2011 - %3, August

GOP Rock: Rick Perry (Drums), Jon Huntsman (Keys), Mitt Romney (Vox), Thad McCotter (Ax)

| Mon Aug. 29, 2011 3:01 AM EDT
Jon Huntsman on the keyboard.

We're still months away from the first meaningful votes in the GOP presidential primary, and a full 14 months away from 2012 election. But it's never too early to start scrutinizing the field. We've written pretty extensively on the various candidates' views on gay marriage, civil liberties, foreign policy, and (most notably) the economy. But in our effort to leave no stone unturned, we got to thinking: Where do the presidential contenders stand on music?

Here's an incomplete guide to their musical careers, their tastes, and the bizarre music they've inspired:

Jon Huntsman, keyboard: When Jon Huntsman was 18 years old, he dropped out of high school to join a prog rock band called Wizard. It was only a matter of time; Politico talked to a former classmate who "recalled the long-haired, diffident Salt Lake City high schooler sitting next to him in history class 'hitting his desk as if it were a piano.'" Now, watching the former Utah governor and US ambassador to China slog through a Republican primary that doesn't seem to have a place for him, you almost get the impression he's secretly plotting to ditch the campaign thing entirely and get the band back together.

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Tinariwen: Music to Cross Deserts By

| Sun Aug. 28, 2011 3:38 PM EDT

Tinariwen sound-checks like any other band: Musicians filter onstage one at a time, adjust knobs, tune up, play little melodies. It's a scene of subdued chaos, like the pleasant cacophony that precedes a classical orchestra performance. But the last musician to step into the soft blue stage lights of Bimbo's 365 Club in San Francisco isn't noodling. A faded old Fender Telecaster hangs from frontman Ibrahim Ag Alhabib's shoulder, but for now it's silent. His dark eyes stare absently out at the empty hall from under a shaggy Jimi Hendrix mane. The look says, "I'm here, but I'm a million miles away."

Really, it's more like 6,000 miles: Tinariwen hails from the harsh, windswept deserts of northern Mali, and despite a decade touring the world the band is still fixed—musically, spiritually, politically—to that spot. Watching the group perform early this month was like experiencing a hallucinatory mirage; intellectually I knew I was in San Francisco, but all my senses told me I had landed somewhere deep in the Sahara. This is the central irony of Tinariwen: that a band that so keenly communicates a sense of place could be formed by members of the nomadic Tuareg people, who have for centuries (and still today) wandered restlessly through the desert with nothing but a few belongings and a fierce disdain for anything remotely static—including the Malian government.

Why Do Bankers Hate Inflation?

| Sun Aug. 28, 2011 2:58 PM EDT

David Leonhardt on why the Fed is so hawkish on inflation even though the economy is sluggish and inflationary pressures seem remote:

Why does the Fed skew more hawkish than the economics profession as a whole? Part of the answer lies in the way the 12 voting members of the policy-setting committee are chosen. They are a mix of presidential nominees subject to Senate approval, with 14-year terms, and regional Fed presidents, who are chosen by outside boards that are made up partly of private-sector finance executives.

David Levey, a former managing director at Moody’s and another critic of Fed inaction, points out that banks often have more to lose from inflation than from unemployment. Inflation reduces the future value of the money that their debtors — homeowners, car buyers, small businesses and the like — will repay them.

“The Fed regional banks represent, in essence, the banking community, which tends to be very conservative and hawkish,” Mr. Levey says. “Creditors don’t like inflation — it’s good for debtors.” Indeed, the three recent dissents all came from regional bank presidents: Richard W. Fisher of Dallas, Narayana R. Kocherlakota of Minneapolis and Charles I. Plosser of Philadelphia.

This is obviously the traditional view, and certainly it was true at one time. But is it still true? Or maybe my real question is: should it still be true? Isn't most long-term debt either indexed to inflation in some way (usually via links to LIBOR or treasury spreads or something similar) or else hedged for inflation risks? Shouldn't banks these days actually be fairly indifferent to inflation as long as it stays within a moderate range? There's probably a hole here in my understanding of how finance works, but I don't really get why this creditor/debtor divide on inflation still exists.

Quote of the Day: Who You Calling Right Wing?

| Sat Aug. 27, 2011 8:18 PM EDT

The Guardian has a big scoop today:

The bastards! "Recognisably rightwing"! That's going too far. Someday soon there will be a price to be paid for this kind of insolence.

Breezy Talk About Oil

| Sat Aug. 27, 2011 6:23 PM EDT

Earlier today, in my post about the economic volatility produced by world demand for oil getting close to the world's supply ceiling, I wrote:

This is not something that can be tamed with gasoline taxes in the United States or anything similar. It’s a global phenomenon. This is all the more reason we should be making Manhattan Project kinds of commitments to developing alternative energy sources and reducing our economy’s dependence on oil. There’s plenty of low-hanging fruit in the areas of conservation and increased efficiency, and no reason to waste any more time arguing about. At the very least, we should be doing the easy stuff.

Matt Yglesias replies:

I find this kind of breezy dismissal of higher gasoline taxes to be quite frustrating. For one thing, it’s just not the case that some amazing technological breakthrough is required for people to have less gasoline-intensive lifestyles. The technologies deployed in France—shorter commutes, lighter cars, trains, and buses—don’t require a massive R&D effort to implement....Meanwhile, if Congress were sitting around atop a giant pile of money, I feel certain that they could be relatively easily persuaded to disburse it on a giant alternative energy R&D effort....But how to acquire the giant pile of money? Well, you could tax gasoline.

The bolded sentence in my piece was prompted by a feeling that, in a post yesterday, Matt had breezily dismissed the oil problem as solvable with higher gasoline taxes. So I guess I deserved that.

To be a little clearer, though, the point I was trying to make in bold is that our global oil constraints are driven largely by increasing demand in developing countries, so things like higher American gasoline taxes aren't likely to have a big effect on the broad dynamic caused by bumping up against limited oil supplies. Higher gas taxes would curb demand a bit in the U.S., but developing countries would just suck up the excess and we'd end up right back where we started. Beyond that, however, there's roughly zero difference between Matt and me. It's absolutely true that we could substantially reduce oil use without a technological breakthrough. It's absolutely true that this would insulate us a bit from volatile oil prices. And it's absolutely true that gasoline taxes could be used to fund lots of basic research that might produce a holy energy grail someday.

Still, until we get that technological breakthrough, it's worth keeping in mind that we probably can't insulate ourselves from global oil dynamics more than modestly. The problem is that if the pessimists are right, we're now in an era where oil volatility is going to limit global growth by provoking periodic global recessions. And even if we use less oil, global recessions will still hurt us.

So we need to be more aggressive about building the alternative energy infrastructure we already know about, we need to be more aggressive about looking for new energy sources, and we need to develop these sources aggressively enough that they're cheap enough for the whole world to use. We're still finding significant new oil fields, like the Bakken formation and the recent offshore Brazilian discoveries, but we're finding them in much smaller numbers than in the past — almost certainly too small to make up for declines elsewhere. We don't have all that much time left.

Al-Qaeda #3 Still a Dangerous Job

| Sat Aug. 27, 2011 5:22 PM EDT

Remember all those #3 guys in al-Qaeda that we used to kill with such frequency? Well, with Osama bin Laden's death they've moved up to #2, and apparently we're still killing them.

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Five Good Things About a Hurricane

| Sat Aug. 27, 2011 5:12 PM EDT

Hurricane Felix over the coast of eastern Honduras. Credit: NASA via Universe Today.Hurricane Felix over the coast of eastern Honduras. Credit: NASA via Universe Today.

 
1. Tropical cyclones are important rainmakers, providing 25 percent or more of available rainfall to places like Japan, India, and Southeast Asia—not to mention Texas, which desperately needs a dousing ASAP.
  

In the course of a year, low latitudes gain more heat and high latitudes loose more heat. Tropical cyclones help transport heat from the equator towards the poles. Credit: NASA.In the course of a year, low latitudes gain more heat and high latitudes loose more heat. Tropical cyclones help transport heat from the equator towards the poles. Credit: NASA.

 

2. Tropical cyclones help maintain the global heat balance by moving warm tropical air away from the equator and towards the poles. Without them, the tropics would get a lot hotter and the poles a lot colder... A typical tropical cyclone releases heat energy of about 50 to 200 exajoules a day. That's equivalent to 70 times our worldwide energy consumption.

 

Long Island, New York, with multiple barrier islands. Credit: NASA.Long Island, New York, with multiple barrier islands. Credit: NASA.

 

3. Paradoxically, fragile barrier islands need hurricanes for their survival—especially now, when sea levels are rising. Although hurricanes erode beaches on the ocean side of barrier islands, they build up the back sides of the same islands by depositing new sediments via winds and waves. This dynamical process keeps barrier islands alive.

Global thermohaline circulation, aka the ocean conveyor belt. Credit: Avsa via Wikimedia Commons. Global thermohaline circulation, aka the ocean conveyor belt. Credit: Avsa via Wikimedia Commons.

 

4. Tropical cyclones stir up the ocean and drive the process of upwelling, thus playing a part in the thermohaline circulation—another important transport mechanism distributing heat between the equator and the poles and keeping the earth's temperature in better balance.

 

Credit: Bruno de Giusti via Wikimedia Commons.Credit: Bruno de Giusti via Wikimedia Commons.

 

5. By stirring the ocean, tropical cyclones also cycle nutrients from the seafloor to the surface, boosting ocean productivity and setting the stage for blooms of marine life.

A Wee Bit More on Oil and the Economy

| Sat Aug. 27, 2011 1:15 PM EDT

Here's a little bit of a follow-up to my post yesterday about oil production and how it may now be a binding constraint on economic growth. The basic argument is fairly simple: Global production of oil has hit a ceiling — or, at best, will grow very slowly for the next few years on its way to a ceiling in 2015 or 2020 or so — and this is going to cause severe volatility in the global economy. As world GDP grows, demand for oil increases and bumps up against the supply ceiling, prices spike upward, and the world goes into recession. Demand for oil then decreases a bit, the economy recovers, rinse and repeat.

This is a plausible story, but as far as I know there's very little in the way of rigorous modeling of this entire scenario. At a minimum, any solid econometric model would need to account for the following:

  1. As the global economy grows, how does demand for oil increase?
  2. As demand for oil increases near the supply ceiling, how do prices spike?
  3. As prices spike, how does the economy react?

#1 is probably fairly straightforward. Doing the math rigorously is a challenge, but basically this is just a regression of oil consumption on world GDP. The evidence suggests that the relationship here is pretty strong: rich countries may have weaned themselves off oil a bit over the past couple of decades, but poor countries haven't. As incomes rise in developing countries, demand for oil goes up strongly regardless of how expensive it gets. This means that pretty much any period of global economic growth will very quickly push oil demand up to its supply ceiling.

#2 is a challenge because we've only been near the oil supply ceiling since about 2007 or so. There just aren't very many data points to work with here. However, we do know that earlier this year oil prices rose about $30 when we lost a mere 2% of global production thanks to the war in Libya. This certainly suggests that we're now in an era where very small changes in demand can have very large effects on price.

#3 would basically be a global version of the work James Hamilton and others have done on the effect of oil price spikes on the U.S. economy. You can see a bit of groping in this direction here, but I don't think anyone has done any kind of full-scale modeling.

All of this, of course, is contingent on the question of whether oil production really has hit a ceiling. That's still an open question, but we can say a few things for certain. First, oil production has certainly peaked in most of the world. The continental United States peaked in 1971 and has been in decline ever since. Prudhoe Bay peaked in 1989. The North Sea peaked in 1999. Norway peaked in 2001. China's massive Daqing field probably peaked around 2005. They're all still producing oil, but they produce less and less every year.

Second, the discovery rate of giant and supergiant oil fields, which produce most of the world's oil, peaked in the 1960s and has been in steep decline ever since.

However, there are still some big question marks in this picture. OPEC is one: no one knows for sure if OPEC, and Saudi Arabia in particular, has peaked or not. The Saudis claim they can continue to increase production, but there are some pretty good reasons to think they're at or near their peak. (They either couldn't or wouldn't pump more oil to make up for Libya's lost production earlier this year, for example.) On the other hand, Iraq's fields definitely have more production capacity. They just need to rebuild their pumping infrastructure. Still, taken as a whole, the balance of the evidence suggests that OPEC is either at or very near its peak and will be at a production plateau for the next decade or so before it starts to decline.

That leaves so-called "frontier oil" — polar and deepwater fields — and unconventional oil like the Canadian tar sands and Venezuelan heavy crude. This is truly uncharted territory, but it's wise to take the more optimistic forecasts with a grain of salt. If history is any guide, there will be some spectacular finds in these areas, but also the usual number of disappointments. And even if these sources pan out, the real question is whether they'll produce enough to offset the declines everywhere else. This is doubly uncharted territory because we don't know for sure how much oil we'll get from these new sources and we don't know for sure what the decline rate will be for the world's existing fields (improved drilling technology makes a big difference in the rate of decline). These are both hotly contested subjects, all the more so because in the past the official forecasts from places like the International Energy Agency have been so wildly — and frankly unbelievably — optimistic (see here and here).

The chart at the bottom shows an oil forecast from ASPO, the Association for the Study of Peak Oil. When you put everything together, they estimate that world production peaked in 2008 and is now in irreversible decline. My own personal guess (worth exactly what you've paid for it) is that this is too pessimistic. I suspect that production will continue to grow slowly for another five or ten years, peaking around 95-100 million barrels per day (compared to current production of 88 mbd). But the ASPO estimate and mine aren't really as far apart as they sound. Either way, demand for oil will increase faster than supply whenever the global economy is growing, and as long as that's the case, and we're bumping along near the peak, oil prices are going to be extremely volatile — and the global economy is going to be volatile right along with it.

This is not something that can be tamed with gasoline taxes in the United States or anything similar. It's a global phenomenon. But it's all the more reason we should be making Manhattan Project kinds of commitments to developing alternative energy sources and reducing our economy's dependence on oil. There's plenty of low-hanging fruit in the areas of conservation and increased efficiency, and no reason to waste any more time arguing about it. At the very least, we should be doing the easy stuff.

There are plenty of places to learn more about this. If you're interested in my lengthy takes on this from back in 2005, try reading "Crude Awakening," a piece I wrote for the Washington Monthly, and this five-part blog series I wrote around the same time in order to provide more detail (and charts!) than I could fit into the magazine.

Rikers Island Prisoners Left Behind to Face Irene

| Sat Aug. 27, 2011 12:09 PM EDT
Rikers at night (center).

"We are not evacuating Rikers Island," Mayor Michael Bloomberg said in a news conference Friday. Bloomberg annouced a host of extreme measures being taken by New York City in preparation for the arrival of Hurricane Irene, including a shutdown of the public transit system and the unprecedented mandatory evacuation of some 250,000 people from low-lying areas. But in response to a reporter's question, the mayor stated in no uncertain terms (and with a hint of annoyance) that one group of New Yorkers on vulnerable ground will be staying put.

New York City is surrounded by small islands and barrier beaches, and a glance at the city's evacuation map reveals all of them to be in Zone A (already under a mandatory evacuation order) or Zone B–all, that is, save one. Rikers Island, which lies in the waters between Queens and the Bronx, is not highlighted at all, meaning it is not to be evacuated under any circumstances.

The Top 5 Longreads of the Week: "Don't Ask, Don't Tell," Clarence Thomas, and ?uestlove

| Fri Aug. 26, 2011 5:35 PM EDT

Mother Jones guest blogger Mark Armstrong is the founder of Longreads, a site devoted to uncovering the best long-form nonfiction articles available online. And what better time to curl up with a great read than over the weekend? Below, a hand-picked bouquet of five interesting stories, including word count and approximate reading time. (Readers can also subscribe to The Top 5 Longreads of the Week by clicking here.)