The wit and wisdom of Cassandra has returned to the Internet.

Temporarily, at least…I see that she still has her notice that “you have reached a blog that has been disconnected or is no longer in service” up on the masthead. Maybe if we all clap our hands, she will stick around. It worked for Tinkerbell, after all.

The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.

–Joseph Schumpeter, 1942

Quoted here: the high price economy

Seen today in Madison on a grocery run.

Pretty damned ironic, that the Costa Concordia disaster happened almost exactly a hundred years after the Titanic. It’s not all that often these days that a European/American flagged passenger ship becomes a catastrophic loss to their insurance company – although it happens with dispiriting frequency to inter-island ferries in the Philippines and hardly any notice of it taken in Western newspapers. The contrasts and ironies just abound; fortunate that the Costa was so close to land that some passengers were able to swim to safety, and that rescue personnel were at the scene almost before the air-bubbles from the sunken half of the ship even popped to the surface.

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Somewhere buried in a comment here someone mentioned that Stefan Zweig wrote a book about Magellan. I have always loved reading about the famous explorers and with my new found interest in Zweig I had to have it. I went to Amazon and found a used copy for five bucks plus a little freight. The copy I received is a very early edition, as it has a picture of a nice boat on front of the style that Magellan used and the pages had that old book smell and feel.

To cut to the chase, this book is absolutely fantastic. Zweig is just so easy to read, it is almost like the guy is sitting across from you reading the book for you.

There are some spoilers below but not too many. If you don’t care for the spoilers, put this one on the top of your reading list. It is a breeezy three hundred pages or so and won’t take long to get through.
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Missed this by a couple of months….November 15, 2011, was the 40th anniversary of the Intel 4004, the world’s first microprocessor. The history of this extremely influential device provides an interesting case study in innovation.

Early computers were constructed out of discrete components, first vacuum tubes and later transistors. Early work on transistors was done at Bell Labs…one of the inventors, William Shockley, became dissatisfied with Bell’s management and left to start his own company, which he located in Palo Alto to be near his mother’s house. (If Shockley’s mom had lived in Roanoke, would the term “Silicon Valley” now refer to the Shenandoah valley!?)

Eight of the new company’s employees (“the traitorous eight”) in turn became unhappy with the way Shockley was running things, and left in 1957 to form Fairchild Semiconductor as a division of Fairchild Camera and Instrument. The integrated circuit, which allowed several transistors to be placed on a single chip, was independently invented at Fairchild and at Texas Instruments. Large numbers of these chips still had to be interconnected to form the central processing unit of a computer.
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Contact information is here.

My Congressman is Danny Davis. It appears that he has not announced a position. I left a polite message asking him to vote against SOPA.

My two Senators are Mark Kirk and Richard Durbin. Kirk has come out against PIPA. Bully for him. I contacted his office and registered my approval.

I called Sen. Durbin’s office, and the person on the phone gave a well-rehearsed explanation of why the Senator supports PIPA.

I suggest that Illinois residents continue to call Sen. Durbin, and if possible have good reasons why PIPA is no good.

He may shift if the volume of contacts is large enough.

Keep working on this, please.

Update: I note that this issue seems to be a genuine example of Left / Right opposition to a naked power grab by one element of the Politico-Big Business Complex.

It is similar to the sliver of overlap on the Venn Diagram between the Tea Party and the Occupy movement: The one thing everyone who is not already an insider is opposed to is Crony Capitalism. See this post.

Does the Main Adversary at last come into view?

One can hope.

Information on SOPA and PIPA here.

A magisterial post by Baseball Crank (via Rand Simberg):

There is general philosophical agreement among both Republicans and conservatives about all of this. Where the fault line lies is in exactly how far we are willing to go to do something about it. Many people who got into politics as good conservatives, and still think themselves good conservatives constrained by the limits of practical possibility, are at a loss when it comes to meaningful ways to tame Leviathan. For reasons, some good (the need to use political power to protect national security, preserve control of the courts and restrain regulatory overreach), some less so, they have thrown in the towel on the central issue of the day. That is who we speak of as the “Establishment.” Others – not always with a sense of proportion or possibility, but driven by the urgency of the cause – seek dramatic confrontations to prevent the menace of excessive spending from passing the tipping point where we can no longer save room for the private sector. They are the Outsiders, the ones challenging the system and its fundamental assumptions. The analogy of a Tea Party is an apt one: the Founding Fathers had much in common with the Tories of their day, but disagreed on a fundamental question, not of principle, but of practical politics: whether revolution was needed to protect their traditional rights as Englishmen from being eradicated by the growing encroachments of the British Crown. As it was then, the gulf between the two is the defining issue of today’s Republican Party and conservative movement.
 
In short, the real “Establishment” and “Outsider,” “anti-Establishment” or “Tea Party” factions are not about who is conservative or moderate, or who is inside or outside the Beltway or public office, or who has fancy degrees or a large readership/listenership or attends the right cocktail parties or churches, or even necessarily who has or has not supported various candidates. The term “Establishment” is used and abused in those contexts, but invariably describes only a division of passing significance. The real battle between the Establishment and the Outsiders is between those who urge significant changes in our spending patterns as a necessity to preserve the America we have known, and those who are unwilling to take that step. It is, in short, between those who are, and those who are not, willing to take action in the belief that the currently established structure of how public money is spent is unsustainable and must be fixed while it still can if we are not to lose by encroachments the all the other things Republicans and conservatives stand for.

Read the whole thing.

This video clip has appeared on other blogs but it’s worth posting again.
 

 
How fortunate the world was to have had both Margaret Thatcher and Ronald Reagan in office at the same time.
 

I heard on the way in to work this morning that Google was blacking out today in sympathy with Wikipedia, over the legislation currently working its way through the Democratic controlled Senate that supposedly will censor the internet. I haven’t had the time or energy to read what the actual legislation says, so I really don’t have a comment on that.

I checked over at Wikipedia and they are indeed blacked out.

So I went over to Google and as of this writing, their NAME is blacked out, but the search engine functionality is working the same as always. Oh huge stand Google.

I have been using Bing for a while now and it works just fine.

In a post about interest rates I wrote about being a little kid and over-hearing my grandfather (who was actually “grandfathered” in as a CPA because he was a practicing accountant before they had the exam) talk in the early 1980s saying that he thought interest rates “would never go below 10%”. At the time inflation was rampant (as Volker came in) and interest rates were in the 20% or so range, so this seemed like a valid observation. As we all know, interest rates have fallen to near-zero right now and even a “ceiling” of 10% (rather than a floor) seems far away.

Along the same lines, when I started in the energy business in the early 1990s, the “rule of thumb” of what a utility would pay for natural gas was about $2 / unit. The price would rise in the winter during the peak heating season and fall in the summer as utilities re-filled their storage, and it would vary around the $2 / unit mark, but not deviate too significantly. At the time there wasn’t a lot of vision forward on prices that I was aware of, but if you mentioned anything like the $14 / unit peak that was hit in 2005-6, you would have been laughed out of the room.

Today natural gas, propelled by innovation and “fracking”, has dropped to a price level that no one would have foreseen back in 2005-6. Per Bloomberg:

Supplies may reach a seasonal record of 2.4 trillion cubic feet in March, which is when heating demand usually ends and producers begin piping more gas into storage, Cooper said. Unless production falls or cold weather bolsters demand, prices will drop to $2.40 per million Btu, and perhaps below $2, as gas overflows storage caverns and clogs pipelines, he said.

To think that natural gas would return to 1990 price levels is amazing. Even using the government’s figures, which I think understate inflation dramatically, in the 21 years from 1990 to 2011, inflation makes the $2 in 1990 the equivalent of $3.51 today, per this inflation calculator.

What happened? Free enterprise and capital markets happened. Fracking and innovation allowed new natural gas deposits to be found in our country which brought forth huge reserves of US energy and drove down costs even while usage soared.

This low price for natural gas is not a short-term phenomenon. These reserves are significant and since natural gas is often found alongside oil, with oil at $100 / barrel the fact that natural gas is at a low price won’t impact it as much as you’d think because anything the driller gets is just profit on top of the huge profits for US sourced oil. The largest “threat” to low prices for natural gas in the US is actually the “high” price of natural gas overseas, because US drillers and pipelines can ship it to foreign countries in a liquefied (LNG) format if their high prices make it economical. Per this WSJ article:

(T)he current low natural gas prices are attracting market demand from around the world. There are already federal permits for 3 trillion cubic feet per year of natural gas exports, Apt said. “Will we export that bounty, and if we do, will that drive up U.S. prices,” he said. Natural gas sells for about $8 in Europe and $14 in Japan, but less than $4 here.

The real longer-term issue is whether other countries in Europe and Asia will also find large reserves of natural gas in shale just like they did in the US, and whether they will drill for it or avoid drilling out of environmental concerns. The French have already banned “fracking” but my (unproven) opinion is that this really says more about the power of the nuclear lobby in France, since the low price of natural gas has really been the final nail in the coffin of nuclear energy (along with the obvious issue of Japan) because it makes the plants un-economic to build. Likely the Ukrainians (smarting from Russia’s bullying over natural gas pricing), the Poles, and the Chinese will take up this technology in earnest and change the overall economics, even if countries like France are content to wait idly by.

As far as the US electricity industry, natural gas is causing coal plants to be mothballed or their owners to choose to not spend money on costly “scrubbers” to comply with EPA guidelines, changing the long term footprint of the US market. Since the nuclear boom was a “mirage” anyways (basically we will get a plant out of Southern Company and one in South Carolina, which won’t even keep up with likely decommissioning of units), this lower priced power is killing the market for new plants entirely.

For heavily indebted companies like Energy Futures Holdings (which bought up TXU assets in Texas), the low price of natural gas spells difficulties, since gas fired “peakers” set the “market price” for energy and with the price of gas at $2 / unit, not $8 or $10 / unit, they will make less money on their “base load” coal and nuclear plants which need to run all the time. Some of these utilities had a great summer in 2011 with high temperatures (especially in Texas) which helped to offset the increasing competitiveness of gas-fired generation.

The other key item to keep in mind is that when we buy US produced energy, we enrich our OWN country rather than sending wealth overseas, often to countries that despise us (and even if we don’t buy directly from Iran, the high cost of oil overall benefits them just the same whether or not we buy or someone else). The new innovative technologies have enormously benefited the United States, making us more competitive in business and reducing energy bills for tens of millions of households. And while energy companies do have “breaks” in the tax code to some extent, this innovation was not part of a government program and is in stark contrast to the failures of the Energy Department’s “research” and political backing of “green” energy which is likely to be a major campaign issue in 2012.

If only they’d unleash our oil companies in the US we would likely be able to dramatically increase our production and further reduce our dependence on foreign energy producers, while enriching our own country. The parable of natural gas is plain for all to see, which is that markets work if you let them, and that government intervention is usually far more harmful than inaction.

Cross posted at LITGM

I know that in Louisiana, they are trying to create a culinary demand for nutria, since the wretched beasts have outworn their welcome in the wetlands there. They were once imported from South America for their fur – but I have no idea why American grey squirrels were inflicted upon Great Britain. You’d think they had enough problems of their own without adding imported, fluffy-tailed tree rats to them … maybe it was payback for that fool who wished America to have every critter mentioned in Shakespeare.
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Watching some maven being interviewed on Fox. He said 21% of Democrats who voted for Obama in 2008 have since changed their party affiliation to Independent or Republican. What he didn’t say was that 40% of voters who have died since 2008 have changed their affiliation to Democrat. There is probably going to be a lot of cheating this year. I assume that one of the points of dropping the prosecution of the Philly Black Panthers was to let everyone know the coast is clear. Romney (I assume it will be he) is going to need big margins in the popular vote to win.

Of course no one is cocky on the Right nowadays, though the Romney campaign appears to be complacent. Maybe they will get their act together in time. Romney’s central flaw, other than his lack of political principles and his record in Massachusetts, is his personal decency. He is a nice guy and he is going to be up against thugs. Perhaps he can rise to the occasion and become more thuggish himself. We can hope.

Romney shouldn’t have run nasty ads attacking Gingrich, but Gingrich and Perry have behaved disgracefully in responding by attacking Romney over Bain Capital. Romney’s record at Bain is the best thing going for him. His defenses of free enterprise, in unguarded moments, have been very good. Yet Gingrich et al have made dishonest assertions about what Bain did, and about the private-equity industry, and by so doing have helped Obama (Gingrich’s self-serving rationalization that his attacks are preparation for the Obama onslaught to the contrary). Perry’s remarks about “vulture capital” were stupid. He and Gingrich remind me of Ann Coulter — quick to say things that harm their side but that benefit them personally. It’s no wonder that conservatives are said to be rallying to support Romney.

All of this makes me miss Herman Cain.

Of course in the general election I am going to vote enthusiastically for whichever one of these highly imperfect candidates will be running against Obama.

This is a new method for evaluating supermarkets. Instead of wasting time going into each store, comparing product selection, prices and so forth, we need only compare the quality of the stray chickens in the stores’ respective parking lots. You think I’m joking? See for yourself:
 

Publix parking lot

Costco parking lot

 
The data predict that Costco will be the superior store, and this prediction is consistent with the evidence. Our model thus has a perfect predictive record.

We could be onto something big here. Do the global-warming people know about this?

Chicago winters are hell on your shoes. Aside from protecting them with those rubber shoe protectors, you can either 1) shine them yourself 2) go to a shoe shine stand. Since my poor shine technique leaves them not much better off than being dirty, I usually try to rely on a shoe shine stand.

The problem is that it takes about 20 minutes or so of standing in line and then getting your shoes done to do this right. And I usually don’t have 20 minutes when I am thinking about my shoes and I happen to be somewhere where a shine is available. As a result, I am stuck with a few pairs of forlorn and nasty shoes in the closet.

Thus I had a brainstorm recently and decided to just take my shoes to my dry cleaner, since they can also send them off for a shoe shine. “Just a shine?” my dry cleaner asked in her Korean accent… she seemed a bit confused. Yes indeed, just a shine.

Since then I’ve taken in all my shoes and given them a new lease on life. I am certain that this seems like a big waste of money (it is $7) but that is not far from the price of a shine plus tip and this takes no extra time at all.

But what is time really worth? I talked about this to a friend of mine in the investment world who refinanced his house and spoke of the endless rounds of re-submitting the same or slightly different documents over and over again and answering (virtually the same) questions until it hurt. Did he even “break even” on the re-financing after this was all taken into account? If your job is by the clock / corporate your off hours aren’t worth much; but if your job involves planning and marketing yourself or thinking of new ideas / research in fact those hours can be quite valuable.

I think that a shoe shine at $7 with a time commitment of zero is a good deal, for me at least. What’s your time worth?

Cross posted at LITGM

…an interesting piece here.

A friend on facebook posted the video below and asked for comments:

I sent my friend the following email (proper names redacted):
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