Ralphie Talks Finance

"President 'Bama says people who have money are baaaaad. But he took my piggybank, so now I am goood. Yay."

"What's Floor Street?"

Team Goldman

I'm siding with Team Goldman, and you should, too. Also, you should try to help my friend in his quest to start a new trend with the word "banksta'." It gives us the edge we deserve now that our peaceful protests or humble defense of actions have been classified as "violent" or provided with conspiracy theories fit for John Grisham novels.

I never thought my polished shoes and Ivy League education would be considered dangerous or 'edgy.' I kind of like it - maybe I could even take off the cufflinks and roll my sleeves up....nah, better not.

But I know what I'll be listening to while I'm doing my TPS reports:

"...been spending most their lives, living in the banksta's paradise...

They got the situation, they got me facin’
I can’t live a normal life, I was raised by the Ivies...
So I gotta be down with the deal team
Too much WSJ reading got me chasing dreams
I’m an educated WASP with money on my mind
Got my ‘Berry in my hand and an Hermes tie
I’m a loc’d out banksta set Hamptons player
And my homie Blankfein down so don’t rouse my anger, fool

...been spending most their lives, living in the banksta's paradise..."

Somehow, I don't think this is what Coolio had in mind, although I think this may be 85 Broad Street behind him, upon closer inspection, and he looks like a guy in my friend Bif's analyst class, come to think of it...

Ayn Rand and Obama Discuss Economic Policy

Save Bad Science or Save a Baby?

While I never was a big follower of the "Green" movement, it wasn’t until the last couple of years when I began to truly detest it. I always thought it was a pile of horse manure: at worst, it was a religion for those claiming to be secular; at best, it was manufactured to warn liberal kids about the dangers of becoming a litterbug, wasteful, or inefficient – a sort of Bogeyman for the Left, I suppose. My other reason for viewing it with displeasure was more personal: as a child, I had the commonplace fears that most kids do - that the Russians were going to drop a big nuke on us, of course. Thanks to a few too many older-brother-administered viewings of Red Dawn and Testament[i], I spent most of my first and second grade years fearful of anyone with a last name that included the consonants ‘c’ and ‘z’ adjacent to each other, so forgive me if I have profound anxiety regarding how many affluent young children are currently in therapy to address either phobias that within the span of a few years, they will fry to death should they set foot in the sun, or severe depression precipitated by that single, dreadful incident when they used virgin paper to draw a picture for mommy, resulting in their bearing sole responsibility for the inevitable demise of the planet.

As someone with a science background, my annoyance continued to grow. How many times in elementary education did we all have to learn the scientific method: question, research, construct a hypothesis, test the hypothesis, analyze data, draw a conclusion, communicate results? It seemed to me from the beginning that the Green movement was chock full of bad science, as the “experts” hypothesizing that abnormal climate change exists were long on hypotheses of the human causes of climate change, but forever short on conclusive evidence in support of manmade climate change actually existing. After all, it’s incredibly illogical to attempt to solve a problem that doesn’t exist, but yet, the government and organizations such as Greenpeace have continued their onward march to force behavior change of corporations and individuals in the name of solving a nonexistent problem. Would a doctor prescribe a dangerous surgery to a person[ii] who had no ills? Not if he wants to keep his license. If you don’t know whether a problem exists, you certainly don’t know how to solve the problem.

But my aforementioned displeasure has turned to disgust; we now have evidence that an abnormal climate pattern created by human behavior does not exist. Although many times in the past, it has been shown that there is no true abnormal warming or cooling of the planet, the big data arrived this past summer when MIT climate researcher, Dr. Richard S. Lindzen, published data showing that CO2 emissions do not cause a change in the temperature of our planet.[iii] It’s difficult to find a researcher more qualified than Lindzen in the field of climate study: not only is he an atmospheric physicist (read: climate expert) at arguably the most respected scientific institution in the world, but he’s published more than 200 papers on the subject, is Harvard-undergrad-through-PhD-educated, and if there is a highly-coveted award in the field of climate study and science, Lindzen has received it. Had Lindzen’s research instead advocated with the same statistical significance (under ironclad protocol) for the beliefs of the Green guys, Lindzen would have been accepting the next Nobel Prize faster than you can say ‘Al Gore’; his body of research would have been hailed as impenetrable and irrefutable. Conversely, shortly after Lindzen’s research was published, there was news breaking about data produced by climate change advocates, now known as Climategate[iv]. It would be a violation of research ethics that the pro-climate change scientists allowed their personal bias to drive their research, but more sinister is that there are damaging emails among those hacked that the cornerstone evidence of these scientists – a graph showing trends of warming over the past 1,000 years, with recent years showing “hockey-stick projection” warming – was manufactured to support the graph. Had the reverse been true – had the climate change skeptics had a “climategate” of their own, and the pro-climate change scientists produced compelling data - it would be close-the-book, the-fat-lady-has-sung, we-now-have-every-reason-to-take-over-more-of-your-life.

Looking at the Green movement wearing an economist’s hat, though, our Administration begins making even less sense, if that’s possible. In an environment where the true unemployment rate – that which includes the unemployed who have ceased looking for employment out of sheer discouragement - looms at 16.8%[v], we must face that in spite of the (artificially-propped-up by stimulus, and thus) increasing market numbers, we are in economic straits. (Incidentally, I keep calling this “bull market” a “dead-cat bounce”[vi], but no one seems to listen.) To continue any dialogue for the foreseeable future regarding whether further taxes should be imposed on individuals and corporations in the name of a nonexistent cause is not only pure insanity, but cruelty to those workers (and their respective families) who are unable to find employment, and those business owners struggling to stay afloat. If businesses are faced with further taxes, not only will they not be hiring workers, they will be forced to lay off more workers. This is truly frightening in two ways: not only will it add to the current burden of unemployment, but many of our businesses are already operating on skeleton crews, so businesses may be unable to continue their current rate of production if further labor cuts are forced upon them via tax hikes. It’s not a great leap of logic to see that our economy could be hitting terminal velocity soon thereafter, resulting in more businesses shuttering and workers unemployed. As far as the so-called “green jobs,” not only are they not materializing in light of current unemployment rates, but I am beginning to suspect that they were a completely fabricated concept to quiet the exact cry that I am making. As Lady Margaret Thatcher famously quipped, “The problem with socialism is that sooner or later, you run out of rich people,” she will be proven wise once again. As more and more people are forced to run into the welcoming arms of the current Administration’s welfare benefits (thus increasing already burgeoning programs), less revenue producers will remain from whom to collect. Then what?

But as an economist and human being, quite simply I first and foremost hate the Green movement for the inhumane choices that it makes. Economics is defined as the study of how people choose between goods and services. Essentially, if I am a believer in climate change, I am saying, “I think that our tax revenues should be put toward trying to create an argument in favor of a photo someone showed me of a melancholy polar bear sitting on a glacier, no matter what *real* research says, and no matter what fraud exists in the data of the guys in favor of (and profiting from) the theory of climate change precipitated by human behaviors. In fact, I think that this is more important than using those dollars instead for education, food, cancer research, and clothing that might be directed to impoverished or dying children of our country, as well as others around the world. Yeah, that furry little bear really gets to me.” I know some very nice people who are steadfast followers/cult members of the Green movement, and if I placed into their hands, their own earned dollars that will become tax revenues to be distributed by our government and gave them a choice of which will receive their money – either the photo of a lonely bear, or a live Haitian child, recently orphaned and without food for the last two weeks – I find it hard to believe that they would still pick the polar bear picture. Hypothetical bears are nice, but living, thriving babies are better.

You say to me, “Mr. Handy, it doesn’t work that way!” and I reply, “you are absolutely, 100% correct” - and therein lies the problem: it must begin to work this way. We need to stop pretending that we’re Veruca Salt with her daddy’s credit cards on a shopping spree through the mall – we actually have to pay for these things, and we simply no longer have the means to cry, “But I want boooooooth, Daddy!” There is no limitless supply of cash (although many in the Obama Administration seem to think that there is by means of the printing press) to meet the demands of every citizen and all nations of the world. Einstein once said that the “definition of insanity was doing the same thing over and over again and expecting different results” – and that’s what this is. We know from history that increased taxation, in the face of economic turmoil, is – as Obama’s own Economic Advisor Christina Romer remarked on Meet the Press back in December – “economic suicide.” We also know that we cannot keep spending at this rate with no other backing to our dollar besides the paper and ink of which it is comprised and perhaps the promise of a lap dance, or we will surely head into inflation (or worse, be speaking Chinese), not to mention the inevitable loss of our AAA credit rating and incurrence of further (recurring and likely exponential) debts in the form of increased interest payments on our gargantuan mound of debt. In the words of another famous scholar, Susan Powter, “stop the insanity!” Please, oh please, I beg you – stop this insanity.

FOOTNOTES:
[i] My good friend Kirk and I recently rented this movie – I was interested to see if it was as terrifying as I remembered and worthy of having ruined two years of my young life and admittedly still too scared to watch it alone. I am happy to report that this movie is still one of the most depressing, hair-raising movies that I have viewed, although probably remains behind the “choose which kid” scene in Sophie’s Choice, another emotionally-scarring movie experience of my childhood.
[ii] Although, according to the President, loads of pediatric patients are going under the knife so that the doctors can collect bigger paychecks.
[iii] http://scienceandpublicpolicy.org/images/stories/papers/originals/co2_report_july_09.pdf
[iv] http://www.guardian.co.uk/environment/series/climate-wars-hacked-emails
[v] http://www.marketwatch.com/story/payrolls-fall-36000-jobless-rate-steady-at-97-2010-03-05

[vi] What’s a “dead-cat bounce”? If you drop a cat out of the 100th floor of a building, it may bounce when it lands, but that doesn’t mean it’s alive or well.