Over the weekend, I wrote,
I’m also still waiting for the Onion headline: “S&P Downgrades Earth; Cites Unbalanced Carbon Budget.”
But the Onion was too slow, and so I took it on myself to write the piece, over at DeSmogBlog. It starts like this:
Washington, D.C.—In a move that came as a shock both in this city and throughout the planet on which it is located, Standard & Poor’s late Monday downgraded Earth from its unique HHH rating—the only one in the galaxy—to HH+.
The coveted HHH rating—meaning, “extremely habitable”—has become indefensible, the ratings agency said, due to continuing failures to balance the atmospheric carbon budget and an increasingly toxic political debate that renders better policies unlikely any time soon.
“Atmospheric carbon inputs continue to outweigh carbon outputs (or sinks), leading to a growing and unsustainable carbon ‘surplus,’” wrote S&P. “Unlike fiscal surpluses, this surplus is very dangerous and is already triggering rising temperatures, heat waves, droughts, and extreme weather patterns.”
Under the new HH+ rating, the Earth is still considered “highly habitable” for humans. However, S&P also changed the planet’s outlook to “negative,” suggesting the possibility of further downgrades.
Critics Cite Dearth of Spaceships
Criticism came fast and furious….
You can read on here. Enjoy.
P.S.: Joe Romm reposts the spoof, and adds an additional ratings downgrade for humanity.
Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default — a position put forth by some Republicans.
Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.
“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”
I’ve been critical of S&P’s reasoning. The ratings agency itself has a lot to answer for and doesn’t strike me as very credible. But honestly, this more forthcoming political rationale for a downgrade makes a lot more sense than anything else I’ve heard.
I used to think global warming denial was the most alarming example of motivated reasoning in our politics. But maybe not. Denying what can at least be made to appear a longer term threat is one thing. Denying the idea that a credit default would be immediately devastating, or arguing that it would be manageable or even desirable, strikes me as an even more extreme concoction and rationalization.
I’m also still waiting for the Onion headline: “S&P Downgrades Earth; Cites Unbalanced Carbon Budget.”
This happened, of course, because the crazed market crash of the past few weeks took a huge bite out of oil stocks–and not as big a bite out of the old Apple.
I’ve already described what a landmark this is, so let me just quote myself from October of last year:
There couldn’t be a more stark contrast between the new economy and the old than the comparison of these two companies–a sleek tech giant versus a dirty fossil energy monster.
The political significance of Apple surpassing Exxon in value–if it happens–will be huge. It’s not just about value, but values.
These two industries are vastly different, as are the people who work in them. We’re talking about the difference between the economies of Texas and California. We’re talking about the core divide over Prop 23 in California, where Texas oil companies like Valero are trying to come in from outside and defeat the state’s pathbreaking clean energy and climate law.
The folks at tech giants like Microsoft, Google, Apple–by and large, they get clean energy. Read More
The Dow closed at 10,809 today. On July 21, it was closer to 12,700. That’s nearly a 2,000 point drop.
I know much of this has to do with Europe. But let’s face it: Much of it has to do with the debt ceiling brinksmanship and its fallout, including the recent U.S. credit downgrade, by an institution that may not deserve its influence but nonetheless seems to have much of it–S&P.
I hate to say that rational people have been, uh, vindicated by this–but as usual, they have. It was insane and pointless to have the debt ceiling fight, and the economic consequences to people’s wealth and well being now probably measure in the trillions.
Hopefully this loss is only temporary and the market will come to its senses–because really, not very much has changed. But it just goes to show that economic stability is very hard to attain, and all too easy to lose. Rational people know this, too.
Not that I expect any introspection–after all, Tea Partiers will just say this is President Obama’s fault. One of our commenters even blamed him today for the 2008 financial collapse, which happened before Obama was even elected–although, rather impressively, this person actually backed down upon being corrected.
That’s rare these days.
And so the polarization continues, despite the cost and the damage to every last one of us.
Like many, many others, I’m pretty worried right now about the economic future of the United States. I’m not concerned with our fundamentals–I’m concerned with our political insanity and our apparent capacity for self-destruction…the Tea Party’s absolute intransigence, and the President’s amazing weakness in the face of the former.
That said, the basis for S&P’s ratings downgrade is called into serious question by this statement from the Treasury Department, which suggests the ratings agency was starting with the answer, and then looking for a rationale–a classic motivated reasoning behavior:
In a document provided to Treasury on Friday afternoon, Standard and Poor’s (S&P) presented a judgment about the credit rating of the U.S. that was based on a $2 trillion mistake. After Treasury pointed out this error – a basic math error of significant consequence – S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one….
…Independent of this error, there is no justifiable rationale for downgrading the debt of the United States. There are millions of investors around the globe that trade Treasury securities. They assess our creditworthiness every minute of every day, and their collective judgment is that the U.S. has the means and political will to make good on its obligations. The magnitude of this mistake – and the haste with which S&P changed its principal rationale for action when presented with this error – raise fundamental questions about the credibility and integrity of S&P’s ratings action.
What do you think? Could motivated reasoning upend world markets? I myself have little doubt that this is possible. After all, if you were informed of a $ 2 trillion error in your calculations, wouldn’t you want step back and wait, and collect your thoughts, rather than stampeding ahead with a previously agreed-upon action….especially with the stakes so high?
Apple (AAPL) smashed earnings forecasts late yesterday, and as a result shares are trading at the highest point ever, currently around $ 387 per share. With less than a billion shares out there this translates into a market capitalization of about $ 357 billion.
The currently most valuable publicly traded company, ExxonMobil (XOM), today trades at around $ 83 and its market capitalization is just under $ 415 billion.
I have said many times that if Apple passes ExxonMobil, it will be a hugely symbolic moment, not just for the markets but for our politics.
The Republicans have long been the party of corporate America–with major stalwarts like the oil majors on their side, an industry centered in very conservative Texas. However, that’s not so true any more: What pro-industry or pro-market party would play chicken with the financial markets, as Republicans have done with the debt ceiling?
And indeed, major companies are shifting to the Democratic camp: Witness clean energy giant GE, for instance, or the fairly blue and liberal California-centered tech industry–epitomized by Apple.
Barring a major downward move in oil prices, or continuing total dominance of the world by Apple, we still aren’t that close to its surpassing of Exxon in value. But we’re closer. Will it happen some day? I suspect so….
This is a guest post by Jamie L. Vernon, Ph.D., a research scientist and policy wonk, who encourages the scientific community to get engaged in the policy-making process
On Wednesday, President Obama gave a fiery press conference performance during which he ridiculed Republicans for their handling of the deficit reductions talks. As I listened to the President, I was reminded of previous legislative negotiations, such as the Health Care debate, where he similarly made it known that Congress was failing to meet their obligations to the American people. On each of those previous occasions, the President came out victorious, by achieving the legislation for which he was advocating.
The language used by the President this week suggests that he’s willing to fight to prevent a default on America’s debt. However, there were some comments that left me wondering if the U.S. scientific research community should brace for deeper cuts in the process.
At one point in the conference, President Obama explained that reaching the spending cut goals would be difficult and they would need to be distributed throughout the government. He said,
We can’t get to the $4 trillion in savings that we need by just cutting the 12 percent of the budget that pays for things like medical research and education funding and food inspectors and the weather service. And we can’t just do it by making seniors pay more for Medicare. So we’re going to need to look at the whole budget…
The word “just” implies to me that he has conceded that cuts must be made to the portion of the budget that includes medical research.
OK. So, we’ve already made those cuts, right? We shouldn’t expect additional cuts, should we? Later in the conference, the President says,
before we ask our seniors to pay more for health care, before we cut our children’s education, before we sacrifice our commitment to the research and innovation that will help create more jobs in the economy, I think it’s only fair to ask an oil company or a corporate jet owner that has done so well to give up a tax break that no other business enjoys.
To me, this suggests that additional cuts in the research and innovation sectors are still on the table. I have to ask, can we afford more cuts? The FY 2011 Budget included more than $300 million in cuts from the National Institutes of Health budget. Francis Collins, Director of the Institute, has said that these cuts will reduce grant funding rates to an all time low.
Here’s my final question. At what point do we admit that we have “sacrifice[d] our commitment to the research and innovation that will help create more jobs?”
Overall unemployment has also dropped by a percentage point over the last 4 months, and is now at 8.8 %.
If this continues, “are you better off than you were 4 years ago?” could be quite the campaign slogan….for different reasons, though, than in 1980.
In order to tackle conservation, energy, funding, and many more critical issues we discuss, economics will be a large part of the solutions. Yet when we hear economists in the media, I often wonder why women aren’t generally quoted and interviewed. Further, where are the women who blog about it? Answer: They simply don’t exist. UCLA economist Matthew Kahn notes:
There are 52 women who rank in the top 1000 [members of the economics profession] and 0 of them blog. Contrast that with the men. Consider the top 100 men. In this elite subset; at least 8 of them blog. Consider the men ranked between 101 and 200. At least, six of them blog. So, this isn’t very scientific but we see a 7% participation rate for excellent male economists and a 0% participation rate for excellent women. This differential looks statistically significant to me.
Kahn is curious about the reasons why and suggests that men may have more leisure time and “nerdy guys spend more time reading and writing blog posts.” Perhaps that’s part of it, but in recent years, the number of women science bloggers has exploded, despite family, teaching, and other obligations. We may not be as well represented when you account for all science blogs (or recognized as often), but our numbers are growing. Women tend to use these forums as tools to share ideas, collaborate, and facilitate discussions beyond the academic bubble where many of us reside. In fact, at ScienceOnline annual meetings, we outnumber our male colleagues. In other words, there must be more to the gender disparity in economics than time and nerdiness. (Although I am, admittedly, a nerd).
Another blogger theorized that women stay away from economics blogs because of their combative style, yet science blogs are not always a particularly friendly place either. (Any regular reader of The Intersection understands what I mean). The pissing contests that emerge do not seem to keep women from blogging. Further, even though comment threads tend to be male dominated, I receive many emails from women and kids, so it’s clear that they’re reading too.
What’s really going on? Here’s my suspicion: Rather than gender differences in attitudes, female economists are simply still not part of the economics blogging culture… yet. It’s not an activity that they consider because there are no predecessors already engaged. In other words, encouraging women to participate is more about changing social mores and cultural norms of what’s acceptable and rewarded within the economics profession. That can’t happen until women are better represented online. A bit of a chicken and egg problem, but I’m confident economics will catch up to science in this regard.
Why does this matter? Because pioneering women will bring new ideas and perspectives to the table. And Kahn is correct that it will also create more opportunities for them to get recognized in their profession. I applaud Kahn for highlighting the gender divide and challenge him and his colleagues to encourage more women to get engaged. If they have reservations, tell them to email me.
My latest DeSmogBlog post is a case study in what happens when we have a pair of dueling experts on a complicated topic–in this case, a dispute between the Political Economy Research Institute (PERI) at the University of Massachusetts-Amherst and the Heritage Foundation. They are battling over this PERI study, which found that a pair of EPA regulations would create jobs. I pose the question:
Is this a dispute in which outside observers have any choice other than to throw up their hands, unsure who to believe? Most of us aren’t economists, after all, so what other option is available to us? How can we possibly say who’s right and who’s wrong, without taking a few years to develop some expertise? Moreover, from a journalistic perspective, is there any way to cover this dispute other than in a “he said, she said, we’re clueless” fashion?
My answer is “yes,” and you can see why by following this link.