Wednesday, June 5, 2024

Has China Run Out of Dollars?

  Here's an interesting contrarian view of China. My understanding is that the Chinese economy is following on the tracks of Japan's post bubble in the 1990s but I may be wrong. The bad investments may be far worse than stated and not just limited to real estate. In which case the crash could come much faster than in Japan and be more global. The current deflationary trend out of China as well as the weakening of the Yuan could be indications that this analysis in indeed correct. 

  In such a case, the coming recession in the West instead of being softened by mild Chinese economic growth will be further amplified into a depression as real money becomes scarce and investment evaporates. We may have inadvertently created a perfect storm. Predicting exactly when it's going to break is impossible but the gathering clouds are clearly indicating that we may not have very long to wait. 

  Two consequences may occur more or less simultaneously: A breakdown of the global supply chain and the start of military operation almost simultaneously around the globe. Who will strike first? Israel in Lebanon in the coming weeks? But does it really matter at this stage? Putting straw next to flammable material was the mistake. Watching the barn burn is just a consequence. 

Has China Run Out of Dollars? by Geovest

What is wanted is not the will to believe, but the will to find out, which is the exact opposite – Bertrand Russell

I would like to know how many dollars are in China’s Reserve Account but the number is a state secret.  For a nation that has been as successful as China in employing mercantilist strategies, you’d expect them to advertise this success.  Yet we do know some things which makes it possible for us to infer with some degree of confidence that China is running out of dollars.  I consider this variable to be the single biggest risk to the global financial system and it’s hardly on anyone’s radar.

It helps to first understand the economics of banking and money supply.  When all debt instruments – loans and bonds – pay interest and principal as they are supposed to, money supply grows.  When some of those debt instruments go bad, the amount that gets written off reduces money supply.  It’s the definition of deflation; disinflation is when the general price level declines.  The distinction is critical to understand.

My thesis is that China has made so many bad dollar-denominated loans that their true net holdings of dollars is either negative or close to going negative.  And based on watching how China operates for 30 years, I believe they may be supplementing their currency reserve account with yuan, which has technically been a reserve currency since 2016. 

For starters, we know that the yuan became a supplementary reserve currency in October 2016, at a time when China’s holdings of dollars, euros, and yen was rapidly declining.  I believe the timing of this change is critical for accepting my thesis.  Technically, this change made it possible for China to hold yuan in their measurement of foreign exchange reserves.      

   

Appearances are more important than the truth in China and the Chinese Communist Party has proven that duplicity is acceptable as long as you can sell it to the broader community. 

We know that the US dollar represented 79% of the reserve account in 2005 and that dollar holdings fell to 58% of the reserve account by 2014.  2014 was the high-water mark for China’s foreign currency reserves which declined by $1 trillion from late 2014 until the start of 2017.  Over the past seven years, reserves have stabilized around $3.2 trillion.

We also know that trade with the US has NOT grown since 2014 indicating that China has had limited opportunities to re-build their dollar positions.  Here’s a chart of China’s trade surplus with the US.  Keep in mind that China needs to generate significant dollar levels in trade to pay for imports of food (20%+), energy (80%), and high-end technology that they can’t produce domestically.  Apart from Russia and Iran, these markets don’t accept yuan.    

Over the past two years, trade with the US and Europe has weakened while trade with Russia has doubled.  The Russians don’t pay in US dollars, nor does Iran. 

Don’t Forget the Debt!

Debt is one person’s liability, but another person’s asset – Paul Krugman

Fifteen years ago, when the Fed’s quantitative easing program was in full swing, the only smart bet seemed to be shorting the dollar in the form of dollar-denominated debt.  Today that bet doesn’t look smart at all.   

      

Since 2009, China has amassed between $2.5 trillion and $3 trillion worth of US dollar-denominated loans, effectively hedging their $3.2 trillion of forex reserves.  What originally looked like an intelligent move to insure against Federal Reserve profligacy, now represents a significant hurdle to overcome in attracting foreign capital. 

A sharp drop in the yuan versus the dollar and a further decline in US imports of Chinese-made goods and that dollar-denominated debt becomes untenable.  That’s when it becomes a huge problem for the unregulated Eurodollar markets that supplied the funding.  In other words, the global banking system is on the cusp of having a massive hole blown in it when the yuan eventually reaches intrinsic value and the Chinese are unable to service Eurodollar debt.

 

Deflation in its simplest form means loss.  If you’re Tom Brady, you remove air from a football and the world calls it “Deflategate”.  If you have an unsustainable high opinion of your worth, you are subject to having your ego deflated.  In economics, they tell you that the general price level has declined, blah, blah, blah. 

Deflation means losses.  If a nation’s banking system makes bad loans in the collective, that nation will experience deflation because money in circulation declines when the banking system incurs losses.  This is what happened in the US in 2008 which is why the Fed started quantitative easing, or QE.  In effect, they injected dollars into the banking system to replace the dollars destroyed with bad investments.  According to HSBC, the People’s Bank of China has “printed” 15% of currency in circulation over the past year as a means towards offsetting part of the deflation in their domestic economy.  It’s not nearly enough.

The Fed also created swap vehicles with global central banks to effectively inject US dollars into the Eurodollar markets.  The Fed will swap dollars for yuan, yen, euros, etc., to get past temporary imbalances in the Eurodollar markets.     

China, collectively, has been making massive investments for the past fifteen years and suffering massive losses.  These losses span from excess industrial capacity to consumer loans to massive “glamour” infrastructure projects across the nation.  These projects required trillions of dollars to pay for the imported components of the investments.  Everything has been capitalized with debt.  Perhaps the most egregious of these losses has been Xi’s once vaunted Belt and Road Initiative. 

A Brick and Road Upside the Head

The only thing my old man ever gave me was a beating – Sonny Liston

Just about every investment initiative backed by Xi Jinping has taken a beating.  Whereas King Midas turned everything he touched into gold, Xi turns everything he touches into deflation.  This acolyte of Mao seems to have the same flair for economic and social destruction as his mentor.

His acumen is on full display in his Belt & Road Initiative, supposedly a modern attempt at recreating the Silk Road between the East and West by building rail lines through much of the most inhospitable topography in the world.  This includes the Tibetan Plateau and the Himalayas, tunneling through mountains and building massive bridges between mountains, to access regions with very little economic potential. 

But it’s not just rail, he’s invested massively in places where nobody else would invest such as a massive port facility for Sri Lanka and a massive airport in the jungles of Cambodia.  In total, Xi has spent at least $1trillion on the BRI, most of which is valued in dollars.  The result is that at least 75% of the BRI investments are already bad which implies that nearly $800 billion has vanished from the Eurodollar markets – gone.

The BRI was started when China was flush with excess dollar reserves acquired through exports to the US and foreign direct investment (FDI) from investors who believed China was the future.  Those exports haven’t grown since 2014 and FDI has dropped by over 90%.  The dollar-denominated debt represented a synthetic short on the US dollar and US economy and a long position on the emerging economies of the world.  It’s been a disaster which is why debtor nations have needed aid from the IMF and World Bank to help with their excessive dollar-denominated obligations. 

Despite all of these red flags, the prevailing narrative holds that China is flush with dollars in their currency reserve account.  My thesis is that China is holding renminbi in that account and bluffing on their financial strength.  If I’m right, the global economy is facing the biggest “beating” since WWII and possibly bigger than anything faced in the 20th Century.

Export Focus

As Austrian business cycle theory has pointed out, any bank credit inflation sets up conditions for “boom-and-bust”; there is no need for prices to actually rise – Murray Rothbard

We may not have the numbers to conclude that China has run out of dollars but we can deduce China’s reserve predicament by observing what China is doing in international markets.  They are flooding the world with their excess production instead of developing their own domestic markets.  They are also paying higher prices for their imports even as their consumer and producer prices fall.

China is built on debt; there is practically no equity to soften their decline.  They may be the world’s leading manufacturing nation but manufacturing brings both operational and financial leverage and China has extraordinary excesses of both.  Slowing demand makes both forms of leverage unbearable thanks to cost absorption over fewer units.

Let’s use the steel industry to illustrate this point.  In 2023, China represented 50% of global steel output by tonnage but only 30% of steel output by value.  For all of 2023, Chinese steel exports rose by 36% based on tonnage but declined by 8.3% by value.  That, my friends, is dumping.  We can observe similar behavior in electric vehicles, solar panels, and lithium batteries.

Making matters worse, Xi Jinping has directed state-owned enterprises (SOE’s) to “bet the ranch” on EV’s and green energy right when the Western world is coming to its senses on the viability of this form of transportation and energy.  Europeans are cutting back on EV purchases even as BYD’s cheap EV cars are piling up on the dock in Rotterdam and Bristol. 

The biggest problem for China, by far, is the fact that contract manufacturing is migrating out of China and with it, China’s biggest source of dollars in trade.  The once bustling cities of Shenzhen, Dongguan, Guangzhou, and Hangzhou are starting to resemble Detroit with empty factories and apartment buildings.  The private owners of these factories are closing their doors because there are insufficient orders from foreign buyers.  The ones that do keep the lights on are forced to price at the margin and often finance the orders themselves.  We normally see this kind of activity in companies that are close to bankruptcy where they are simply generating cash flow to make it to next month.     

Phantom Reserve of Dollars

The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it.  The first lesson of politics is to disregard the first lesson of economics – Thomas Sowell

You know there is a serious problem when a story hits the media in June of 2023 about China having excess stores of US dollars in its banking system.  The source was credited to Brad Setser, a former Treasury official.  Setser claimed that Chinese banks held $3 trillion in “shadow” reserve accounts.

The problem is that you can’t hide $3 trillion.  Is Setser referring to deposits at Chinese commercial banks from trade?  Are they the aggregate notional amount of a swap arrangement?  Are they assets on the books of Chinese banks that are a function of a carry-trade – perhaps they borrowed in yen and bought US dollar assets?  The only usable reserves would come from dollar deposits or from a swap arrangement with the Federal Reserve.  All we know for certain is that China supposedly had $3.2 trillion in official currency reserves against aggregate short-term borrowing in the Eurodollar markets of $2.9 trillion.  Everything else is noise.

You could say that nobody would fall for that nonsense but the truth is that we’ve been falling for China’s nonsense for 30 years.  China has been the perfect example of the old credit card model from the 1990’s where bad underwriting standards were obscured by growth of card balances.  Once the growth stopped, losses overwhelmed their capital positions. 

Conclusion

For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not.  Avarice and usury and precaution must be our gods for a little longer still – John Maynard Keynes

As it pertains to China, the market is disregarding the growing suppuration of deflation coming from China.  In the first half of the Great China Cycle, cheap imports from China allowed central bankers to concentrate on creating an asset bubble to allow an aging western society to continue consuming.  It was great while it lasted but now the second part of the cycle has arrived – some call it the Great Reckoning. 

The political class wants you to ignore what I believe is obvious and potentially contagious.  I believe China is close to running out of dollars and when it happens, we’re going to see scarcity in the Eurodollar markets along with financial insolvency far worse than 2008.

The authorities know about the problem otherwise there would never have been a need for Setser to comment on hidden reserves.  That was the tell and we’ve seen the authorities play this hand many times before. 

I’ve got two indicators.  The first is the yuan.  When it decisively breaks above 7.36 to the dollar, it will be game-on.

The second is copper which I believe is elevated from a false belief that we’ll aggressively add to the electric grid to accommodate artificial intelligence.  When copper breaks below 3.20 on the CME along with a weak yuan, deflation will follow.  

I don’t know when it’s going to break because China has been holding onto the ghost since 2016.  It’s also an election year in the US.  But ultimately, cash flow forces markets to clear at intrinsic value for at least a little while and that’s why my best advice is to expect this to be the second act after something else breaks the markets. 

Tuesday, June 4, 2024

Gaza War Is Eroding Egypt-Israel Relations (Video - 32mn)

  Too bad that someone at YouTube doesn't like Douglas MacGregor interviews, they are truly superb with a depth of knowledge and analysis which the current American administration so clearly lacks. 

  This one about the war in Gaza broaden the scope of what is happening to the whole Middle East with a risk of complete de-connection between Americans and Arabs orchestrated by the Chinese. Brilliant and convincing. 

  Beyond the war, the real turning point is that Beijing seems to have stopped trying to mollify Washington and is methodically implementing a global strategy no doubt in full coordination with the Russians. Then go figure why the Americans and Europeans are getting nervous and upping the ante in Ukraine. The control of the world is at stake and the West has indeed everything to lose. The fight for preeminence is probably just getting started!


 

Monday, June 3, 2024

WSJ: US actively preparing for war with China (Video - 23mn)

  Is America looking for war with China before it's "too late"?

  A better question: Could there be people who think in those terms? Unfortunately the answer might be yes in spite of the tremendous risks. 

  The strategy: If you cannot goad Russia to war with Ukraine, well maybe Taiwan "independence" will do the trick with China? Taiwan has become essential for the US. China represent an "existential" risk. Well, at least from an hegemonic perspective. War in the mind of these people, mostly neo-cons could therefore solve the problem. These are mad people, but as in the past, their madness is well protected from sanity! 


 

Saturday, June 1, 2024

Blinken To NATO Leaders: Ukraine Has 'Strong & Well-Lit Bridge To Membership'

 The problem I have with these guys is that both Blinken and Stoltenberg look like imbeciles and unfortunately I mean it literally not as an insult. It is truly frightening to think that the most powerful people on the Western side do not have the caliber to occupy the positions they're in. And then there's the "others", The Baltic Chihuahuas who growl at the border, the rabid anti Russian Poles, the panicked French Macron, the clueless German scholz... It would all be so funny in a Simpsons episode ending with a yellow mushroom cloud. In reality, they are sinister.

US Secretary of State Antony Blinken on Friday addressed a meeting of NATO foreign and defense ministers in Prague. The meeting is being held in preparation for a bigger Washington summit set to take place in July. Blinken previewed that the later summit will bring Ukraine closer to NATO.

"At the summit we'll be taking concrete steps to bring Ukraine closer to NATO, and ensure that there's a bridge to membership - a bridge that's strong and well lit," he said in an address.

Touting that the alliance is "stronger" than ever with the recent addition of two new members (Sweden and Finland), he said that the Western allies are also committed to rebuilding Ukraine after the war.

"NATO will help build Ukraine's future for us - one that effectively deter aggressive and defend against it as necessary," Blinken continued.

The US top diplomat said further:

We'll advance Ukraine's integration with NATO. 32 countries are also negotiating individual bilateral security agreements with Ukraine.

Thirteen have already been concluded. I expect many more will be concluded by the time of the summit.

"We'll bring them all together to show how powerful that commitment is," the continued to preview of the July summit.

From the start of the Feb. 2022 Russian invasion of Ukraine, Russia's Putin and top Kremlin officials have consistently pointed to NATO expansion to Russia's borders as a prime cause of the conflict.

And yet, Washington is more intent than ever on seeing Ukraine's eventual and full integration into the NATO alliance. This is of course a recipe for world war and nuclear-armed confrontation between Moscow and the West. Also, the US on Thursday approved for the first time the ability of Ukraine to hit Russian territory using American-supplied weapons systems.

Blinken's "well-lit" path of Ukraine to NATO may in the end be "lit" with the blinding flashes of nuclear bombs.

Numbers Behind The Narrative: What Climate Science Actually Says

  Climate science is exactly like virus science, weaponized science for morons. 

  Scientists who actually study climatology or virology, look for patterns, create models, find interesting facts, test ideas and discuss hypothesis. They tend to know more and therefore be less certain about what is true. It's complicated, there are many variables, a lot of uncertainties... Often, you can only offer questions where people expect "truths" and answers.

  We've come a long way over the last 300 years of science. We've learned a lot and still, we know almost nothing about the nature of reality for example or the complexity of the biosphere. Is the Gaia hypothesis correct? In other words, is the planet alive? A difficult question that we still cannot answer although depending on the answer, our understanding of our environment could change drastically. 

  Even what we think we know is probably wrong. Dark matter means we have no clue what it is. We need it otherwise what we see makes no sense but maybe we just don't understand what we see. Dark energy, even worse. Well at least, we've learned that the Universe is at least 13.7 billion years old. Maybe but then why do we find stars which looks older than the Universe or galaxies fully formed very close to the origin? It makes no sense. 

  In fact, the more questions you ask the more you realize how little we know about almost everything. It is truly frightening. Except for climate science. Here we know that there is global warming and that it is anthropomorphic. And that if "you" do not stop producing CO2, we're doomed. Finally, one certainty we can nail on the wall! 

Authored by Kevin Stocklin via The Epoch Times,

Most people by now are familiar with the narrative that our planet faces a dire crisis due to rising temperatures.

In January 2023, former Vice President Al Gore provided a graphic depiction during a World Economic Forum summit, informing attendees that greenhouse gas (GHG) emissions are “now trapping as much extra heat as would be released by 600,000 Hiroshima-class atomic bombs exploding every single day on the Earth.

“That’s what’s boiling the oceans, creating these atmospheric rivers, and the rain bombs, and sucking the moisture out of the land, and creating the droughts, and melting the ice, and raising the sea level, and causing these waves of climate refugees,” he stated.

United Nations Secretary-General Antonio Guterres echoed these remarks at the U.N. Environment Assembly in February of this year, warning: “Our planet is on the brink.

“Ecosystems are collapsing,” he stated. “Our climate is imploding, and humanity is to blame.”

Despite ubiquitous reports that there is an overwhelming consensus among scientists in support of this narrative, many scientists, like John Clauser, a 2022 Nobel Prize recipient in physics, see it differently.

Mr. Clauser stated in 2023 that “the popular narrative about climate change reflects a dangerous corruption of science that threatens the world’s economy and the well-being of billions of people.

“Misguided climate science has metastasized into massive shock-journalistic pseudoscience,” Mr. Clauser stated. “In my opinion, there is no real climate crisis.”

How can there be such a vast discrepancy on such an extensively researched topic?

Having studied the production of climate data for decades, physicist Steven Koonin said he has “watched a growing chasm between what the politicians, the media, and the NGOs were saying, and what the science actually said.”

“Nobody has an incentive to portray scientific truth and facts,” he told The Epoch Times.

Mr. Koonin was the undersecretary for science in the U.S. Department of Energy, under President Barack Obama. He is a former physics professor at Caltech and is currently on faculty at New York University.

He also has expertise in the development of analytical models.

In 2021, Mr. Koonin published a best-selling book titled “Unsettled: What Climate Science Tells Us, What it Doesn’t and Why It Matters.” The book analyzes where climate data comes from and how it makes its way from dense, thousand-page scientific reports into headline news for public consumption.

The United Nations’ IPCC

One of the most often cited sources of climate information is the Intergovernmental Panel on Climate Change (IPCC), a collection of scientists and government appointees that, according to its website, is dedicated to “assessing the science on climate change.”

The United Nations and the World Meteorological Organization established the IPCC in 1988.

The IPCC is both a scientific and a political body. It doesn’t conduct its own research but rather assembles teams of hundreds of scientists in working groups that collect reports from scientific journals regarding climate change, its effects, and what should be done about it.

About every seven years, an IPCC Working Group called Working Group I synthesizes the latest reports into Assessment Reports (ARs), often several thousand pages thick, which are then reviewed and edited by government appointees from the 195 member nations.

In 2023, the IPCC released its Sixth Assessment Report (AR6).

The information on which the ARs is based often has a bias from the start, critics say, because research grants typically fund studies that support the prevailing narrative on climate change, and because scientific journals often avoid publishing studies that suggest climate change is not dire.

“Any literature that supports alarmism is promoted and any that does not is rejected,” William Happer, professor emeritus in physics at Princeton University, told The Epoch Times.

According to Mr. Happer, the source of much of today’s climate data comes from “centers whose generous funding would cease if climate hysteria were to abate.”

In addition, according to Richard Lindzen, emeritus professor of meteorology at Massachusetts Institute of Technology, who served as one of the scientists on Working Group I in the past, “the IPCC itself is only studying anthropogenic [man-made] climate change.

“It doesn’t do anything regarding natural climate change,” Mr. Lindzen said, “and that’s a severe technical shortcoming because you can’t do things like attribution unless you know what natural variability is.”

Despite that, “when you read the [Assessment] Reports, focusing mostly on the science, they’re actually pretty good,” Mr. Koonin said.

The data presented in the ARs is a relatively sober analysis. However, it provides little support for the narrative of climate catastrophe—at least as far as what has been observed to date.

Trends in Extreme Weather Events

Chapter 12 of the AR6 details the IPCC’s assessment of the impact of extreme weather events. The tables provided in this chapter show that extreme weather events that have “already emerged” are limited.

The report states a “high confidence” of temperature increases in average air and ocean temperatures and incidences of extreme heat in tropical and mid-latitudes.

It also indicates high confidence in a decrease in arctic sea ice.

However, it states “low confidence” for any increase in floods, rainstorms, landslides, drought, “fire weather,” cyclones, hurricanes, tornadoes, sand and dust storms, hail, sea level rise, coastal flooding, and erosion.

It also indicates low confidence regarding a decrease in snow, glaciers, ice sheets, or lake, river, and sea ice, beyond the Arctic region.

The IPCC’s assessment that such extreme weather events don’t appear to be escalating is supported by the findings of other scientific organizations.

A 30-year analysis of “tornado trends” by the National Oceanic and Atmospheric Administration (NOAA) found that “the number of strong and violent tornadoes hasn’t varied much since 1970.

“While the peak in tornado frequency in the early to middle 1970s included the 1974 Super Outbreak, the year with the most tornadoes during that span was 1973!” the NOAA report states.

It attributed an increase in tornadoes reported in the 1990s to the newly implemented Doppler weather radars, the development of spotter networks, population shifts, the proliferation of cell phone cameras, and “the growing ‘hobby’ of tornado chasing.”

Likewise, a 2022 report in Nature, found a “declining tropical cyclone frequency under global warming.

“On average, the global annual number of TCs [tropical cyclones] has decreased by 13 percent in the 20th century compared with the pre-industrial baseline 1850–1900.” the report stated.

In addition, the Drought Severity Index published by the U.S. Environmental Protection Agency (EPA) showed no material increase in droughts in the United States between 1895 and 2020.

From Data to Narratives

How do such mundane assessments of the impact of climate change evolve into the narrative that “our climate is imploding” and “oceans are boiling”?

In two ways: first, the public statements from the IPCC and the U.N. often diverge from what their own ARs actually say; and second, the predictions of a dire future are based on models rather than observations.

Alongside each new AR, the IPCC also writes condensed Summaries for Policymakers (SPMs) to “inform policymakers what scientists know about climate change.”

The SPMs distill the voluminous ARs down to a short list of bullet points.

In addition, the IPCC produces Headline Statements and Press Releases to “provide a concise narrative” on climate change.

“[The AR] gets boiled down to the Summary for Policymakers, and while it’s drafted by scientists—a small number of them—the governments have to approve the SPM line by line,” Mr Koonin said.

“And so you already have the potential for, let’s say, non-scientific factors entering.”

“The SPM itself is 20–30 pages, and the media have to cover that,” he said. “And they typically will cherry pick the most extreme parts of it, so that’s how we get the distortions, and then that is exacerbated by the politicians, seeing opportunity in distortion, and the NGOs,”

Despite observing no increase in the tornadoes, cyclones, droughts, wildfires, or floods that have been attributed to climate change, the IPCC’s 2023 Headline Statement warns: “There is a rapidly closing window of opportunity to secure a liveable and sustainable future for all [very high confidence].”

“This problem [climate alarmism] is especially severe in the summaries for policymakers, which are mostly written by government bureaucrats,” Mr. Happer said.

“Some of the scientific reviews in the voluminous background material are sound and dispassionate,” he said. “But it is not easy for honest scientists to buck the pressures for alarmism from the political leadership.”

Rise of Computer Models

Much of the basis for climate catastrophism comes not from observation but from computer models.

study of climate models between 1970 and 2020 by the U.S. Department of Agriculture (USDA) found that “observed changes in temperature and precipitation have generally been consistent with the changes projected by earlier models.

“The accurate projections of future climate and hindcasting of past climate makes us confident that models can reliably project changes in the climate,” the USDA report states.

However, taking a closer look at the climate modeling industry raises questions about how reliable those projections are.

The IPCC draws up its predictions based on averaged results from dozens of models, which Mr. Koonin says “disagree wildly with one another.”

In his book, Mr. Koonin notes that the average surface temperatures generated by the models in IPCC reports vary among themselves by around 3 degrees Celsius or three times the amount of warming observed throughout the 20th century.

The ARs “downplay this embarrassment” by focusing not on the actual temperature predictions, where models diverge, but rather on the predicted change in temperatures, where models are more likely to coincide.

And then there is the process of “tuning” the models.

The models typically divide the Earth up into “grid cells,” each a few tens of square miles.

These grid cells are “tuned” in a process of hard-wiring the results from the cells to manually account for more random elements like cloud formations, storms, or humidity, which the models can’t predict but are material to temperature changes.

“There are hundreds of such parameters because the climate system is complicated and has many different dimensions,” Mr. Koonin said.

“And so, as people tune the parameters differently, they get different results.”

Tuning also helps the models show results closer to observed data, but this highlights another shortcoming of the models—while purporting to predict the future, they often fail to reproduce historical temperatures.

They also struggle to separate human influence from natural phenomena, all of which elevates the uncertainty of modeled predictions regarding human behavior.

“If you’re trying—as a politician or NGO or company—to promote a narrative, you don’t want to talk about the uncertainties,” Mr. Koonin said.

“You just want to say it’s going to be five degrees warmer and the world is going to hell.”

Living In Denial

Those who question the narrative of climate catastrophism are often attacked as climate “deniers.”

“Anyone who willfully denies the impact of climate change is condemning the American people to a very dangerous future,” President Joe Biden stated in November 2023.

“The impacts we’re seeing are only going to get worse, more frequent, more ferocious, and more costly.”

Absent the hyperbole, however, what do the numbers indicate about our future?

“Modest warming since the 1900s; 1.3 degrees [Celsius] at the global level,” Mr. Koonin said.

“Despite that, by whatever measure you want to use—lifespan, nutrition, GDP, death rates from extreme events—it’s all going in a positive direction.”

“Sea level rise is continuing at just about a foot a century,” he said. “But the actual and projected economic impacts of warming are in the noise … even the IPCC says it’s small compared to many other things that determine human wellbeing.”

2022 report by the Heritage Foundation, modeling the costs and benefits to the United States of complying with the Paris Agreement and meeting the Biden administration’s goal of reducing GHG emissions to 52 percent below 2005 levels by 2030, predicts these policies would reduce global temperatures by 0.5 degrees at the end of this century.

“Even with theoretical efficiency, we find the costs of the policy to be staggering,” the report states.

“The economy would, in aggregate, lose $7.7 trillion of gross domestic product (GDP) through 2040, which is $87,000 per family of four.”

If the developing world is deprived of the use of fossil fuels, the impact there could be even more severe.

“The billions of people who don’t have energy, who don’t have modern conveniences, they will be condemned to perpetual poverty,” Mr. Lindzen said.

“CO2 has played an important role in increasing agricultural productivity, so we’ll see everyone paying more for food and more people starving.”

“You are already seeing tragic consequences even in the United States, where a whole generation of kids has been told that they have no future,” he said.

“They’re not having children themselves, because what’s the point of having children in a world that’s going to self-destruct?”

The Epoch Times contacted the IPCC for comment but didn’t receive a response.

OpenAI o3 Might Just Break the Internet (Video - 8mn)

  A catchy tittle but in fact just a translation of the previous video without the jargon. In other words: AGI is here!