As IF Times

link  Truckloads of snow dumped on melting Vancouver mountain | Reuters.

When they promised that the Vancouver games were going to be green, they didn’t fool around.  First of all, credit goes to the writers of this story for not blaming the unseasonably warm weather that’s occurring in Vancouver on Global Warming.   A year ago, when the frenzy for everything AGW was at its peak, you can bet that SUV’s  and air conditioners would be fingered as the causes of no snow here in February.  Now that there appears to be some cracks in the case for AGW, there are fewer knee jerk reactions to anything that is ‘abnormal’.  At least the games people had a contingency plan in case of no winter in Vancouver, though I suspect moving snow from 150 km away by truck was probably down the list around plan G.  Hey, it’s Vancouver, we’re famous for rain.  Even pets here wear gore-tex. 

The second thought that comes from this article is the entire circus surrounding the Olympics.  While no one is naive enough to think that the spectacle is really about skiers, skaters and bobsledders, the whole “Olympic spirit” propaganda seems hollow when the reality is that the staging of the events are political and economic operations.  If this were not the case, the venues would be the same every 4  years, in particular, the winter Olympics. According to John Furlong, the Vanoc chair when speaking to the lack of snow,

“This has happened at every Olympics and what we’re trying to do is demonstrate we are on top of this.”

 It would make far more sense to hold the events where winter has a greater than 50/50 chance of showing up.  In addition, it would be easier to compare the performance of participants from year to year.

Instead, a beauty contest is held regularly to determine which city will have the “privilege” of spending billions of dollars on infrastructure and these days, security.  The process resembles the old joke; the good news is, you won; the bad news is, you won.  If nothing else, it’s a good excuse to travel somewhere fun every 4 years.  The unspoken winners however, are those involved with the decision making process as Olympic committee judges.  These guys get wined, dined and feted like royalty as nations vie for their favor and attention like competing lovers.  Why anyone would run for el presidente of a country is beyond me when being an Olympic poobah is a much better gig. 

There is obviously economic benefit from hosting the games of course.  Builders, engineers, contractors and developers benefit.  Vancouver will get new civic structures, possibly legacies for future generations.  So you have to spend a billion or so to get a billion or so.  Minus the cost of medals.  And umbrellas.

Paulson says he was scared and clueless during Lehman collapse – MarksJarvis on Money.

Now there’s something you don’t hear everyday.  A person of position and influence speaking with candor about a circumstance facing him in which he had no knowledge or easy resolution.  This candor is refreshing because of all the other players during the banking crisis who were probably in the same boat, but declined to admit it.   This includes officials in the government and central bank who were thrust into the role of “fixing it”, as if they were characters in a movie faced with defusing a ticking bomb while people are screaming all about them.  In the movies, it’s always the red wire that needs to be cut, but in the real world, the solution is much less elegant.

If a guy like Hank Paulson, former Goldman Sachs honcho is gripped by genuine fear and panic,  what are a bunch of lawyers going to do?  As in most emergencies of any kind, the default answer is usually throw money at it and that’s exactly the action taken by way of the massive injection of federal monies into the banking system to stem losses known and unknown. 

The unknown part is most interesting, because historically, there are always consequences to massive financial resources poured into any segment of an economy.  Economic history has shown that at some point down the road, lots of money sloshing around eventually shows up as inflation.  By now, it has been accepted by most that the low interest rates which prevailed for most of the first decade of the 21st century were responsible for fueling the grotesque increase in demand for real estate assets worldwide, but particularly in the U.S. 

As the bubble in this asset class inflated, other assets of all kinds were pulled up unreasonably in value too, such as balance sheets of banks, which by now were merely fronts for their hedge fund revenue engines.  Ironically, as much as cheap money built the real estate bubble in the first place, it required even more money to bail out the banks.  (As an interesting aside, it’s worth noting that despite all the money thrown at trying to revive real estate and banks, most valuations are way below where they were a year ago.  It’s as if money just disappeared )  As referenced in a previous posting, the risk reward dynamic was skewed grossly to the side of the banks, because profits were a never ending river when things went well, but risk was all with the public went bets went badly, which had to happen eventually.

Paulson himself was savvy enough to recognize that pay rates were unusual;

“…When I ran Goldman, even during benign times, I thought compensation was out of whack,” he said.  He claims he told his staff during meetings “people don’t like you” because of compensation levels…”

He recognized intuitively that people who were not risking their own money should not be compensated like feudal lords, especially when they didn’t even understand the full scope of their activities.

As this is written, a new budget has been proposed by the administration with total spending of 3.8 TRILLION dollars for fiscal 2011 which results in a $1.3 trillion dollar deficit.  Not to be pedantic, but that number is 3,800 billion dollars.  The point of this is; do the people responsible for this budget really know what they’re doing, or are they following the same path that bankers have, playing with the house money and gambling on the red wire?  Given that most lawmakers don’t have Hank Paulson’s scope of knowledge, and he himself confessed ignorance of all the risks associated with his business, I’ll wager there are lots of legislators closing their eyes and panicking in private.