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<d...@y...com> wrote in message
news:1167927951.511083.70670@i15g2000cwa.googlegroup
s.com...
>
> Let me put it this way:
>
> 1. is the climate warming? Yes. From all evidence, and all historical
> evidence that we can collect. And it is warming within reasonable
> parameters of what our models would predict.
>
> 2. is the most likely cause human activity via CO2 accumulation? Yes.
> We can't find any other proximate cause that correlates so well, nor
> that theoretically would give that rise. there isn't a meaningful
> scientific constituency (that has an expertise in climatology) that
> doesn't think that.
Then all those scientists better go back to school. You can't do a decent
scientific study without a control. There is no control for comparison (we
don't have two earths) making it impossible to arrive at a conclusion.
Scientists have a THEORY that human activity is causing global warming. They
may be right.
And they may be wrong.
For one, I'm not making any financial decisions based on this theory.
Elizabeth Richardson
Elizabeth Richardson wrote:
> Scientists have a THEORY that human activity is causing global warming. They
> may be right.
>
> And they may be wrong.
>
> For one, I'm not making any financial decisions based on this theory.
People living in coastal areas are being forced to make financial
decisions about global warming, regardless of their opinions about its
causes. On another forum someone pointed out that Allstate recently
cited global warming as the reason for withdrawing from several markets
-- states with coastal areas that may be affected by
more-frequent/intense hurricanes. Here's a brief NPR piece on it with a
statement from an Allstate spokesman about GW being the driver:
http://www.npr.org/templates/story/story.php?storyId
=6607675
Businesses like Allstate have a dollar-and-cent focus on the GW issue
and it's interesting to see them react - unhindered by the political
process. If a few million Floridians can't insure their homes because
insurers think GW is real, then it's real!
Apparently it's becoming a significant financial planning problem in
Florida that is likely to affect home values if things continue the way
they're going. One colleague mentioned a hike to $20,000 annually for
coverage on a home (not sure how pricey a home, but $20k is a heck of a
lot of money). I expect we'll see a lot more talk about this topic, in
the context of any collapse of certain FL real estate markets -- it
might not be the sole trigger for price drops, but it certainly must be
helping to drive them. Arguably more so than interest rate hikes,
because the dollar impact of some of the premium hikes has been greater.
-Tad
Elizabeth is right in the fact that we can't prove that global warming
wouldn't occur naturally without our presence because there is no
control to show otherwise. Its Theory not law.
FYI, nickel manufacturers spent more money lobbying for catalytic
converters than environmentalist did (nickel is used in cat.
converters). How will all those scientists justify their grants if
global warming doesn't exist?
We are getting off base though...
I was always taught that "risk-free" investments are not techincally
risk free. That was never the intention, its just a simplified name.
The idea is that "risk-free investments" are a benchmark for comparison
because they carry LESS risk than any other viable alternative.
Historically one year t-bills have been considered risk-free. TIPS are
not necessary because the benchmark is reset annually to the new t-bill
rates and therefore inflation becomes marginal/negligible(sp?).
Because US markets play such a large part in the world economy and so
many other nations are financially bound to our economic success, IF
our gov't bonds ever did go belly up, the "risk-free" status of any
other non-US investment is going to become threatened also.
___
"Tad Borek" <b...@p...net> wrote in message
news:uFenh.11409$ZT3.5543@newssvr19.news.prodigy.com
...
>
> People living in coastal areas are being forced to make financial
> decisions about global warming, regardless of their opinions about its
> causes.
I live 1/4 mile from salt water. I am not making any financial decisions
based on this theory.
Elizabeth Richardson
"Tad Borek" <b...@p...net> wrote in message
news:uFenh.11409$ZT3.5543@newssvr19.news.prodigy.com
...
>
> Businesses like Allstate have a dollar-and-cent focus on the GW issue
> and it's interesting to see them react - unhindered by the political
> process. If a few million Floridians can't insure their homes because
> insurers think GW is real, then it's real!
Tad, we're way off-topic on MIFP, but let me say that Allstate is not making
any decisions based on GW. They are making decisions based on the increased
incidence of hurricanes, which may or may NOT have anything to do with GW.
It's certainly interesting to note the dearth of such storms in 2006, yet
scientists are saying its the warmest year on record. They don't have any
idea of the cause and effect.
Elizabeth Richardson
Tad Borek wrote:
> Businesses like Allstate have a dollar-and-cent focus on the GW issue
> and it's interesting to see them react - unhindered by the political
> process. If a few million Floridians can't insure their homes because
> insurers think GW is real, then it's real!
Companies react incorrectly to data all the time. Look at the utilities
(like CMS Energy and Aquila) that entered the energy trading business
because Enron made it look good. Doesn't make Enron's profits real.
Look at the telecoms that overbuilt because of all the bandwidth demand
that was going to be needed. Didn't make that demand real (until recently).
-Will
kastnna wrote:
> Historically one year t-bills have been considered risk-free. TIPS are
> not necessary because the benchmark is reset annually to the new t-bill
> rates and therefore inflation becomes marginal/negligible(sp?).
This is certainly true. But some argue, I think correctly, that if your
time horizon is long, then a T-bill is no longer risk-free. After all,
you'll have to reinvest in new T-bills each period causing your return
to have some volatility.
-Will
> After all, you'll have to reinvest in new T-bills each period causing your return
> to have some volatility.
>
> -Will
The risk-free rate is not intended to be steady (nor would it be with
TIPS) thus non-volatility is not a determining factor. Interestingly
enough, in our current system volatility is small because the risk-free
rate is adjusted SO REGULARLY that there is little time for a major
shift in rates.
A risk-free rate this year MAY not be the risk free rate next year (or
1 minute from now). Its a benchmark for comparison. The 3-month T-bill
is the common benchmark because that allows for frequent adjustment to
minimize interest/inflation rate risk. TIPS pay interest, which is
adjusted for inflation, every 6 months. They have an adjustment lag
that is potentially twice that of 3-month t-bills.
Lastly, TIPS are not used because the intest rate is fixed for the
entire term of the bond, it is the principal that is adjusted. This
makes calculating the risk-free interest rate more difficult (and still
potentially not as accurate). A 20 year TIP purchased today will have
the same interest rate 20 years from now, the principal will have
adjusted accordingly.
On a small tangent, we also use CPI to adjust for inflation. CPI is the
best single indicator we have, but not entirely accurate. That's like
saying a 70% accurate is good enough because our next best measure is
only 65% accurate. Economists have argued for some time that
substitution and techonological effects make the CPI artifically high
and a combination of new measures should be used to measure inflation.
"kastnna" <k...@a...org> wrote
> On a small tangent, we also use CPI to adjust for
> inflation. CPI is the
> best single indicator we have, but not entirely accurate.
> That's like
> saying a 70% accurate is good enough because our next best
> measure is
> only 65% accurate. Economists have argued for some time
> that
> substitution and techonological effects make the CPI
> artifically high
> and a combination of new measures should be used to
> measure inflation.
Plus, every year I get the feeling that CPI is pretty
worthless as a measure of my personal inflation rate. I
think it's a bit overrated for individual financial
planning. Instead, folks should track their yearly expenses
and look for trends. This approach is likely not perfect;
just superior to the CPI.
> Plus, every year I get the feeling that CPI is pretty
> worthless as a measure of my personal inflation rate. I
> think it's a bit overrated for individual financial
> planning. Instead, folks should track their yearly expenses
> and look for trends. This approach is likely not perfect;
> just superior to the CPI.
CPI is widely considered to be 1% - 2% over inflated. There are many
factors it neglects.
1. It only measures a limited bundle of goods. If you don't buy those
particular goods you could experience wildly different inflation of
deflation. Multiple CPIs are developed to try and combat this, but they
have only slightly corrected a large problem (they acknowledge that).
The number of bundles of consumables we buy is almost infinite.
2. Substitution: The CPI assumes that consumer spending on each item in
the index is an unchanged proportion. However, it is undoubted that
when one item increases in price, cheaper subsitute items are purchased
more often and the original item is purchased less. This results in
consumers spending less overall than the CPI assumes we do.
3. Technology: The price of many items drastically rise and fall with
technology. For example, TVs now costs as much as $10k and up. This
looks like massive inflation in the CPI, but it is just the result of a
new quality that cannot even be compared to what we considered a TV in
the 60s. Look at it this way: a TV built today to exactly match a TV of
the 60s (components, quality, technology, everything) would fetch very
little on the open market (low long-term inflation). This is of course
barring the subjective value of "collector's items" or "vintage
quality" which is intangible.
Whew, way of base now.
Sorry guys.
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