The Holly Book

The IPCC exposed: political to its core

A new book demolishes the neutral, scientific façade of the UN’s climate change body and reveals its real, debate-ending purpose.

By Rob Lyons

‘We meet here at a time when greenhouse gas concentrations in the atmosphere have never been higher, when the number of livelihoods that have been dissolved by climate change impacts has never been greater and when the need for action has never been more compelling or more achievable.’

So said Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC), as she opened the organisation’s latest extravaganza in Durban, South Africa this week. Her words are a neat demonstration of how UN bodies like the Intergovernmental Panel on Climate Change (IPCC), far from being neutral and independent organisations, are highly political. The task before the gathered governmental delegations is urgent, we are told, because the concentrations of greenhouse gases have ‘never been higher’, the impacts have never been ‘greater’ but action is ‘achievable’. (Figueres was also being disingenuous - there’s pretty much zero chance of any meaningful agreement coming out of the Durban talks.)

These statements are all built upon the wisdom provided by what Donna Laframboise rightly refers to regularly as the ‘Climate Bible’: the periodic assessment reports produced by the IPCC. But while the UNFCCC is clearly a political body, hammering out just who is going to pay to sort out the planet-threatening problem of global warming, the IPCC is widely seen as a body simply offering the very best expert advice from the finest scientific minds in the world.

In The Delinquent Teenager Who Was Mistaken for the World’s Top Climate Expert (a fabulous title that surely deserves to be a winner with charades players everywhere), Laframboise provides chapter and verse on the Climate Bible and the body that produces it. The IPCC is presented as being made up of thousands of top scientists who work tirelessly and self-critically to bring together the best peer-reviewed research and reach an unbiased, cautious and independent assessment of where global temperatures are heading and what the consequences will be. Sadly, as Laframboise shows, the reality is very different.

Sitting in a coffee shop around the corner from the spiked office, Laframboise explains to me how she came to write the book. Formerly a feature writer and editorial board member at Canada’s National Post, she left the paper in the early Noughties and turned her back on journalism, feeling it was ‘time for a change’. She continues: ‘I didn’t write anything for seven or eight years but in early 2009 I became so annoyed at the way climate change was being covered in the media, it was just so shallow... so I started doing my own research and I started blogging.’

What Laframboise found was that there is a lot more uncertainty about climate change and its effects than the general public has been led to believe. Indeed, her original book project was simply going to spell out 10 reasons why we should stay calm about the whole issue. What really drew her to focus on the IPCC, she tells me, is that ‘this organisation is regarded as a prototype. It’s the golden child, it’s won the Nobel Peace Prize. So the UN has now set up an IPCC-like body for biodiversity and another one for agriculture, and another for soil degradation. And in each case, they appear to be trying to recruit the science and the scientists to help them pursue a global agenda on these issues.’

Before digging deeper into the issue, Laframboise tells me that she assumed - like most people - that the IPCC was ‘dependable, trustworthy and professional’. She adds: ‘The more I investigated the IPCC, the more I thought it was like a child that had been praised and flattered, that had been given rules to follow but, when it doesn’t follow the rules, faces no consequences. And now it’s grown up into a problem, collectively, for all of us.’

In her book, Laframboise takes us through the major claims made about the IPCC and demolishes them one by one.

For example, there’s the idea that the IPCC report is the product of the world’s top experts. But in reality, knowing a subject well is not nearly as important, it seems, as having a face that fits. So, leading IPCC contributors sometimes do not even have PhDs in their subjects, never mind being world-class experts, while other researchers in charge of chapters had expertise in a completely different area to the one they were working on. Meanwhile, the nature of the review process means that when leading experts are critical, they can safely be ignored by chapter authors.

Another piece of IPCC spin is that its reports are built upon the best available research. In fact, there is heavy reliance on the so-called ‘grey’ literature - material that is not from peer-reviewed journals at all. This material can even just be magazine articles or propaganda from environmentalist groups. The most famous example of this is the ‘Himalayagate’ affair, which centred on the important claim made in the 2007 report that glaciers, apparently crucial to the water supply for billions of people, would disappear entirely by 2035.

Nothing could demand urgent action more than this. However, nothing could be further from the truth. The glaciers are likely to last for hundreds of years, as was pointed out by expert reviewers - who were ignored. However, in early 2010, it was pointed out that the erroneous idea came from a document produced by environmental group WWF, which in turn had quoted an earlier interview in New Scientist magazine.

In March 2010, Laframboise decided to take on the task of working out just how many references in the 2007 report were to non-peer-reviewed sources. With the help of volunteers from her blog readership, her audit found that 30 per cent of the references were from newspaper and magazine articles, unpublished masters theses, reports produced by green groups and even press releases. That hardly inspires confidence, particularly when she also reveals how IPCC movers and shakers have exploited links with peer-reviewed journals to get the ‘right’ kind of research into print just in time to bolster their views in the assessment reports - and to block the ‘wrong’ kind of research from getting the kudos of peer-reviewed publication.

Time and again, the IPCC claims to do one thing while in reality doing something quite different. For example, it declares that there is a cut-off point for each report for research to be considered because, of course, expert reviewers need to have time to consider and comment upon chapters in which that research is mentioned. However, such deadlines are routinely ignored so that chapters refer to work published after the deadline. The result is that those sections of the assessment reports don’t even receive the easy-to-ignore comments of reviewers.

This was particularly blatant in relation to the Stern Review, a report commissioned by the UK government that reported in late 2006 that immediate action to tackle climate change would be much cheaper and more effective than adapting to rising temperatures. Many references to the Stern Review were included in the 2007 report - even though the cut-off for material to be included was officially January 2006. It’s no surprise that such a politically helpful publication should find its way into the IPCC report, despite its inclusion being in breach of IPCC rules.

There is more - much more - detailed in Laframboise’s book, but in truth, none of it should come as a surprise. Because the purpose of the IPCC is not to assess science in a disinterested manner. Its job is to be a debate-ender, a shut-the-fuck-up to anyone who disagrees with the underlying political agenda. Indeed, far from the political process arising out of the gloomy prognostications of the scientists, it is the demand for scientific legitimation that comes out of a pre-existing political process.

Once the whole process is politicised, there’s no going back. If the conclusions of your supposedly disinterested work will have a major influence on political decisions, it is surely impossible to expect anyone to remain completely disinterested. One example of this is the way in which green lobby groups have recruited IPCC-connected authors. For example, Laframboise lists 78 people involved with the IPCC who are also members of WWF’s parallel climate panel. Of these, 23 are IPCC co-ordinating lead authors - the people in charge of individual chapters of the reports. ‘Ladies and gentlemen’, she writes, ‘the IPCC has been infiltrated.’

This surely undermines the IPCC’s claim to impartiality. ‘The IPCC is, in many ways, analogous to a trial judge’, she tells me in that noisy coffee shop. ‘In a murder trial, for example, there are supposed to be two sides - prosecution and defence - with the conduct of the trial and the outcome decided by a neutral referee. But if you found out that the judge went out partying with the prosecution every night, I think we could all agree that was a problem because there is another avenue of communication between them that we weren’t all party to.’ If those scientists had the slightest sense of their role as neutral arbiters, they should surely be keeping their distance from such lobbyists, not getting into bed with them.

When it comes to global warming, what we have at present is considerable uncertainty about what the future holds, combined with a variety of possible policies we could pursue to deal with climate-related problems. The real job of the IPCC is to remove that uncertainty, replacing it with an armageddon scenario that can short-circuit the political debate. The Science has spoken became a mantra at the time of the release of the last assessment report in 2007. Anyone who dared to deny The Science was abused as a ‘denier’, a ‘flat-earther’.

Laframboise has done the world a favour by pointing out, in detail, why the so-called Climate Bible is nothing of the sort. That doesn’t mean we won’t face environmental problems in the future - though the experience of the IPCC farce should reinforce our scepticism about any such claims - but it does remind us that those problems have to be balanced up with all the other demands made upon society’s time and resources.

That balancing act is called politics. It’s a messy, frustrating but utterly vital process that should never be shut down by anyone waving a holy book and a hidden agenda.

Unemployment Solutions

Both Weird and Scary

By Jeffrey Tucker

There was a brief moment of joy at the news that retailers hired 206,000 new people in November. But only one day later, the other shoe dropped: Jobless claims are, again, past the 400,000 mark — meaning that the unemployment problem is, overall, getting worse, not better. The broadest measure of unemployment exceeds 17%. It is much higher among new college graduates. And this doesn’t even speak to the larger problem of job downgrades; there’s a personal tragedy embedded in each one.

The longer the unemployment problem persists, the more we are seeing oddball theories and proposals for dealing with it. Ben Bernanke remains enthralled with the antique view that the way to cure unemployment is to depreciate the value of money. You have to blow the dust off some old Keynesian macroeconomics texts, surely to be found in some dingy library somewhere, to see his rationale.

I’ll cite two additional cases in point (one news story and one commentary) as indicators of a more widespread problem.

A New York Times news story by Adam Davidson regrets how the economic changes of the last half-century have made job opportunities fewer than ever. He cites the common complaint about international trade. Steel, textiles, toys, furniture, electronics were once domestic industries, but these goods are, mostly, made overseas now, presumably, leaving less for us to do.

This is the common protectionist line, and it is rooted in fallacy. Offloading these industries where they can thrive more efficiently does two things: saves American consumers money so that they can save or spend on different things, and saves American workers from wasting time making things that can be made more cheaply elsewhere, so that they can do things that are more productive, rewarding and remunerative.

The end result should be more and better jobs at home. (I’ll get to why that is not happening in a bit.)

His second complaint is straight out of the Luddite playbook. Davidson regrets how technology (capital) has replaced human hands with machines. This isn’t about technology only recently online. He regrets that “countless secretaries were replaced by word processing, voice mail, email and scheduling software; accounting staff by Excel; people in the art department by desktop design programs.” It gets worse. He seems to regret even your ability to buy a bookshelf at OfficeMax because there are no longer “a bunch of people…helping measure things and making sure everything worked correctly.”

My goodness. He might as well regret the invention of the wheel, because those employed to carry others around on their backs are now out of work. If we take this logic far enough, we would be back to the Stone Age, when, it’s true, everyone had jobs to do. Then again, the living standards were rather low.

It seems trivial to point it out, but market-created technology is not violence to society. It appears because we want it, and we want it because it helps our lives. We become better at what we do. The outmoded technology no longer needs to be made — shed a tear for typewriter manufacturers! — but there are new jobs in making the new technology, and industries that use that new technology can expand because they are more efficient than ever.

I’m sorry for wasting your time by pointing out some commonplace refutations of brainless nostrums, but apparently, there is nothing so brainless that it is unworthy of being featured in The New York Times. And if it is being featured there, it strongly suggests the need for refutation. So let us visit yet another piece along these lines, this one even wackier and more wicked than the last one.

In “The Age of the Superfluous Worker” by Columbia sociologist Herbert Gans, we discover an even-more-bizarre explanation of why unemployment persists. He begins by pointing out that having surplus workers is hardly a new problem; it has been an issue faced by all countries in all times. But in the old days, he writes, surplus workers were afflicted with “illnesses” that caused them to be “incapacitated” or were otherwise “killed off.”

Wow, bring back the old days, huh? What’s more, he writes, wars were a blast, because they “absorbed the surplus” of labor by employing people to kill or be killed. Ah, the salad days of mass bloodshed when “sufficient numbers of those serving in the infantry and on warships were killed or seriously enough injured so that they could not add to the peacetime labor surplus.”

Sadly, those days are long gone, he writes, because people are so much healthier now. Not even war works its magic on the labor pool anymore: “Iraq and Afghanistan wars have left many more service members injured than killed.” (This whole line is based on a myth that war and death have an economic upside.)

So we are in a pickle. Gans says that we need an “industrial policy” that brings together government and business to make new jobs. An example he offers: “Reducing class sizes in all public schools to 15 or fewer would require a great many new teachers, even as it would raise the quality of education.”

We could have government employ some people to dig holes and other people to fill them back up again. Laugh if you want, but this is precisely what J.M. Keynes suggested in his General Theory. His plan was to have government fill up bottles with money, throw them into mines, fill the mines with trash and have private enterprise set loose to find them. Voila, no unemployment. He failed to add that this would be incredibly stupid and a ghastly waste of resources. (Thebest refutation of this fallacy should be distributed by the case.)

Gans ends his theorizing with the suggestion that government restrict everyone to working only 30 hours per week. When that time is done, presumably, others will be standing right by to step in to fill up the rest of the week, while the first workers go home to vegetate and wait for their turns at the wheel again. Actually, I don’t know why he says 30 hours per week. We have a growing population. Maybe we should all be forbidden by law from working more than 10 or five hours per week! That would, surely, bring prosperity.

All these cockamamie theories are deeply dangerous, and they evade the incredibly obvious point as to why there is unemployment in the first place. If you read economics books from the 15th-19th centuries, there was hardly a word written about unemployment at all.

Why is that? Because there is more than enough work to do in this world. There is no shortage of jobs, now or ever.The only question concerns the terms of exchange between the worker and the person who is being hired. Only in the 20th century and, mostly, beginning during the Great Depression has there been widespread unemployment, and that is because of the government’s interventions in the relationship between workers and employers.

What kinds of intervention? There are legal restrictions that make hiring and firing a litigator’s paradise. There are high payroll taxes that vastly increase the cost of new works. There are minimum wage laws, labor union privileges and “child” labor laws that cartelize the workplace to benefit the few at the expense of the many. There are restrictions on immigration that make it very difficult for many businesses to function and expand. If you could somehow get rid of all these problems in one fell swoop, the so-called unemployment problem would vanish rather quickly.

The problem of unemployment is not really an economic problem; it is a political problem. It is one of the many costs imposed by a state that involves itself in things it ought to leave alone. But rather than eliminating these costs, there is a growing fascination with wacky ideas, which will only guarantee that a bad problem grows ever worse. If you know aNew York Times editor, send him or her a book on the basics of economics, and soon.

As for Bernanke, he has never met a problem in life for which he doesn’t see the solution as more paper-money printing. If he could find a way for the Bureau of Engraving and Printing to hire 7 million people, and another 6 million to fly the helicopters needed to distribute the new bills, we’d had full employment, and absolutely no reason to work.

Good as Gold

Stupid Arguments Against Gold

By George Selgin 

Persons familiar with my writings on monetary reform know that, far from being anyone's idea of a gold bug, and despite my conviction that those monies work best that governments govern least, I've always shied away from arguing that we ought to re-establish a gold standard. Instead, I've favored reforms aimed at preserving our existing fiat standard while eliminating the role of bureaucrats, and increasing that of competitive market forces, in regulating that standard.

I respect nonetheless those who, having given serious thought to the matter, conclude that gold remains our best hope. Alas, such people make up but a small fraction of self-described gold bugs. My standard reaction to finding myself within earshot of any of the rest is to look for a more remote and unoccupied bar stool.

But there's one thing that's guaranteed to bring out the gold bug in me, and that is ill-informed arguments against the gold standard. No, make that stupid arguments, because the ones I have in mind aren't  merely ill-informed. They are ill-informed in a way that suggests that the persons who make them don't even think about what they're saying.

An example of the sorts of arguments I have in mind is this opinion piece ^[1] from yesterday's New York Times, in which Eduardo Porter responds to recent pro-gold testimonials of various Republican presidential candidates and conservative talking heads. Such persons aren't exactly heavyweights when it comes to making good arguments for returning to gold. Yet in trying to show just what lightweights they really are, Mr. Porter mainly succeeds in revealing his own featherweight grasp of monetary economics and history.

For his opening salvo Mr. Porter turns to R.A. Radford's famous article ^[2] on the employment of cigarettes as money in German P.O.W. camps, noting how, according to Radford, the prices of other goods sometimes fluctuated dramatically in response to new cigarette deliveries or to cigarettes' gradual disappearance in the absence of such. This experience, we are assured, proves that a gold standard is a dumb idea since gold, "as money,...share's tobacco's basic drawback" of being a commodity.

This would be an unanswerable argument against the gold standard were it not for two minor issues: first, gold isn't tobacco; second, P.O.W. camps aren't ordinary economies. Those who plead for a return to gold have a right to be understood to be extolling the merits of a gold standard rather than those of a tobacco standard or a cowrie shell standard or some other commodity standard; and the instability exhibited by any standard in a P.O.W. camp might not supply an accurate indication of the same standard's likely performance in a more usual economic setting. I would bet, for example, that the real price of cigarettes was subject to more violent changes within the confines of Stalag Luft III than in the surrounding German economy; and after the war the real price of a pack of cigarettes net of taxes, in the U.S. at least, was more-or-less constant until the early '80s, when it started to rise gradually. (It is now about twice what it was then). Finally, there isn't even any good reason for supposing that cigarettes were a poor monetary medium for P.O.W. camps, given the available options. Indeed, having often assigned Radford's article myself in teaching monetary economics, I have always understood its lesson to be, not that cigarettes make crummy money, but that markets are remarkably clever when it comes to expediting exchange. The logical implication of Mr. Porter's argument, on the other hand, seems to be that by relying on the market the P.O.W.s blew it: it would have been wiser, according to his point of view, for them to have invited their captors to supply, in exchange for some of their precious Red-Cross parcel contents, fiat money especially designed for their use, and backed by a solemn promise to manage the stuff scientifically, so as to best provide for the prisoners' macroeconomic well-being.

And gold itself? Is its supply in fact subject to the sort of shocks to which P.O.W. camps' cigarette endowments were exposed? Though Mr. Porter seems to assume so, he offers no proof. Had he bothered to inquire into actual facts he might have learned that by far the most notorious of all precious metal "supply shocks"--the one following Spain's conquest of the New World--led to the sixfold increase in European prices that has since come to be known as the great European "Price Revolution." ^[3] Q.E.D. for Mr. Porter? Well, not quite, because that sixfold increase occurred over an interval of over 150 years, which translates into a continuous rate of inflation of just 1.1 percent--a rate that would have Ben Bernanke and many other modern central bankers squawking about being on the brink of a deflationary crisis.

And what about that other famous gold supply shock started by a lucky discovery at Sutter's Mill? Well, have a look if you will at a chart showing the progress of the U.S. CPI since 1800 ^[4] or so, and see if you can pick out the rise in prices this discovery caused. Unless you happen to be on drugs, you can't, because it isn't there: there are price jumps, sure enough--in or around 1812, 1862, and 1918--but they all mark moments when the U.S. temporarily abandoned the gold standard, which is to say moments when it embraced the sort of paper standard Mr. Porter thinks so obviously superior to gold. (During WWI, although the U.S. didn't suspend the gold standard outright, it limited gold exports.) Wars are exceptional, of course. But then what about the CPI lift-off after 1971, when the dollar's last link to gold was severed once and for all? Is the CPI a Republican plot?

If not, are we not entitled to wonder why Mr. Porter, in assuring us that "the Fed can print dollars at will to meet the growing demand for money as the economy grows," does not seem to realize that it can, and often does, "print" too many dollars? Are we not entitled to wonder why, in making a case against gold and in favor of paper money, he supplies us with an almost perfectly irrelevant story about tobacco-plus-paper inflation, without so much as hinting at the many far more serious inflations fueled by paper alone? Is "Zimbabwean" inflation to him nothing other than a bogeyman invented by some right-wing talking head? Perhaps Mr. Porter was so absorbed by his vision of P.O.W.s struggling to carry on despite occasional cigarette windfalls that he managed to overlook the damage irredeemable paper monies have done at one time or another to the entire populations of Angola, Argentina, Bolivia, Brazil, Bulgaria, China, France, Germany, Greece, Hungary, Israel, Mexico, North Korea, Nicaragua, Peru, the Philippines, Poland, Romania, Yugoslavia, and Zaire--to offer but a very incomplete list.

But why harp on inflation? After all, fiat money at least has the virtue of hardly ever being in short supply, so that economies need not fear being unable to grow for want of it. In contrast under a gold standard, Mr. Porter assures us, "the economy couldn't grow faster than the supply of gold." Evidently Mr. Porter here overlooks another relevant episode in economic history. This episode is known as "the 19th century."

It's hardly surprising under the circumstances that Mr. Porter should share the very widespread opinion that the gold standard was to blame for the United States Great Depression. Yet even by his own telling it wasn't the gold standard as such, but the particular rules by which the Fed administered that standard, that led to the Fed's failure to prevent the post-1930 collapse of the U.S. money stock. In fact the Federal Reserve's requirement of a 40 (not 60) percent gold cover for its outstanding notes was not a necessary part of the gold standard but a regulation based on naive ca. 1840 British Currency-School ^[5] thinking. (In Scotland's free-banking based gold standard, in contrast, banks managed quite well with specie reserve ratios that varied little from one or two percent.)

The stipulated gold minimum was, moreover, something that the Fed itself had statutory authority to lower, had it considered doing so worthwhile. In fact, it didn't, because (as Dick Timberlake ^[6] points out) the Fed never ran up against the 40 percent limit during the crucial, early years of the depression: in August 1931 the Fed's gold holdings of $3.5 billion were over twice what it needed to meet that requirement; and even at the time of the Bank Holiday in March 1933, despite having endured a run on gold triggered by fear of an impending devaluation, the Fed was sitting on more that $1 billion in excess gold reserves. What the Fed was short of wasn't gold but what clueless Fed officials, subscribing to the bogus "real-bills doctrine," considered good private securities, which until 1932 were the only assets eligible for backing its notes other than gold. If Mr. Porter knew his Friedman and Schwartz, he'd know that those authors, among several others, conclude on the basis of such facts that the gold standard was not the cause of the Fed's failure to combat the Great Depression. Since Christina Romer ^[7] is among the authors in question, I trust that Mr. Porter will not be tempted to declare that they must all be Republicans.

While the general thrust of Mr. Porter's essay is that one has to be daft to say nice things about the gold standard, he is generous enough to allow that this might not be the only reason for Ron Paul's defense of gold. After all, Porter informs us, "much of his [Paul's] wealth is tied up in gold-mining stocks." Consequently, Porter reasons, Paul "would certainly benefit if even more American's caught the gold bug." But would he? Have a look at any plot ^[8] of the real price of gold ^[9], and ask yourself whether, if you had "much of your wealth" in gold mining, you would be pleading for a return to the gold standard, or pulling hard for a continuation of the fiat-money status quo. Besides not making sense, and being nasty, Porter's argumentum ad hominem is profoundly silly. Would he have us conclude that Paul is pro-life only because he's a pediatrician an obstetrician, or that, since he favors drug legalization, he must be long on marijuana, coca, and poppies?

What I find most obnoxious about Mr. Porter's arguments isn't that they are arguments against reviving the gold standard (for I recognize good arguments for not attempting such) or even that they are bad arguments. It is that they are both bad and smug; indeed they are bad because they are smug. Starting from the premise that only idiots can favor a gold standard, Mr. Porter imagines that no great effort is required to prove that such a standard is deeply flawed. He then cobbles up his proof, by plucking up a fistful of old anti-gold canards from the murky bottom of google.com, by recalling an old article describing inflation that wasn't the fault of some central bank, and by simply asserting his own a priori beliefs. After all, he reasons, why bother to use a tower or ram or even a ladder to assail something that mere wind ought to topple? In fine, Mr. Porter falls victim to the tempting but evidently mistaken assumption that he surely knows more about money than the average right-wing nut.

It's going to be painful, and it's going to be nasty

Factories stall worldwide, U.S. jobless claims rise

By Ross Finley and Emily Kaiser

LONDON/SINGAPORE (Reuters) - Manufacturing activity is contracting across Europe and most of Asia, data showed on Thursday, and a Chinese official declared that the world economy faces a worse situation than in 2008 when Lehman Brothers collapsed.

Factory activity shrank even further in the euro zone, reinforcing the view that the debt-strapped region is in recession, while British manufacturing contracted at the fastest pace in two years, raising the risk that the UK economy may suffer the same fate.

This has been the case for much of the developed world for several months, with the exception of pockets of better news from the United States. But the slowdown now appears to be spreading to economic powerhouses of the developing world.

Adding to the gloom, new U.S. claims for unemployment benefits rose unexpectedly last week, popping above 400,000 for the first time in over a month and reinforcing the view that the battered labor market was healing only slowly.

China's official purchasing managers' index (PMI) showed factory activity shrank in November for the first time in nearly three years, while a similar PMI showed Indian factory growth slowed close to stall speed.

Both China and Brazil eased monetary policy on Wednesday. It came alongside coordinated action from the world's biggest central banks to try to prevent another credit crunch by lowering the cost of dollar swaplines.

"The big picture here is this is an unwinding of a 20-year debt bubble," said Peter Dixon, global financial economist at Commerzbank. "It's going to be painful, and it's going to be nasty. What policymakers are aiming for is a smoothing of the path."

But those policymakers appear to be getting more worried.

Zhu Guangyao, China's advance coordinator to the Group of 20 talks and also a vice finance minister, said heavily indebted countries had limited scope to act now, which will make it harder to sustain global growth as the European debt saga drags on.

"The current crisis, to some extent, is more serious and challenging than the international financial crisis following the fall of Lehman Brothers," Zhu said.

"It's keenly important for countries around the world to work together in the sprit of 'co-operating in the same boat'," he added.

After the Lehman bankruptcy, G20 countries committed trillions of dollars to boosting growth and backstopping banks, and central banks cut interest rates to record lows.

But rates are still near zero in the United States, Japan and Britain, and public finances have deteriorated around the world, leaving less policy space to counter a European downdraft.

SPREADING

Fast-growing emerging markets such as China, Brazil and India led the recovery in 2009, and they are still growing far more rapidly than most developed economies. But they are not immune to weak demand from Europe or the United States.

China's official purchasing managers' index for November fell to 49, dipping below the 50 mark that separates growth from contraction for the first time in nearly three years.

The index of new export orders tumbled to the lowest level since February 2009, perhaps not surprisingly given that Europe is one of China's biggest trading partners.

The final euro zone manufacturing PMI was confirmed at 46.4, its weakest level in two years, with factory activity in both of its biggest economies, Germany and France, weakening.

The UK factory PMI fell to 47.6 in November, its lowest since June 2009, further evidence that Britain's economy is in dangerous territory.

"The manufacturing engine has run out of steam," said Rob Dobson, senior economist at Markit, which compiles the surveys.

Similar factory data for the U.S. are expected later on Thursday, coming on the heels of a Federal Reserve report on Wednesday that said there was moderate growth in recent weeks but that hiring and housing market activity remained anemic.

The weaker-than-expected China PMI reading came one day after Beijing lowered banks' reserve requirements by 50 basis points to try to ease credit strains.

"It's time to start reflating China's economy," said Qu Hongbin, co-head of Asian economics research at HSBC.

An HSBC PMI on China also showed manufacturing activity shrank in November as new orders fell. The index dropped to 47.7 from 51 in October.

He predicted China's central bank would cut another 1.5 percentage points off of reserve requirements by mid-2012, and said the European debt crisis along with China's weakening property market would "only add to downside pressure on growth".

Reserve requirements for big banks stand at 21 percent.

Just a few months ago, inflation was the primary concern for most of Asia's economies. But Europe is the top export destination for many countries including China, so when its crisis intensified, Asia's growth prospects dimmed.

South Korea's factory activity shrank for a fourth consecutive month. Its November exports rose faster than expected, although many economists think that won't last because export orders weakened.

In Indonesia, year-on-year export growth slowed in October to 16.7 percent, well below economists' forecast for 22.7 percent and barely one-third of the growth rate recorded in September.

India bucked the trend, reporting a pick-up in export orders, although its overall PMI dipped on weak domestic demand.

Goodbye C++

10 Things I Didn’t Learn in College

By James Altucher

I’ve written before on 10 reasons Parents Should Not Send Their Kids to College and here is also Eight Alternatives to College but it’s occurred to me that the place where college has really hurt me the most was when it came to the real world, real life, how to make money, how to build a business, and then even how to survive when trying to build my business, sell it, and be happy afterwards.

Here are the ten things that if I had learned them in college I probably would’ve saved/made millions of extra dollars, not wasted years of my life, and maybe would’ve even saved lives because I would’ve been so smart I would’ve been like an X-Man.

1. How to Program - I spent $100,000 of my own money (via debt, which I paid back in full) majoring in Computer Science. I then went to graduate school in computer science. I then remained in an academic environment for several years doing various computer programming jobs. Finally I hit the real world. I got a job in corporate America. Everyone congratulated me where I worked, “you’re going to the real world,” they said. I was never so happy. I called my friends in NYC, “money is falling from trees here,” they said. I looked for apartments in Hoboken. I looked at my girlfriend with a new feeling of gratefulness – we were going to break up once I moved. I knew it.

In other words, life was going to be great. My mom even told me, “you’re going to shine at your new job.”

Only one problem: when I arrived at the job, after 8 years of learning how to program in an academic environment – I couldn’t program. I won’t get into the details. But I had no clue. I couldn’t even turn on a computer. It was a mess. I think I even ruined people’s lives while trying to do my job. I heard my boss whisper to his boss’s boss, “I don’t know what we’re going to do with him, he has no skills.” And what’s worse is that I was in a cluster of cubicles so everyone around me could here that whisper also.

So they sent me to two months of remedial programming courses at AT&T in New Jersey. If you’ve never been in an AT&T complex it’s like being a stormtrooper learning how to go to the bathroom in the Death Star where, inconceivably, in six Star Wars movies there are no evidence of any bathrooms. Seriously, you couldn’t find a bathroom in these places. They were mammoth but if you turn down a random corner then, Voila! – there might be an arts & crafts show. The next corner would have a display of patents, like “how to eliminate static on a phone line – 1947″. But I did finally learn how to program.

I know this  because I ran into a guy I used to work with ten years ago who works at the same place I used to work at. “Man,” he says, “they still  use your code.” And I was like, “really?”  “Yeah,” he said, “because it’s like spaghetti and nobody can figure out how to modify it or even replace it.”

So, everything I dedicated my academic career to was flushed down the toilet. The last time I programmed a computer was 1999. It didn’t work. So I gave up. Goodbye C++. I hope I never see you and your “objects” again.

2. How to Be Betrayed. A girlfriend about 20 years ago wrote in her diary. “I wish James would just die. That would make this so much easier. Whenever I kiss him I’m thinking of X”. Where X was a good friend of mine. Of course I put up with it. We went out for several more months. It’s just a diary, right? She didn’t really mean it! I mean, c’mon. Who would think about someone else when kissing my beautiful face? I confronted her of course. She said, “why would you read through my personal items?” Which was true! Why would I? Don’t have I have any personal items through my own I could read through? Or a good book, for instance, to take up my time and educate myself? Kiss, kiss, kiss.

Why can’t they have a good college course called BETRAYAL 101. I can teach it. Topics we will cover: Betrayal by a business partner, betrayal by investors, betrayal by a girlfriend (I’d bring in a special lecturer to talk about betrayal by men, kind of like how Gwynneth Paltrow does it in Glee), betrayal by children (since they cleverly push the boundaries right at the limit of betrayal and you have to know when to recognize that they’ve stepped over the line, betrayal by friends/family (note to all the friends/family that think I am talking about them, I AM NOT – this is a serious academic proposal about what needs to be taught in college) – you help them, then get betrayed – how to deal with that?

Then there are the more subtle issues on betrayal – self-sabotage. How you can make enough money to live forever and then repeatedly find yourself in soup kitchens, licking envelopes, attending 12 step meetings, taking medications, and finally reaching some sort of spiritual recognition that it all doesn’t matter until the next time you sink even lower. This might be in BETRAYAL 201. Or graduate level studies. I don’t know. Maybe the Department of Defense needs to give me a grant to work on this since that’s who funds much of our education.

3. Oh shoot, I was going to put Self-Sabotage into a third category and not make it a sub-category of How to Be Betrayed. Hmmm, how do I write myself out of this conundrum. College, after all, does teach one how to put ideas into a cohesive “report” that is handed in and graded. Did I form my thesis, argue it correctly, conclude correctly, not diverge into things like “Kim Kardashian will never be the betrayer, only the betrayed. But this brings me to: Writing. Why can’t college teach people how to actually write. Some of my best friends tell me college taught them how to think. Thinking has a $200,000  price tag apparently and there is  no room left over for good writing.

And what is good writing? It’s not an opinion. Or a rant. Or a thesis with logical steps, a deep cavern underneath, beautiful horizons and mountaintops at the top. Its blood. Its Carrie-style blood. Where everyone has been fooling you until that exact moment when n0w, with the psychic power of the written word, you spray pig blood everywhere, at everyone, and most of all you are covered in blood yourself, the same blood that pushed you and your placenta out of your mother’s womb, pushed and shot out with you until just the act of writing itself is a birth, a separation between the old you and the new you – the you that can no longer take the words back, the words that now must live and breathe and mature and either make something of themsleves in life, or remain one of the little blips that reminds us of how small we really are in an infinite universe. [See also, 33 Unusual Tips to Be a Better Writer]

4. Dinner Parties. How come i never learned about dinner parties in college. Sure, there were parties among other people who looked like me and talked like me and thought like me – other college students of my age and rough background. But Dinner Parties as an adult are a whole new beast. There are drinks and snacks beforehand where small talk has to disguise itself as big talk and then there’s the parts where you KNOW that everyone is equally worried about what people think about them but that still doesn’t help at those moments when you talk and you wonder what did people think of ME? Nobody cares, you tell yourself, intellectually raffling through pages of self-help blogs in your mind that told you that nobody gives **** about you.

But still, why don’t we have a class where there’s Dinner Party after Dinner Party and you learn how to talk at the right moments, say smart things, be quiet at the right moments, learn to excuse yourself during the mingling so you can drift from person to person. Learn how to interrupt a conversation without being rude. Learn how to thank the host so you can be invited to the next party. And so on. Which brings me to:

5. Networking. Did it really take 20 years after I graduated college before someone wrote a book, “Never Eat Alone.” Why didn’t Jesus write that book. Or Plato. Then we might’ve read it in religious school or it would’ve been one of those “big Thinkers” we need to read in college so we can learn how to think. I still don’t know how to network properly so this paragraph is small. I’m classified under the DSM VI as a “social shut-in”. I’d like to get out and be social but when the moment comes, I  can only make it out the door about 1 in ten times. I always say, “I’d love to get together” but  then I don’t know how to do it. Perhaps because not one dollar of my $100,000 spent on not learning how to program a computer was also not spent on learning how to network with people. [See also, my recent TechCrunch article, "9 Ways to be a Super-Connector"]

Central Banksters of the World Unite Part II

Leaping Toward the Keynesian Dream

By Jeffrey Tucker

The Fed’s latest inflationary scheme sounds like a technocratic innovation. It lowered the costs of currency swaps between central banks of the world, with the idea that the Fed would do for the globe what Europe, England and China are too shy to do, which is run the printing presses 24/7 to bail out failing institutions and economies. In effect, the Fed has promised to be the lender of last resort for the entire global economy.

It’s sounds new, but it is not. Following the Second World War, John Maynard Keynes pushed hard for a global paper currency administered by a global central bank. This was his proposed solution to the problem of national currency disputes. Let’s just take the inflation power away from the national state and give it to a world authority. Then we’ll never have to deal with a lack of coordination again. [1]

The idea didn’t fly, but the institutions that were supposed to administer such a system were nonetheless created: the International Monetary Fund and the so-called World Bank. It didn’t work out that way. Instead, nation-states retained their monetary authority, and the new institutions became glorified welfare providers, conduits for transfer payments and loads to developing nations.

The dream lived on, however. The creation of the euro and its central bank was a step in that direction. So was the Nixon’s closing of the gold window. Each new currency crisis has created the excuse for further steps toward what Murray Rothbard calls the Keynesian dream.

Why hasn’t it happened yet? Many reasons. Nation-states do not want to give up power. The World Bank and the IMF are institutionally unsuited to the task. Many people in the banking world are also downright squeamish about the idea, with full knowledge of the ravages that unchecked inflationary credit can bring to the world economy. Mostly, there hasn’t been a crisis big enough to warrant such extreme measures.

However, that crisis might have finally arrived. Since 2008, the Fed has demonstrated that among all the world’s central banks, it alone is brave enough to embrace gigantic inflationary measures without wincing. The European Central Bank is under some strictures to not act as a monetary central planner. China is unconverted to the inflationary faith. The same holds true for England.

Ben Bernanke, however, is different: He is revealing himself to be an unreconstructed Keynesian with an unlimited faith in the power of paper money to solve all the world’s problems.

What this means is that it is left to the Fed alone to bail out the world. There is a perverse logic to this. After all, if you are going to be a world empire, operating under the assumption that nothing on the planet is outside your political purview, you bear certain responsibilities as well. Foreign aid and troops in every country are just the beginning. You must, eventually, embrace your financial responsibilities, too. A globalized economy addicted to debt needs an institution willing to step up and guarantee that debt, and provide the liquidity necessary to get us through the hard times.

As soon as the announcement of the new Fed measures came, the smart set of the World Wide Web lit up with the obvious observations that these measures come with massive risk of setting off a global inflationary crisis. It could lead to the final crack-up boom.

The Fed assures us otherwise. It “bears no exchange risk” in undertaking such actions. But as economist Robert Murphy explains: [2]

“Strictly speaking, this isn’t true. If the Fed gives $50 billion in dollars to the ECB, which (at those market prices) gives $50 billion worth of euros to the Fed, then the ECB lends out the dollars to private banks, and before they repay the loans, the euro crashes against the dollar…then the ECB has no means of acquiring dollars to repay the Fed. Even though the ECB has a printing press, it is configured for euros, not dollars.”

He further states what everyone knows but no one is will to say:

“The current round of interventions will not solve the problem. Down the road — probably much sooner, rather than later — the central banks of the world will engage in some further extraordinary measures, again, lest the whole world fall apart. Even so, printing money doesn’t fix the underlying problems. No matter what they do, eventually, the whole financial world will fall apart.”

The speed at which all of this is happening is startling to behold. It was only 36 hours ago that we heard the first public worries about the drying up of credit in Europe. Large corporations were seeing their credit lines tightened. Banks were starting to become more scrupulous in their operations, which is hardly a surprise, given that zero interest rates have made it nearly impossible to make a profit in conventional lending operations.

Where in the fall of 2008, the Fed let the worries about tight credit grow to the point of international mania before it acted, this time, it jumped in to anticipate the inevitable warnings about the imminent death of civilization. Only trillions in paper money can save us now! The Fed saw what was coming and decided to do the deed, even before the demand came. [3]

But rather than settle markets down, the real effect is the opposite. If you go to the doctor with a head cold, and he rushes you to the hospital for surgery, you don’t merely congratulate him for being thorough. You figure that he knows something that you don’t, namely that your condition is way more serious than you thought. Your family is likely to fly into a panic.

For this psychological reason alone, this action is likely to roil markets in crazy ways. The Fed is now paper money printer for the entire world. It’s a new world, and a brave one. If you think that a new era of prosperity, peace and stability awaits, you have been living under a rock for at least a century. There’s not a soul alive who will sleep soundly knowing that Ben Bernanke has elected himself the loan officer of the entire globe.

Central Banksters of the World Unite Part I

The Financial Entangling Alliances Thicken

By Robert Murphy

From CNBC:

The world’s major central banks unleashed coordinated action Wednesday to ease the increasing strains on the global financial system, a move that sent stock markets up sharply.

The European Central Bank, U.S. Federal Reserve [cnbc explains] , the Bank of England and the central banks of Canada, Japan, and Switzerland are all taking part in the operation, which is designed to “enhance their capacity to provide liquidity support to the global financial system.”The ECB said in a statement the banks are making it cheaper for banks to get U.S. dollar liquidity when they need it, starting next Monday.They are also taking steps to ensure banks can get ready money in any currency if market conditions warrant. … Fears of more financial turmoil in Europe have already left some European banks dependent on central bank loans to fund their daily operations. Other banks are wary of lending to them for fear of not getting paid back.Such constraints on interbank lending can hurt the wider economy by making less money available to lend to households and businesses.

You have to like the last part: They’re doing it for the average household, not the big bankers sitting on sovereign debt.

Although the Fed likes to say that it “bears no exchange rate risk” in such swaps, and though (back a few months when they expanded the swap lines with Europe in a different “coordinated central bank action”) they like to stress that the Fed isn’t on the hook when the ECB lends the dollars to European banks, strictly speaking this isn’t true. If the Fed gives $50 billion in dollars to the ECB, which (at those market prices) gives $50 billion worth of euros to the Fed, then the ECB lends out the dollars to private banks and, before they repay the loans, the euro crashes against the dollar…then the ECB has no means of acquiring dollars to repay the Fed. Even though the ECB has a printing press, it is configured for euros, not dollars.

The experts tell us that these types of arrangements are necessary, lest the whole (financial) world fall apart. Back in September 2008, when many of us were vociferously objecting to TARP and Bernanke’s incredible monetary inflation, the experts told us such things were necessary lest the whole world fall apart.

The current round of interventions will not solve the problem. Down the road–probably much sooner rather than later–the central banks of the world will engage in some further extraordinary measures, again lest the whole world fall apart.

Even so, printing money doesn’t fix the underlying problems. No matter what they do, eventually the whole financial world will fall apart.