World May Not Be Warming, Says Scientists

According to U.N.'s climate panel IPCC (Intergovernmental Panel on Climate Change), "global warming" is "unequivocal".

Britain's Times Online tells us part of what kind of science has been behind the global warming: thousands of weather stations around the globe, monitoring the temperature change over the past 150 years.

You would think that's the solid, scientific data that you can't dispute. Far from it, it turns out.

World may not be warming, say scientists
(Jonathan Leake, Times Online 2/14/2010)

"The United Nations climate panel faces a new challenge with scientists casting doubt on its claim that global temperatures are rising inexorably because of human pollution.

"In its last assessment the Intergovernmental Panel on Climate Change (IPCC) said the evidence that the world was warming was “unequivocal”.

"It warned that greenhouse gases had already heated the world by 0.7C and that there could be 5C-6C more warming by 2100, with devastating impacts on humanity and wildlife. However, new research, including work by British scientists, is casting doubt on such claims. Some even suggest the world may not be warming much at all.

"“The temperature records cannot be relied on as indicators of global change,” said John Christy, professor of atmospheric science at the University of Alabama in Huntsville, a former lead author on the IPCC.

"The doubts of Christy and a number of other researchers focus on the thousands of weather stations around the world, which have been used to collect temperature data over the past 150 years.

"These stations, they believe, have been seriously compromised by factors such as urbanisation, changes in land use and, in many cases, being moved from site to site. " [The article continues.]

Good, now even the scientists are talking about "urban heat island", which has been dismissed as urban myth, or worse, crackpot pseudo-science.

The article mentions different ways the weather stations could have distorted the number:

• weather stations sitting right next to air conditioning units
• weather stations on waste treatment plants
• weather station at Rome airport, catching jet exhaust fumes
• weather station next to an incinerator
• weather station surrounded by heat-generating buildings

What kind of science behind global warming? Is it a science?

By the way, if you are still worried about Himalayan glaciers melting away by 2035, as IPCC told you in 2007, rest assured. It was a typo that no one at IPCC caught. The person at IPCC who copied the original study must be dyslexic. It was 2350, not 2035. Duh.

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OT: Mavericks Surf Contest Is ON

Waiting for the final now.

Finalists: Anthony "Tazzy" Tashnick, Dave Wassell, Shane Desmond, Carlos Burle, Kenny "Skindog" Collins, Chris Bertish.

Here's the live stream:

Live streaming video by Ustream

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Bureaucrats Set the Taxi Fare in Japan

for the taxi companies who wanted to offer LOW fare

Let's see... Japan is entering the third decade of stagnation/recession/depression however you want to call it. People are struggling to keep or find jobs, now that the traditional "life-time employment" has been destroyed even for male workers (female workers never had such a thing). Contrary to what is generally reported and perceived here in the U.S., prices of goods and services haven't gone down in Japan. It has pretty much stayed the same. But increasing burden of more taxes from two decades of deficit spending, pensions, national health insurance, and national long-term care insurance on a shrinking population means people have less money to spend.

So, when entrepreneurial taxi companies in Osaka, Japan wanted to continue their popular low taxi fare so that people use their taxis more (and maybe they can hire more taxi drivers), what does the government bureaucrat in the regional bureau of MLIT (Ministry of Land, Infrastructure, Transport and Tourism) do?

Deny the request, of course.

Yomiuri Shinbun reported (in Japanese) on February 11, 2010 that the regional bureau of MLIT notified the two taxi companies that their request to continue the low taxi fare was denied. The bureau is demanding that the two taxi companies RAISE the fare for the first 2 kilometers (1.24 miles) from 500 yen to 590 yen, in line with their competitors.

"500-yen" taxi is also called "one-coin" taxi, as 500 yen is the largest denominated coin in Japan.

The MLIT bureau even calculated the profit and loss for them, and decided that the profit level would not be "appropriate" if the first-ride fare remained 500 yen.

The two taxi companies are furious. Their competitors welcome the decision, as it will "help dampen excess competition".

This is the first intervention by the MLIT after the legislation to "normalize and revitalize the taxi industry" was passed in October last year. Far from "revitalizing", this legislation was designed to further regulate the industry. Orwellian use of language is not exclusive to English-speaking countries.

(Hmmm. Maybe I will start writing about Austrian economics on my Japanese blog...)

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'Trust' May Have Been the Biggest Casualty in Banking

in this recession triggered by the financial crisis

I went to a local branch of a big, national bank yesterday to deposit checks. I went inside instead of using ATM machine. The bank was crowded with people waiting to do transactions. The bank greeters were back. Two of them. There were people sitting in the cubicles taking to the bankers.

Six months ago, this branch looked deserted whenever I went. Usually only 2 to 3 tellers were open, and there was no line, no greeters. Almost all the tellers looked barely out of high school.

That changed, I think, about two months ago. At first I thought it must be something to do with the holiday seasons. But the branch continues to be crowded. Now half the tellers look like they actually have some work experience.

I asked the person who did my transaction, "Is the bank crowded today?" She said it was, and that it had been like that for some time. "I wonder why," I said. She replied, "I think people are more worried about their money these days. They don't trust banks. I hope my money is safe with this bank..."

I was rather taken aback by her assessment. This is the branch of a bank that scores relatively high for a large national bank in terms of customers trust.

This New York Times article from February 9, 2010 lists the bottom 7 banks in terms of trust (as percentage of customers who agree with the statement "My financial provider does what's best for me, not just its own bottom line"). Not surprisingly, they are large national and regional banks: Bank of America, Chase, Capital One, TD/Commerce, Fifth Third, Citibank, and in last place, HSBC.

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Obama Now Says Huge Bank Bonuses Are OK

because "that's part of the free-market system"

As the news appears of Wall Street Banks starting to donate more to Republicans, the president, who won the election with big donations from the same banks, changes tune.

Obama Doesn’t ‘Begrudge’ Bonuses for Blankfein, Dimon
(2/10/2010 Bloomberg)

"Feb. 10 (Bloomberg) -- President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

"The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

"“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.” " [The article continues.]

Hahaha that's rich. Free-market system? Does he think we have a free-market system? Does he even know what a free market is? The one without his beloved government interventions and controls and greedy hands.

So what about his seemingly harsh rhetoric, since mid January, on the nation's largest banks and their excessive compensation "while Main Street suffers"? I guess it was just that: seemingly harsh rhetoric.

What caused the sudden shift? Money. And it talks loudly and effectively.

This article is from two days ago:

In a Message to Democrats, Wall St. Sends Cash to G.O.P.
(2/7/2010 New York Times)

"WASHINGTON — If the Democratic Party has a stronghold on Wall Street, it is JPMorgan Chase.

"Its chief executive, Jamie Dimon, is a friend of President Obama’s from Chicago, a frequent White House guest and a big Democratic donor. Its vice chairman, William M. Daley, a former Clinton administration cabinet official and Obama transition adviser, comes from Chicago’s Democratic dynasty.

"But this year Chase’s political action committee is sending the Democrats a pointed message. While it has contributed to some individual Democrats and state organizations, it has rebuffed solicitations from the national Democratic House and Senate campaign committees. Instead, it gave $30,000 to their Republican counterparts.

"The shift reflects the hard political edge to the industry’s campaign to thwart Mr. Obama’s proposals for tighter financial regulations.

"Just two years after Mr. Obama helped his party pull in record Wall Street contributions — $89 million from the securities and investment business, according to the nonpartisan Center for Responsive Politics — some of his biggest supporters, like Mr. Dimon, have become the industry’s chief lobbyists against his regulatory agenda.

“... If the president wanted to turn every Democrat on Wall Street into a Republican,” one industry lobbyist said, “he is doing everything right.” [The article continues.]

And it's not just J.P.Morgan Chase.

"Buyers' remorse"? For that, Wall Street is not alone.

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Reuters: US Banks Exposure to PIIGS Is $176 B

Who could have known that a small country like Greece can move the global stock markets, as it has done exactly that for the past several weeks. Initially, it was discounted here in the U.S. as the problem for mostly European banks, particularly U.K. banks; U.S. banks had very little exposure to the debts in PIIGS (or Club Med plus Ireland) or to the Central and East European debts, or so it was said.

Uh huh.

Here's from Reuters. It turns out that the top 10 U.S. banks (the usual suspects) have $176 billion exposure to Greece, Portugal, Ireland, and Spain. Exposure to Ireland alone is $86 billion.

US banks have $176 bln exposure to Greece, others (2/9/2010 Reuters)

"NEW YORK, Feb 9 (Reuters) - U.S. banks have $176 billion in exposure to Greece, Ireland, Portugal and Spain, with risks concentrated among the 10 largest U.S. banks, Barclays Capital said on Tuesday.

"The total exposures to these nations, however, comprises only around 5 percent of the total foreign exposure of U.S. banks, Barclays analysts Jonathan Glionna and Miguel Crivelli said in a report.

"Exposures to Greece and Portugal comprise less than 1 percent of cross-border exposures, they said. The data is based on a lending survey by the Federal Financial Institutions Examinations Council (FFIEC), and includes cross border claims, derivatives and foreign office claims on local residents.

"Concern about sovereign debt has increased on worries that Greece will need a bailout to avoid a debt default.

"Credit default swaps on bank debt have increased in recent weeks, in line with rising concerns over sovereign debt risk.

"For example, the cost of credit default swaps insuring JPMorgan's (JPM.N) debt have risen to around 78.5 basis points, or $78,5000 per year for five years to insure $10 million in debt, from 47 basis points at the beginning of the year, according to Markit intraday.

"The FFIEC data shows that 10 U.S. banks -- Bank of America (BAC.N), Citigroup (C.N), JPMorgan, Wells Fargo (WFC.N), Bank of New York (BK.N), State Street (STT.N), Goldman Sachs (GS.N), Morgan Stanley (MS.N) and the U.S. branches of Deutsche Bank (DBKGn.DE) and HSBC (HSBA.L) -- hold 96 percent of the risk, Barclays said.

The banks have $86 billion in exposure to Ireland, $68 billion to Spain, $18 billion to Greece and $9 billion to Portugal, Barclays said." [Emphasis is mine]

Ireland looks scarier than Greece when you look at the numbers. Ireland's GDP (2009 estimate) is $177 billion. (Source: CIA World FactBook)

U.K. banks have £100 billion (US$157 billion) exposure, according to The Independent UK article: £76.2 billion (US$119 billion) exposure to Spain, £7.8 billion (US$12 billion) to Greece, and £15.6 billion (US$24 billion) to Portugal. Total Anglo-American exposure: $333 billion

So, if EU, the supra-national political entity with no constituents other than bureaucrats and politicians, can essentially force Germany to bail the PIIGS out (starting with G), it won't be bailing out EU member countries. It will be bailing out US and UK bankers so that they get their money. Or worse, EU (or piggy bank Germany) will be checkmated by these bankers, and be forced to pay up.

As Zero Hedge indicated already, can you smell A.I.G.??

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OT: Mr. President, You Look Downright Scary!

The front page of pro-Obama Huffington Post has these pictures of the president. I'm scared.

(I wonder why he and his wife always look angry.)

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Chinese Military Wants Government to Dump US Government Bonds

to punish Washington over the planned arms sales to Taiwan.

China PLA officers urge economic punch against U.S. (2/9/2010 Reuters)

"BEIJING (Reuters) - Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.

"The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China's National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.

"The interviews with Major Generals Zhu Chenghu and Luo Yuan and Senior Colonel Ke Chunqiao appeared in the issue published on Monday.

"The People's Liberation Army (PLA) plays no role in setting policy for China's foreign exchange holdings. Officials in charge of that area have given no sign of any moves to sell U.S. Treasury bonds over the weapons sales, a move that could alarm markets and damage the value of China's own holdings.

"While far from representing fixed government policy, the open demands for retaliation by the PLA officers underscored the domestic pressures on Beijing to deliver on its threats to punish the Obama administration over the arms sales.

""Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counter-punches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease," said Luo Yuan, a researcher at the Academy of Military Sciences.

""Just like two people rowing a boat, if the United States first throws the strokes into chaos, then so must we."" [Emphasis is mine. The article continues]

So in the eyes of the People's Liberation Army, the U.S. is the disease.

I am not so sure of the usual argument that China will refrain from actually dumping the U.S. Treasuries because that would decimate their foreign reserves, much of which is denominated in U.S. dollar. I have a feeling that the Chinese government couldn't care less, and would be quite willing to take, say 50 cents on a dollar and be done with the U.S.

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Turnaround Tuesday on Potential Greek Rescue by EU

more specifically by Germany, the piggy bank of EMU.

The U.S. stock market followed European bourses and spiked up on the news that there may be a rescue package for Greece, after all.

Wall Street climbs on reports of aid for Greece
(2/9/2010 Reuters via Yahoo Finance)

"NEW YORK (Reuters) - Stocks rose broadly on Tuesday, with the Dow on track for its largest daily percentage advance since July, on reports euro zone countries will come to the aid of debt-stricken Greece.

"The U.S. dollar fell against the euro, boosting commodity prices and shares of natural resources companies.

"A senior German ruling coalition source said euro zone governments have decided in principle to help Greece and that various options were being considered.

""I would see that as good news (for the stock market), knowing that there's a backer there, that those nations will be able to back up the (Greek) debt," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland." [The article continues.]

They will find out what the German taxpayers and voters would say to the rescue of the Club Med member. German bunds tanked on the news. US dollar is dumped, as the need for "safe haven" has seemingly diminished, boosting the commodity prices.

The US dollar index (DXY) currenty sits at 79.79, right below the decades-long support/resistance of 80. A logical place to turn back technically.

It remains to be seen if this is simply a much-awaited DCB (dead cat bounce) after 4 dismal and often scary down-weeks, or if those 4 weeks are a part of the pattern that has already happened twice (see my TA blog).

After Greece, Spain, Portugal (where public union workers are planning a strike to protest wage freeze) will be waiting. So will Ireland and Italy. Germany's backyard - Central and Eastern European countries - is not quite sanguine, either.

If Zero Hedge is correct, it may be just a transfer of money from one piggy bank (Germany) to another (Vampire Squid). It is remniscent of a currency trade executed to perfection by George Soros in the early 1990's against the UK government.

You would almost have to admire the gall of these traders, and the total lack of morality in executing the trades...

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Zero Hedge: Goldman May Be At It Again, This Time on Greece

Zero Hedge's Tyler Durden thinks that the Vampire Squid aka Goldman Sachs is at it again, this time sucking the blood off Greece, just like it did off A.I.G. Spain, Portugal, Dubai, too. Japan and the U.S. next. Maybe.

The Ever Increasing Parallels Between AIG And Greece... And The CDS Puppetmaster Behind It All (Tyler Durden, 2/8/2010 Zero Hedge)

"...... Yet as we look forward, we ask, who now determines the variation margin on Greek CDS (and Portugal, and Dubai, and Spain, and, pretty soon, Japan and the US), the associated recovery rate, and how much collateral should be posted by sellers of Greek protection? If Greek banks, as the rumors goes, indeed sold Greek protection, and, as the rumor also goes, Goldman was the bulk buyer, either in prop or flow capacity, it is precisely Goldman, just like in the AIG case, that can now dictate what the collateral margin that Greek counterparties, and by extension the very nation of Greece, have to post on billions of dollars of Greek insurance. Let's say Goldman thinks Greece's debt recovery is 75 cents and the CDS should be trading at 700 bps, instead of the "prevailing" consensus of a 90 recovery and 450 spread, then it will very likely get its way when demanding extra capital to cover potential shortfalls, since Goldman itself has been instrumental in covering up Greece's catastrophic financial state and continues to be a critical factor in any future refinancing efforts on behalf of Greece [Note: Goldman is trying to broker Greek debt off to China]. Obviously this incremental margin, which only Goldman will ever see, even if the CDS was purchased on a flow basis, will never be downstreamed on behalf of its clients, and instead will be used to [buy futuresbuy steepenersprepay 2011 bonusesbuy more treasuries for the BONY $60 billion Treasury rainy day fund].

"In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level.

"This is yet another AIG in the making, with Goldman this time likely threatening to accelerate the collapse not merely of the US financial system, but of the global one, in order to attain virtually infinite negotiating leverage. Of course, the world will not allow a Greece-initiated domino, allowing Goldman to call everyone's bluff once again.

"As the amount of gross and net sovereign CDS notional is constantly increasing, as more and more hedge funds join the shorting fray with Goldman as the intermediate (just like in AIG), it behooves any remaining regulators and any sensible Federal Reserve parties to supervise precisely what the terms of Goldman's collateral margins with various sovereign debt sellers are, especially when it pertains to increasingly distressed CDS, where a liquidity squeeze, again as in the AIG case, would have tremendous adverse downstream consequences. If indeed Goldman's counterparties are the banks of respective countries, then the parallels with AIG are nearly complete. And we all know what happened then.

"Furthermore, we are now convinced that Goldman will join the government in facilitating the engineered market swoon with a bifurcated goal: while the Treasury will take advantage of a sell off to offload as many UST as it can in the rush for safety (which could backfire now that Gold is increasingly seen as a dollar alternative), Goldman (with or without Warren Buffett - it depends on what the actuarial tables say) will jettison its own stock price in order to go private in an increasingly hostile world. "

[Here's a better link for the Spiegel article on Goldman instrumental in covering up Greece's financial state. Der Spiegel writes better English than Google Translate.]

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Times UK: JP Morgan to face Lehman crash probe

Remember those days in September 2009 when Lehman Brothers went bankrupt and the hell broke loose?

After nearly a year and a half, Lehman creditors are still sorting things out in a bankruptcy court.

JP Morgan to face Lehman crash probe (2/7/2010 Times UK)

"A COURT-APPOINTED investigator is this week expected to shine fresh light on the role of JP Morgan and other financial institutions in the events running up to the collapse of Lehman Brothers, the American investment house.

"Anton Valukas, a whitecollar crime specialist who played a leading role in the Conrad Black fraud investigation, was recruited by a New York bankruptcy court. His long-awaited report, which is understood to run to more than 1,000 pages, should be published this week.

"It will focus on whether JP Morgan, Lehman’s main short-term lender, dealt a fatal blow to the bank by increasing collateral demands on loans in the days immediately before its demise.

"Valukas’s findings will be pored over by all those who lost money in Lehman’s collapse, and by the Lehman estate, which holds the bank’s residual assets and is charged with recovering money for creditors. According to one source, the estate, which represents the interests of all the bank’s creditors, is planning to launch a $17 billion (£11 billion) claim against JP Morgan.

"That would mirror a complaint lodged with the court by the bank’s creditor committee in the immediate aftermath of the bankruptcy filing. This claim, made in October 2008, cites the $17 billion figure as the amount of Lehman cash and securities that JP Morgan “froze” in its final days, precipitating the largest collapse in corporate history." [Emphasis is mine. The article continues.]

I can almost imagine the JPM's defense: the same as Goldman Sachs as it demanded a cash collateral from A.I.G. It's prudence, it's rigorous risk management.

Lehman Brothers was engaged heavily in highly complex financial assets (derivatives, CDOs, and other structured finance products). And as this blog posted in September 2009, the accountants at PriceWaterhouseCoopers in London were just beginning to attempt to unravel some of those complex deals then, with hardly any major counterparties having reconciled their positions with Lehman.

Just like there is way more to the Goldman's collateral demand from A.I.G. than meets the eye (like Goldman's active destruction of A.I.G, almost), I suspect that JP Morgan's risk management may have involved more than that.

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Sudden Spike of Strong Support for Obama Was Just That: A Spike

on Rasmussen Daily Presidential Tracking Poll, which is calculated by subtracting "Strongly Disapprove" from "Strongly Approve". The number has been negative since July 2009, after the House passed the climate change bill.

Another poll shows the support for Obama at 44%, while 47% disapprove. The approval rate among independent voters is abysmal 27%.

My guess is that Americans don't want to be scolded all the time on just about everything by the Nanny-in-Chief, as this Politico article points out ...

(Obama always sounds to me like an irritated middle school principal, new to the job, who is puzzled why his students aren't behaving the way he thinks they should.)

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Chicago, Chicago...

This from AP.

Dem. Ill. lt. gov. candidate exits race amid furor
(Karen Hawkins, AP via Breitbart)

"CHICAGO (AP) - The Democratic nominee for Illinois lieutenant governor has dropped out of the race less than a week after winning the nomination amid a political uproar about his past.

"Scott Lee Cohen announced his decision Sunday night at a Chicago bar.

"The pawn broker and owner of a cleaning supplies company won the nomination Tuesday. Since then, it has become widely know that he was accused of abusing his ex-wife and holding a knife to the throat of an ex-girlfriend.

"The girlfriend herself had been charged with prostitution. He also admits using steroids in the past." [The article continues.]

Illinois' Democratic candidate for the Senate seat vacated by Obama also has a colorful past and present, according to Rolfe Winkler writing for naked capitalism on 2/7/2010:

"Alexi Giannoulias — the whippersnapper IL State Treasurer and basketball buddy of the President — won the Democratic primary for Senate Tuesday night. Given Giannoulias’ troubling background, including ties to a bank that received a rebuke from FDIC just a week ago, how much political capital will Obama now want to spend defending his old Senate seat?

"The Giannoulias story is classic Chicago. He was elected Treasurer at 29 with no substantial experience that would qualify him for the job. All he’d ever done was work as a loan officer and VP at Giannoulias family-owned Broadway Bank of Chicago.

"How did he get elected Treasurer? Because Obama endorsed him. Why did Obama endorse him? Because the Giannoulias family had been big financial supporters for Obama’s Senate campaign (Alexi continued his financial support for presidential candidate Obama).

"Broadway Bank has long been under the microscope, in particular for lending to known mafiosos. The bank also lent to convicted influence-peddler Tony Rezko….points emphasized by Giannoulias’ opponent in the Democratic primary, David Hoffman.

"The latest twist in the story came a week ago, when FDIC issued a consent order to Broadway Bank instructing it to raise capital and cease unsafe and unsound lending practices." [The article continues.]

Classic. Just classic.

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