Tuesday, June 21, 2016

Margin Call, or Jo Nova, Wanna Be Hedge Fund Manager

Jo Ann Nova, David Evans and a guy by the name of Chris Dawson, CEO of the Lord Monckton Foundation are asking for donations to establish a something or other, in which said something or other will do something in some undisclosed way to slay the sky dragons.

Chris Dawson is cagey about what the something or other will be except it will be a hedge fund, whatever that is, and everybunny knows that hedge funds are the key to riches and have special tools and by the way climate change is a crock and the hedge fund of Jo Ann's dreams will . .

. . . short-selling overvalued renewables stocks, and doing other things that profit from cooler weather or collapsing subsidies — but which fund could you invest in to manage that? It’s a niche crying out to be filled. David and I liked this idea so much when we were approached by Chris Dawson two years ago, we got involved in developing Cool Futures (and obviously stand to benefit if this comes together, see the Disclosure at the end). Cool Futures could change the game in so many ways.

. . . . With a self funded, highly profitable due diligence process and cost benefit analysis on the science, economics and finance of climate change, we will literally hedge our bets on climate change and on changing climate change policy.
The Weasel has expressed a few words of derision,
Bored with force X from outer space? Was Force F just too fuckwitted, and part 22 just too dull? Then why not play “hedge funds”? Hedge funds do lots of complex maths and make lots of money (only not so much recently); they also have the advantage of being opaque. So play today, with Jo Nova and her band of performing marsupials. Yes, I know, its a picture of a monkey with an arrow up it’s bum, and a monkey is not a marsupial. But no known mediaeval manuscripts feature marsupials.
Context, context: I forget the context in my obsession with primate posteriors. coolfuturesfundsmanagement is, like, a hedge fund. Run by Jo Nova! And some others. Or perhaps better, a wannabe hedge fund with a severe shortage of moolah. And its going to hedge against cooling, maan. Tagline: “Are we preparing for catastrophic warming when we should be preparing for cooling?”
It's hard figuring out exactly what this "fund" is going to do except raise money to figure out what they are going to do and indeed Chris Dawson is pretty cagey about this because it would be dangerous to actually say that they are raising money for a hedge fund because investment in hedge funds are limited to a qualified (e.g. very rich) people who know what they are doing and can afford to lose their money.  Minimum US qualifications are a net worth of a million, and income of over $200K in the past two years, and oh yes, prospects of making that or more into the future.

But no, there is no such hedge fund, but the ask is for money to "set up" such a hedge fund which will then go seek investors. And, of course, since it will be housed on one of the Caribbean islands well known for housing tax evasion schemes, Eli assumes that the incorporation papers will be drawn up by Mossack Fonseca. Of course, hedge funds being inherently risky this becomes a lot like asking rich people to contribute mega dollars to Donald Trump so he can rip them off.

But wait, why the Cayman's or similar to house this "hedge fund"  Well, guess what, there are no limits on who is a qualified investor in a Cayman "hedge fund", unlike the US where you have to have a minimum of a million net worth and an income of $200K.  Given this and a good guess at how much the net worth and income of the inhabitants over at Nova's offered this kinky opportunity.  Now some, not Eli to be sure.

ATTP points out that, well, the facts assumed are taken from a rather tall cherry tree, but the grifters have already scored over 42K$ US.   This gave rise to a hilarious (well Eli is easily amused, how else do you think he has made it to a ripe old age) series of tweets, starting with

upon which Paul, just Paul borrowed the Pielke humphing apparatus and replied

and it goes neener neener for a while as twitter is won't, but, the answer is simple, these clowns are not hedge fund managers, they are hedge fund manager wanna bees. 

A bunny wanting to flush their hard earned dollars down the toilet would do better giving directly.




Sunday, June 19, 2016

Someone else notices gas stations are disappearing

This time it's Daniel Gross at Slate, noting a 25% decline in stations over a decade. He acknowledges the importance of extraneous forces like pricier real estate and fleet vehicles switching to natural gas, as well as future impacts from driverless vehicles. Gross also highlights electrical vehicles and plug-ins as a force, though. He doesn't quite get to the virtuous cycle argument - that as market share for electric increases, the market for gas stations suffers, gas stations disappear, gas vehicles become less convenient, and market share for electric increases even more. But he's heading in that direction.

Among the other tidbits Gross finds is Norway contemplating a ban on gas engine vehicle sales starting in 2025 (with Netherlands and even India saying something similar, but I find Norway more believable).  EVs are 20% of current sales in Norway - when penetration reaches those levels, then these proposals don't seem outlandish. It's one way to accelerate the virtuous cycle of EVs replace ICEs.

Monday, June 13, 2016

Astrobiology Is a Crok


Now some, not Eli to be sure, want to know why Eli thinks astrobiology is a crok.  Ever helpful, allow the Bunny to explain.  There are many reasons but it starts with Enrico Fermi.

Lots of things do.  Fermi was the type of thinker Eli has always aspires to and hopefully on occasion is.  As Philip Morrison wrote, a Fermi question allows

... the estimation of rough but quantitative answers to unexpected questions about many aspects of the natural world. The method was the common and frequently amusing practice of Enrico Fermi, perhaps the most widely creative physicist of our times. Fermi delighted to think up and at once to discuss and to answer questions which drew upon deep understanding of the world, upon everyday experience, and upon the ability to make rough approximations, inspired guesses, and statistical estimates from very little data." [Philip Morrison [1]]
The story goes that one day Fermi was munching at lunch with colleagues when the question of extraterrestrial civilizations came up.  They went through the exercise of thinking about how much time and resources it would take to spread through the galaxy and
Fermi realized that any civilization with a modest amount of rocket technology and an immodest amount of imperial incentive could rapidly colonize the entire Galaxy. Within ten million years, every star system could be brought under the wing of empire. Ten million years may sound long, but in fact it's quite short compared with the age of the Galaxy, which is roughly ten thousand million years. Colonization of the Milky Way should be a quick exercise.

 So what Fermi immediately realized was that the aliens have had more than enough time to pepper the Galaxy with their presence. But looking around, he didn't see any clear indication that they're out and about. This prompted Fermi to ask what was (to him) an obvious question: "where is everybody?"
Now this is not quite astrobiology which in its weak form merely asks if there is any biology out there, but at this point it would be well to look at Brian's most recent post, where he discusses the morality of research on better ways of extracting fossil fuels.  There is, sad to say, a strain of people who want to escape to space, terraform Mars, visit the stars, so that we can escape responsibility for dealing with the problems we are creating for ourselves on Earth.  Even sadder and more common is the fixation of many more on an afterlife, the belief in which is coupled to escaping not only the responsibilities for this Earth but also the trials and tribulations of the same.  Decoupling of this sort is not a good thing.  Before flaming, allow Eli to point out that this is not an attack on the religious or the space mad, but rather on those who use either to ignore responsibility.

The last part is from personal experience.  The NASA Astrobiology Program was started as a consequence of a claimed finding of polycyclic aromatic hydrocarbons (PAH in the business) in a meteorite that was expelled from Mars, landed in the Antarctic and was discovered.

This was amazing.  To Eli what was amazing was the study that showed the rock came from Mars.  He was rather more skeptical of the analytical chemistry and the possibility that the rocks had been contaminated over many thousands of years on Earth, but that is not the story.  What the story really is, is how the news was received at NASA.

NASA is chronically underfunded and survives only because of public support driven in large part by the public's interest in space.  To the NASA administration the Public Affairs Office is the key part of the agency.  Evidence of "life" (OK of PAHs, but they didn't sell it that way) was immediately seen as a great way to sell both space science and the manned space program, two of the main parts of the Agency.

At the time Eli was running a summer program at Goddard working with the University Affairs Office there.  The Director of the Office, Gerry Soffen was an amazing guy (you can read about him here and here).  He also was one of the most important people in the agency who was a biologist, having been the Project Scientist for the Viking landers on Mars which search for life there and did not find it.  True believers still believe Gerry lied.

In any case Gerry was tasked by Headquarters with putting together a much larger program than the small one that existed called exobiology.  The idea was to not anchor the program in a single location but rather creating a distributed institute which had obvious political advantages and off they went.

The meteorite discovery was an important impetus for Mars exploration missions, even though doubt has been cast on how pristine the rock was and how the issue was handled since then.  When Gerry asked Eli what he thought, the Rabett replied that although that he was amazed by the rock solid evidence that the meteorite came from Mars, he was less impressed by the chemistry knowing something about the technique used and the focus of research in the lab where the chemical characterization was done.  In short they were not geochemists.

The doubts about the meteorite results arose very quickly, within two years, but by that point NASA had already decided to emphasize astrobiology.  And many things became astrobiology which are really astrochemistry and astronomy.

All of which is why Eli believes astrobiology is a crok.

Sunday, June 12, 2016

Researching cheaper fossil fuel extraction is unethical

That's not to say that researching fossil fuel extraction in general is bad. New technologies to make it safer, less environmentally damaging, and better understood in terms of environmental impact is fine. Research to make fossil fuel use cheaper also may not be a problem if the research improves the energy efficiency, in effect reducing the carbon emissions from fossil fuel use. The problem is research that provides no help with emissions but instead harms the low-carbon market in the future.

We need to transition away from fossil fuels, especially coal but not just coal. I don't know if emissions 15 years from now will be lower than today but it would be better if they were, and they must trend downward. Research that makes fossil fuel extraction cheaper has no immediate economic benefit, it just changes price levels down the road as it succeeds and spreads. Fracking is a good example of something that was decades in the making and is still spreading internationally.

While some research may be applied quickly, the more likely and widespread application of some bright new idea that arises today is 10-20 years in the future. Low-carbon power sources will be much more widespread then, so the alleged need for fossil fuels will be less, and the urgency to stop using fossil fuels will be even greater.

As usual, natural gas is the trickiest component, but just as new natural gas plants don't make sense, new research to make natural gas cheaper doesn't make sense. Any bridge argument for natural gas has little bridge left to cross in 10-20 years in the future, and becomes a liability instead. And as with new gas plants, investment in research requires a payback period. Researching cheaper fossil fuel now is an attempt to promote fossil fuel use over renewables 20 to 40 years from now.

I think ending this type of research at the university and governmental level should complement the current divestment movement. My alma mater, Stanford, did the right thing by divesting from coal but refused full divestment. I know that Stanford has some complicated investments that would take some time to unwind, and I believe they're in natural gas. The complication by itself isn't a barrier to divestment - I think no one would object if Stanford took a little more than the typical five years to complete divestment. What may be a barrier, though, is the research aspects.

Getting to a speculative level, I suspect that Stanford's complicated investments have a significant research component, and that the real financial value Stanford sees is in its research paying off - i.e., making fossil fuel extraction cheaper. That's problematic, and I don't think they have thought it through or even have been confronted with it.

As the link shows, Stanford is establishing a climate task force to examine operations, research and teaching (investment is somehow not mentioned, must just be an oversight). This could be an opportunity to examine whether Stanford should research or should invest in research that makes fossil fuels cheaper in the future, right at the time that we need to end using them.

Friday, June 10, 2016

The Frame War: How Skeptics Lost the Climate Debate


Many in the community Eli slums in twit and blog about Exxon, about climate risk and recent attempts to force fossil fuel companies to confront the risk to their business of climate change.  At the Exxon stockholders meeting just last month a motion to that effect failed with 37% of the voting shares being in favor.  That is an outstanding shot across the bows of Exxon management, 37% means that many significant economic players have come over to the side of yeah, climate change is not only a risk to people, but also our money, but there is more.

Now some, not Eli to be sure, who might not be paying attention, indeed Eli was not, but the Bunny was at a recent seminar on the economic issues of climate change with some of the high and mighty holding forth, and they kept coming back, one might, only might say smugly, to three letters of the alphabet, FSB and the Bloomberg Committee.

Eli sat up bolt upright because he thought that there were four letters FASB, the US Financial Accounting Standards Board, basically the guys who killed defined benefit retirement by making the costs appear out to infinity on any employer who offered one.  They also trashed the Bunnies retirement health insurance plan for the same reason.  Were they taking an interest in meeting the accounting challenges of climate change?  Big news if so (and this will require looking into)

But no, this is the Financial Stability Board, a construct of the G20, more exactly the Finance and Treasury ministers of same the G20 being the 20 most economically important countries in this Galaxy (Eli thinks that astrobiology is a crock).  The FSB was formed after the recent 2008 economic meltdown

The FSB promotes global financial stability by coordinating the development of regulatory, supervisory and other financial sector policies and conducts outreach to non-member countries. It achieves cooperation and consistency through a three-stage process, including monitoring implementation of agreed policies.
and as a creature of governments and especially the finance ministries of governments it is not to be sneezed at.  The FSB IS concerned with how the threat of climate change to economic stability
Policymakers have an interest in ensuring that the financial system is resilient to all forms of risk. In April 2015 the G20 asked the FSB to consider risks related to climate change and in November the FSB proposed the creation of an industry-led Task Force to develop recommendations on climate-related financial disclosures. Appropriate disclosures are a prerequisite for financial firms not only to manage and price climate risks accordingly but also, if they wish, to take lending, investment or insurance underwriting decisions based on their view of transition scenarios.
Just what the activist shareholders are trying to drag the fossil fuel companies to, and they are resisting.  The task force was put together in December 2015, and Michael Bloomberg is the chair.

That should cause some bunnies to sit up in their seats.

A first report on the lay of the land has already been published (more later) and
During the second phase, the Task Force’s work will focus on delivering specific recommendations for voluntary disclosure principles and leading practices, if appropriate, with a view to issuing a report for public consultation by end-2016. As part of its work the Task Force will conduct public outreach to engage a wide and varied range of stakeholders as it develops its recommendations.
The intent of the FSB can be read in the next paragraph
The work of the TCFD builds on the successful work of the Enhanced Disclosure Task Force (EDTF), which was created to provide recommendations on developing more effective bank risk disclosures
and that is what the TCFD is about
The Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders. The Task Force will consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries. The work and recommendations of the Task Force will help firms understand what financial markets want from disclosure in order to measure and respond to climate change risks, and encourage firms to align their disclosures with investors’ needs.
Stress tests for Exxon bunnies and voluntary is likely to become not optional real quick as governments implement the rules.

Sunday, June 05, 2016

McArdle messaging mess

Lost in her errors and insults flung at the scientific community, and at her political opponents who accept climate reality, was the only part of Megan McArdle's argument that should matter:

....there are folks like me who aren’t sure enough to make a prediction, but are very sure we wouldn’t like to find out, too late, that the answer is “oops, catastrophic.”
Okay, so she's very sure that we shouldn't follow a policy pathway that makes catastrophe possible. What does she want to do with that framework? I see she semi-approvingly cites to a lukewarmist, kind of a bad sign. Said lukewarmist said basically stop doing everything we're doing now to fight climate change and impose a carbon tax instead, but doesn't say what we should do given that the Republican Party rabidly prevents all attempts at imposing a carbon tax. McArdle, somewhat to her credit, says he doesn't want to do enough, but again fails to tell us what enough is to her.

My two takeaways:

1. She's mad at the rest of us that her tribe is wrong, so even as she semi-admits they're wrong, she throws as many insults at climate realists and adds as many mistakes as she can, starting with the idea that the flaws in modeling human behavior demonstrate similar flaws in modeling the physics of climate. The important message, that we need to act, gets lost in her discussion of alleged communication failures by people outside her tribe.

2. McArdle has (possibly) made an interesting leap over a divide where many lukewarmists/denialists haven't. A common denialist position short of complete denial is to accept scientific reality up to the point at which that reality would require them to shift their policy positions, and then for mysterious reasons, they suddenly find that the science no longer works. McArdle seems to allow we need to do something. How she deals with the binary choice issue between Republicans and Democrats was left unsaid here, but could be worth pursuing.

Finally, I'd add that I'd write this very differently if I expected McArdle to read this and wanted to influence her. I'm writing to us realists here, and I'm mostly just mouthing off without expecting to change much. Maybe climate realists should try more, or at least check in periodically with people like her, despite the annoyance involved. But for her part, if she were really trying to influence "alarmists", then she's doing it wrong.

Saturday, June 04, 2016

A Weekend Puzzler


The Denialati are busy showing everybunny figures created by John Christy




Excellent examples for the Eli Rabett Weekend Puzzler contest.  To explain why these figures are both correct (well Eli would like to know where those 982 stations are, but he can make a good guess) requires only that the bunnies have been reading and remembering one of Eli Rabett's seminal contributions to combatting bullshit and have a native distrust of a bottom dealer like John Christy. 

Sit back and have a drink of your choice with a partner of your choice.  All entries should include a small check for the Bunny Friend Alliance Ethics Committee and at least one of these


My spirited defense of Bush and Trump

I'm going back to one of my arguments, that in no way was Bush Junior the worst president in US history - he's the third worst. History and historians are pretty clear that James Buchanan was the worst ever, and even a President Trump is going to have to stretch to be worse (although it's not impossible). Reading more about Buchanan, I had no idea that he was involved in making the Dred Scott decision much worse, and that his mismanagement helped trigger the start of the Civil War at Fort Sumter.

I think history's pretty clear about Franklin Pierce being second-worst, even if historians themselves are a little vague (come on, Harding was just a buffoon, he doesn't rate, and Andrew Johnson's mistakes after the war are no comparison to the mistakes that allowed it). Accommodating the South and expanding slavery were Pierce's and Buchanan's response to the impending disaster, and they made it happen as much as actively evil people like Calhoun and Davis.

Bush can't handle this competition.

Moving on to Trump, it's outrageous to call him fascist - he's authoritarian, someone who respects and might want to emulate dictators and their violent repression, but without the ideological and intellectual development to espouse a theory of total domination of the individual by the state or ethnic identity. His personality is similar to Mussolini, but the only thing he cares about is Trump, not the crushing of the individual under ethnicity.

The only way I see to calling Trump fascist is to equate the word with authoritarian, which is stupid. English already has a word for someone with dictatorial tendencies, and if fascist becomes a duplicate for it then we don't have a word for the even-worse thing that fascism described. It reminds me of the tendency to redefine terrorism from violence directed at civilian for political reasons to politically-directed violence that the speaker disagrees with.

Since I haven't been feeling the Bern, I will give Bernie some applause for calling out the morons who have used violence to keep citizens from being able to hear Trump. What I find strange is the number of people on the left who think violently interfering with people's free speech and assembly rights is wrong, but non-violently interfering with those rights by blocking access and shutting down speeches is somehow good. My term for people who do that stuff is authoritarian, even though some might consider themselves anarchists.