paper,

[A]pproximately 90% of USHCN stations were compromised by encroachment of urbanity in the form of heat sinks and sources, such as concrete, asphalt, air conditioning system heat exchangers, roadways, airport tarmac, and other issues.

This is the result of the well-known urban heat island effect.  The cities grew out to surround the originally placed sensors, and nothing was done about those sitings.

In Watts’ present paper (that inspirationally titled “area and distance weighted analysis” paper), Watts used a better method of assessing the quality of the station locations, one developed by Michel Leroy of METEO-France and accepted for use by the World Meteorological Organization.

Watts’ findings:

…a spurious doubling of U.S. mean temperature trends in the 30 year data period covered by the study from 1979 – 2008.

Moreover,

Poorly sited station trends are adjusted sharply upward, and well sited stations are adjusted upward to match the already-adjusted poor stations.

Well sited rural stations show a warming nearly three times greater after NOAA adjustment is applied.

Urban sites warm more rapidly than semi-urban sites, which in turn warm more rapidly than rural sites.

And finally:

The new analysis demonstrates that reported 1979-2008 U.S. temperature trends are spuriously doubled, with 92% of that over-estimation resulting from erroneous NOAA adjustments of well-sited stations upward.

Hmm….

He Built This

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…and it’s not pretty.  The costs of Obamacare are starting to come home to roost, now that its various mandates are starting to take effect.  Gerri Willis has a listing; this is a brief summary.

The requirement that lets grown adultschildren stay on mummy and popsy’s health insurance policy until they’re 26 will cost $3,400 per grown adultchild per year.  But there’s an additional cost: employers are beginning to not include such policies at all in their benefits package; they’re too expensive.  There’s yet another cost: colleges where Buffy or Junior might go—and might have gotten coverage as students—are beginning to drop the policies: they’re too expensive.

But wait.  There’s still the little 26-year-old tyke’s pre-existing condition that’s required to be covered.  Except that coverage still is hard to find.  Willis writes

Insurers in 20 states have given up offering child-only insurance plans.

Those child-only plans matter because that’s all that’s left after those other policies have been withdrawn from the market.  RTWT.

There’s more, though.  Medical equipment manufacturers are being forced to cancel plans for medical equipment manufacturing in the US.  Cook Medical, the US’ largest privately held maker of medical devices, with annual revenue of more than $1.8 billion and employment of around 4,000 people in the Bloomington, IN, area and 10,000 worldwide, is an example.

Cook says it will have to cancel plans to build an additional five manufacturing plants, each employing 300 people when those plants were scheduled to open.  The medical device tax that’s another important part of Obamacare, will cost Cook Medical $20 million this year alone—that’s the price of one of those additional manufacturing plants.

It gets worse—or better, if you like the Obamacare move.  Follow the Fox News link to the larger article and video at Indianapolis Business Journal.  Executive Vice President of Strategic Business Units at Cook Medical, Pete Yonkman, described one of those unintended consequences that are so monstrous and so ubiquitous in Obama’s centerpiece.  With this medical device tax, Cook can’t economically bring a new technology to patients and hospitals in the US; Cook instead is looking to Asia.  Moreover, as this technology is developed in Asia, that’s where the expertise will be developed.  As a consequence of that, that’s where the engineering, and then manufacturing, jobs will appear:

It’s important to have that [engineering and scientific expertise] around your manufacturing base[.]

And this: Yonkman noted that

One of the fastest growing areas in our company every year is always our regulatory team having to deal with the increased burden coming from…increased regulation….

A medical device manufacturer’ fastest growing area has nothing to do with its device manufacturing or sales.

And finally this: Obamacare’s medical device tax is a 2.3% tax on medical devices; however, the impact is greater than just this immediate 2.3%.  Yonkman said the impact on actual earnings is another 15%.

He’ll stop that from being built.

Let’s See, Now….

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Spiegel Online International has some remarks about Governor Mitt Romney’s first day with the press in London last week, as the Republican Presidential Candidate began his European trip.

SOI didn’t much like him.  They also cited England’s Daily Mail running a generally negative article.

If the liberal European press doesn’t like Romney, he can’t be bad.  Especially after the way it so favored Presidential Candidate Barack Obama.

Eurozone Breakup Disaster?

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Spiegel Online International carried an interesting article the other day.  They cited the Institute for New Economic Thinking as saying

We believe that as of July 2012, Europe is sleepwalking toward a disaster of incalculable proportions….

Paraphrasing them, SOI went on to say that the European leadership must move faster and more decisively, else the euro could simply disintegrate.  The INET report can be read here.

SOI went on, noting that

The experts wrote that the crisis is the result of flawed design, construction and implementation of the finance and currency system.  In order to rescue it, the economists are calling for a radical restructuring.

And here are the changes these experts want:

  • tighter integration of the financial system with a strong institution at the European Union or euro-zone level that would make stabilizing the banks a matter for all of Europe;
  • the permanent euro rescue fund, the European Stability Mechanism, to be provided with a banking license as a lender in order to give it the “firepower” that it needs;
  • the European Central Bank to better use all the tools at its disposal (both conventional and unconventional) in order to bolster the currency union.

Then these experts claim, contradictorily, that none of this

mean[s] that the costs of the crisis should be socialized across euro-zone citizens: systemic failure does not absolve from responsibility individuals, banks and supervisors who took or oversaw imprudent lending and borrowing decisions.

This much is correct, but each of those three steps specifically socialize the costs of the present crisis across “euro-zone citizens.”

Even the illustrious Secretary General of the OECD,  Angel Gurria, thinks much of this is a good idea, insisting that the ECB should get back into the business of buying bankrupt countries’ junk bonds

more decisively and with bigger numbers…you have to stabilize the yields.

Gurria added that he saw no reason why Italy and Spain should be paying yields of 7.5%.  Here he shows the typical mindset of a European government man: the market has said these bonds have value only at those yields.  Why should individual taxpayers be forced to indemnify them at a lower yield?   Because a Government Man Knows Better.

None of these measures can succeed, though, since they proceed from a wholesale misunderstanding of what is necessary for effective integration of polities: comity of social purpose, common understanding of the role of government in the lives and economies of free men, common understanding of the purpose of money.  These do not obtain in the EU as a whole, nor in that subset that is the eurozone.  The whole of southern Europe has an entirely different view of the role of government and of money, wholly differing social imperatives than those of northern Europe.  And these nations radically differ in their views from the concepts extant in eastern Europe.  And France and Great Britain differ—in their unique ways—from all of these.  Absent greater political and social moral imperative agreement, there can be no successful “eurozone.”

There is a lesser false premise from which INET (and the others) proceed: that the breakup of the Eurozone would be a “disaster of incalculable proportions.”  The only disaster here would be to the various subsets of Europe forcibly carved up and jammed into the eurozone’s Procrustean Bed, and to the egos of those married to the Eurozone as it is constructed.