Even more damaging leaked climate science email comes to light

Following the saga of hacked emails from the Hadley Climate Research Centre, the Anthropogenic Global Warming lobby has taken another body blow – with a new email coming to light this morning apparently containing the smoking gun that the Hadley emails lacked:

From: ernst.kattweizel@redcar.ac.uk

Sent: 29 October 2009

To: The Knights Carbonic

Gentlemen, the culmination of our great plan approaches fast. What the Master called “the ordering of men’s affairs by a transcendent world state, ordained by God and answerable to no man”, which we now know as Communist World Government, advances towards its climax at Copenhagen. For 185 years since the Master, known to the laity as Joseph Fourier, launched his scheme for world domination, the entire physical science community has been working towards this moment.

The early phases of the plan worked magnificently. First the Master’s initial thesis – that the release of infrared radiation is delayed by the atmosphere – had to be accepted by the scientific establishment. I will not bother you with details of the gold paid, the threats made and the blood spilt to achieve this end. But the result was the elimination of the naysayers and the disgrace or incarceration of the Master’s rivals. Within 35 years the 3rd Warden of the Grand Temple of the Knights Carbonic (our revered prophet John Tyndall) was able to “demonstrate” the Master’s thesis. Our control of physical science was by then so tight that no major objections were sustained.

More resistance was encountered (and swiftly dispatched) when we sought to install the 6th Warden (Svante Arrhenius) first as professor of physics at Stockholm University, then as rector. From this position he was able to project the Master’s second grand law – that the infrared radiation trapped in a planet’s atmosphere increases in line with the quantity of carbon dioxide the atmosphere contains. He and his followers (led by the Junior Warden Max Planck) were then able to adapt the entire canon of physical and chemical science to sustain the second law.

Then began the most hazardous task of all: our attempt to control the instrumental record. Securing the consent of the scientific establishment was a simple matter. But thermometers had by then become widely available, and amateur meteorologists were making their own readings. We needed to show a steady rise as industrialisation proceeded, but some of these unfortunates had other ideas. The global co-option of police and coroners required unprecedented resources, but so far we have been able to cover our tracks.

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You lost us at hello

The FT’s Lex Column last week:

Like leaf blowers, commodity analysts seem pointless and full of hot air. Investors might have at least expected some respite when the resources bubble burst last May. In spite of buy recommendations across the board (if everyone in China bought a refrigerator, etc), the price of oil, copper and cotton halved. But it has taken less than a year for noise surrounding commodities to reach full volume again.

What is more, the worst economic slump in generations has done nothing to modify the bullish arguments of old. Commodity prices, apparently, will rise for ever on the back of rapid growth in emerging markets. The current rally may well have legs. But, just like last time, the fundamentals do not stack up.

Oh?

Assume, for illustration, that the long-term supply of resources is more or less the same as before the crisis. That seems sensible…

Ah.

The sincerest form of flattery

Proposals to be unveiled [in a speech today by Conservative Shadow Chancellor of the Exchequer George Osborne] include a “green investment bank” designed to “spur economic growth by financing the next generation of British green technology companies”.

The Tories said the bank would be “similar” to state banks in Spain and Germany that back investment in strategically important sectors.

Financial Times, 23 November 2009

I suggest the UK sets up a British development bank in order to finance our shift to a zero carbon economy.

At the moment, we have several development institutions which finance clean-tech and renewables projects, such as the EIB, EBRD and World Bank, though they mainly finance them in emerging market countries, or in certain countries ear-marked by the EU as big receivers of renewable subsidies (Spain and Germany).

The UK needs its own institution to drive development of the green economy here.  State-owned development banks have worked well in Asian economies, particularly for critical infrastructure projects which require long-term lending.

Jules Evans on Global Dashboard, 29 April 2009

Get ready to switch off the QE boosters…

At the beginning of this year, there was a lot of concern about whether the government bond markets could absorb the record amounts of debt being issued by sovereigns. As one banker told me: ‘Governments became the borrowers of last resort. If they hadn’t been able to access the market, it would have had a huge impact.’ Indeed, it would have meant we were in a genuine 1930s style financial collapse.

But luckily, despite a failed auction here and there, sovereigns were able to access the markets and to sell trillions in debt – Eurozone sovereigns sold €950bn this year, the UK £220bn, the US $1.9tn and so on. As Paul Spurin, head of government bond trading at RBS, and vice-chair of the European Primary Dealer Association, told me: “The market has been through the biggest stress test imaginable.”

Well, get ready for an even bigger test. Sovereign issuance is likely to be at the same levels next year – but this time, without the benefit of central banks buying up most of the debt.

This year, for example, the Bank of England has bought up three quarters of all Treasury issuance. The Fed has bought up a similar amount of US Treasuries. The ECB’s Quantitative Easing programme, it turns out, is not quite as big as I’ve suggested here before, but the ECB has still lent hundreds of billions to banks at 0.5% via its liquidity auctions.

Stuart McGregor, head of public sector syndication at Bank of America Merrill Lynch, says: “There’s no question that QE has helped considerably in getting auctions done. When that stops, it will become more difficult. Everyone assumes that for debt to be sold next year, sovereigns will have to pay higher yields.”

I interviewed Robert Stheeman, CEO of the UK’s debt management office, who says he is confident that the UK will be able to meet its borrowing demands next year – he points out that yields are still at historical lows – but he’s worried about an orderly transition from a QE environment to a post-QE environment. He says: “Any big buyer distorts the market. But as the Bank slows down and yields may move up, presumably our debt will be more attractive to other investors. My main concern is that any market adjustment happens in as smooth, orderly and frictionless way as possible.”

On the positive side, the appetite for government debt is quite big, partly because the $3tn securitisation market has more or less disappeared, so there’s a lot of demand for AAA debt, even if western central banks are no longer buying.

But traders say the risk is that central banks will wait too long to put up rates, and that inflation will suddenly pick up. If that happens, expect to see demand drop suddenly for long-term sovereign bonds, at the very moment that sovereigns are trying to borrow less in short-term debt and more in longer-term bonds.

We could be in for a bumpy few months in the sovereign debt market.

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