09 December 2009

Reality Check's Tax Proposal Haunts Bankers

My idea of taxing excessive bonuses for bankers is still alive. After the Americans, now the British give it a try. If only they would keep it up!

27 August 2009

Downsizing the financial sector

It happens rarely, but sometimes it does: Influential people from politics and finance speak up with ideas that are not too far from my view. The latest example is Lord Turner, chairman of the Financial Services Authority in London, who says the financial sector in the city has grown too big and needs to be cut to a socially reasonable size, possibly by imposing taxes.

Good luck, Mr. Turner!

22 August 2009

Chess Champions in Zurich


A chess post for a change: Today, 8 chess world champions came to Zurich to celebrate the 200th anniversary of SG Zurich, the world's oldes chess club.

They are playing simuls against a total of 200 amateurs right now in the hall of Zurich's main station. I've been there and got some snapshots with my mobile's camera. See here two chess greats with name tags in the background!

Some games can be followed live.

26 July 2009

Oops, they did it again

A little add-on to my previous post about the newest article of Chilingar et al. In fact, I only now compared it more closely with their 2008 twin-papers. I was surprised by the amount of overlap between the new piece and the two old ones. Ok, the new paper is not a one-to-one copy as the other two were, but it really is not much more than a re-arrangement of the old theories and arguments. At least close to a recycling fraud again.

Here are some examples, comparing the new paper "Greenhouse gases and greenhouse effect" with the old one "Response to W. Aeschbach-Hertig rebuttal ...’’, both published in Environmental Geology (EG from here on):

- The new Fig. 3 is identical to the old Fig. 2 (and the new Fig. 2 is an extension of the old Fig. 1).
- Equations 1, 2a, 2b, 3, 4b, and 5 in the new manuscript are identical to equations 11, 5, 6, 7, 9, and 1 in the old paper.
- The new eqs. 4a, 6, and 7 are also present in the 2008-paper in slightly modified form (as eq. 8, text on p. 1571, and eq. 13.)
- A lot of the discussion around the equations is also identical or very similar.

In summary, none of the equations in the "new" manuscript are really original. There are very little if any new arguments compared to the twin-papers. So which honest journal being aware of this situation would publish this remake? Well, EG does.

Last time, when finally answering to my inquiry, the editor of EG had the excuse that they allowed Chilingar et al. to "reprint" parts of their EG-paper in "Energy Sources" because EG had a long delay in printing the piece. So then, this time they allowed them to re-use large parts of the previous paper published in their own journal? For me (and Fred Singer, it seems) EG has no excuses anymore.

Note, by the way, that neither of the twin-papers is cited in the new paper. Quite unusual that you do not quote any of your own two previous papers that contain all the equations of your present work. Plus one figure. In fact, this is self-plagiarism.

12 July 2009

Chilingar's Greenhouse Paper

Alright, let me make some comments on the contents of the recent paper by Chilingar and co-authors in Environmental Geology: Greenhouse gases and greenhouse effect.

First of all, the title is rather misleading. The paper hardly deals with the greenhouse effect, as we will see shortly. Secondly, the main "theory" presented in the paper, which the authors call the "adiabatic theory of greenhouse effect" is nothing new and has already been discussed by Eli Rabett.

The essence of the theory is that atmospheric temperature can be related to pressure (i.e., altitude in the atmosphere). The fact that the temperature profile in the Earth's troposphere is dominated by the adiabatic gradient, i.e. the effect that air cools as it ascends and expands, is of course textbook knowledge, although Chilingar et al. do not acknowledge this. If you would like to know how it works, for example, follow this link to lecture notes of my colleagues in atmospheric physics at our institute. Using this fact and a strange version of a global radiation balance, Chilingar et al. construct their equation (1) to describe temperature as a function of pressure with two empirical factors b ("scaling factor") and alpha ("adiabatic exponent").

I do not have a clue why the "precession angle" of the Earth enters the radiation balance term. One might have to follow the Sorokhtin and Chilingar references given at the outset of this discussion, but these aren't easy to find (maybe the one in Energy Sources would be available, but we already know that these authors like to duplicate their papers in that journal and Environ. Geol.). I do know, however, that the angle of 23.44° to which the authors refer is usually called the inclination angle or axial tilt, whereas precession refers to the change in the direction of the tilted rotation axis. Anyway, if you are interested in a more conventional radiation balance, see these lecture notes.

Chilingar's equation (1) has a form that fits the temperature profile in the troposphere, they only need to adjust their two empirical parameters. Adjusting b sets the temperature at the surface - this is of course where a proper discussion of the radiation balance and greenhouse effect would be needed. But the authors circumvent this by simply setting b to fit the current mean surface temperature of the Earth. The parameter alpha is indeed a well-known exponent in adiabatic gas theory. For a dry atmosphere it would be given by c_p/c_v - 1 = R/c_p = 0.4. For a humid atmosphere it has to be adjusted for the latent heat in the condensation process. Chilingar et al. introduce two further fit parameters to adjust alpha, C_w and C_r, which they refer to as accounting for the effects of water vapor and - yes, indeed - absorption of heat by greenhouse gases.

I am not sure if the radiation correction term C_r makes much sense, but in any case this seems to be the parameter by which Chilingar et al. describe the greenhouse effect. To summarise the theory thus far, it has three adjustable fit parameters: b to adjust the surface temperature, C_w and C_r to adjust the adiabatic lapse rate. Values of these parameters are found by fitting equation (1) to the current temperature profile of Earth and Venus for comparison. They are quite different for the two planets, which is not further explained. However, an essential assumption of the paper then appears to be that these parameters are somehow characteristic for the two planets, INDEPENDENT OF THE COMPOSITION OF THEIR ATMOSPHERES. This is a rather strong assumption.

The theory and the above assumption are then taken to the extreme by calculating the temperature of Earth for a hypothetical pure carbon-dioxide atmosphere. The authors explicitly state that b is kept fixed and with a bit of calculation one can verify that they also do so for C_w and C_r. Given that C_r is meant to reflect the heat absorption by greenhouse gases, I find it slightly surprising that a pure CO2 atmosphere should have the same value as the current N2/O2 atmosphere. Wouldn't it be here where the authors should discuss the greenhouse effect as they announced so loudly in their title?

Well, they don't but rather find that (given their theory and assumption) a world with a pure CO2 atmosphere would in fact be 6.5°C cooler than the present day world. Great result, isn't it? Funny, though, that Venus with its CO2 atmosphere is so much hotter than Earth. This is due to the much higher factor b and a different C_r. But for Earth, these parameters would of course stay constant even if we were to convert all oxygen to CO2. No problem with global warming there. Just a bit tough to breathe, maybe...

In the event you are not convinced by Chilingar et al.'s theory, they have a backup argument as well, very typical for the rethoric of climate sceptics. This time, towards the end of the article, they dig up the old argument that the climate and CO2 reconstructions from ice cores have shown that temperature changes lead fluctuations of the greenhouse gases, not vice versa. This is correct, but not "indisputable evidence to the fact that the changes in CO2 concentrations of the atmosphere are the effect of global temperature changes, and not their cause." This is a frequent logical mistake. Yes, temperature increases in the past have caused CO2 to rise. This does, however, not exclude the (quite probable) possibility that rising CO2 in turn contributed to warming, and does so today.

There are some other mistakes in the paper as well, of course. One of the more obvious is the list of partial pressures in the Earth's atmosphere (after equation (2), cited literally here): "pN2 = 0.7551; pCO2 = 0.00046 pN2 = 0.7551 and pAr = 0.0128 atm are the partial pressures of the
corresponding gases (Voitkevich et al. 1990)".
Apart from the typo of repeating the N2 value twice, I wonder about the values and the Voitkevich reference. Compare the above values with the standard composition of the atmosphere in any textbook...

05 July 2009

Singer Resigns from Environmental Geology Board

When I recently reported on the new piece of Chilingar and friends in Environmental Geology, I did not mention that it actually was the well-known climate sceptic Fred S. Singer who - by asking for my opinion in a mail - evoked my attention to it. I replied to him, saying that I thought the paper was nonsense. Singer's answer may be surprising: He agreed and announced his resignation as an Advisory Editor of Environmental Geology.

Well, for now he is still listed on their website. But as I stated before in this context, I take it that Singer really plays in a different league than Chilingar. He does not want to compromise his credibility by endorsing Chilingar's humbug. But someone at Envrion. Geol. must support these writings. I rather suspect another climate sceptic editor of Environ. Geol., Lee C. Gerhard, to be involved in pushing the bizarre papers of Chilingar through "peer review". Whoever it is, these articles are a shame for this journal. However, it seems only few people take notice. So much for the impact of scientific publications...

01 July 2009

Chilingar is Back

I had not been aware of it (nor has the climate blogging community, apparently), but the infamous climate sceptic G. V. Chilingar and his friends have a new article in Environmental Geology:

Greenhouse gases and greenhouse effect

It is only available online so far, but probably will soon be printed.

If I find some time I may go for a little discussion of the paper. For the moment it may suffice to say that it just warms up their old weird "adiabatic theory of greenhouse effect", which Eli Rabett has already debunked. For some background on the authors also follow this link.

02 April 2009

Clean Coal and Sparkling Water

This is the title of a News & Views article of mine that just appeared in Nature. I had the opportunity to comment on a paper by colleagues from the noble gas and isotope community on the long-term fate of CO2 in natural gas fields. This is a hot topic because it relates to carbon capture and storage (CCS), a technology that may become important in fighting climate change.

Actually I don't think that the paper will or should have any great consequences with regard to CCS applications, but the media seem interested. I got several calls yesterday and for example the German magazine SPIEGEL has an article in its online issue today.

20 March 2009

US Congress Follows My Recommendation

Incredible: It seems that some US lawmakers have read my blog! Or did they develop the idea of using tax law to re-claim undeserved bonuses all on their own? Anyway, they House of Representatives passed a bill that imposes a 90 % tax on bonuses paid by government backed companies such as AIG. Revolutionary indeed.

This move is in line with the ideas I have proposed before in this blog (here and here). However, in my opinion it should be expanded dramatically to inlcude all kinds of excessive salaries all over the world. This would be a real step forward, but I doubt it will ever be achieved...

22 February 2009

Money, Money, Money

15 years ago, when I was a postdoc in the US, I read an article in the New York Times Magazine about the earnings of chief executives. As I remember it was entitled "What they earn and why they deserve it". I found it outrageous that they could seriously say that earnings of many millions a year would be "deserved", because of good performance of the company at the stock markets and so on.

Now, the New York Times has an article about reclaiming some of the money that executives of failed banks have received over the past years. Apparently they have come to the conclusion that these guys really did not "deserve" all that money. This is a step forward, but I still wait for someone to argue that excessive pay should not be allowed even if companies make good profits. The point is that such salaries favor a wrong mentality. Take this citation from the above mentioned article:
“This is really in our view a giant fraudulent conveyance, where money was paid out to executives at firms that were fatally undercapitalized,” said Daniel Pedrotty, director of the A.F.L.-C.I.O. office of investment. “We are arguing for a recovery of money that was used by people who treated these companies as a giant A.T.M. machine.”

So what can we do to change the thinking of executives that they can use their companies as giant A.T.M. machines? I have been arguing that a political approach could be to charge excessive taxes on excessive earnings. Would be quite simple if there were no "tax oases", i.e. countries that invite rich people to hide their money from taxes.

Unfortunately, one of the countries that happily accept the money that should be paid to other states is my homecountry Switzerland. The Swiss idea (and law) that "tax evasion" is not a crime, only "tax fraud", coupled with the bank secret, opens the door for such behaviour. And my favorite Swiss bank UBS has championed in it. The US has now turned up the heat on UBS and they agreed to hand over "secret" data on some clients whom they helped to evade US taxes. Furthermore, "the bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities."

Obviously, this breach of the Swiss' sacred bank secret instilled a heated debate in Switzerland. Most blame the US, although it now transpires that the top executives of UBS knew very well that they engaged in a risky and illegal business. What motivated them to do this? Did they just aim to increase the shareholder value of their bank, or could it be that they calculated how much their own personal share would be diminished if they stopped the raid on the US?

So, what's the bottom line? The leaders of UBS not only invested heavily in "toxic" US loans, which cost them many tens of billions, they also engaged in criminal activities to cheat the US government. The fine of $780 million is peanuts, much less than what they still pay out as bonuses to their employees. And the losses are covered by the Swiss government, to avoid a crash of this crucial company. Will they get away with that?

The irony is that these bankers happily accept to be helped with taxmoney, while they help rich people (like themselves) to avoid paying taxes wherever possible. Not only do they think they deserve the millions they earn, they also blame the state for claiming something back via taxes. Even as they themselves are saved by taxmoney, they don't appreciate the value of taxes.

Here is what I would do if I were in charge in Switzerland:
- nationalize UBS
- fire all top executives (they should be happy not to go to jail)
- claim back bonuses of the past 5 years (at least)
- abolish the bank secret and abusive tax laws
- introduce a 99% tax on all income above say 0.5 million Francs
- start the Swiss financial sector all over from scratch

29 January 2009

The Bankers haven't hit Reality yet

While my homecountry Switzerland is in turmoil over more than 2 billion Francs of bonuses being paid by the government-backed bank UBS (formerly a national pride, now essentially bankrupt), with heated discussions even at the world economic forum in Davos, things are even worse in the center of the entire mess, my former second home New York.

The New York Times had an interesting article about Wall Street paying the sixth highest amount of bonuses ever after a year that hardly can be said to have been one of the best. Yes, I know, they HAVE to do this, otherwise they might lose their best people (e.g., those who just wrecked the world economy). But, where will these people go if most banks are down? The argument was bad even before the crash, now it is just outrageous.

The best comes at the end of the article: "A poll of 900 financial industry employees [...] found that while nearly eight out of 10 got bonuses, 46 percent thought they deserved more." They haven't hit reality yet. They still live in their dream world where money comes from nothing. It either has to get much worse or someone has to tell them that it's over.

Or are we really going to accept that this kind of unrestrained capitalism continues?

P.S. I am glad to learn that Obama seems to share my opinion and tells the bankers what's up. It may be populist, but at least he's not alone.