Robert -
Here's an interesting take on the issue. What do insurance companies
think about climate change?
http://www.nytimes.com/2013/05/15/business/insurers-stray-from-the-conservative-line-on-climate-change.html
Good contribution. I don't know if this helps with Nick's pursuit of "a
rational discussion" but I think the point made here is highly relevant:
Science seeks mechanisms of causality that explain as well as predict,
often studying correlation along the way to get to it. Insurance
companies are happy with correlation and prediction... they don't *care*
what causes what, they only care that one measurable thing predicts
(within some interval of confidence) another.
I think your point is well taken, however: While highly politicized
discussions may argue over whether climate change is afoot, insurance
companies don't waste their breath on such arguments. Whatever the cause
of the weather may be, they are betting on more and more extreme weather.
Unfortunately, I think it benefits their business to *over* estimate
extreme climate... it lets them charge higher rates to anyone *near*
hurricane, tsunami, flood, or tornado country for said coverage... the
best scenario for them is to predict more extreme weather than actually
happens.
Similarly, I was surprised to see this:
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/25/here-is-every-previous-government-shutdown-why-they-happened-and-how-they-ended/
Again, the stock market is somewhat humorless about world events...
following the "efficient market hypothesis", it doesn't really care
about political correctness or the illusions caste by politicians with
agendas. The financial markets are a huge crowd-sourced prediction
game. On the other hand, to the extent those who are *analysing* the
stock market's response to government closures might have the agenda of
a bull or bear's desire. While the stock market is not so much
responsive to the then illusions of politics, that is not to say it
doesn't ride the crests and troughs of it's own greatest hopes and fears.
I *am* surprised however, that the stock market took a small bump
upwards today in spite of or is it because of the shutdown? How does a
government shutdown bode well for the financial markets? I assume it is
more "in spite of" than "because of" the shutdown... or some kind of
reverse psychology effect... all the savvy players taking advantage of
the chicken littles willing to unload their stocks at a bargain in the
face of uncertainty?
For those of us who might want to put our money where our mouths are
<http://tippie.uiowa.edu/iem/markets/congress14.html>... the Iowa
Futures Market explore this in predicting interesting things such as the
outcome of political contests.
Any insights in FRIAM-land?
- Steve
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