I Would Be More Worried About Global Cooling

by: Sean Maher

So the U.S. recession is officially a year old, panicking Chinese authorities are letting the Yuan depreciate to help plunging exports, the famed Tudor hedge fund is halting redemptions, and economist Paul Krugman has noticed the economy is in 'steep decline.'

All of these factors fed a sharp reversal of the recent near 20% rally, but given that Krugman has become the personification of a contrary indicator, I'd be buying. My tactical view as explained in Equities: A flock of Black Swans... remains intact; we will likely see new bear market lows in 2009 (and a bursting of the historic bond bubble), but not before a substantial rally through the next couple of months. One of the key secular trends that will define our long-term economic future is Climate Change, but in which direction? Right now, the Green lobby are quietly cheering global recession; there's nothing like slumping economic activity to cut those nasty carbon emissions that will see us all wading knee deep in seawater in a few decades.

Allegedly. When I see an overwhelming consensus that takes on almost religious overtones, the skeptic in me can't help asking questions. Like: why are ice glaciers from Alaska to Norway thickening in recent years? Why has their flow rate declined? In Alaska, the growth reverses a decline stretching back two centuries. Evidence is emerging from New Zealand to Canada of a similar trend, which flies in the face of the Global Warming hysteria. Why have average Northern Hemisphere temperatures been falling over the last decade, despite that carbon cloud, and average snowfall rising? So far, experts are dismissing these perverse developments as some kind of anomaly, but I'm not so sure. If we've learned anything this year, it's how utterly, comprehensively wrong expert opinion can be and how different the world can actually be to our preconceptions. I'm reminded of the Y2K hysteria, when tens of billions in IT spend were wasted on a non-existent problem that experts believed would bring Armageddon (and in the process inflating the Nasdaq bubble).

I have no doubt that human carbon emissions have a warming effect on global climate in an equilibrium model, with all else being equal. But just as simplified equilibrium models have wrong footed economists, so they may be misleading scientists, who are equally susceptible to 'groupthink' (particularly when their research grants depend on it).

I've read widely on this, and it seems that there are natural cyclical climate factors that may dwarf the marginal influence of human activity and that we just don't fully understand yet. In the National Gallery in London you can view 18th century paintings representing the 'Little Ice Age', a period of about 50 years when temperatures across Northern Europe suddenly plunged, leaving rivers and lakes frozen for months on end and causing huge mortality. Contemporary records note a dramatic decrease in Sunspot activity (essentially huge nuclear explosions on the Sun's surface that emit electromagnetic radiation across the solar system) during this period, a decrease which has been apparent in the past few years (data from NOAA here).

Might we regret not pumping out a lot more carbon to mitigate the effects of a huge cyclical climate change to far colder conditions? I suggest you watch for incoming evidence that something strange and contrary to consensus is occurring in the world's climate. Maybe it's time to buy that discounted SUV; after all, GM needs the business, and you can't drive across a glacier in a Prius. At least Al Gore is well padded enough to survive a sudden freeze.

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