Saturday, August 27, 2011

Stay Thirsty Is Favorite In Travers

ESPN:
The last two Preakness winners to have run in the Travers won the race. Three of the last four Belmont Stakes winners that competed in the Travers also were victorious.
The field for Saturday's 142nd Travers at Saratoga includes Preakness winner Shackleford and Belmont Stakes winner Ruler On Ice. But New York Racing Association linemaker Eric Donovan believes there are at least two other horses who the betting public will find more appealing.
Donovan installed Jim Dandy winner Stay Thirsty as the 5-2 morning-line favorite followed by Haskell winner Coil at 3-1 for Saturday's $1 million Travers, which drew a field of 10. Shackleford, who was beaten a neck by Coil as the 3-2 favorite in the Haskell, was made the 9-2 third choice followed by Ruler On Ice (6-1).
The King's Bishop Stakes and the Travers Stakes will be broadcast from Saratoga on NBC starting at 5.  Uncle Mo is running in the King's Bishop

Cotton Eye Joe

For the edification of the sister:

Grant To Help Redevelop Closed Packinghouse

Des Moines Register:
Sioux City will receive a $2 million federal grant to help with the redevelopment of the former John Morrell meat packing plant. The project is expected to spur $10 million in private investment and create 200 jobs, according to the U.S. Department of Commerce.
The Economic Development Administration grant will help the city redevelop the former meatpacking site to make way for a 65,000-square-foot production plant planned by Global Foods Processing, a longtime Sioux City employer that has about 175 existing workers.
Officials say the new facility will be a “technology-driven meat processing facility.”
The grant will help pay for demolition of existing building and improvements to access road, sewer and utility infrastructure, the federal agency says.
In March, EDA provided a $40,000 grant to Sioux City to support the development of a local economic planning strategy following the Morrell closure.
A technology-driven meat processing facility?  Is this primary processing?  I wonder how far off slaughterhouse robots are.  With the reliance on immigrant labor, sometimes without valid papers, I would guess it isn't too far off.

Images Of Cleveland, Part 2

More photos:
First, Terminal Tower and the KeyBank Tower, from the Lorain-Carnegie Bridge



Also from the bridge, Progressive Field and the east side bridge sculptures:



From the Terminal Tower observation deck:



Also, a couple pictures of the movie set at Public Square:




Finally, the Hyatt at the Cleveland Arcade, where I stayed:




Peak Oil And The Economy

A couple of interesting pieces:

Our Oil-Constrained Future, by Kevin Drum
and
Can we Grow the Economy any More, by Stuart Staniford.

Stuart's piece is following up on a previous post by Drum.  Stuart's piece gets into a number of interesting, but ultimately painful areas.  It goes toward the point I've felt, that our national standard-of-living (and the First World) differential versus the developing world is unsustainable, and will result in our standard-of-living decreasing relatively while the developing world's standard-of-living improves.  This assumes we don't hit a Malthusian-type limit to total growth, be that in resources, food supply, climate change or some other restraint.  Another possibility, well covered by Stuart and at Greed, Green and Grains, is civil unrest.  This decrease in standard-of-living, which I think is almost inevitable, will most likely bring instability here at home.  Likewise, food shortages will continue to bring unrest to the developing world.  We face a challenging future, and the time to begin to deal with it is now.

Canada Halts Trading In Sino-Forest

The NYT, via nc links:
Sino-Forest has been the subject of considerable controversy since June, when Muddy Waters Research issued a report by a short-seller, Carson Brock, that called the company a “multibillion-dollar Ponzi scheme” that was “accompanied by substantial theft.”
A reporter for The Globe and Mail of Toronto subsequently spent two weeks visiting various properties ostensibly owned or controlled by Sino-Forest and its subsidiaries. It proved to be a trek that frequently led him to nonexistent addresses and empty offices. Like Muddy Waters, the newspaper also found evidence that Sino-Forest had greatly inflated the size of its forestry assets.
After the accusations, Sino-Forest’s stock price tumbled and the hedge fund manager John Paulson, who had been one of the company’s largest shareholders, dumped his shares. His hedge fund, Paulson & Company, which had owned 35 million shares, is estimated to have lost nearly $500 million on Sino-Forest.
Neither Sino-Forest nor its public relations agency would provide comment about the order on Friday.
While Sino-Forest initially rejected the assessment of Muddy Waters and dismissed The Globe and Mail’s article, it did appoint a independent committee of directors to review the accusations. Earlier this month, it said that the review was taking longer than first anticipated because of, among other things, “challenges associated with the sourcing and verification of data in China.”
It is amazing how these Chinese frauds have been able to bamboozle so many major investors.

The Mysterious Death of Arturo Gatti

Chris Jones at Grantland:
But despite the best efforts of his still-loyal corner, the story of Gatti's death will probably always be incomplete. He was a great boxer because his fights were definitive; there was never much mystery about him in the ring. But his end wasn't nearly as plain. There are so many possibilities, but each of them leads only to impossibility. Answer after answer, and yet none feels true.
For the people who knew and loved Gatti — most especially his longtime manager, Pat Lynch, who funded Ciolino's investigation — his alleged suicide remains the greatest impossibility. In brutal fights against Micky Ward, against Ivan Robinson, against Wilson Rodriguez, Arturo Gatti never quit. He won fights despite broken hands and swollen eyes. His face opened with the frequency of doors, but he always pushed through, blind to the blood.
How could a man with that kind of heart ever choose to stop it?
Gatti was brutal to watch.  His fight against Tracy Harris Patterson amazed me.  He was pummelled throughout the early rounds, but managed to come back and win the fight.  A fight he participated in was selected by The Ring magazine as the fight of the year four different years.  The man was extremely tough.  I don't know what happened to him, but anytime he entered the ring, he showed amazing heart.

The Battle of Castlebar

August 27, 1798:
 Wolfe Tone's United Irish and French forces clash with the British Army in the Battle of Castlebar, part of the Irish Rebellion of 1798, resulting in the creation of the French puppet Republic of Connaught. The long-awaited French landing to assist the Irish revolution begun by Theobald Wolfe Tone's Society of United Irishmen had taken place five days previously on 22 August, when almost 1,100 troops under the command of General Jean Joseph Amable Humbert landed at Cill Chuimín Strand, County Mayo. Although the force was small, the remote location ensured an unopposed landing away from the tens of thousands of British soldiers concentrated in the east in Leinster, engaged in mopping up operations against remaining pockets of insurgents. The nearby town of Killala was quickly captured after a brief resistance by local yeomen; Just south, Ballina was taken two days later following the rout of a force of cavalry sent from the town to oppose the Irish march. Following the news of the French landing, Irish volunteers began to trickle into the French camp from all over Mayo.
The Lord Lieutenant of Ireland, Lord Cornwallis, requested urgent reinforcements from England but in the interim all available forces were concentrated at Castlebar under the command of General Gerard Lake, the victor of the Battle of Vinegar Hill. The build-up of the British forces at Castlebar had reached 6,000 soldiers with dozens of artillery pieces and huge caches of supplies by dawn of 27 August.
The British had barely completed their new deployment when the Franco-Irish army appeared outside the town at about 6.00 a.m. The newly sited British artillery opened up on the advancing French and Irish and cut them down in droves. French officers, however, quickly identified an area of scrub and undergrowth in a defile facing the centre of the artillery line which interfered with, and provided some cover from, the British line of fire. The French launched a bayonet charge, the ferocity and determination of which unnerved units of the militia stationed behind the artillery. The militia units began to waver before the French reached their lines and eventually turned in panic and fled the battlefield, abandoning the gunners and artillery. Some soldiers of the Longford and Kilkenny militias ran to join the republicans and even joined in the fighting against their former comrades. A unit of cavalry and British regular infantry attempted to stand and stem the tide of panic but were quickly overwhelmed.

Friday, August 26, 2011

Professors' Productivity

This story is for my friend the professor:
But some critics of the university say professors like Carter aren't teaching enough students, that they spend too much time in small classes, doing research or serving on committees. And with tuition rising faster than inflation, that's a luxury no one can afford.
David Guenthner: The top fifth of faculty in terms of teaching loads are teaching an average of about 318 students per year. The other 80 percent of faculty are teaching approximately 63 students a year.
That's David Guenthner of the Texas Public Policy Foundation. Its offices are in an unassuming bank building a few blocks from the state capitol. But the conservative think-tank is behind a growing movement to transform higher education in the state. Guenthner says if more professors taught more students, the university would need fewer teachers. And that would save millions of dollars that could offset tuition.
Now that he's out of the public sector, my friend the professor doesn't have to worry about this.  One former professor I know wasn't pulling his weight, Ohio Governor John Kasich:
As a candidate for governor, Republican John Kasich has called on colleges and universities to cut costs and force professors to teach more courses.
Yet for seven years Kasich served as a “presidential fellow” at his alma mater, Ohio State University, in a role that paid him the equivalent of about $4,000 per campus visit.
“It sounds like a perk program for a politician that we can’t afford,” said Matt Mayer of the Buckeye Institute, a conservative-leaning think tank that has posted government salaries in an online database.
Rob Nichols, Kasich’s campaign spokesman, said: “John was paid in alignment with what OSU thought his teaching was worth. They thought his work there was valuable — they kept asking him back.”
The job was among the many hats Kasich wore in the years after he left Congress in 2000. Although other politicians, including Republican Senate candidate Rob Portman, have taught courses at OSU for no cost, Kasich’s role paid him $50,000 a year.
Then-OSU President Brit Kirwin invited Kasich to serve as a fellow in August 2001. Starting with the 2002 winter quarter and ending last year, Kasich worked roughly one to five days a month — guest-lecturing in political science, economics, finance and psychology courses, posing a question of the month to first-year Mount Scholars, and serving as a panelist at banquets and forums.
Although I'd rather have him taking money as a nearly no-show prof than being governor.  Much less damaging to all involved.

Forever Young

As the season winds down, I'll play Pepsi's ad from a couple years back:

Chart of the Day

From the Dish:


Instead of looking at raising the age of Medicare, why aren't we looking at getting rid of private insurance to cut down costs for the private sector.  Send that money to an enlarged single-payer that covers everybody.  No, that would cut out too many middlemen and cut expenses for private employers.  And it would sound like socialism.  Or a national cooperative.  Where is the Farm Bureau of old?  Oh, that's right, sold out to big business.

Filling The Founder's Shoes

The Wall Street Journal looks at the transitions at Ford, Disney, Wal Mart and Microsoft, in light of Steve Jobs leaving Apple (h/t Ritholtz):
There are perils in every course. Disney got in trouble for hewing too close to its founder's vision. Wal-Mart is faulted now for veering too far from its founder's strategy.
The tension isn't limited to the U.S. Japan's Sony Corp. lost its market leadership in electronics after charismatic founder Akio Morita stepped down as chairman in 1994. By contrast, some of Honda Motor Co.'s most innovative vehicles—and greatest market successes—came after founder Soichiro Honda retired in 1973.
Students of leadership say the companies that navigate the transition most successfully are those that embed the founder's values in the organization and groom multiple generations of leaders.
"The difference between a cult and a religion is that one outlasts the founder," said Harvard Business School professor Rakesh Khurana, who has written extensively about CEO succession.
Strong leaders can help, but Mr. Khurana offers a sober outlook. "Most firms don't survive," he said. "In tech in particular, it's like watching fruit flies."
It is a very fascinating dynamic.  I kind of like the line about the difference between a cult and a religion, although my comparison of the Republican party to a cult is more about their enforcement of dogma than whether they have a single charismatic leader.  Apple lovers are nearly a cult already, so it may well bloom into religion.

Why We Can't Return To The Gold Standard

Barry Eichengreen (h/t the Dish):
BUT TO invoke the wisdom of Herman Cain, returning to the gold standard would be more difficult than practical. Envisioning a statute requiring the Federal Reserve to redeem its notes for fixed amounts of specie is easy, but deciding what that fixed amount should be is hard. Set the price too high and there will be large amounts of gold-backed currency chasing limited supplies of goods and services. The new gold standard will then become an engine of precisely the inflation that its proponents abhor. But set the price too low, and the result will be deflation, which is not exactly a healthy state for an economy.
Given the inflation-phobic nature of gold­-standard proponents, deflation would seem to be the more likely scenario. In response, we are counseled not to worry. In End the Fed Paul describes how the United States returned to the gold standard in 1879 after a two-decades-long hiatus caused by the Civil War. Resumption, as this decision was known, pegged the price of gold at levels lower than during wartime, leading to an extended period of deflation. If we could do it then, the implication follows, we can do it now.
Then again, there are some things you don’t want to try at home. The distributional effects of deflation are no happier than those of inflation. In this case it is debtors with obligations fixed in nominal terms, rather than creditors with assets fixed in nominal terms, who are unable to protect themselves. The populist revolt of the 1880s was stoked by farmers with fixed mortgages who labored under growing debt burdens and financial distress as a result of falling crop prices. Nor is deflation likely to support robust economic growth, as any close observer of the Japanese economy will tell you. Because nominal interest rates are not easily reduced below zero, the faster the price level falls, the higher will be the real interest rate (the real cost of borrowing and investing). The robust investment and job creation prized by the gold standard’s champions and the deflation they foresee are not easily reconciled, in other words.
Proponents of the gold standard thus face a Goldilocks problem: the porridge must be neither too hot nor too cold but just right. What temperature exactly, pray tell, might that be? And even if we are lucky enough to get it right at the outset, consider what happens subsequently. As the economy grows, the price level will have to fall. The same amount of gold-backed currency has to support a growing volume of transactions, something it can do only if the prices are lower, unless the supply of new gold by the mining industry magically rises at the same rate as the output of other goods and services. If not, prices go down, and real interest rates become higher. Investment becomes more expensive, rendering job creation more difficult all over again.
Under a true gold standard, moreover, the Fed would have little ability to act as a lender of last resort to the banking and financial system. The kind of liquidity injections it made to prevent the financial system from collapsing in the autumn of 2008 would become impossible because it could provide additional credit only if it somehow came into possession of additional gold. Given the fragility of banks and financial markets, this would seem a recipe for disaster. Its proponents paint the gold standard as a guarantee of financial stability; in practice, it would be precisely the opposite.
It's just not going to work.  Why this is such a hot topic amongst the Republicans, the party of business, I don't understand.  Nothing like grinding deflation to crush a nearly already depression-bound economy.  The Republican party needs to become much more pragmatic, and much less fundamentalist, whether that is Christian, free market or both. 

Images Of Cleveland-Part 1

Some of the things I saw in Cleveland last weekend.  First, a couple of pictures of the Arcelor Mittal steel mill complex (formerly Republic Steel and Jones & Laughlin, both later became LTV Steel):




Then, a view of the Terminal Tower:


Next, a couple pictures of the Great Lakes Brewery, which I toured, and hung out in the restaurant they run next door:





I got to try a few of their beers which I had never had before, the Wright Pils, the Cellar Dweller and the Big Black Smoke.  They were all very good.

Lord Of The Flies Revisited

David McRaney with a great post, via the Big Picture:
In 1954, in eastern Oklahoma, two tribes of children nearly killed each other.
The neighboring tribes were unaware of each other’s existence. Separately, they lived among nature, played games, constructed shelters, prepared food – they knew peace. Each culture developed its own norms and rules of conduct. Each culture arrived at novel solutions to survival-critical problems. Each culture named the creeks and rocks and dangerous places, and those names were known to all. They helped each other and watched out for the well-being of the tribal members.
Scientists stood by, watchful, scribbling notes and whispering. Much nodding and squinting took place as the tribes granted to anthropology and psychology a wealth of data about how people build and maintain groups, how hierarchies are established and preserved. They wondered, the scientists, what would happen if these two groups were to meet.
These two tribes consisted of 22 boys, ages 11 and 12, whom psychologist Muzafer Sherif brought together at Oklahoma’s Robber’s Cave State Park. He and his team placed the two groups on separate buses and drove them to a Boy Scout Camp inside the park – the sort with cabins and caves and thick wilderness. At the park, the scientists put the boys into separate sides of the camp about a half-mile apart and kept secret the existence and location of the other group. The boys didn’t know each other beforehand, and Sherif believed putting them into a new environment away from their familiar cultures would encourage them to create a new culture from scratch.
He was right, but as those cultures formed and met something sinister presented itself.
The whole anecdote is great, and he expands the idea in an interesting direction.  Well worth the read.

Thursday, August 25, 2011

Another Reason I Won't Live In The South

I bet they wouldn't support praying the Hail Mary.

Just Think Of Factory Farms As Cities For Livestock

James McWilliams, criticizing production agriculture:
But I think Bill misses a critical point. True, even without subsidies, there might indeed be economic advantages to raising animals under intensive conditions. But we should never fail to overlook the psychological implications of something as emotionally charged as killing animals for food. And when it comes to this endeavor, scale and density of production accomplishes something essential for all factory farming: it severs the emotional bond between farmers and animals. In the bluntest terms, it allows my friend Bill to kill thousands of animals a year and remain a happy person.

Understanding this phenomenon requires going back to the nineteenth century. Before 1850, when most animal husbandry happened on a relatively small scale, farmers viewed their animals as animals. That is, they saw them as sentient beings with unique needs that, left unaddressed, would result in an inferior product. Agricultural manuals from the time routinely instructed farmers to speak to their animals in pleasant tones of voice, to make sure that their bedding was soft and spacious, and to shower them with affection every day. Farmers never referred to their animals as objects. They knew better.

The reason they knew better was because the system of mixed pastoralism they practiced was defined by close physical proximity. This intimacy ensured that farmers interacted daily with their animals, developing an emotional sense of their individual personalities and quirks. The personal scale of animal husbandry made the slaughter—which farmers also tended to do themselves—a solemn occasion at best. No normal person, even on the hardest settlement frontier, would have been indifferent about killing an animal he spent years nurturing. Nobody could have doubted that he was taking the life of a sentient being with wants and needs.

After 1850, things changed. American agriculture fell into the grip of scientific farming. Agricultural scientists, followed by farmers, began to conceptualize farming as a strictly quantifiable venture. Beginning with plants, and then moving to animals, they became less concerned with individual idiosyncrasies and more concerned with collective evaluations of productivity.
I think lots of farmers in the 1850s would have raised thousands of animals for slaughter if they could have fed them:
No normal person, even on the hardest settlement frontier, would have been indifferent about killing an animal he spent years nurturing. Nobody could have doubted that he was taking the life of a sentient being with wants and needs.
Think about that.  The same frontier farmer who wanted the government to kill all the Indians, didn't want to kill an animal he spent years nurturing.  The same Southerner who kept slaves didn't want to butcher a hog.  Sure, farmers often got attached to their breeding stock and their draft animals, because they kept them around for a long time.  But most of the litter of pigs got butchered or sold to butchers.  If feed got low in the winter, one of those cows would have to go. 

I personally am ambivalent at best when it comes to battery cages, gestation crates and veal crates.  But in a world of nearly 7 billion people, either you don't have meat, or you raise it in an industrial manner.  I feel kind of bad about shooting the raccoons who eat my chickens sometimes, but I do it anyway.  I question a world where people buy health insurance for their pets, but are opposed to subsidies to pay for health insurance for poor people.  Anyway, I digress.

I'll take a stab at what made people different in the 1870s than they were in the 1850s.  I don't think it was agricultural scientists leading folks to making people hard-hearted, I think it was the Civil War.

The Kings of LEED

Kaid Benfield:
As this post is published, I am on vacation in Victoria, British Columbia, a wonderful city that -- among other good things -- is home to Dockside Green, which some people are calling the greenest development in the world.
At least with respect to new, highly urban developments-in-progress, they may have a case to make. For starters, when NRDC, the US Green Building Council, and the Congress for the New Urbanism first announced the LEED for Neighborhood Development pilot program to honor smart growth, the developers of Dockside Green made a point of being the program's very first applicant. It has since earned a platinum rating under LEED-ND.
Moreover, its two completed residential phases have also earned platinum ratings under the LEED green building programs, in one case setting a new world record for the highest LEED building score ever achieved and in the second case tying their own record. Its completed commercial phase has also earned, you guessed it, a platinum rating.
This is a very interesting brownfield redevelopment.  Some of the efficiency projects are better for scoring LEED points than being cost effective, but if people are going to blow a bunch of money on fancy housing, energy-efficient housing is better than the alternative.

Mr. Obvious Story of the Day



Big houses overcome appliance efficiency:
And how has energy use changed over time? As the second chart below illustrates, our appliances have become more efficient over the past 20 years. Air conditioners, for instance, which account for a particularly large fraction of summer electricity bills, are getting sleeker. Overall, we’re using less energy per square foot. But that’s been counteracted by the fact that houses and apartments in the United States have kept getting bigger, which means that overall energy use continues to climb.
Anyway, the wasteful building of bigger and bigger crap shacks will haunt us for a long time.  I just avoid heating and cooling my home as much as possible.  Problem solved, sort of.

Commodity Demand

Via the Big Picture:


Also, he linked to a Cleveland Fed publication on the impacts of food and energy price increases.

Is The Era Of Personal Transportation Almost Over?

I would say, to some extent, yes.  I think we'll need to cut down on vehicle miles in the near future.  Here's Brad Plumer on the future of vehicles, after the world passed the one billion vehicle mark:
What’s stunning is how far countries like China and India still have to go. Right now, there’s one car in China for every 17.2 people, compared with one car for every 1.3 people in the United States. If China caught up to the U.S. ownership rate, the country would field a billion vehicles all by itself. And car ownership in China would have surged even faster had the country not recently scrapped a series of auto subsidies last year.
So where is this all heading? According to the International Transport Forum, the global vehicle population could reach 2.5 billion by 2050. Daniel Sperling, a professor at UC Davis’s Institute of Transportation Studies, put out a useful presentation last year running through what that two billion cars would mean. Take energy: Right now, the world produces about 87 million barrels of oil per day, and most of that comes from conventional sources. A world with two billion—or more—cars will likely require boosting that to 120 million barrels per day or beyond, Sperling argues. And, given that production from conventional wells is expected to flatten in the coming decades, getting to that level will mean relying on unconventional sources like the tar sands in Alberta.
Marketplace was talking about Chinese auto sales yesterday.  If China continues to buy vehicles rapidly, oil supplies will come under unprecedented strain.  We should have heeded the warnings when U.S. oil production peaked in 1971, but we are extremely lazy and very slow learners.  A good portion of our economic problems, both within households, and nationally, can be traced to the increase in transportation costs as we've required more imported oil.  They also featured a story on the demand for petroleum engineers.  One girl working on her doctorate pointed out how our whole way of life depends on oil.  We have constructed our living environment to revolve around automobiles, and the future will be tough because of it.  She's planning on cashing in on our dependence.  Based on past history, she's making a decent bet for the near term.  Long-term, the future is in other fields.

Chart Of The Day

Via the Dish:


I know that nothing burns up your average white person more than a suggestion of racism, but can anyone look at this map and not see at least some connection to affinity for the Confederate cause.  West Virginian and Virginia are the only exceptions.  I would posit that cost of living might have some impact on the map, except I don't expect an extremely high cost of living in North Dakota.  Many of the 10 to 20% states might be really close to 20%, while many of the 20 to 30% states might be really close to 21%, but I still see some kind of pattern here. 

CDS Warning Signs?

The Telegraph, via nc links:
Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender's bonds against default is now £343,540.
The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.
"The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive.
"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank.
The level of market uncertainty is astounding.  I get a bad feeling that we might see commodity price drops right before harvest, even though we are going to have a short crop, and major carryover issues and food price increases next year.  Things may get pretty ugly.

Kass: Kill The Quants

Doug Kass looks at the recent volatility in the market (via the Big Picture):
Here we go again.
Those quantitative, high-frequency traders that utilize computer programs to focus on price-momentum-based trading "strategies" and the uber leveraged ETFs have retaken control of the wheel.
Neither strategies nor vehicles have any redeeming social and/or economic value. Indeed, one can argue that their influence on the market's volatility is contributing to the negative feedback loop that is threatening our domestic economy's growth trajectory.
They were back in force on Tuesday afternoon, when the DJIA advanced sharply from being up by about 150 points at midafternoon to closing with a gain of over 300 points by day's-end.
Computers don't sleep, don't get tired, don't care about politics or fundamentals and don't vacation in late August in the Hamptons or on the Jersey Shore -- they just wreak havoc on our marketplace by amplifying moves on the downside and on the upside (as they did in the last hour of trading yesterday).
Over the last two hours of trading yesterday, I polled numerous sell-side institutional desks and a number of sizeable high-net-worth brokers, and none of them had any meaningful individual buy orders during the late afternoon that could account for the sharp market advance. By contrast, my contacts in the high-frequency-trading community were on trading overload after 2:00 p.m. EDT, as the quants dominated the market's trading activity (almost all on the "buy side").
I think that each of these massive moves on the markets in the late afternoon is program trading.  Kass estimates that 3/4 of trading currently is high-frequency traders.  It isn't investing, it's playing in a rigged game.  These mathematicians should get some real jobs that contribute positively to society, not find ways to steal from normal folks.

Rain Update

Three-quarters of a tenth of an inch overnight.  Very slightly better than zero. Very slightly.

Wednesday, August 24, 2011

Chavez Wants To Move Venezuelan Gold Home

All Things Considered:
Venezuela's president Hugo Chavez has announced that he wants all of the country's holdings in gold to be physically transferred to his country. That's more than $12 billion worth of gold. And the prospects for shipping it fill our heads with all kinds of James Bond-ish ideas.
Well, Jack Farchy wrote about this for the Financial Times. And, Jack, we're talking about 211 tons of Venezuelan gold. Where is it exactly?
JACK FARCHY: Well, most of it is in the U.K., in the Bank of England vault. There's also a little bit in the U.S. and in Canada.
BLOCK: And it's stored exactly how? I mean, what form does this gold take?
FARCHY: Well, it comes in 400-ounce bars, which is the standard, what's called good delivery bar, which is the standard unit of physical gold trading in the London market which is the center of the global gold market. So that 211 tons is something like 17,000 400-ounce bars.
BLOCK: OK. So, if Hugo Chavez wants to get the 17,000 bars of gold into Venezuela, how do they do that? How does it get there?
FARCHY: Well, the real challenge is one of insurance, because the issue is not so much weight. Two hundred tons is not - it's heavy but it's not huge amounts of cargo especially to move. The issue is, at today's gold price which is a new record, as it seems to be every day these days, it's worth almost $13 billion.
That is a damn large amount of gold to be hauling around.  If Chavez were smart, he'd dump it on the market and crush the price down.  Gold is pointless as an investment.

Republicans Really Like Idiots

Joe the Plumber is being recruited to run for Congress:
Samuel Joseph Wurzelbacher, the Ohio resident who rose to prominence during the 2008 presidential cycle as "Joe the Plumber" and later served as a war correspondent, is now considering a run for Congress - and national Republicans appear to be on board.


Wurzelbacher would challenge longtime Democratic Rep. Marcy Kaptur, who represents Ohio's 9th congressional district, an area that includes Toledo. Jon Stainbrook, chairman of the Lucas County Republican Party, told the Toledo Blade that there exists a "high-level interest in the national Republican Party" in a Wurzelbacher candidacy, adding: "We are encouraging Joe to run."

For Republicans, a large part of the appeal of a Wurzelbacher candidacy is his name recognition and the fundraising potential that comes with it. The everyman appeal that prompted the McCain campaign to latch onto Wurzelbacher after he confronted then-candidate Barack Obama over his tax plan at a campaign event, meanwhile, certainly won't hurt. (Mr. Obama told Wurzelbacher he wanted to "spread the wealth," a phrase that Republicans would repeatedly cite to criticize the Democratic nominee.)

Kaptur's district is heavily Democratic, but that could change after redistricting is finalized in the wake of the 2010 census. Wurzelbacher, who has been on the speaker circuit, is likely waiting to see how the district lines shake out before making a decision. 
I swear, why would anybody vote for that guy?  What the hell has he done, other than ask Obama why Obama was going to raise taxes on him?  Turns out, he wouldn't have ever paid higher taxes if he didn't become a damn wingnut celebrity.  The man is stupid, and he'll get crushed by Marcy Kaptur if he runs, that's my prediction.

Man Visits Every D-1 Football Stadium

Frank Deford highlights him on Morning Edition:
On Nov. 13, 1954, young Dick Wessels, a high school sophomore, went to a football game at Purdue. Fifty-six years and 264 days later, on Aug. 4, 2011, Richard H. Wessels, a labor lawyer from Geneva, Ill., arrived at Bulldog Stadium, home field for Fresno State. He had done it. Wessels had visited the stadiums of all 121 Division I college football teams.
I mean, sports fans tend to like to collect stuff. I've heard of fans going to all major league parks. I've met people who spend their time going to sports halls of fame. Autographs, cards, et cetera, et cetera, et cetera. But 56 years and change to go to 121 stadiums, from Massachusetts to Hawaii –– this takes the cake.
"I'm a quester," Dick Wessels says. "I'm a leaf blowing in the wind."
Think of it. Places like Boise State, which The Quester visited on July 26 on what he calls "my last push," didn't exist as a four-year school when he began his pilgrimage. Usually, too, he must travel alone. His wife, he says, thinks he's a fine fellow but nuts in this one particular territory.
Nonetheless, if Wessels hits the highways and byways all by his lonesome, he finds plenty of company. Athletic directors, fascinated by his quest, often personally escort him around their stadiums. He's part owner of a minor-league baseball team, the Kane County Cougars, so, in season, he usually goes to a minor league game at night.
And, he also loves opera, so, on the pigskin path, he seeks that out, too. During his final climb to the college football summit –– Washington State, Idaho, Boise, Nevada-Reno, San Jose State, Fresno –– Wessels diverted to Denver and saw five operas. Yes, "Buckle Down, Winsocki" one day, "Un bel di" the next.
Now he says he might try to visit all the minor league baseball parks.  I could go for the college football and the minor league ballgames, but I think I'll pass on the opera.

Giamatti Bans Pete Rose From Baseball


August 24, 1989:
 Cincinnati Reds manager Pete Rose is banned from baseball for gambling by Commissioner A. Bartlett Giamatti.
Giamatti died eight days later at the age of 54.  Pete Rose is still alive, and still banned from baseball.

More On Texas And Regulations

Richard Green on the Texas economy, via Mark Thoma:
So why is Texas doing well?  First, it has managed to maintain its state and local government spending far better than most other states, and has not had the negative stimulus arising from massive layoffs. Over the past decade, government job growth in Texas has outpaced private sector job growth by about 2 to 1.

Second, Texas has among the most stringent consumer protection laws in finance in the country--likely arising from a long-standing Western mistrust of bankers.  As a consequents, consumers were essentially forbidden from using their homes as piggy banks.  As Mike Konczal shows, this means Texans have far less debt to pay off (it also shows how we in California are still in the soup).  So "heavy-handed" regulation helped keep Texas out of trouble.

Finally, it is simply easier to develop everything in Texas--housing, businesses, etc.  This is the one part of the conservative view of Texas that I buy--as one Los Angeles planner said to me, it takes 18 months in LA to do what it takes six weeks to do in Dallas.  LA doesn't even have by-right zoning.  It is here where I think Texas has an enormous advantage for business development over California.

That said, California has a greater share of people with BA's than Texas.  Part of the reason why may be that well-educated people, who can afford to live in a place that takes environmental protection seriously, do so.    There is actually some good reason for California's stringent environmental rules--the air quality here, while much better than it used to be, is still not good enough.  Of the ten cities with the worst air quality in the country, six are in California.  But the cities with the worst air quality outside of California are Houston and Dallas; someday voters in those cities are going to demand better.  I do think California can do a better job of protecting its environment while making business development easier, but that is the subject of another post.
Of all the regulatory issues, land use issues play a big part.  Heck, two developments in our area have been held up for years by neighbors overturning the zoning by referendum (one 12 times).  I can see a state growing extremely rapidly, if very haphazardly, if they have very weak zoning requirements.

Tuesday, August 23, 2011

Rick Perry And Campaign Science

I couldn't believe it, Rick Perry and science in the same sentence.  From the NYT, via the Big Picture:
But given the interest in Rick Perry, the Texas governor and new Republican presidential candidate, the portion of “The Victory Lab” about Mr. Perry will be published on Tuesday as an electronic book, “Rick Perry and His Eggheads: Inside the Brainiest Political Operation in America.” Mr. Issenberg is also the author of “The Sushi Economy.” An e-mail exchange between Mr. Issenberg and me — slightly condensed — follows:
Q: What makes Rick Perry’s approach to politics different from that of other candidates?
Mr. Issenberg: No candidate has ever presided over a political operation so skeptical about the effectiveness of basic campaign tools and so committed to using social-science methods to rigorously test them.
As the 2006 election season approached, the governor’s top strategist, Dave Carney, invited four political scientists into Perry’s war room and asked them to impose experimental controls on any aspect of the campaign budget that they could randomize and measure. Over the course of that year, the eggheads, as they were known within the campaign, ran experiments testing the effectiveness of all the things that political consultants do reflexively and we take for granted: candidate appearances, TV ads, robocalls, direct mail. These were basically the political world’s version of randomized drug trials, which had been used by academics but never from within a large-scale partisan campaign.
He must have some brainier guys running his campaign, because he seems like a dumber George W. Bush.  Maybe I'm wrong, but he doesn't seem very bright.

Stephan Roach: Debt Jubilee Needed

From Edward Harrison, via nc links:
On CNBC today, Stephen Roach of Morgan Stanley says, we need “ways to forgive the excesses of mortgage, installment and revolving credit, as what was done in the 1930s, that will help consumers get through the pain of deleveraging sooner rather than later.” There are four ways to reduce real debt burdens:
  1. by paying down debts via accumulated savings.
  2. by inflating away the value of money.
  3. by reneging in part or full on the promise to repay by defaulting
  4. by reneging in part on the promise to repay through debt forgiveness
Listening to Roach explain the conundrum of high unemployment and poor wage gains, juxtaposed with high debt, it is clear he recognizes there is zero chance that consumers will be able to support the kind of economic growth via deleveraging and accumulating savings that avoids a deflationary outcome. The macro backdrop for consumers is deflationary.
Consumer deleveraging, along with government budget cuts equals major pain.  There may well have to be major debt forgiveness of consumers to get out of this mess.  That could be voluntary on the part of creditors, or debts may be removed through default, forclosure and bankruptcy.  First on the list should be the home equity loans which will never get paid back.  That might wipe out the four major TBTF banks, but so be it. 

The Avengers Begin Filming At Terminal Tower

Plain Dealer:
Hordes of extras ran screaming out of Terminal Tower and onto Public Square Monday night --- several times. Filming of "The Avengers" movie moved from East Ninth Street to Public Square, which has been transformed into a modern-day beer garden in Stuttgart, Germany, complete with German flags and street signs.
Hundreds of excited onlookers, hoping to catch a glimpse of the action or one of the stars, gathered to watch as night fell and Public Square lit up with spotlights and neon.
At 11:15, those still there were rewarded when Tom Hiddleston, the actor playing the Norse god of mischief Loki, Thor's half brother, appeared outside Terminal Tower in gleaming gold armor and a long hooked lance. With him later was Joss Whedon, the director of the movie, going over the scene.
The rehearsal of screaming extras only added to the thrill of being near the set.
This was the set they were building on Saturday when I was up there:

Add captionThere's a new light on Public Square, a mock-up of a German opera house called SchlossPlatz, at the site of the former Higbee's Department Store. But it's only here for the filming of "The Avengers" movie downtown. (from Plain Dealer)

Texas Drought Update

Marketplace on Texas agriculture and the drought:
Only six-and-half inches of rain have fallen in Texas since last July.
Pacatte: Our diesel bills that run the irrigation pumps are what we're judging it by. And they're at least three times, if not maybe four times, what they were last year.
Last week, economists estimated the drought cost farmers and ranchers $5.2 billion since November. Some agricultural experts advise ranchers to move livestock up north temporarily to greener pasture. Or ranchers can sell out and try again after the drought.
Dr. David Anderson is a livestock economist at Texas A&M University.
David Anderson: For every cow that a rancher is forced to sell, you know that cow is not going to have a calf next year. That calf won't become a steak 20 months after that. One of the things we will see is certainly some reduced supplies and higher prices on the meat side of things.
Only 6 and a half inches since last July.  That hurts.  It can't be good for the Ogallala Aquifer to have such a dry year. 

Monday, August 22, 2011

World Resources

At Awesome Infographics (h/t Ritholtz):


Vacation and Work

I made a quick one-day trip up to Cleveland this weekend.  I didn't realize they were filming The Avengers in Cleveland.  When I arrived, there were trucks and people all around Terminal Tower.  Crews were placing a giant neon sign with German text on the Higbee's Building.  The Plain Dealer had a photograph of Thor fighting somebody in a Cleveland Street.  I also didn't realize that the new casino was going into the Higbee's Building.  I'll post some photos from the trip, but first I have to go to my new part-time job which entails keeping up on EPA submittals.  I guess I'll discover if my hypothesis that EPA regulations are not ridiculously cumbersome will prove to be correct or not.

The Infrastructure Sell-Off

Michael Hudson claims banks are intentionally pushing cities and states toward selling infrastructure to close budget gaps:
Banks report winnings in the derivatives trade day after day, with nary a loss – an indication of how poorly their hapless customers and other outsiders must be doing! So the path of least resistance for most cities and states is to cut back spending on public services, and above all on pension plan contributions.
The ultimate sacrifice (and the aim of financial predators) is to sell off public land and buildings, roads and other transportation services, sewer systems and other basic infrastructure. In this aim, the investment bankers are being aided and abetted by the credit ratings industry, threatening to downgrade cities that do not sell off their public domain. In this respect the financial end-game of privatization is similar in the United States to pressures by the European Central Bank to force the indebted PIIGS economies to engage in privatization sell-offs, Third World and post-Soviet style.
Just as in Europe, when revenues are squeezed and something must give – either debt service, payment to pensioners or current payments to labor – the financial sector is seeking to take all the available surplus for itself. This puts creditors in the forefront of today’s class war against labor.
On the eve of the September 2008 financial crash, cities such as Birmingham, Alabama and Chicago already were looking for ways to cope with the fiscal squeeze imposed by political pressures from the major local campaign contributors – the real estate and banking sectors – to cut property taxes. One seeming path of little resistance was to gamble in the Wall Street financial casino, hoping to make easy gains rather than making landlords, wage earners or consumers pay higher taxes.

I don't know who is encouraging John Kasich to sell-off Ohio's infrastructure, but he is going to for sure.  Ohioans will end up paying much more for things the government used to own or operate, the employees will be paid less, and profits will go out of state.  Woo hoo, that is some bold leadership.  Or change leadership to theft.