Tuesday, December 29, 2015

Canaries ignored


The death of a canary and it's metaphor should always alert us that something terrible is happening, whether it's financial disaster, health, social, or political. Miners were the beneficiaries (thanks to the experiments of John Haldane) of how important canaries were to workers...because when the canary died, the death of humans weren't far behind.

An interesting fact about birds, is that they get fresh air when they inhale and when they exhale - a double dose for our single one. This makes birds great at taking in oxygen, but extraordinarily sensitive to poisons in the air. A canary can take in the poison twice with every breath. 

The canaries of our day? The slaughter of innocent people in war torn countries, currency manipulation (Fed bailout, debt/deficit, and etc), ideological chasms (Liberal vs conservative), and changing social morays. 

Living in Oregon, I grew up with my dad always having a big fire to burn excess yard leaves, sticks, and so on.  But when I  was staying at my mother-in-laws farm in Ohio, conditions were somewhat different. It was summer and I wanted to burn a few items. I ensured the area was heavily watered down and had my hose ready if anything got out-of-hand. It wasn't long before I had a good fire burning, but the wind had picked up and the fire jumped my perimeter. Rather than put out the fire, I tried desperately to get control of it (and the new little fires) with one hose. It was too late. Lucky for me, the fire department's truck was nearby. So within minutes of our 911 emergency call, the firemen were at our farm. When they arrived, the fire had spread across the brittle grass, up trees, and toward the forest. Fortunately, with their equipment, they overcame the fire within no time.  My first canary was when the wind picked up. At that time I should have put out the fire instead of just managing it. My second canary was when the flames jumped and spread. If we hadn't called in the big guns in time, the third canary would have been to flee with our lives. 

I don't want to address all the canaries of mankind, but I would like to focus on an obvious big one...a world-wide problem - ISIS. From the beginning and for years now, I have harped to all who would listen that ISIS was an evil entity and should be eliminated. I'm sure there were others out there that were calling attention to the problem too; but in any case, there was a surprising silence. In fact, during the first year of the ISIS expansion I even received condescending viewpoints. Was the subject too shocking? Was it that we have difficult lives of our own and can't think about those across an ocean? Or are our lives here in the states are so comfortable it's easy to ignore things in the hinterland? Maybe our disbelief of an unusual event put us into a fit of paralysis. But regardless the reasons,  the only response should have been a quick one...put out the fire.
But that is not what has happened to ISIS. It was left alone for too long before a response was made and now look at the expanded version of them. And here we are: Having to let go of the executed and displaced Christians that would have had a pleasant Christmas; having to pass by the thousand of innocent dead that were murdered for convenience; having to watch helplessly as the newly conquered populations adhere to new strict rules - such as forced marriages, female genital mutilation, fanatical Sharia law, strong-arm taxing and theft, and so on. 
Now the ISIS fire is so big and so wide, it has spread into Afghanistan and east, Libya and south, and even to the north up to Ukraine. It is easy for politicians to spout out tough resolutions to stop the ISIS cancer, but at this point it is almost the same as those that tried to stop the ancient plague infested ships from coming to shore, thinking the disease was on the people...all the while, flee infested rats walked on by.
Some have said that it's the Middle East, let them fight their own fight. Well how has that worked out? At this point, it's spread like a cancer throughout the region, and America (and other countries) continue to send millions of dollars of military might and men into the area with little effect. 
Years have passed and hindsight has shown us the devastation in the world, created by ISIS unchecked. They are evil and propagate evil. It is a perfect example of why it is vital we listen to our canaries...AND ACT - NOW, NOT LATER. Listening to the first canary, and responding with a pre-emptive strike would have stopped this whole mess.

It was our moral duty as human to human to listen to the pleas of the weak and helpless and support them with due diligence. Our world is a fragile planet. Events can spiral out of control in grotesque and unbelievable ways...and many times does. Recent US politics are upside down, with the popular-ism of bombastic anti-PC comments. Social unrest with American Blacks against cops has spun out of control. And now the first successful terrorist attack in over a decade has hit the American streets again. To add insult to injury, fuel is thrown on these fires through media outlets like news stations, Facebook, Twitter, etc. Therefore, with so many canaries out there, is it not vital we watch, listen, and respond?

How many canaries must die before we wake up to our responsibilities?
Human populations may be getting larger, but the world is getting smaller, and whether we like it or not, we are our brothers keepers in this world. I'm sure ISIS will eventually be defeated...but at what cost? Must we do this to ourselves? The Christmas holiday has ended, but hopefully not the message of love toward others. It's not too late to be vigilant and do the right thing, but woe to those who ignores the first and the second canaries - for there may not be a third.


Links:


  

Saturday, October 17, 2015

The Sweet Spot Between Ice Ages


Earth's Warm Sweet Spot



One evening, I watched a fascinating documentary about the ancestors of North America. Not the migration from Asia 13,000 years ago, but from southern Europe a few thousand years prior (see link 4). After watching the film, I realized how precious and grateful I was to be able to live in this place - in this time. My topic concentrates on why we should be grateful for the climate we have

We are in, what I call, the sweet spot of Earth's glacial cycles. The reason I say this is clear. Mankind has been able to populate and survive over virtually most of the earth. It's not impressive until you consider that this hasn't always been the case in earth's climate history.

120,000 years ago, the earth's glacial pattern was very much like today (see link 1 below). However, about 60,000 and 20,000 years ago, ice sheets (over a hundred feet thick) covered huge swaths of the northern hemisphere. During these periods, it would have been unthinkable for mammals to survive in those areas. A few basic scientific reasons explain why there are cycles of disappearing and recovering ice sheets (see link 2), but that is not what I wish to discuss.


I wish to compare today's climate with Europe during the Medieval period. It will be a good example of large temperature extremes in the modern era, and the effects on a society.

The Medieval period had what was called the Little Ice Age. It occurred between 1300 and 1850 AD. Winters were far harsher than previously experienced and since then. I won't go into why this occurred, but would rather discuss the effects of the drastic temperature drop. There were a few years of warmth, but on the whole it was a dreadful time for survival.

Effects of Medieval cold weather: (See link 3)

Faminecold weather and torrential rains decimated crops and livestock across Europe. The recent addition of the potato was one of the hardiest crops, but even the potato couldn't survive the harshest of winters.

Disease. A weakened human immune system and increasing rat population instigated an outbreak of the bubonic plague (transmitted by flea infested rats). Also known as the Black Death, it took a heavy death toll on EuropeNorth Africa and Central Asia. It killed an estimated 75 million people.

Political upheaval. Class warfare and political strife destabilized formerly prosperous countries as millions of people starved. One of the spillover effects was the 30 year war, which fueled civil discontent and weakened European economies.

General discontent. Many Europeans spent their summers around the fire due to lowered summer temperatures. 
An illness called St. Anthony's Fire affected whole villages. They would suffer from convulsions, hallucinations, gangrenous rotting of the extremities, and even death. 
Grain, if stored in cool, damp conditions, developed a fungus known as ergot blight and also fermented just enough to produce a drug similar to LSD. 
Wine drinking was not even a relief, because grape production dropped to as low as 20%. 

Weather:
Sea storms were fierce and the advancement of sea packs restricted normal ship passage. The cooler temperatures forced cod (a staple for European diet) further out to sea, making it more difficult for fisherman to catch a reliable food source.  


Effects of Today's warm weather:

Agriculture: Stability of a warmer climate dictates longer growing seasons and more productive crops. 

Health: Warmer weather means fewer illnesses and death. Science, in the last several hundred years (especially recent decades), has led to advancements in medicine, and ultimately longer lifespans.

Economic stability: With generally warmer conditions, less funds are needed to survive harsh winters (i.e. cheaper fuel costs, conditions allow outside work to continue, and less severe winters equal greater GDP for government).

Weather: Less storms equal greater comfort, wealth, and survival. Ice packs retreat, which has actually allowed sea travel to be more effective, reaching passages normally not accessed during cold weather years.

Population: Setting aside the political unrest that occurs in densely populated areas, the last Hundred years has seen an amazing explosion of human kind. This not only indicates the advancement in science, but also the favorable conditions in the earth's weather. 


The planet is in the peak of its warm cycle, punctuated with snap-shots of record heat. This period on earth should continue for a few hundred years, as it always has done. Then it will end...maybe slowly, maybe quickly. Ice sheets will eventually grow at an increasing rate for the next 10,000 years or so until much of north America and possibly all of Canada is under several hundred feet of ice once again.

There is no guarantee about what kind of weather we will have in the next hundred years or so, but there is one thing I can guarantee...once the ice sheets start to encroach upon our property, people will appreciate a hot summer much more fondly than a frozen one. 
To be sure, there are many places on earth where people struggle to survive; but generally speaking, mankind is reaping the fruits of the most habitable time of the glacial ice ages. Therefore, regardless of the climate change of random, unpredictable and wacky weather, let us pause to reflect less on our minor inconveniences and more on the blessing of all that we have. 








Friday, May 29, 2015

Please Continue to Hold





Is government a bloated bureaucratic nightmare? 
I had a recent personal experience regarding just that issue.
The other day, I received a check in the mail from the IRS for $1007.04. The problem is that I just finished my taxes and ended up owing several hundred. So why did they give me a check? Printed at the bottom left of the check was “INT 7.04” I assumed that meant interest and that the check was originally $1000.
This story isn't about numbers, so hang in there.
As I am self employed, I file estimated tax payments throughout the year. I looked through all my estimated payments and there was one check this year with that amount. But why would they send the exact same amount (with interest) back to me?
This is where things get weird.
I called the IRS 800 number to clear it up and that’s when the stereotypical view of government took over. At the other end of the line was a lovely, soothing, female, computer generated voice. It gave me options: 1 - English or 2 - Spanish. I pressed one. Then came three options 1 - Questions on refunds or extended returns, 2 - blah, blah, blah, 3 - blah, blah, blah, blah.
I pressed one. Then she asked for my social security number, my date of birth, and zip code.  Not understanding the connection, I did what I was told.
Then came on some more options that were unrelated to me, so I decided to press zero for the operator. That didn't work, but they did give me one last set of options: press buttons 1 through 5 for things don’t relate to me or they will hang up. I couldn't understand why there wasn't a "press button number 8 for WAIT" option. 
I hung up.
I got on the phone again and this time manipulated the options so that I could speak to an operator. Success! The voice said the wait time would be 15 to 30 minutes. With the hope someone else would get off the line and I would be in at 10 minutes, I decided to wait while the new-age massage therapy music played on in the background.

15 minutes went by and I got up from my desk to stretch. 30 minutes went by and I turned the phone to speaker. I opened the fridge to see what I could eat while I waited. I can’t eat. What if they answer and I have my mouth full. Fine! I could drink some ice tea and wait. Man, no ice tea!  Then I remembered the sun tea on the deck. I went to get it, but cautiously made my way, just in case the phone signal turned fuzzy. I brought the sun tea in, plopped in some ice, and waited…and waited…and waited.

45 minutes passed and my frustration had turned into anger. “What is with these guys?” I asked myself aloud. “Is this a clever ploy to delay me so long that I hang up? What are we paying them for?" Oh no! They must be under funded and lack staffing; the IRS needs to hire more people…RIGHT? Nooooot!.They are just incompetent. After amusing myself with my clever deductions of government operations I looked at the clock.

An hour had gone by. My anger turned to acceptance. This is just government. I looked through my Facebook page, check my email, then turned on the local news and watched it until the national news came on.
Incidentally, At every 2.5 minute interval, the female voice would remind me “Our representatives are still helping other customers. Please continue to hold.” For a moment I thought that they were intentionally ignoring calls, kicking back with their feet on the desk, laughing at interdepartmental jokes. But that's impossible…the IRS doesn’t laugh about anything.

At an hour and a half I had to go to the bathroom. Oh well, that’s what the speaker phone is for. Soon I was hungry and went to the kitchen to make a salad. I wanted to make dinner, but it had to be something easy to prepare, so I wouldn't miss the IRS representative. Pizza it is.

The news had ended -- and it was the two hour mark. I was ready to hang up, but by this time I had to know if they would ever answer. I was in it for the long haul.

After 2.25 hours of waiting it was 6:40pm. I was munching on pizza, knowing that they close at 7:00pm. I almost hoped they wouldn’t answer, because I could tell all my friends how messed up and incompetent the IRS and government is. 

But at 6:43pm……………………..it happened.
I was completely amazed - there was a click and a monotone voice that said "standby".
Soon, another female voice came on. This time a real one. An American. A black woman - I think....(according to Louise C.K. as pointed out on his SNL monologue - that's mild racism).  It was Mrs. Nangle #100022119912314141414141414414 or something like that. I was so impressed that someone answered I couldn’t keep track of the identification number she threw at me,
For a second I forgot why I called, then remembered and explained my situation. After I proved who I was, she told me to hold for a minute…..I almost cried, but I didn’t, because I’m a grown man and a grown man doesn’t cry, unless his daughter is getting married and he will never see her in the house as his baby girl, or maybe if a vet comes back from the war and surprises his kid at a school assembly, or maybe if a mother cat sleeps with her baby kitty with hugs. Wow…off track.
She came back to me and said she found the trouble. It was a simple mistake where I applied my estimated check with a 2013 voucher instead of a 2014 voucher. She said I should void it and send it back with an explanation. She would make a note so it doesn’t affect my taxes.
She was great. Was it worth the wait? Yeah, because I got my taxes squared away, and no because I didn’t get the extra cash, and/or  I'm not sure because I am just now recovering from hitting the wall of a mental marathon of patience (of which I'm proud to have survived and may make a T-shirt out of). 

So to answer my original question, YES!!!!!!!!!!!!! This is a perfect example of how Government is bloated and inefficient. Heavy sigh.
Nevertheless, I have to admit that as bloated and inefficient the government may be, the employees rock! Thank you, Mrs. Nangle!


Sunday, January 25, 2015

Are we out of the bad economy woods?





SUMMARY: 
The Federal Reserve has finally stopped pumping billions into the monetary system as of October of 2014 (This was known as QE3 - the third quantitative easing). The Fed didn't pull the plug quickly, but tapered the infusion to zero...for now. This was to wean Wall Street slowly, so as not to upset the markets. I suspect if the economy stumbles again, we will see a QE 4, but it would be highly doubtful for several reasons. The stock market is still stable, employment is up, interest rates and inflation are low, and there is generally more optimism.

DEBRIEFING: 

With the conclusion of QE3, I thought it prudent to see the results and how it has affected America.
It's easy for me to spout off numbers and indicators, but my favorite is the DIY stores. I visit the stores almost daily, picking up supplies and examining the new products. At the height of the recession it was almost a ghost town and employees would hover around me constantly, trying to look busy. Today the activity in the stores is busy, and it is evident that people are spending at normal rates.
The goal was to stabilize the economy, and as mentioned in the Summary it seems to have occurred. Whether or not there is a correlation between economic growth and Quantitative Easing is up for debate.
With all this good news, so comes the bad. There are still areas that are casualties of the economic war, such as the widening income gap between rich and poor, the black segment of the population being unemployed at twice the rate of whites, and a decline of median income to a level back in the 90's, to name a few. It is easy to gloss over the spillover effects of a recession and to point to one major contributing factor of success, but it is rarely that simple - as my several examples indicate.

President Obama likes to take credit for many of the good that has taken place in the economy, as noted in his most recent State of the Union speech. But presidents have little overall effect on what happens. For example, In 2010 Obama was quoted as saying "the days of cheap and easily accessible oil were numbered". In other words, he expected gasoline prices to increase from that point on. He probably never expected himself to say, in the 2015 State of the Union, "and thanks to lower gas prices and higher fuel standards, the typical family this year should save $750 at the pump." Obama is incorrect to say that higher fuel standards have something to do with savings. However, he is correct to conclude that the lowering of gas prices allowed the average citizen to reap the benefits. But the real credit and thanks should go to the initiative of private gas corporations, who believed drilling would work. It stimulated greater competition in the world and forced foreign countries to drop their price, ultimately bringing fuel costs down to record lows.
Presidents can either hinder economic conditions by delaying recovery or give it a shove in the right direction. It usually is in the form of regulations and taxation, where business feels it the most. But the U.S. economy is like a big ship crashing through the waves of adversity. Creative companies are the economic engine of the ship, pressing forward at great speed - if allowed to. The president more or less controls the rudder, which keeps the ship straight and gives the passengers comfort; or at times turns the ship such that the waves of adversity crash sideways, resulting in great discomfort and hardship.

In my opinion, the QE is a Keynesian concept that showed its colors when it buckled under stagflation in the 1970s. But governments love Keynesian economics because it can be used to justify wasteful projects and feeds into big bureaucracy. Pumping money into a system to entice companies to invest or hire wasn't the answer...in this case. It made wall street happy and less nervous...sort of like filling up on cotton candy - feels and tastes great, but it ain't healthy. I attribute most of the economic gains to the American entrepreneur. Businessmen who really knew how to work around the system by creating a new demand for products, which in turn created jobs, and ultimately got the economy rolling again. It was as if the business community figured out how to get America to the dining table of healthy food so the QE cotton candy could be set aside.  
Another advantage for the U.S. is that while the economy continues to gain momentum, the rest of the world continues to struggle. Therefore, America has still been the best place for other countries to invest their confidence with currency.

In fact, Europe has just begun their own QE stimulus package. I suspect they saw the growth in the U.S. and expected they may be able to reap some benefits as well. Countries like Greece and Spain, with unemployment over 23%, most likely will welcome the prospect. These expansionary monetary policies usually weaken an economy's exchange rate, which boosts exports...most likely breaking the economic stagnation and lack of confidence.  However, as wonderful as this stimulus may be, it still won't address other casualties that come into play. An example of this would be Germany's widening gap between the rich and poor...even the strongest economy in Europe has its problems.

Final notes:
I sense a new era of non-obligation in the world. Europe traded austerity (paying their debts) for a stimulus (going into debt). It is difficult for a region of the world to be responsible (and at the same time remain competitive), all while there is a spending spree in the U.S.
In the end, the hard facts will have to be addressed at some point, and the piper will have to be paid. This may come in the form of a new monetary policy (i.e. changing the U.S. dollar as the worlds Reserve status currency to something new), a major war or wars that could topple major economies (these wars could take the form of military action, economic strategies, or even cyber attacks), or natural occurring events that affect life on earth (such as astrological, geological, or climatological conditions). Pray none of these things happen.
I don't wish to sound pessimistic, but we humans are in a constant position of fragility. Living only for the present does not serve our descendants well. If we wish mankind to live in a better future, it is imperative we cast off our selfishness, think clearly, be willing to sacrifice, make the tough decisions, and take responsible steps for humanity to prosper...better sooner than later.

Further additional and maybe boring information.

What is a stimulus or quantitative easing? 

For those of you who want the cliff notes on the QE thing, let me take a moment to quickly explain how quantitative easing works.
In 2008 QE1 was initiated to combat the flagging economy at the end of the Bush administration (a $700 billion bailout plan). This stimulus had little effect on the economy.  In 2011, during the Obama administration QE2 (a $600 billion bailout) was initiated; it also had little effect on the stagnant economy. In 2012, The Federal Reserve pushed further with QE3 or sometimes called "QE infinity," because the Fed promised an on-going amount of $85 billion per month of infusion into the system until the economy recovered. In 2014, the economy improved enough so that the Federal Reserved "tapered" those billions to smaller levels per month until it formally ended in October '14.

At this point, I will digress into a description of the monetary process. For ease of discussion I will use money and currency interchangeably...although in actuality currency is a more illusive term.
When the government begins a stimulus, the process is as follows:
(1) Funds are needed for spending projects aimed at job creation and revival of an economic slump and with the Federal Reserve's help, the U.S. Treasury issues bonds (more or less  IOUs). This increases the National Debt.
(2) The bonds are auctioned off to major world banks at an open market.
(3) The banks receive payment from the Federal Reserve (The U.S. government's banker) for the bonds in the form of checks (the Fed's version of IOUs).
(4) The banks provide money for businesses and the treasury so they can fund the government projects.
(5) Americans earn income on those projects and put their money into local banks (who borrow most of the money and invest it),
(6) This invested money multiplies, helping the supply of currency to grow within the economy.
(7) The next year, the Treasury oversees the IRS as it takes a percentage of that earned income to pays off the IOUs the Federal Reserve made.
(8) This reduces the amount of bonds in the Reserve and lowers the National Debt.

Note: Just like the average citizen, if the U.S. borrowing exceeds income the debt grows; if income exceeds borrowing the debt shrinks. With the implementation of the stimulus, debt grew faster than could be absorbed. Only until sometime in the future (if the economy is strong) can we expect or hope the debt will be reduced.
The Federal Reserve is not like the average citizen. It had no obligation to pay itself back and could have continued to pump IOU checks into the system as long as it felt necessary for the economy to recover...which is exactly what it did. It was a risky venture (to be discussed on another day) that evidently seemed to pay off, for now.



http://www.bankrate.com/finance/federal-reserve/financial-crisis-timeline.aspx
http://www.statista.com/statistics/268830/unemployment-rate-in-eu-countries/
http://www.wsj.com/articles/ecb-announces-stimulus-plan-1421931011
http://www.iter.org/newsline/136/300
http://www.bloombergview.com/quicktake/federal-reserve-quantitative-easing-tape