Sunday, February 25, 2018

Climate change: The feel-good catastrophe

Last week my newly adopted home of Washington, D.C. had two back-to-back days of summer in the middle of winter. The first day the temperature reached 78 degrees (when the high is normally 48 degrees). That was a new record. The next day the high was 82 degrees (normally 49 degrees). Not surprisingly, that was a record, too.

People were walking the streets in T-shirts and shorts. Last week's balmy interlude felt like those late spring days which provide a preview of the summer ahead. Everyone was telling me I had to get outside so I could to take advantage of such great weather—which I did.

But the long walk I took on day one was not a particularly happy one. As most of the rest of the Washingtonians I encountered were experiencing the feel-good part of the feel-good catastrophe called climate change, I was experiencing the catastrophe part.

Sunday, February 18, 2018

LNG comes to Boston, a harbinger of the future?

The most curious natural gas story of the year so far comes out of Boston and seems to have echoes of a deepening Russia-related scandal in Washington. A liquefied natural gas (LNG) tanker bearing natural gas produced in part in Russia delivered its cargo to the Boston area for insertion into the natural gas pipeline system there. Apparently, the Russian company that supplied some of the gas may fall under U.S. sanctions against the financing and importation of Russian goods.

One of the many ironies of the delivery is that the United States is simultaneously importing LNG in one place even as it exports LNG from another. (I'll explain later why this may become a more frequent occurrence in the years ahead.)

The hue and cry from the natural gas partisans blamed Boston's predicament on the lack of pipelines to carry growing gas production from the nearby Marcellus and Utica shale deposits to needy Bostonians whose gas supplies had been depleted by a deep winter freeze.

Sunday, February 11, 2018

The stock market swoon and our hatred of (some kinds of) volatility

The steepest one-day point drop in the history of the Dow Jones Industrial Average last week shook stock investors into an awareness that all is not sweetness and light in the financial markets. The sudden downside stock market volatility had been preceded by the breathless upside volatility of a months-long melt-up—one that had financial gurus outbidding each other to increase their targets for major stock indices. (See here and here.) Investors, too, felt that heaven had arrived on Earth, at least financial heaven.

After years of steady gains—with only the occasional drop—stock and bond market investors had gotten used to narrow swings in price that didn't disturb their sleep. In fact, whenever the stock (or bond market) looked like it might crash, the world's central banks offered reassurance both in words and deeds. The deeds included unprecedented buying of bonds (which kept interest rates low) and in some cases the purchase of stocks. The Bank of Japan and Swiss National Bank are two central banks which buoyed stocks through purchases though they bought stocks for different reasons.

Sunday, February 04, 2018

Ruin is forever (revisited): Why your death isn't as bad as that of all humankind

It should be obvious that the death of an individual human being isn't as bad as the death of all humankind. But that's only true if you accept the following premise laid out by Nassim Nicholas Taleb in his upcoming book, Skin in the Game:

I have a finite shelf life; humanity should have an infinite duration. Or I am renewable, not humanity or the ecosystem.

The quotation actually comes from a draft version of one chapter available here. The book is not yet out.

But what does this mean in practical terms? The simple answer is that human societies should not engage in activities which risk destroying all of humanity. Nuclear war comes to mind. And, most, if not all, people recognize that a nuclear war would not only result in unthinkably large immediate casualties, but also might threaten all life on Earth with a years-long nuclear winter.