This is the date that President Obama is expected to announce a sweeping homeowner mortgage buy-down via Federal Reserve fiat. It is also the date we are expecting an update from PIOMAS (Pan-Arctic Ice Ocean Modeling and Assimilation System) on exactly how much Arctic Sea Ice there is left.
Whether you are talking Global Warming or Global Economy, I suspect that a tipping point was reached sometime in 2003.
A tipping point is a very simple concept. If you tip a glass of wine a little bit, it rights itself. If you tip it too far, it goes off the table, the wine is spilled, the glass broken.
The Global Economy Tipping Point of 2003: Jobless Recovery
You may remember 2003 as the year of the "jobless recovery". That is an oxymoron. There is no such thing as a jobless economic recovery. What we had was a systematic distortion of the size of the work force, instead of job creation, to make the unemployment numbers seem not as bad. For instance, anyone who can be convinced to go on SSI, for back pain or whatever, automatically drops out of the work force, improving employment numbers without actually creating jobs. This is but one of many mechanisms by which the actual size of the work force is continually underestimated.
Second, we had the actual export of jobs. This satisfied Wall Street, by cutting costs and improving the bottom line for corporations. Notice how a lack or down-turn of economic activity is used to create good numbers.
Then,there was the creation of the predatory home mortgage bubble, enabled by an out of control derivatives market that allowed banks to bet against their own lending policies. The equity bubble provided a ready source of cash for homeowners to continue the consumer debt-driven spending that we all have become accustomed to.
I call this a tipping point because,like dispersed Gulf oil, cover-up replaced recovery. Once the tipping point has been reached, what ensues after that simply amounts to kicking the can further down the road. Creating a couple of hundred thousand temporary jobs for the census is an example of that. The fact that it was termed a jobless recovery should have been a red flag. A deepening crisis was made to look like a recovery, just as the thinner sea ice of 2008 and 2009, spread over a larger extent was ballyhooed as a recovery.
Tip Of The Iceberg
With the last bank bailout, $1.2 trillion in Tarp Funds were just the tip of the iceberg, sitting on top of about $13 trillion of Fed action. As the next bank bailout started coming due, I wondered how the President was going to sell it. The American People already consider the banks the number one welfare queens and are not about to spring for another one. Well, we now have our answer. What you will hear Tuesday is simply Bank Bailout II, done entirely by the executive branch, because this would not pass Congress at this point. We simply buy-down the bad portion of bank debt, and couch it in language about helping homeowners. Never mind that it will have to be done again next year, after the election, because housing values continue to decline.
To be sure, there were $600 billion in stimulus funds, but we can't spend our way out of a recession any more, not without structural changes. Much of money goes to multinational corporations, who can produce the cheapest goods based on horrible labor standards abroad. That money promptly leaves the country.
There comes a point when enough of our jobs and productive capacity have been shipped overseas that true economic recovery is no longer possible. The step between a collapse of the U.S. economy and the collapse of the Global Economy is, I believe, a small one.
The Global Warming Tipping Point of 2003: Arctic Ice
The Arctic Sea Ice has been melting for some time. The Arctic Ocean will soon be ice-free in the summer. Predictions differ on what year. If you want to be the first to sail to the North Pole, I think you should have your expedition ready to go by 2014. This is based on the shocking arctic sea ice volume estimates by PIOMAS, which are in turn based on NASA ICESat (Ice, Cloud,and land Elevation Satellite) data.
The Arctic Sea Ice is by itself an example of a tipping point which has been reached. Open seas absorb solar radiation. Sea ice reflects it back into space. This is the albedo effect. Warmer ocean temperatures lead to more melting, which on the average, translates into less coverage. That means more open seas, greater absorption of solar radiation, and warmer ocean temperatures.