The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

One of the memes I’ve heard recently in the climate debate is that there is no scientific consensus — that there is actually strong disagreement.

The main basis of this argument is that 31,486 dissenting scientists have signed a petition against the belief that Global Warming is man made at the PetitionProject.org.

I don’t want to debate climate change; rather, I want to look at that argument to see if there are any statistical flaws in it.

My problem is whenever anyone uses a single, out of context, data point. What does this number actually mean? Is 31,486 alot or a little? How many scientists are there in the US? etc.

I heard this argument the other day, and went hunting down a visual way to express it, and found this via Information is Beautiful:

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This does not resolve the debate — there are more variations (Climate Change: A Consensus Among Scientists?) — at but it demonstrates an obvious flaw in the “dissenting scientist” argument.

Here is the breakdown of skeptics, by field:

Interesting stuff . . .

Visuwords is is a visualization tool based upon Princeton University’s WordNet.

The online graphical database — part dictionary, part thesaurus — that groups words by their meanings and associations with other words and concepts. These related linguistic ideas are visually displayed in an interactive graphic.

The most interesting visual displays come from the broadest topical words. Try words like Music, Biology, War; I’ve had more luck with nouns than verbs.

Each node can be further opened, revealing related ideas, words, etc. As an example, here is what “Economics” looks like:

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Click for interactive graphic>

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For the above, I used the Fill Browser setting — a scalable, widescreen display.

We won’t get the final numbers til after the close today, but here is what they look like going into the final session:

• Nasdaq is up 45%; Its the big winner for 2009 of the major US Indices;

• S&P 500 index up 25% for the year.

• Dow Jones Industrial Average is up 20% for the year (up 61% from its March lows); Transports are up 18%.

Here is how the year looked, month by month, along with major events:

Chart courtesy of WSJ

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Today also marks the end of the decade as well as the year.

Below you will see a chart depicting the price performance of the Dow for each decade since 1900. As you can see, from the close of 1999 through 2009 was the second worst performance on record. Only the Great Depression decade of the 1930s was worse.

The current zeros decade also shares an unfortunate outcome with the 1930s in being a decade during which the Dow actually ended lower than where it started.

Happy 2010!

Chart courtesy of Chart of the Day

Seems appropriate:

“I’m starting to get the sense that 2009 wants to finish me off before it dies of old age. A calendrical unit yelling “I’m taking you with me, you bastard!” from its vanishing final paper bunker marked December, every spent day a room deleted from the structure until 2009 is finally huddled in one small box marked 31 and screaming obscenities in stark terror.”

-Warren Ellis, writer, ranting in his blog

Interesting commentary in the UK on QE:

“The truth is, though, that we have been living in an economic La La Land, induced by perhaps the biggest policy undertaken during the Labour Government’s period in office: printing money, or quantitative easing, to use its economically correct but unlovely name.

The way QE works is like this. The Bank of England is owned by Her Majesty’s Government and the Chancellor has given it permission to create £200 billion of what is known as “central bank money”. Rather than physically print the notes at its works in Debden in Essex, it has simply been buying up Government bonds, or gilts, from investors and crediting electronically the accounts of their bankers.

What happens now? At times like these, history can be a useful guide and I am afraid the precedents are rather scary. Printing money has been used before as an emergency monetary policy: during the Napoleonic Wars; in the 1820s; and during the First World War. On two out of three of those occasions the authorities overdid it and the result was inflation, followed by a second crash, when the printing presses were turned off rather clumsily.”

Worth perusing . . .

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Source:
Printing money is a game with potentially dangerous results
George Trefgarne
Telegraph, 14AM GMT 30 Dec 2009
http://www.telegraph.co.uk/finance/financetopics/recession/6909897/Printing-money-is-a-game-with-potentially-dangerous-results.html

Economics Nobel laureate and Columbia University professor Joseph E. Stiglitz has what very well be the best year end piece I have seen to date;

“The best that can be said for 2009 is that it could have been worse, that we pulled back from the precipice on which we seemed to be perched in late 2008, and that 2010 will almost surely be better for most countries around the world. The world has also learned some valuable lessons, though at great cost both to current and future prosperity – costs that were unnecessarily high given that we should already have learned them.”

What were those 6 “harsh” lessons?

1. Markets are not self-correcting, and without adequate regulation, they are prone to excess.

2. There are many reasons for market failures. Too-big-to-fail financial institutions had perverse incentives: Privatized gains, socialized losses. .

3. When information is imperfect, markets often do not work well – and information imperfections are central in finance.

4. Keynesian policies do work. Countries, like Australia, that implemented large, well-designed stimulus programs early emerged from the crisis faster

5. There is more to monetary policy than just fighting inflation. Excessive focus on inflation meant that some central banks ignored what was happening to their financial markets. The costs of mild inflation are miniscule compared to the costs imposed on economies when central banks allow asset bubbles to grow unchecked.

6. Not all innovation leads to a more efficient and productive economy – let alone a better society. Private incentives matter, and if they are not properly aligned, the result can be excessive risk taking, excessively shortsighted behavior, and distorted innovation.

Why this was published in the China Daily, and not in the US is beyond my understanding . . .

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Source:
Harsh lessons we may need to learn again
Joseph E. Stiglitz
China Daily, 2009-12-31 07:51
http://www.chinadaily.com.cn/opinion/2009-12/31/content_9249981.htm

We are on track to finish the yr with the trends that have been in place 3/4 of ’09, strong stocks and corporate debt, weak US$ and lower US treasuries. The credit markets led the way down in ’08 in terms of equity performance, up in ’09 and I believe will again dictate the direction in ’10, particularly the sovereign side, which now includes half of the entire mortgage debt in the US. The Yuan partially reversed yesterday’s sharp move up after Chinese officials said economic policy will remain on track. Helping to send the US$ index to a 2 week low is a better than expected home price gain in the UK which is sending the pound higher by almost 1%. Initial Jobless Claims are expected to total 460k and will be impacted by the difficulty in seasonally adjusting data this time of the yr. If the economy continues to improve, ’10 will see job growth but will it be enough to lower the unemployment rate and will the longer term unemployed find work?

What Would Cause A 5.50% 10-Year Note Next Year?

Here are the highlights of the year’s news stories, depicted visually:

Click for large graphic

Source:
OP-CHART: Picturing the Past 10 Years
Phillip Niemeyer
NYT, December 27, 2009

http://www.nytimes.com/interactive/2009/12/27/opinion/28opchart.html