Friday, July 31, 2009

Used Cars

You got a fast car
And we go cruising to entertain ourselves
You still ain't got a job
And I work in a market as a checkout girl
--Tracy Chapman

A proposal is on the table to renew the gov't's Cash for Clunkers program. It's already chewed thru $1 billion in short order. This is the classic government subsidy. Applying Hazlitt's method, we can forecast the consequences.

Who it helps. Domestic carmakers, people buying new cars, politicians catering to these special interest groups.

Who it hurts. Taxpayers, people who bought used cars in the past, entrepreneurs who want to break into the car industry.

Short term effects. Gooses demand, keeps inefficient operators in the game. supports prices.

Long term effects. Overcapacity, reduced demand (buyers push up purchases to present period), lower prices, more debt, lower investment (taxpayer resources squandered).

Few forecasts could be more certain.

Thursday, July 30, 2009

Tired Trend

"Jesus, you can't make a buck in this market. Country's going to hell faster than when that sonofabitch Roosevelt was in charge. Too much cheap money sloshin' around the world. Worst mistake we made was letting Nixon take us off the gold standard."
--Lou Mannheim (Wall Street)

After a couple of sideways days, major indexes were on the move once again. At one point, both the S&P 500 (SPX) and NASDAQ Comp were within spitting distance of 'round number' milestones (1000 and 2000 respectively).

They 'feel' good to me right here but that means little as I don't proclaim to make my living by trading the guts of the tape. Many of the traders I do follow are getting pretty bearish in here.

A couple of historical analogs helped further restrain my bullish pangs today. First, the SPX is one trading day away from realizing it's largest percentage gain since July 1939. However, look what happened in the period that followed.

Second, the SPX has rallied about 46% in 145 days from the March lows. This move is on par with the bear market rally that followed the Crash of 1929, which rallied a similar 46% in 147 days. Once this rally was over, however, the index cratered for an 85% loss.

The lesson, or reminder, is that the sharpest rallies tend to occur in the context of bear markets. And this rally is likely getting long in the tooth.

I've been adding to my risk profile over the last couple of weeks. Vehicles include retail (GPS), energy (DBE, GAZ), and select pharma (LLY, MRK). I'll begin shedding this incremental exposure) into further liftage.

positions in DBE, GAZ, GPS, LLY, MRK

Wednesday, July 29, 2009

Shore Leave

"Short of the outbreak of World War III, the ship sinking, being attacked by a giant octopus, I'd like to be undisturbed for the next thirty minutes."
--Capt Frank Ramsey (Crimson Tide)

After studying Q2 earnings reports of financial firms, Minyan Peter concludes that banks et al used the run up in asset prices during the quarter to sell their winners--those positions that sported gains.

He also notes that loan portfolios continued to reflect broad credit deterioration.

The Big Bet is that markets recover from here. Indeed, if prices continue to rise, then selling winners today while pushing losses out may appear smart.

But if prices resume their decline, then banks will have tied future earnings potential, and perhaps solvency, to an anchor cast overboard.

no positions

Tuesday, July 28, 2009

Chain Letter

But I'll die as I stand here today
Knowing that deep in my heart
They'll fall to ruin one day

Don't buy the argument that government borrowing and spending is a necessary 'investment' that will increase future standard of living. It is true that investment is necessary to improve standard of living. But investing comes from income that has been saved, not from borrowing resources from others, or by creating dollars out of thin air.

Here is the train of thought to keep in mind:

Higher standard of living comes from improving productivity.

Improved productivity comes from investment.

Investment comes from capital formation.

Capital is formed from savings.

Savings comes from setting aside a portion of income for future use.

The key to the game is capital formation, which comes from savings. If you remember this, you'll be able to separate wheat from chaff in any economic 'stimulus' proposal.

Wrong for Long

It's just no good, you teasing like you do

Nice piece that autopsies Fed chief Ben Bernanke's comments over the past few years. As Jim Rogers might say, why do we continue to listen to a guy who's been wrong for 5 years in a row?

Monday, July 27, 2009

Open House

I remember way back then when everything was true and when
We would have such a very good time such a fine time
Such a happy time

Speaking of Tim Geithner, he's still trying to sell his NY home that's been listed since early Feb. It's a 5 BR tudor built in 1931. In 2004 he and his wife paid $1,602,000. After a recent $60K price cut, current asking price is $1,575,000.

Records show the Geithners have two loans totalling $1.25 million, and they pay $27K/yr in prop taxes.

Looks like our Treasury Secretary grasps the concept of leverage. Hopefully he doesn't accrue first-hand experience in the meaning of 'upside down' as well.

Dripping Drivel

Here come old flattop he come grooving up slowly
He got joo-joo eyeball he one holy roller
He got hair down to his knee
Got to be a joker he just do what he please

Speaking to a group of Chinese officials, Treasury Secretary Geithner pledged that US deficits will be down and savings will be up in four years. It's doubtful I'll encounter another missive more worthy of a personal Laugh of the Day Award.

The Chinese are smart cookies. They know to focus on actions rather than words. And U.S. actions demonstrate little fortitude for saving. We've become a borrow and spend society, with debt now so gargantuan that we're spinning the hampster's wheel of borrowing more just to pay interest on what we owe.

Mr Geithner also discussed the administration's intentions to invest in domestic energy, education, and health care in order to improve productivity. You can't invest with no savings. You can only borrow more and make a leveraged bet that things work out.

And the particular leveraged bets we're making require high levels of government prowess in order for the wagers to turn into winners.

Winning the lottery looks more probable in comparison.

Sunday, July 26, 2009

Mental Illness

Have we become a habit
Do we distort the facts
Now there's no looking forward
Now there's no turning back
--Pat Benatar

Ron Paul astutely observes that health care is not a right but a good. When we view goods like health care, education, housing, etc as rights that all people deserve, we throw systems for allocating resources out of balance.

For example, cap doctor's salaries to make the health care system 'more efficient' and you'll get what happens whenever price ceilings are imposed: a supply shortage. Qualified docs will go elsewhere, or select other careers.

The Obama administration seems to imply that our current health care system is problematic due to its free market nature, and these problems can be solved if health care is placed under government control. Our current health care system is not market-based, however, and the State already assumes the role as largest, most influential buyer. The bureaucracy imposed by Medicare and Medicaid has restrained innovative forces that drive market-based improvement.

More government control of health care ensures that health care in this country will get worse instead of better.

As Congressman Paul notes, the solution is to completely turn health care back to private hands. Unfortunately, no politician with special interest voting blocs possesses the political will to do such a thing.

Saturday, July 25, 2009

Economic Welfare

The city is crowded
My friends are away
And I'm on my own
It's too hot to handle
So I got to get up and go

Henry Hazlitt observed that economic policies are often misunderstood because of tendency to fixate on: a) the policy's consequences on a single group rather than all groups, and b) the policy's short term outcomes rather than on its long term consequences.

Hazlitt argued also observed that people were prone to make these mistakes because special interest groups who would benefit from enacting particular economic policies hire 'the best buyable minds' (Hazlitt, 1946) to talk the policy pretty.

As such, the intelligent questions to ask in lieu of any economic proposal include:

Who will be the primary beneficiary of this policy? What will be the impact of this policy on all people?

What will be this policy's near term outcome? What will be the long term consequences of this policy?

In nearly all cases, a single group benefits at the expense of the whole, and that benefit is likely a near term one at the expense of society over time.

Test it out. Bailouts, economic stimulus, social programs. All return a similar cost benefit profile.


Hazlitt, H. 1946. Economics in one lesson. New York: Harper & Brothers.

Friday, July 24, 2009

Literal Liberal

Benjamin Martin: May I sit with you?
Charlotte Selton: It's a free country, or at least it will be.
--The Patriot

In the early 1800s, if you were a 'liberal' then you were someone who believed in individual freedom and liberty. You distrusted centralized government. You favored localized, republican government whose primary role was to uphold property rights. You believed in private enterprise, and that freedom was more important than safety and security ('Give me liberty or give me death.'). This was the classical liberalism of Locke, Bastiat, and Jefferson.

Could today's definition of 'liberal' possibly be any more antithetical? If you're a liberal today, then you believe in strong centralized government with the authority to meddle in the lives of its citizenry. You think that the State has the right to confiscate property from some and redistribute it to others. You feel that State must control economic activity, and that the rights of the individual are subordinate to the rights of 'society.'

This view is also known as 'social liberalism,' or 'progressivism' although its principles align with socialism.

Economist Joseph Schumpeter thought it interesting that opponents of classical liberalism were able to appropriate the label and assign a different meaning to it. Interesting indeed.

Historians site the populist movements of the late 1800s as one catalyst behind the transformation of the notion of liberal toward socialistic underpinnings.

Just goes to show you how twisted around things can get over time.

Thursday, July 23, 2009

Boarding Call

We're not scared to lose it all
Security throw through the wall
Future dreams we have to realize
--Howard Jones

Another strong market day that saw major indexes break out above resistance. Case in point was the SPX which creased thru 950 early and never looked back.

Things are starting to get that 'fear of missing' feel, as folks on the sidelines are getting nervous that they'll be left behind. This is particularly true among fund managers as their benchmark bogeys boogie higher.

Brief aside: One thing that stuck out to me today when gazing at the above chart was the relatively low volume corresponding to this leg higher.

Unfortunately, I was never able to take down some SPY last week as hoped. Never found a suitable entry. But I'm carrying a decent slab of commodity exposure along with select pharma. The pharma shares, particularly Merck (MRK), have been among the leaders of this leg higher (for a change).

My plan is to make some sales (discipline) into SPX1000. If we head higher yet, I'll continue to feed the ducks.

position in MRK

Wednesday, July 22, 2009

Heavy Meddle

"Profit? Fiscal year? Tsk! Tsk! Tsk! Beware, my dear Zilkov. The virus of capitalism is highly infectious. Soon you'll be lending money out at interest!"
--Dr Yen Lo (The Manchurian Candidate)

Many are questioning the merits of capitalism in the face of our economic problems. The claim is that the present crisis 'proves' that capitalism doesn't work. Capitalism, however, is defined as an economic and social system where ownership and administration of production are in private hands. In capitalistic systems, government's sole role is to protect individual property rights.

No such system currently operates in any significant scale on this planet. All economic systems currently involve at least some government interference.

The polar opposite of capitalism is socialism, where ownership and administration of production are controlled by the state. In its pure form, socialistic systems currently aren't practiced either, although some regimes such as North Korea come close.

So, what's it called when an economy operates somewhere between pure capitalism and pure socialism? It's called interventionism. Interventionism reflects an economic and social system where government exercises incomplete control over production and its administration. Interventionism describes current world economies at large, with local economies varying only in the level of state control being exerted.

There are two theories out there concerning the merits of interventionism. Theory #1, which seems more widespread today, is that there is an optimum amount of interventionism necessary for economic functioning. However, precisely what level constitutes optimum here has yet to be ascertained after many decades (centuries) of government meddling.

Theory #2 holds that interventionism, once undertaken, leads only toward more intervention and, ultimately, towards socialism in its pure state. As interventionism escalates so do economic problems.

It is difficult to objectively argue that the past 100 years have not seen increased government interference in markets. And with this interference has come gigantic distortions that now appear to be expressing themselves in perhaps intractable problems.

Seeing as we're in the midst of giant empirical test of these rival theories, I'm placing my money (quite literally in many ways) on Theory #2.

Tuesday, July 21, 2009

Show Me State

"No man's life, liberty, or property are safe when Congress is in session."
--Mark Twain (1866)

Sage insight.

Monday, July 20, 2009


Lights go out and I can't be saved
Tides that I tried to swim against
Have bought me down upon my knees
Oh I beg, I beg and plead

Ever since Markowitz's (1952) pioneering work on portfolio theory, a core concept in the financial services industry has been diversification. Spread your money around to assets that aren't correlated in order to reduce risk.

While this theory is widely hailed as gospel, there are two arguments against diversification. As Jim Rodgers notes about midway thru this video, big money is rarely made using a diversification approach. Better to focus your bets on a limited number of superior ideas. Common wisdom says that it is unwise to put all eggs in one basket. An alternative approach would be to put all eggs in the basket, then watch the basket.

The other problem with diversification is that, during times of major leveraging and deleveraging, prices of all risky assets tend to move together. Mike Shedlock notes that the correlation has been particularly high during the deflationary wave of the last couple of years. When folks are leveraged, falling prices drive investors to sell assets in order to reduce risk and avoid margin calls. The selling tends to be indiscriminant--prices of nearly everything fall. Diversification does little to cushion the blow when folks are selling all that isn't nailed down.

Note also in Mike's missive how valuable the diversification myth has been for the financial services industry.

The shackles of diversification are unlikely to shed by the masses anytime soon, however, unless they take a more proactive approach in managing their money.


Markowitz, H. 1952. Portfolio selection. Journal of Finance, 7: 77-91.

Sunday, July 19, 2009

Crystal Light

I looked out this morning and the sun was gone
Turned on some music to start my day
I lost myself in a familiar song
I closed my eyes and I slipped away

Here's the totally nonsensical market path over the next few months that I'm warming to. Optimism that the worse is behind us continues to grow. The SPX breaks above 950 over the next week or two. The index grinds higher as non-believers become believers and jump on board. Shorts get their eyeballs squeezed. The SPX touches 1100 by mid fall. Commodities move higher in kind. The USD gets sold.

Fundamentally and structurally, though, things continue to deteriorate. Unemployment (as measured by the BLS) easily moves thru 10%. Bid/ask spreads on mortgages widen, as lenders raise credit requirements and borrowers shy away from risk. Stimulus-related government spending increases in ongoing efforts to breathe life into a stalled economy. Debt at all levels continues to hover at all time highs.

When it becomes clear that the economy is not catching up to recently elevated market prices. A new round of deleveraging begins. To cover debt projects, assets of all types (stocks, commodities, real estate) are sold. Prices decline in correlated fashion. By end of year, the SPX is back below 900, gold is below $800, oil is below $40, and the USD is heading higher.

Over the past few weeks I've added to my equity and commodity positions in hopes of catching a meaty move higher. Should this nonsensical scenario come to fruition, I'll likely be making significant sales into SPX 1050 and higher. Depending on how things feel at this point, there's a chance that I'll shed all risky assets in favor of cash. Should we enter a new deflationary leg lower it's my sense that prices will fall across the board. In such instances, cash is king.

Should I be fortunate enough to 'see' the right opportunity, I might also take on some short exposure in the SPX 1050-1100 area. But my primary goal will be return of capital rather than return on capital.

High cash levels could then be deployed to chunk down mortgage debt in early 2010, buy bullion at suppressed prices, and scoop other bargain assets on the other side of the ride.

Again, the chances of this scenario playing out as-is are likely pretty slim, but this is the pic I'm warming to. I'll adapt as things unfold.

position in gold, oil

Saturday, July 18, 2009

Beyond Thunderdome

Out of the ruins
Out from the wreckage
Can't make the same mistake this time
--Tina Turner

Carol Loomis is one of the most talented reporters of the financial industry. Her capacity for describing important people and actions in this industry is nearly unparalleled.

Like many 'journalists,' however, she frequently slides down the slope from description to analysis and, sadly, to editorial. When she assumes these latter roles, it appears to me that her diagnosis frequently misses the mark, and reveals bias toward 'big bad business' and desire for increased government control.

In her recent Fortune article on derivatives, for example, Ms Loomis advances the typically Leftist argument that derivative markets require more regulation because they threaten the financial system. Without more oversight, buyers and sellers of these instruments, whom to Ms Looomis appear incapable of understanding the complexity of these instruments and/or managing their risk, will create a situation that will ultimately bring down large institutions or perhaps the entire system. In fact, that situation may be upon us currently, with the world wide notional value of derivatives standing at nearly $600T (yep, that T stands for trillion).

Let's for a second assume that the root cause behind all of this is just greed-driven miscalcuation of risk by the buyers and sellers of these instruments. Sellers of these instruments underestimated the probability that the events they were insuring would come to fruition, and buyers overestimated the counterparty's capacity to make good on the terms of the derivative contract.

Were we to stop right there and assume we're at the root cause of the problem, then regulation makes little sense. The way that markets drive improvement of such situations is to have buyers and sellers learn from their mistakes--in the form of losses. The bigger the losses, the more future market participants will change their behavior to get risk:reward into better balance.

Regulating markets, almost by definition, mitigates lessons learned and squelches learning and improvement.

More importantly, however, by assigning the blame to 'excessive greed' and 'lack of understanding,' Ms Loomis' superficial level of analysis does little to explore real root causes of this situation.

Valuable analysis would employ more reason. First, we might begin by observing that the derivative market is way out of balance. We would then reason that markets do not get way out of balance on their own, because markets seek balance between risk and reward. To get this far out of whack, there has likely been intervention that has skewed the risk:reward calcuation.

Why did sellers of credit default swaps misjudge tail risk so badly? Why did buyers of derivatives fail to accurately assess counter party risk? What situation(s) suddenly created such huge demand for these derivative products? 'Greed' alone can't explain this, because under free market situations 'fear' checks greed.

Instead, a salient question here seems to be: What interventions distorted the risk:reward dynamic, and threw the derivative market way out of balance?

Rather than blindly assigning a cause of 'excessive market freedom,' prudent analysts would be wise to investigate the interference that threw the system out of balance, and not settle for superficial analysis that pins the blame on excessive market freedom.

Friday, July 17, 2009

On the Mat

Coach: You done everything you came here to do?
Louden Swain: Not yet.
Coach: Then do it boy. You got 27 seconds left and you're down 4 points. Forget your nose. Forget about everything. You've got to go out there and stick him. Now go out there and do it!

Congressman Ron Paul continues his personal visionquest of Fed accountability (and perhaps it's ultimate dissolution. He's one of the few who is trying to unearth a root cause of our problems.

It would have been easy for Mr Paul to pack up and head home a long time ago. After all, who needs the angst he's had to endure?

But you know what? He might sense that he has the leverage for a take-down this time.

Thursday, July 16, 2009

Seems Like Old Times

You remind me I live in a shell
Safe from the past

And doing okay

But not very well

--Barry Manilow

Remember the tech bubble days, when earnings reports from folks like Intel (INTC) would propel stocks higher after hours? A 'gap and go' would follow the next day, as broad market indexes would open green and then grind higher throughout the session.

We experienced some of that vuja de the last couple of days courtesy once again of Mother Chip, who was was spin her earnings call magic like the good 'ole days. The real story may be more sobering, but right now it feels like the INTC news has the bulls wanting to party.

To me, the technical set up looks pretty bullish. The last half year of price data looks reverse head and shoulder-ish. Should the S&P 500 break above SPX 950ish, then there's pretty clear sailing to 1000 and 1100 from a chart perspective.

The set up has me looking for an opportunity to get long some Spyders (SPY) somewhere in here.

For a trade only, please understand--and with funds I can afford to lose (this isn't a bet the farm trade). My big picture concerns place me squarely in Boo's camp as my sense is that this will all end in tears.

In the near term, tho, feels like bulls are gonna try to jam 'em higher.

no positions

Saturday, July 11, 2009

Work Study

Hey I'm not complaining cause I really need the work
Hitting up my buddy's got me feeling like a jerk
Hundred dollar car note, two hundred rent
I get a check on friday, but it's all ready spent
--Huey Lewis & The News

I continue to be amazed about how little people seem to understand minimum wage laws. As Peter Schiff deftly explains, minimum wage laws lock productive earners out from low paying jobs. Qualified talent willing to work for $6/hr is legally banned from a market where $7.25 is the minimum. Because the price of labor goes up, employer demand for labor goes down.

Perversely, the demographic that purportedly benefits the most, low income wage earners, is damaged the most.

So who benefits? Following the money leads us toward politicians and collective bargaining units that vote for them. Wage minimums raise barriers to entry into job markets where unions have a presence.

But even the union's advantage is temporary, as markets will be made in other parts of the world for buyers and sellers of labor at the unmessed with price.

Thursday, July 9, 2009

Here We Go Again

I don't know where I'm going
But, I sure know where I've been
Hanging on the promises
In songs of yesterday

Fannie Mae (FNM), Freddie Mac (FRE) et al just celebrated their 75th birthdays. This piece provides a nice chronology of the story. Many folks like to blame Democrats for the damage that these institutions have wrought. After all, FDR originated them.

But this article offers ample evidence that Republicans have been just as complicit, if not more so, in escalating housing market distortions over the past three quarters of a century.

The message once again, although most folks don't want to hear it, is that our housing problem did not stem from 'free market' causes, but rather from fatal flaws inherent to any central planning initiative.

And yet here we go again, escalating housing market intervention to ever higher levels.

no positions

Wednesday, July 8, 2009

No Quick Fix

Maybe someday
Save by zero
I'll be more together
--The Fixx

I wanted to highlight one of Mr P's many sage points from this missive. Higher standard of living comes from improved productivity (more output per unit of input). Improved productivity comes from investment, or abstaining from consumption today so that resources can be allocated toward productivity projects.

As such, critical to improved standard of living is saving and capital formation.

Our current approach, more debt and increased spending, is leading us in the opposite direction. A direction pointed toward squalor.

Tuesday, July 7, 2009

Hat Trick

Rise up! Gather round
Rock this place to the ground
Burn it up let's go for broke
Watch the night go up in smoke
--Def Leppard

Dems are raising the spectre of another stimulus package. That government would want to head back to the till for more stimulus is one of the biggest layup predictions of all time. When you have a debt and spending problem, adding more debt and spending worsens the situation, which requires more debt and spending...etc.

This process only ends when we decide to head the other way (pay down debt and save--not likely given our lack of political will). Or creditors decide not to fund our habit anymore, in which case the the system freezes up.

Monday, July 6, 2009

Summer Gaze

Out on the road today I saw a DEADHEAD sticker on a Cadillac
Little voice inside my head said, 'Don't look back. You can never look back.'
--Don Henley

As we enter the back nine for '09, here are three themes that I'm assigning a decent probability to:

1) State and municipal funding issues take center stage. We're already seeing some evidence of this (#2,3,4 here). Now that the US government has bailed out corporations, how will it be able to say no to states stumbling to DC with hat in hand?

2) Unemployment continues higher. We're just south of 10% currently using current government methodology. Economists are herding close to the 10% number as a ceiling. What better motivation of continuation north?

3) Resumption of debt destruction. Markets have rallied over the past couple of months largely because of a belief that deflationary forces are behind us. However, only a small fraction of the mamouth debt and leverage out there has actually been retired. Particularly if #2 above remains in force, then chance favors more deflation in the near future.

In terms of market positioning, this translates for me into relatively high levels of cash--with some bullion, commodity ETFs/ETNs, and a couple of dividend paying stocks in the mix to guard against an inflationary surprise. I'm also trying to retire mortgage debt (my only debt) as quickly as possible.

position in gold and silver

Sunday, July 5, 2009

Spirit of '76

"All tyranny needs to gain a foothold is for people of good conscience to remain silent."
--Thomas Jefferson

Two hundred and thirty two years ago yesterday Thomas Jefferson's document declaring our independence was ratified. One does have to wonder how the Founders would react if, through some divine intervention, they were able walk the country today.

Perhaps Thomas Paine would respond like this.

Unfortunately, such Common Sense is much less common today than it was 200 yrs ago.

Friday, July 3, 2009

Nature Calls

Mr Miyagi: You remember lesson about balance?
Daniel LaRusso: Yeah
Mr Miyagi: Lesson not just karate only. Lesson for whole life. Whole life have a balance. Everything be better. Understand?
--The Karate Kid

Buried in this piece critiquing Paul Krugman, who by the day seems to be bidding to be remembered as the greatest fool ever to win a Nobel Prize, was this simple explanation of what an economy is:

"In the real world, an economy is the social organization that comes about when large numbers of people act to alleviate scarcity."

Nice. Because resources are necessarily scarce, people naturally organize in a manner that facilitates exchange.

Like any natural system, economies works best in a free, unimpeded state. However, natural systems contain buffers that help make them robust to intervention (otherwise they couldn't evolve). If messed with to the extreme, however, they'll push back with a vengeance in order to re-establish balance.

It's difficult for even dedicated interventionists like Mr Krugman to argue that our current approaches are not extreme. In response, our economic system is building up forces in kind. An important question involves the nature of these counterbalancing forces. Will they be long and shallow? Or will they be swift and deep?

It's impossible to know with certainty. However, given just how much we've messed with the system, it's easy to imagine that the push back will be equally severe in order to re-establish natural balance.

Wednesday, July 1, 2009

Burden of Proof

Juror #2: "It's hard to put into words. I just think he's guilty. I thought it was obvious from the word 'go.' Nobody proved otherwise.
Juror #8: "Nobody has to prove otherwise. The burden of proof is on the prosecution. The defendant doesn't even have to open his mouth. That's in the Constitution
--12 Angry Men

Professor Anderson offers thoughtful counter to the global warming thesis. As I understand it, the global warming hypothesis generally posits that the earth is getting dangerously warm, that the increase in earth's temperatures is caused by an increase in atmospheric CO2, and that man's industrial activities are the primary source of this detrimental increase in CO2 load and in earthly temperature.

Mr Anderson's argument includes recent data points inconsistent with the higher C02/higher temp hypothesis, the fact that most of the 'evidence' provided by scientists who favor global warming is sourced from computer models of CO2/temperature interaction (not experiments where causality can be more decisively verified), and the inherent inaccuracy of weather forecasting.

In one of the early missives on this blog, we suggested that considerable data were inconsistent with the global warming hypothesis. From a scientific standpoint, until such inconsistencies can be resolved, then the global warming hypothesis can not be considered valid--at least among those who prefer to think critically.

Particularly interesting were the responses to Mr Anderson's piece, of which there were many. Of those who disagreed with the position in the article, there was little, if any, evidence offered to strengthen the validity of the global warming case. Instead, themes included:

"the experts have spoken--there is no debate"
"I observe out-of-the-ordinary snow melt/hot weather in my locale, so global warming must be true"
"you must have a political agenda by taking this position"
among others...

None of these strengthen the scientific case for global warming. And, as with any endeavor grounded in the scientific method, the burden of proof rests with the prosecution--those seeking to advance their hypothesis.