Chart of the Week: Price of a Home in Gold

To allow for some perspective and filter out the "noise" of fluctuations in the value of the dollar, economists often look at the price of an asset in terms of gold, the only other international standard. The chart below shows the median price of a US home in gold, and clearly shows the burst of the housing bubble beginning in 2008 after peaking in 2001:

The following chart is another revealing comparison. It shows the yield spread for Greek bonds.  The basis points difference between German bonds, considered a safe investment, and the bonds of a country in dire financial straits is becoming wider, approaching a full percentage for 2 year bonds.  Greece is therefore facing ruinous expense in refinancing its huge public debt with short term bonds yielding a whopping 10% and long term bonds 8.8%:

The Senate's "Climate" Bill

Update:  After suddenly loosing the support of an influential Republican senator, the administration is temporarily withdrawing the Senate climate bill from consideration.  The move by Lindsey Graham (R-SC) appeared to be a protest of Senate Majority Leader Reid's decision to move an immigration bill ahead of the climate legislation on the Senate's agenda. Graham had reached agreement with Senator Chuck Schumer (D-NY) on a bipartisan immigration bill, but objected to the Democrats using  a bipartisan bill for political advantage. The Democrats are facing increased pressure from Hispanic voters to pass legislation providing a path to legitimacy for undocumented workers. Democrats are working to smooth Lindsey's ruffled feathers, but the politics are complicated: Senator Henry Reid (D-NV) is facing a tough re-election campaign and needs Hispanic support to retain his seat.

{4.23.10}The Senate will introduce its climate bill on Monday April 26th. In a transparent government, the bill would honestly be titled "the nuclear industry subsidy bill" because that is exactly what it does: subsidize expensive new nuclear power generation as a solution to the climate crisis. The day is significant for another reason. April 26th is the 24th anniversary of the Chernobyl catastrophe. We now know that tens of thousands of people died as a result of the Chernobyl explosions and aftermath. Many more will become ill and die[1] as the effects of long lived nuclear decay (Cesium 137, Strontium 90) takes its toll on the lives of eastern Europeans. Two reports, one commission by European Greens and another commissioned by Greenpeace document the effects of the environmental disaster that effectively halted new nuclear power construction in this country. But that was twenty four years ago. Now, the Senate is proposing to spend $54 billion of taxpayer funds to encourage a moribund industry to expand capacity in the name of achieving an inadequate reduction in carbon emissions of 17% by 2020. Many climate scientists think that is not nearly enough to keep global temperatures from rising 2℃ above pre-industrial times. Other industry friendly proposals to be put forward include prohibiting EPA from regulating CO₂ as a pollutant, expanding offshore domestic oil and gas production in Alaska, and on the east coast[2], and funds for research on clean coal burning.

[1]the basic conclusion of the World Health Organization/IAEA contained in a 2005 report of the "Chernobyl Forum" is that 4,000 to 9,000 people died or will die of exposure to radioactivity.  But both reports linked here conclude that the long term effects of radioactive contamination were ignored or minimized by international bodies.  More than 50% of the fallout affected 13 European countries outside of Russia, Belarus and Ukraine that were dangerously contaminated by radionuclides.  More than half the Cesium 137 emitted was carried in the atmosphere to these countries.  The most recent published figures in Belarus, Russia and Ukraine alone indicate that the accident killed an estimated 200,000 additional people between 1990 and 2004.
[2] A Louisiana oil rig explodes, burns and sinks killing all aboard the platform in the Gulf of Mexico.  Now that the rig has sunk, it could be spilling as much as 8,000 barrels of crude a day into the Gulf.  
[photo, right: the radioactive wreckage after the persistent graphite fires were "liquidated", courtesy Soviet government. A new book on the disaster from the New York Academy of Sciences says that of the 830,000 involved in fire extinguishing, containment and clean up between 112,000 and 125,00 died by 2005. This figure is based upon previously untranslated, published slavic language studies and articles. It contrasts sharply with the initial WHO/IAEA estimate of only 31]

Toontime: State of Denial

[credit: Lalo Alcaraz]

Wackydoodle sez:  Papers? I ain't got no stinkin' papers!

The passage of Arizona Senate bill 1070 culminates a rightward shift in a state that has been conservative even before the days of Barry Goldwater. The law is a potential fountain of police abuse and racial discrimination that allows majority white police to stop anyone they think is possibly undocumented to prove they are legally in the United States. The bill smacks of vigilante justice and probably violates the constitutional doctrine of federal preemption in the area of immigration.

Some Good News In Honor of Earth Day

WWF tells us that Brazil's latest analysis of deforestation in the Amazon from August 2008 to July 2009 shows the slowest rate of loss since record keeping began in 2000. While good news, the reduced rate must be seen in the context of a global loss of forest of just over 32 million acres per year.  Deforestation and degradation accounts for 15% of global CO₂ emissions.  Recent studies show that 40% of the reductions in deforestation achieved from 2004 to 2007 is the result of the creation of protected areas, including protecting indigenous lands. WWF is working with the Brazilian government on the Amazon Region Protected Areas initiative to create a network of protected forest areas 50% larger than the United State's park system. Preserving forest is the most cost effective way to keep us away from the zone of catastrophic climate change*. So go out and plant a tree for Earth!

US Person still recalls the thrill of riding a friendly, working elephant through the Thai rainforest. Using elephants to protect other species is a good idea, and is one being adopted by wildlife officials in Asia. In Sumatra's Bukit Barisan Selatan National Park, the Elephant Patrol was out on the job when a baby elephant, confused and apparently abandoned, approached the group of four domesticated elephants with their rangers aboard. Despite their efforts to find his group and return the one year old to the forest, he came back each time to the patrol. Apparently he had decided to joint this slightly unusual herd. The rangers relented and took in the new recruit. The national park is 882,000 acres at the south end of Sumatra covering forests, hills, river beds and beach that provides a home to endangered rhinos, tigers and elephants. It shares a border with 127 native villages. Human-wildlife conflicts are therefore inevitable. Tomi, as he is now known, accompanies the Patrol regularly learning to be a wildlife protector and an elephant ambassador to humans.

*last March was the warmest March on record according to the National Oceanic and Atmospheric Administration (NOAA). The combined land and ocean global average was 1.39℉ above the 20th century average. Antarctic sea ice expanse in March was 6.9% lower than the 1979-2000 average. Many locations in Ontario, Canada received no snow in March setting a record for low snowfall.

Chart of the Week: Keeping it Simple

A little confused by modern finance? Rest assured you are not alone. Even the bankers don't understand synthetic collateralized debt obligations fully! But here is a chart to help you figure out who's on first:

Another Example of Pay for Play

This one could really make you sick.  Senator David Vitter (R-LA) is blocking the listing of formaldehyde as a known carcinogen by the EPA. The National Cancer Institute issued a study last year showing a link between formaldehyde and leukemia.  The report increased efforts at EPA to upgrade the chemical's status from "probable"to "known" carcinogen. But Vitter has blocked the nomination of a key EPA official while urging the agency to seek another National Academy of Science review of formaldehyde's health risk, a process requiring more time and money.  Eventually the agency capitulated, postponing the new designation. Vitter is backed by the formaldehyde industry. For his 2010 election campaign, he received $9000 from Dow Chemical, $5000 from Monsanto, $4000 from Exxon/Mobil and $2500 from the American Forest and Paper Association. His position on formaldehyde corresponds exactly to that of the Formaldehyde Council Inc, which spend $30,000 on a lobbying campaign to win a National Science review of the scientific studies on formaldehyde toxicity.

Vitter is not alone in backing the chemical industry's delay tactics.  Senator James Inhofe (R-OK) stalled the more serious reassessment in 2004. Koch Industries {"Koch"} contributed $6,000 to Inhofe campaign that year. Koch bought two paper mills from Georgia-Pacific the same year. Formaldehyde is used in the manufacture of plywood. Thousands of Katrina victims complained of respiratory problems after being temporarily housed in government trailers contaminated with formaldehyde.

Sea Shepherds Claim Success

Despite having their high speed trimaran Ady Gil smashed in a ramming at sea, and its crew captain detained to face serious charges in Japan, the Sea Shepherds claim their harassment tactics were responsible for halving the Japanese catch of whales in the Southern Ocean.  The Japanese whaling fleet returned to port last Monday with its smallest catch in years--506 minke and one fin whale--well short of its target of 935 whales. The smallest toll on record was the 2006-07 season when the fleet returned home after a ship caught fire. Whalers blamed the aggressive interference of the Sea Shepherds for the small catch.  The Japanese fisheries agency said that their activities forced the fleet to suspend its activities for 31 days.  The season was a probable economic loss for the Japanese, since the environmental group thinks the fleet needs to kill at least 700 whales to break even.

The industry has been subsidized by the Japanese government since 1988. The price of whale meat is now lower than beef or reindeer meat in Norway, the other major country hunting whales on a commercial scale. Nevertheless, Japan is making headway through the IWC, seeking to end the international moratorium {"whaling moratorium"} on whaling in its coastal waters in exchange for lower quotas in Antarctic waters. Japan apparently sees the whaling issue in terms of protecting national sovereignty despite a declining demand for whale meat in its domestic market. Incredibly, their effort is being supported by the United States.{Betraying the Whales, 4.2.10} It is taking the official position that continuing the moratorium is impractical. There appears to be a growing black market in whale meat. Last year nearly 1700 whales were taken compared to 300 in 1999. The US is willing to allow Japan, Norway and Iceland to continue reduced commercial hunting for ten years. Australia has said it may take the Japanese to court for abusing the research exception to the moratorium as cover for commercial hunting. Conservationists see the US brokered deal as a sell out of a hard won international consensus against further exploitation of whales, once hunted by man to near extinction.  The IWC meets in June to consider the moratorium's fate.  Go here to sign a petition against the resumption of commercial whaling.

[photo:  a slaughtered whale and her calf are hauled abroad a Japanese whaler, Australian Customs Service]