Once upon a time there was Global Warming. Al Gore and others made up a bunch of data and went on evangelical tours to convince people that “The End Is Near!” Increased hurricanes, increased tornadoes, melting glaciers, rising ocean levels, extinction of polar bears, destruction of food crops were just some of the horrific results that we were supposed to experience if we didn’t act immediately to move our economy back to one that reflected something from the 18th Century. We were told this was urgent! We were told we only had ten years to change our ways or go beyond the point of no return.
We didn’t change.
Some time passed, actually most of the ten year urgent zone, and something odd was noticed. Hurricanes and tornadoes didn’t increase, their occurrence rates stayed flat or even reduced. Polar bears didn’t disappear, they actually increased in numbers. Worse of all, temperatures were no longer increasing, they were flat or (HORRORS!) in some cases, even decreasing. How could any of this be? None of this was supposed to happen with “Global Warming!”
The warming zealots condescendingly chided us for asking “what happened to the warming,” and explained that “Global warming was only part of the equation.” As they fully understood the complexities climatic interactions, they told us that “warming was only a part of the equation. Actually,” they continued, “cooling can also be part of the equation. While our concern was originally focused on warming, the real issue is “Climate Change” which includes any variation in climate that we can use to fool you into believing our desire to control your actions!”
And so, the term “Climate Change” was born not as a definition of reality but as a result of sleight of hand where just like a magician, they didn’t want you to pay attention to the real issue and the real action of the trick.
For months there has been concern about what would/will happen if China, the largest holder and buyer of US treasuries, decided they were full and didn’t want to obtain any more. This past week, the US held another treasury auction. We found out at that auction that indeed, China is now full. Not only did China not buy many treasury offerings, they became and net seller of treasuries in December of ’09.
If indeed China is full of treasuries or worse, if China is net selling treasuries, the financing of President Obama’s massive deficits will become a big challenge. If US debt is not absorbed in the open market and no change is made in the debt required due to the huge spending budgets, the solutions become ugly. Dramatically higher interest rates and force inflation are just two of the prettier ways of dealing with the situation. Other options are far less attractive.
One would think that the Obama administration would be paying attention to the change in China’s attitude. One would think that if Obama were really serious about his newly announced appreciation for fiscal conservatism, he would be using this event as an indicator of our need for change. He would point at it and say “we’re at the end of our borrowing limits, we need to change now!”
One would think.
When asked what if anything, the change in China’s treasury appetite meant, Top White House adviser Lawrence Summers said:
The truth is that these numbers fluctuate and that there’s a wide range of holders of Treasury debt.
Like “Global Warming” before it, President Obama’s concern for “budget deficits” appear to be transforming underthe inconvenient and untimely facts that face it. As “Global Warming” became “Climate Change”, a “debt crisis” is now just “portfolio diversity” according to Larry Summers.
Yeah, right. Now, let me tell you the one about the three bears!