Today’s broadsheet from the FM website pressroom. There are 3 sections, all with hot news. Also — you can now subscribe, receiving posts by email — see the box on the upper right.
- Links to interesting news and analysis
- Doomster nonsense of the day: China May Demand Physical Gold
- Feature article of the day, proof that science report is improving
- Plus, an Afterword
(1) Today’s links
- “Teabagging Michelle Malkin“, Matt Taibbi, True/Slant, 15 April 2009 — Typical Taibbi. Funny, coarse, insightful.
- “Freedom of information, my okole…“, Willis Eschenbach, Climate Change, 24 November 2009 — Another excellent narrative of the climate change debate, using the hacked CRU emails to filling in the missing pieces of the puzzle. It’s a must-read for anyone interested in the debate. True believers will avoid this like vampires do garlic.
- “Negative Equity Report”, First American Corelogic, 23 November 2009 — reported at Calculated Risk. Negative equity and near negative equity mortgages account for nearly 28% of all residential properties with a mortgage nationwide, 13 million housing units.
- Today’s hidden history lesson: “Roosevelt’s Last Days – Did cancer kill FDR?“, Barron H. Lerner, Slate, 24 November 2009
(2) Doomster nonsense of the day: China May Demand Physical Gold
The Internet allows fringe “news” sources to flourish for every delusion. Today’s reading is from The Public Intelligence Blog: “China May Demand Physical Gold – Special from our sources in Asia“, 26 November 2009 — Excerpt:
Gold could be about to get disorderly also as it approaches the key $1200 call option strike. The strong rumour is the large $1200oz Dec call owner is the Peoples Bank of China. Gold traders increasingly believe that China will force physical delivery of 2.8moz of gold instead of the usual cash settlement. My contacts suggest short-term mayhem may be about to break out in gold for a few days as those who have sold the call and get exercised scramble to buy physical for delivery. To put this in context 2.8moz is around 80 tonnes of gold. Yes, it’s that big and you can see why there is short-covering everywhere in gold.
Phi Beta Iota: If Mack becomes Secretary of the Treasury, we anticipate China running the US Treasury as a condition for selective cover-ups, and China managing the situation so it gets compensation for all the gold stolen by Japen and confiscated by the US to create the Treasury Black Eagle Trust and Golden Lily slush funds. China did NOT sign the San Francisco Treaty and is on solid ground. For background see …
Such rumors are ubiquitous — and almost always wrong — among the fringes of the Internet, among the doomsters. For thirty years I’ve read confident reports about rumors that the current social-finanical-political regime was about to end.
This particular rumor is almost certainly wrong, as it displays a misunderstanding of central banks and China.
Central banks exist to maintain the orderly workings of the global financial machinery. Central bankers typically act …
- incrementally — not taking large steps
- reactively — responding to change, not leading it
- conservatively — to maintain the status quo
As for China, it has more to lose than the US from disruption of the global financial system — with is the likely result of the massive shock forecast by this rumor. Among the world’s large nations, China has the fastest growth, and the great dependence upon global trade. Most experts say that China needs growth of 7%+ to maintain social stability. That’s unlikely if the global financial machinery goes “boink.”
The US has conditions almost opposite of China. Exports are a small fraction of our economy. Much of our trade — imports and exports — are commodities, necessities who will move under any circumstances short of war. Also, we’re a debtor — again unlike China. Collapse of the global financial system might allow us to reneg on our foreign debts.
For these reasons (among others), we have the least to lose from disruption of the global system — which is why we are widely considered the weakest link.
To see how these things play out in the real world, watch the IMF gold sales. India bought half (Bloomberg story here). China is a likely candidate to buy the remaining half of the IMF gold sale, if they can get a good price. That’s how the central banks work, moving the pieces around in a minimally disruptive manner.
For reliable information about the current gold market see the Wall Street Journal and Financial Times. Such as this article: “A Mad Rush as Gold Bugs Get the Boot“, WSJ, 24 November 2009.
(3) Feature article of the day, proof that science reporting is improving
“World’s last bastion of stable ice now thawing“, New Scientist, 24 November 2009 — A year ago this article would have had the same opening, but omitted the last few paragraphs about error bars and sources of error. This is a major change, largely due to the tireless work of skeptics like Steve McIntyre.
We thought it was one of the Earth’s last remaining regions of stable ice. Now it seems the East Antarctic ice sheet has been losing mass since 2006 and could become a significant source of sea level rise, according to data from gravity-measuring satellites.
Previous studies have suggested that the ice sheet was either stable or even gaining ice mass. Now satellite measurements analysed by Jianli Chen of the Center for Space Research at the University of Texas at Austin and his colleagues suggest that the East Antarctic ice sheet is losing at least 5 billion tonnes of mass each year.
… Some researchers are not convinced that the continent is losing mass, since the margins for error in the team’s analysis range between 5 and 109 billion tonnes of ice loss per year.
“I don’t think we can confidently make a statement yet on whether East Antarctica is growing or shrinking,” says Philippe Huybrechts at the Free University of Brussels, Belgium. “Seven years is too short to make meaningful statements on the evolution of the Antarctic ice sheet,” he says.
Part of the problem with accurately estimating ice loss is a phenomenon known as post-glacial rebound: the rock underneath Antarctica is rising up because the ice of the last ice age is no longer weighing it down, and this is naturally changing the continent’s gravity field.
“One of the limitations of GRACE is that it can’t distinguish between changes in mass underlying the continent caused by the post-glacial rebound effect from changes in ice mass at the surface,” says Wilson.
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