Saturday, March 31, 2012

America's Dead Sea


America's Dead Sea from Jim Lo Scalzo on Vimeo.

Deep in the desert of southern California sits one of the worst environmental sites in America—a former tourist destination that has turned into a toxic soup: the Salton Sea.

The sea was born by accident 100 years ago, when the Colorado River breached an irrigation canal; for the next two years the entire volume of the river flowed into the Salton Sink, one of the lowest places on Earth. The new lake became a major tourist attraction, with resort towns springing up along its shores. Yet with no outflow, and with agricultural runoff serving as its only inflow, the sea’s waters grew increasingly toxic. Farm chemicals and ever-increasing salinity caused massive fish and bird die-offs. Use of the sea for recreational activities plummeted, and by the 1980s its tourist towns were all but abandoned.

The skeletons of these structures are still there; ghost towns encrusted in salt. California officials acknowledge that if billions of dollars are not spent to save it, the sea could shrink another 60 percent in the next 20 years, exposing soil contaminated with arsenic and other cancerous chemicals to strong winds. Should that dust become airborne, it would blow across much of southern California, creating an environmental calamity.

Chart of the Day

From Stuart Staniford:


Maybe I'll be proven wrong, but I think North Dakota production is somewhat of a flash in the pan, and that crude production increase won't continue for too long.  We really need to plan for the day when we won't have all the oil we do today.

Interview With A Goon

Davy Rothbart interviews career hockey goon Doug Smith, whose autobiography is now a movie:
I got onto a summer rec league in 1988 where you just pay a few bucks and sign up. The coach knew that I was a horrible hockey player but that I was trying to have fun and learn how to play. He didn't know I had a bit of a secret agenda: I was not only trying to learn to skate at a higher level but also looking for opportunities to square off with someone. I wanted to learn how to keep my balance in a fight. That was one thing Adam couldn't teach me. We'd spar on skates day after day, but there's nothing like the real thing. In summer hockey, though, it didn't take too long to find opponents willing to brawl.
An actual NHL scout was watching these summer leagues and after our last game, he approached me and said, "Smitty, I've watched you all summer. You're one of the worst skaters I've ever seen but you're a helluva fighter. I might be able to help you out. I know a team that could use you." This gentleman made a phone call to a coach he knew, and before I knew it, I was heading down to North Carolina for a tryout with the Carolina Thunderbirds of the East Coast Hockey League.
The whole thing is worth the read, it is hilarious.

Barry Ritholtz FiveBooks Interview

Barry Ritholtz lists 5 books to explain the financial crisis in a FiveBooks interview at the Browser.  Here's his explanation of how Bernanke got buffaloed by Jamie Dimon on the Bear Stearns deal:
No, no. Here’s what happened. Jamie Dimon [the chief executive of JP Morgan] completely outplayed Ben Bernanke. Dimon went to Bernanke and said, “Look, we’re a counterparty with Bear Stearns, we could probably absorb them – but why should we step up? Normally we wouldn’t do this in a shotgun wedding, it would take a year to negotiate. I have a weekend to make this decision, so you have to guarantee $29bn of losses.” And the Fed did that.
If I had been the Fed chief, I would have said: “Let me explain this to you, Jamie. I know the history of JP Morgan” (Everybody thinks Dimon is this genius who avoided the subprime situation, but that’s actually not true. They just ran into their subprime problem way earlier than everybody else, so when they had to liquidate, there was a bid there.) “I’m looking at the derivative book of Bear Stearns. It’s $8 trillion and you’re the single biggest counterparty. So if they go down, it’s your problem. So here is what I am willing to do. When you go into receivership, I’ll promise not to put you in jail! If you want to buy them, buy them. If you don’t want to buy them, we’re going to put them into a pre-packaged bankruptcy and if it ultimately causes JP Morgan to go bankrupt, well, put it this way, this is your opportunity to avoid it. So take a walk once around the park, and have a good think. As Fed chair, I have no problem testifying that I suggested you buy Bear Stearns because, if you didn’t, it really looked like they were going to blow up JP Morgan – and good luck with the shareholder lawsuits for the rest of your life.”
Instead, Dimon outplayed Bernanke. Bernanke is an academic, he was learning on the job. When the head of one of America’s biggest banks says “I’ll save your bacon, but you’ve got to do this for me...” He didn’t know better. Even at the time, a lot of people, including me, said, “This is outrageous for the Fed to give $29bn to JP Morgan to buy Bear Stearns.”
Unfortunately, it went the way it did.

California Farmers' Water Allowances Cut

WSJ, via Big Picture Agriculture:
Amid an unusually dry winter, managers of the federal Central Valley Project, which delivers mountain water for agriculture, late last month announced an initial reduction in farmers' water allowance for this year to 30% of the allotment in the driest southern reaches of the valley, down from 85% last year. Now farmers and local agriculture officials are taking in the economic impact they face.
Officials of the 614,000-acre Westlands Water District, near Fresno, say farmers there are expected to leave tens of thousands of acres fallow, only a year after California experienced one of its wettest winters on record.
"Being a farmer in California is worse than going to Las Vegas," said Mark Borba, as he inspected a barren field he may leave without crops this year because of the water reductions. Mr. Borba, co-owner of Borba Farms, which gets water from the district, expects to reduce his cotton crop by 38% to 1,480 acres from 2,400 last year.
The Central Valley, which is 450 miles long and about 50 miles wide, is home to most of California's agriculture industry. With much of the valley semi-arid, farms there for decades have depended on irrigated water from the Northern California mountains, but those supplies have long been subject to sharp fluctuations. Environmental regulations have made the water supplies from year to year even more unpredictable.
That's a crappy deal for those farmers, who work an amazingly productive part of the world.  However, it is a stark reminder that the past century's growth in the American West was extremely foolhardy.  Massive development in California, Nevada and Arizona is just unsustainable considering annual rainfall accumulation.  Global warming is most likely going to make things worse in the not-too-distant future.  I guess winter doesn't look so bad here in southwest Ohio, as we sit on a massive buried valley aquifer.  With the Great Lakes, maybe the Rust Belt will grow again.

The Beginning of The U.S. Empire

The Archdruid Report, via nc links:
As we saw in last week’s post, though, Mahan’s advocacy of naval expansion came at a crucial time, when the wealth pump of America’s industrial system was struggling to keep from consuming itself, and a growing number of Americans were beginning to look enviously at Europe’s global empires. The huge success of The Influence of Sea Power upon History—it was an international bestseller, was translated into more than a dozen languages, and became required reading for politicians and naval officers around the world—had a massive role in reformulating the debate around imperialism. Armed with Mahan’s logic, the proponents of an American empire could redefine the pursuit of global power in terms of the nation’s safety and prosperity. By the mid-1890s, the obsolete Civil War-era ships that made up what there was of the Navy a decade earlier were rapidly being replaced by a new fleet on the cutting edge of naval technology. All that was left was an opportunity to put the new fleet to use and begin carving out an American empire.

That last step came in 1898, with the Spanish-American war. Those of my readers who think that the neoconservatives marked any kind of radical departure from America’s previous behavior in the world should take the time read a book or two on this now-forgotten conflict. Spain at that time was the weakest of the European colonial powers, with only a handful of possessions remaining from her once-vast empire—a few islands in the Caribbean, notably Cuba and Puerto Rico, and the Philippines were among the most important. The project of seizing Cuba from Spain had been a popular subject of discussion in the South in the years before the Civil War, when finding new acreage for the plantation system had been a central theme of regional politics; Mahan’s book argued forcefully that the United States needed at least one large naval base somewhere in the islands to the south of the US mainland, and the hope that new territorial possessions might become captive markets for American industry gave new incentive to the old plan.
The latter part of the post talks about how fossil fuels helped propel the U.S. to world power status.  It's pretty interesting.

Will The FDA Act?

Dr. Robert Lawrence works over the animal agriculture industry:
The media's coverage of the decision has focused on the use of antibiotics for growth promotion. While ending these uses would be an important step, it would not be sufficient to end the misuse of antibiotics in industrial food animal production. As long as low doses of antibiotics may be continuously fed to food animals to prevent disease, the industrial operations that produce the majority of food animals in this country will continue to serve as giant incubators for antibiotic-resistant bacteria.
It is unclear whether the FDA still considers the use of antibiotics to prevent disease safe. The agency has acknowledged that feeding antibiotics to entire herds or flocks, for disease prevention and other purposes, "poses a qualitatively higher risk to public health" than treating individual sick animals. the FDA has nevertheless termed the preventive use of antibiotics "necessary and judicious."
The use of antibiotics for disease prevention is only necessary because companies have chosen to raise food animals using methods that make them especially susceptible to infectious diseases. If we improved the diets and living conditions of the animals, we could prevent disease without compromising the effectiveness of antibiotics and putting the health of the public at risk. This is how Denmark ended the misuse of antibiotics in 2000 -- over strenuous objections from the Danish swine industry -- and remained the world's top exporter of pork.
How we use antibiotics, in animals as in humans, will determine the rate at which infections become resistant to antibiotic treatment. If we take steps now to ensure responsible use of these drugs -- including a ban on their use for growth promotion and disease prevention at industrial farms -- we can slow the rise of resistance. The recent court decision offers hope that this is possible. We now must push the FDA to comply with the decision and to extend the logic of the ruling to other antibiotics. We do not have much time.
Again, farmers really need to get ahead of this.  Dragging their feet and hoping nothing bad happens isn't a good strategy.

Friday, March 30, 2012

Trappistine Candies

If you are looking for a nice Easter gift, order your caramels from the Trappistine nuns in Dubuque, Iowa.  It is damn good candy.  For the last several years, I've sent the candy to a couple of my old college roommates' wives, hoping to stay in their good graces.  Unfortunately, my address book at the convent website got lost, and I haven't chased down the addresses, so it doesn't look like they'll get any candy for Easter.  Maybe at Christmas.  Last Christmas the nuns were sold out of candy, so they didn't get any then, either.  I'm probably on the shit list now.

Farmland Bubble Watch

Reuters, via Big Picture Agriculture:

"At the end of 2006, I took a look at the markets, didn't like what was on the horizon and decided to move into hard assets," Vieth says.
He isn't the only one betting on the farm these days.
During the last several years, investors have taken notice of the swelling prices and hearty returns that come with productive farms. Individuals and funds are increasingly seeing farmland as an ideal hard asset class.
Farmland generates not only regular income but also capital appreciation and can be used as a hedge against inflation. Another benefit: farmland returns tend to be immune to stock or bond fluctuations, making it a good diversification tool.
"A lot of people like to say 'It's gold with a coupon,'" says Chris Erickson, managing director at HighQuest Partners, an agribusiness consulting firm.
For the year ended December 31, 2011, agriculture proved the best performer among commodity-based exchange-traded products by net inflows. The asset class brought in some $3.5 billion, which raised total assets under management by 50 percent, according to IndexUniverse.
Still, investing in farmland isn't for everyone, especially in the actual land. Investors must deal with upfront costs, more complexity than a typical stock or fund and a lot less liquidity. It also takes a leap of faith considering factors outside an owner's control such as weather, seed prices and trade wars. Global factors such as the demand for ethanol or evolving eating habits are also at play.
This is a major bubble warning.  Anytime the everybody is investing in this hot market stories are running, you are in the midst of a bubble.  What will pop it?  I have no idea.  I would expect a hard landing in China is the most likely cause, making commodity prices drop precipitously.  We own a decent amount of farmland, so this is currently beneficial, but I'd also like to buy more, so these prices make that much less likely.

Seward's Folly

 The original check used to pay for Alaska, worth $7.2 million

March 30, 1867:
Alaska is purchased from Russia for $7.2 million, about 2 cent/acre ($4.19/km²), by United States Secretary of State William H. Seward.  The Alaska Purchase was the acquisition of the Alaska territory by the United States from Russia in the year 1867 by a treaty ratified by the Senate. The purchase, made at the initiative of United States Secretary of State William H. Seward, gained 586,412 square miles (1,518,800 km2) of new United States territory. Originally organized as the Department of Alaska, the area was successively the District of Alaska and the Alaska Territory before becoming the modern state of Alaska upon being admitted to the Union as a state in 1959.
Russia was in a difficult financial position and feared losing Russian America without compensation in some future conflict, especially to the British, whom they had fought in the Crimean War (1853–1856). While Alaska attracted little interest at the time, the population of nearby British Columbia started to increase rapidly a few years after hostilities ended, with a large gold rush there prompting the creation of a crown colony on the mainland. The Russians therefore started to believe that in any future conflict with Britain, their hard-to-defend region might become a prime target, and would be easily captured. Therefore the Tsar Alexander II decided to sell the territory. Perhaps in hopes of starting a bidding war, both the British and the Americans were approached, however the British expressed little interest in buying Alaska. The Russians in 1859 offered to sell the territory to the United States, hoping that its presence in the region would offset the plans of Russia’s greatest regional rival, Great Britain. However, no deal was brokered due to the American Civil War.
Following the Union victory in the Civil War, the Tsar then instructed the Russian minister to the United States, Eduard de Stoeckl, to re-enter into negotiations with Seward in the beginning of March 1867. The negotiations concluded after an all-night session with the signing of the treaty at 4 a.m. on March 30, 1867, with the purchase price set at $7.2 million, or about 2 cents per acre ($4.74/km2).
American public opinion was generally positive, as most editors argued that the U.S. would probably derive great economic benefits from the purchase; friendship of Russia was important; and it would facilitate the acquisition of British Columbia.
Historian Ellis Paxson Oberholtzer summarized the minority opinion of some newspaper editors who opposed the purchase:

Old Pump Station May Become Brewery

Cincinnati Enquirer:
The city of Cincinnati is investigating whether a 118-year-old red brick pump station and water tower behind Krohn Conservatory could be sold and converted to a micro-brewery.
A pair of developers recently approached the city to redevelop the 7,000-square-foot property, which was designed by renowned architect Samuel Hannaford to enhance the park landscape. It’s on the National Register of Historic Places.
The city declined to share the developers’ names, but minutes from an East End Area Council meeting said father and son Jack and Bryon Martin were spearheading the project on Martin Drive. Jack Martin retired from the city’s transportation department in recent years. He is an architect.
The pair could not be reached for comment on their plans.
The men operate as Cincinnati Beer Company and in 2007 bought the old Christian Moerlein home and office on Elm Street near Findlay Market, announcing plans to open a brewery there once the streetcar was in operation.
The council minutes said that the men hoped to use the Eden Park facility to make small batches of beer to sell to local restaurants. A tap room in the building would also be open to pedestrians and bicyclists in the park. The Martins planned to pursue state tax credits to help fund the project.
Honestly, if a person made good beer, I think any historic building could become a nice site for a brewery.  If it is old and brick, it would make a good site.

More On Pink Slime

WSJ, via nc links:
Supporters say taking the product out of the U.S. food chain will lead to higher beef prices and fattier hamburger, since it is very low in fat.
"You effectively need to kill 1.5 million more head of cattle in a year to replace the meat that would go off the market from this unwarranted, unmerited food scare," Gov. Branstad said. "That's why we're pushing back on it."
"We have said all along, and have been saying for weeks, this product is safe," USDA chief Tom Vilsack said in a news conference Wednesday.
The USDA chief is dispatching a top federal food safety official, Under Secretary Elisabeth Hagen, Thursday to a facility that produces the additive in South Sioux City, Neb. Several governors also will attend the event as they pressure supermarkets to return ground beef with the filler to refrigerator cases.
"We're going to consume it," Gov. Branstad said. "We'll do everything we can to set the record straight."
Known in the industry as lean finely textured beef, the additive is made from scraps remaining after cattle are butchered into cuts such as steaks and roasts. Processors remove the fat from trimmings, and in some cases treat the meat for bacteria with ammonium hydroxide. The product is then mixed with ground beef, often making it leaner, according to Beef Products Inc., a major producer.
The filler has been used for nearly two decades and the U.S. Department of Agriculture says it is safe. Still, that hasn't kept supermarket chains such as Kroger Co., Safeway Inc. and Supervalu Inc. from phasing out the additive. The decision caught state and federal officials off guard and led Beef Products to suspend production at plants in Amarillo, Texas; Garden City, Kan.; and Waterloo, Iowa.
I've apparently been eating pink slime added beef for nearly two decades and I have to say, it hasn't tasted bad.  It is amazing how quickly people can blow something up and pressure the groceries to change their practices. 

Pesticides Linked To Bee Colony Collapse

Wired:
A controversial type of pesticide linked to declining global bee populations appears to scramble bees’ sense of direction, making it hard for them to find home. Starved of foragers and the pollen they carry, colonies produce fewer queens, and eventually collapse.
The phenomenon is described in two new studies published March 29 in Science. While they don’t conclusively explain global bee declines, which almost certainly involve a combination of factors, they establish neonicotinoids as a prime suspect.
“It’s pretty damning,” said David Goulson, a bee biologist at Scotland’s University of Stirling. “It’s clear evidence that they’re likely to be having an effect on both honeybees and bumblebees.”

Neonicotinoids emerged in the mid-1990s as a relatively less-toxic alternative to human-damaging pesticides. They soon became wildly popular, and were the fastest-growing class of pesticides in modern history. Their effects on non-pest insects, however, were unknown.
In the mid-2000s, beekeepers in the United States and elsewhere started to report sharp and inexplicable declines in honeybee populations. Researchers called the phenomenon colony collapse disorder. It was also found in bumblebees, and in some regions now threatens to extirpate bees altogether.
Many possible causes were suggested, from viruses and mites to industrial beekeeping practices and climate change. Pesticides, in particular neonicotinoids, also came under scrutiny.
Leaked internal reports by the Environmental Protection Agency showed that industry-run studies used to demonstrate some neonicotinoids’ environmental safety were shoddy and unreliable. Other researchers found signs that neonicotinoids, while they didn’t kill bees outright, affected their ability to learn and navigate.
Wow, who'd have guessed industry-run studies would be shoddy and unreliable.  Our good friends in industry wouldn't lie to us just to put money in their pockets, would they?

Army Recruits Robots

Scientific American:
Three of the U.S. military's newest recruits reported for duty this week at the Army Test and Evaluation Command. These troops are different from normal soldiers in several ways—for starters, each has six feet. And they are robots designed to look and move like cockroaches. Aside from those details, the Army is hoping its new Boston Robotics RHex bots will soon join grunts in Afghanistan.

RHex furthers the U.S. military's ongoing efforts to deploy aerial drones and land robots to assist troops in the field. Weighing 13.5 kilograms, the camera-equipped RHex is designed to be carried in a backpack until it is needed to provide reconnaissance in rough terrain areas such as rocky inclines, riverbanks, mud and loose sandy soil. A fully charged robot can operate via remote control for six hours at a distance of up to 600 meters from its controller.

The key to RHex's mobility is the shape of its feet, which resemble apostrophes and swing in circles, slapping the ground to propel the bot forward (see video). The feet can also serve as paddles in water. RHex moves much like a similar, four-legged robot developed a few years ago by a team of Georgia Institute of Technology, Northwestern University, and University of Pennsylvania researchers.
My friend the Professor has been working to develop a robotic goat to find land mines for the army.  It's clear the army is pursuing robotic animals in a lot of different places.  Maybe these will develop into some non-war uses and actually contribute something to society.  Robots fighting wars makes it easier for humans to kill other humans.  That isn't a good thing.

Hyperinflation History

While we have no reason to fear hyperinflation in the U.S., Matthew O'Brien looks at Zimbabwe, the Weimar Republic and Post-WWII Hungary.  Here's the story from Hungary:
Weimar Germany and Zimbabwe have both captured our popular imagination when it comes to money-printing ad absurdum, but post-war Hungary has both of them beat. By many, many orders of magnitude. Indeed, on an annual basis, Hungary's peak inflation rate was over 10,000,000,000,000,000 times more severe than Weimar's. Prices in Hungary doubled every 15 hours.

Hungary turned to the printing press with such unparalleled gusto because they thought the alternative was much worse. The war had destroyed nearly half of Hungary's productive capacity. Basic infrastructure had quite literally been obliterated. The government wanted to rapidly rebuild this lost capacity (and put people back to work), but it couldn't afford to do so. The occupying Soviets had burdened the Hungarians both with onerous reparations (this will become a recurring theme) and the bill for the occupation. Hungary was left with a colossal government deficit and no way to finance it. They printed the difference.

There was at least some kind of logic at work here. Even absent any printing, the large-scale destruction from the war meant that inflation was going to jump up. There were simply fewer goods for money to chase. If inflation was going to surge anyway, why not at least use it to repair the country's bombed-out infrastructure? Short answer: because printing money to pay your bills quickly spirals out of control. In Hungary's case, this happened to the tune of an annual inflation rate of 9.63x10^26 percent.
Now that is hard to beat. Seriously, a little inflation isn't a terrible thing, as long as there is wage inflation in there.  Food prices going up doesn't translate into "oh my God, we're the Weimar Republic."

Thursday, March 29, 2012

USDA Prospective Plantings Preview

Progressive Farmer predicts the planting intentions report:

Corn: Pre-report estimates for prospective corn plantings came in at 94.7 million acres, up about 2.78 million acres from 2011. This number is an increase from USDA's baseline estimate of 94 ma released in February. Estimates stretch past 95.5 ma with few in the market thinking USDA will jump that far in its initial report. However, given the early planting and the tendency of the planter to keep rolling until the seed runs out, a June number over 95 ma is becoming more likely.
Soybeans: Pre-report estimates pegged soybean planted acreage at 75.5 ma, up slightly from 2010's and USDA's Outlook forum numbers of 75 ma. If the number comes in between 75.5 ma and 76.0 ma, the market may view it as bearish given the idea that beans failed to hold onto acres versus corn starting late last fall. On the other hand, the much-discussed 8 million extra acres over and above what was planted in 2011 would imply a stable to increased number in soybeans.
Wheat: All-wheat planted acres are expected to come in at 57.6 million, up from the 54.41 ma reported in 2011-2012. Year-to-year increases are expected to be seen in the three major classes of winter, spring and durum. However, the 57.6 ma is slightly below USDA's baseline figure of 58 ma. A possible surprise could come in spring wheat, with a loss to either corn or soybeans talked about as planting season gets an early start.
What the markets say: The strong carry in the new-crop December-to-March corn futures spread has long indicated a bearish prospective plantings number was likely, possibly more than 95 ma as opposed to the baseline estimate of 94 ma. Conversely, new-crop bean spreads are showing a strong inverse, implying less acreage will be planted, indicating a bullish surprise could be in the works. New-crop winter wheat spreads continue to show strong carry, maintaining a bearish outlook, while the carry in the September-to-December Minneapolis spring wheat spread is weaker, indicating a more bullish outlook.
Wow, over 95 million acres of corn is amazing.  Probably best to be short corn and long beans.  I won't be able to post in the morning when the report comes out (damn work), but I would expect this to roil the markets after 8:30.

RIP Earl Scruggs

Bluegrass legend Earl Scruggs died Wednesday morning:
Banjo player Earl Scruggs, who helped define the sound of bluegrass, died Wednesday morning. Scruggs, who began playing the banjo when he was four years old, just after his father died, and would go on to become a member of some of the most influential groups in bluegrass.
Scruggs died of natural causes in a Nashville hospital, according to his son. He was 88 years old.Scruggs played in Bill Monroe's Blue Grass Boys band, and later led Flatt & Scruggs with guitarist Lester Flatt. But his lifelong affection for the banjo began long before, as a young boy on the North Carolina farm where he grew up. At first, he tried a picking technique using just his thumb and index finger, but he always wanted to poke his middle finger into the mix. The picking technique he developed, using three fingers, revolutionized banjo playing and took on his name: Scruggs style.

NIT Final Tonight

I'm sure everyone will be tuned in to see whether the Minnesota Golden Gophers or the Stanford Cardinal will take home the NIT Championship.  Well, a lot of folks in Minnesota probably won't notice, as they will be discussing the real Gophers' chances in the Frozen Four.

Privatization and the Public Good

At The Guardian, via nc links:
What of the argument that the private sector is more efficient at running things because of competition? Although this may hold true for the production of many commodities (as we know from the sad experience of Soviet-style central planning), it is by no means a universal principle.

It used to be argued that publicly owned industries are necessary in the case of "natural monopolies"; ie, where long-term economies of scale in production make for "monopoly profits". It is only fair that government – through ownership or regulation – captures such revenues for the public benefit. Also, because natural monopolies (eg, water, energy, transport) typically require very large initial capital outlays, often the state alone is in a position to finance them. What has happened in recent decades to many public utilities is that, having been established and run by the state often with a strong element of public subsidy, they have been sold to private interests at knockdown prices on the grounds of fiscal rectitude (and with the blessing of the IMF).

Another reason for preferring public provision is where "external" costs or benefits exist. A contemporary example of such an externality is where an industry damages the environment. A private company might want to cut down swathes of forest to grow crops for biofuel, disregarding the long-term environmental impact. Such companies typically have short-time horizons – they must make profits for shareholders next year, not next century. Government needs to step in to take the long-tern environmental effect – or any other form of market failure – into account.

The notion that competition always makes the private sector more efficient than the public sector is therefore quite unjustified. Markets are not perfect, the future is uncertain, externalities are important and some goods and services by their very nature must be publicly provided. What politicians typically mean when they speak of greater efficiency is lower costs, typically achieved by employing cheap, non-unionised labour. This is the real reason so many public services are outsourced.
Three things I don't think should be for-profit are hospitals, schools and prisons.  As the for-profit colleges indicate, that profit motive gets in the way of good outcomes.  Another area where privatization seems like a bad deal for the masses is infrastructure.  Usually the taxpayers pay for building it, then corporate interests bid to manage it, and gouge those same taxpayers while lining their own pockets.  We need to get back to respect for public good.

Jones & Laughlin And The Commerce Clause

Amy Davidson looks at another historic Supreme Court case dealing with the commerce clause:
If there had been Twitter, instead of news tickers, in February, 1937, reporters and other observers would have been using it to follow the arguments before the Supreme Court in National Labor Relations Board v. Jones & Laughlin Steel Corp. It was the central case of five, argued in one extraordinary round, which challenged the constitutionality of the National Labor Relations Act, also known as the Wagner Act. The J. & L. dispute involved ten steelworkers who had been fired from the company’s Aliquippa, Pennsylvania, mills for trying to organize a union. As with this week’s hearings on the Affordable Care Act, also known as Obamacare, those deliberations were being watched with an anxiety that extended well beyond any concern for the protagonists in the suit, or even the law in question, to an entire vision of government.
Jones & Laughlin and its companion cases involved the Commerce Clause, the constitutional conductor for a whole orchestra of New Deal programs and Franklin D. Roosevelt’s more urgent efforts to pull the country out of the Great Depression. (It gives Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.”) The post-1937 conception of the Commerce clause has, as Jeffrey Toobin noted yesterday, become an assumed part of any number of government efforts today; it is the defense for challenges to the individual mandate but also to other aspects of the A.C.A., like provisions protecting people with preĆ«xisting conditions. Before the Supreme Court this week, as that assumption was challenged, there was a certain forgetfulness about what was at stake in Jones & Laughlin, both constitutionally and practically. Ten steelworkers have become phantoms, along with the four dissenting Justices who were almost joined by a fifth.
 I don't really know much about this case, but I do know a reasonable amount about J&L.  They had plants in Pittsburgh and Cleveland, before becoming part of LTV, then International Steel Group, and finally Mittal Steel.  The plants in Pittsburgh are gone, but the Supreme Court case is still alive in history.  If the Supreme Court decides to limit the commerce clause, they are tampering with a lot of history, and a lot of modern America.

Knights of Columbus Established



March 29, 1882:
The Knights of Columbus are established.The Knights of Columbus was founded by an Irish-American Catholic priest, The Venerable Father Michael J. McGivney in New Haven, Connecticut. He gathered a group of men from St. Mary's parish for an organizational meeting on October 2, 1881 and the Order was incorporated under the laws of the U.S. state of Connecticut on March 29, 1882. Though the first councils were all in that state, the Order spread throughout New England and the United States in subsequent years.
The primary motivation for the Order was to be a mutual benefit society. As a parish priest in an immigrant community, McGivney saw what could happen to a family when the breadwinner died, and wanted to provide insurance to care for the widows and orphans left behind. He had to temporarily leave his seminary studies to care for his family when his father died. In the late 19th century, Catholics were regularly excluded from labor unions and other organizations that provided social services. In addition, Catholics were either barred from many of the popular fraternal organizations, or, as in the case of Freemasonry, forbidden from joining by the Catholic Church itself. McGivney wished to provide them an alternative. He also believed that Catholicism and fraternalism were not incompatible and wished to found a society that would encourage men to be proud of their American-Catholic heritage.
McGivney traveled to Boston to examine the Massachusetts Catholic Order of Foresters and to Brooklyn to learn about the recently established Catholic Benevolent League, both of which offered insurance benefits. He found the latter to be lacking the excitement he thought was needed if his organization were to compete with the secret societies of the day. He expressed an interest in establishing a New Haven Court of the Foresters, but the charter of Massachusetts Foresters prevented them from operating outside their Commonwealth. The committee of St. Mary's parishioners which McGivney had assembled then decided to form a club that was entirely original.
If you see a bunch of guys in tuxes and crazy looking hats marching around today, they're probably celebrating this.  If they look like they're going to give you trouble, offer them a beer, that ought to settle them down.

Will We Have Smaller Nuke Plants?

Scientific American:
Globally, large reactor designs remain the predominant technology. One alternative to cut costs could be small, novel reactors, appropriate for areas with smaller electricity demands or as part of a flexible power production facility that could scale up quickly as necessary. Small reactors would have a maximum capacity of 300 megawatts of electricity, or enough to power more than 200,000 U.S. homes for a year. In addition, the reactors would be modular—made in factories and shipped to sites—to reduce costs. But such reactors still require the same electricity-generating, safety, and waste disposal systems as the hulking light-water reactors presently being built as well as identical rigorous licensing requirements, at least in the U.S.—and that may cost them. "Yeah, there's less concrete and, yeah, there's less steel in the reactor vessel," says nuclear engineer Eric Loewen, chief consulting engineer at GE Hitachi Nuclear Energy, which is proposing a modular fast reactor to help the U.K. with its plutonium problem. But the list of other expenses associated with nuclear will not change with the new designs and "that gives pause to small modular reactors."
A modern pressurized water reactor, like the two being built in Georgia, can pump out more than 1,000 megawatts worth of power using the heat from fission to boil water to spin a turbine. Babcock & Wilcox—one-time builder of large pressurized water reactors as well as smaller ones suitable for the submarines of the U.S. Navy—would like to shrink those down to just 180 megawatts. "It's not for lack of knowledge of how to build big reactors," says Chris Mowry, president of B&W Modular Nuclear Energy.
Instead, B&W suggests that the fundamental problem facing the adoption of nuclear power is not the technology itself, but the financial risk of committing to a build a big nuclear reactor. Simply put, even the largest utilities do not have the capital to build a $7 billion reactor, and such large projects have a tendency to see costs balloon as projects are delayed.
I haven't understood why they don't have smaller plants, like submarine reactors, which could be staffed with ex-Navy engineers and other nuclear engineers, and which would pose a lesser problem if an incident occurred.  Considering the problems we may likely be facing from global warming, this would seem like a sensible thing to consider.

USA Today World

It looks like that's where I live, according to this map of where certain news outlets are more popular than average:
It's no great surprise that Mississippi, Texas and Montana folks get more news than average from Fox News, but I like it more that more people than average in Wisconsin and Minnesota get their news from The Onion.  That isn't really surprising either, since it is based in Madison, but that is one of the many reasons why Minnesota and Wisconsin are better than Texas and Mississippi.

Crazy Cash Rents

Progressive Farmer:
Put cash rent on the auction block and normal, rational farmers act like they're buying a Picasso, not the rights to farm a piece of flood-prone or sandy soil for only two years. That was DTN's Elizabeth Williams' impression after attending a weekend cash rent auction in Mason City, Iowa where many of the 300 people attending ignored blizzard warnings to observe a new phenomenon for Iowa: the public rental auction. (See her story today in Top News or on the Farm Business page).
As Elizabeth reported, several parcels brought $520 per tillable acre, but most of the winning bids ranged from $425 to $490. Several farms came with warnings that they were rated a crop insurance risk and paid surcharges for coverage. So by all accounts, that denotes a huge premium given that USDA surveys show farmers in Iowa's most expensive cash rent county only paid an average of $235 an acre in 2011, according to USDA. (Keep in mind that "average" factors in below-market rates charged by elderly grandparents and other blood relatives.)
A handful of landlords also solicited renters this winter by posting newspaper ads asking for bids on their Iowa farms. One of my Iowa friends--a loser at $465 an acre in the newspaper auction battle--thinks they can make high rents pay if they have long-term leases and reap the benefits of being able to spread hog manure (a potential $75 value versus the commercial stuff). Cash grain operators have trouble competing.

$520 an acre?  I've got 160 tillable acres to rent at those prices.



Wednesday, March 28, 2012

News Flash: Republicans Are Full of It

Minnesota Public Radio, via Ritholtz:
A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump. If more domestic oil drilling worked as politicians say, you'd now be paying about $2 a gallon for gasoline. Instead, you're paying the highest prices ever for March.
Political rhetoric about the blame over gas prices and the power to change them - whether Republican claims now or Democrats' charges four years ago - is not supported by cold, hard figures. And that's especially true about oil drilling in the U.S. More oil production in the United States does not mean consistently lower prices at the pump.
Sometimes prices increase as American drilling ramps up. That's what has happened in the past three years. Since February 2009, U.S. oil production has increased 15 percent when seasonally adjusted. Prices in those three years went from $2.07 per gallon to $3.58. It was a case of drilling more and paying much more.
U.S. oil production is back to the same level it was in March 2003, when gas cost $2.10 per gallon when adjusted for inflation. But that's not what prices are now.
That's because oil is a global commodity and U.S. production has only a tiny influence on supply. Factors far beyond the control of a nation or a president dictate the price of gasoline.          
 No kidding, Republicans are full of shit.  I'd have never guessed it.  Maybe if their presidential candidates quit talking about bombing Iran, we'd lose some of that risk premium in the market.  But then, high oil prices might be the only way those clowns might be able to win the presidency.  It sure isn't because they are likable.

Derby Prep Preview

Stealth Fighter About Ready To Fight



Wired looks at the F-22 a quarter century after its development:
After nearly 20 years of development and $65 billion, the F-22 Raptor stealth fighter entered service with the U.S. Air Force in 2005. But it wasn’t until this month that the first squadron of Lockheed Martin-built F-22s was fully combat-ready with ground-mapping radars and a flexible bomb payload — standard equipment on most Air Force strike jets. The cost to bring the roughly 150 front-line Raptors up to this normal level of capability: an extra $8 billion, boosting the per-jet cost from $350 million to almost $400 million.
The belated outfitting is symptomatic of the Air Force’s “spiral” approach to warplane development, and a foreboding sign for the Raptor’s successor, the smaller F-35 Joint Strike Fighter. Rather than wait until a jet design is fully developed, the Air Force sends early models out into the world as soon as they meet a minimum standard for combat performance. The planes get extra enhancements over time to bring them up to full spec. While this approach ensures the flying branch gets some utility out of its new aircraft as soon as possible, it also obscures the true time and investment needed to fully develop a new warplane.
The F-22 entered service seven years ago with its air-to-air weapons mostly in place, but with only rudimentary bombing systems. Likewise, the roughly $200-million F-35 will possess only a fraction of its expected capabilities when it finally enters service sometime after 2018. That could force the Air Force to hold onto older fighters far longer than it ever expected, in order to buy time for the new jet’s spiral upgrades.

This month’s “Increment 3.1″ update to the F-22 adds a mapping function to the jet’s radar plus more accurate targeting and the ability to carry eight satellite-guided bombs. ”A four-ship of Increment 3.1 aircraft can successfully find, fix, track, target and engage targets in the most challenging of anti-access environments,” Lt. Col. Paul Moga told Flight. What he didn’t say is that the Boeing-made F-15E has had similar skills since the 1990s.
My grandpa worked on the Northrup YF-23 for the Air Force bidding, and he's been dead for almost 22 years.  Of course, he was working on drones from the late '60s or early '70s until near his death.  The military doesn't get in a hurry in project development, and the contractors would get pissed if they did. And, as this article highlights, it is really amazing how little the military gets for our money.  It took a long time of trying to burn monkeys' eyes with lasers before we got laser-guided bombs.

Of Gas And Steel

Chart via Ritholtz.

Matthew Yglesias:
Here's a neat story out of Pennsylvania by John Miller about how the gas boom in the Marcellus Shale is boosting US Steel on both the supply and demand sides:
Shiny coils roll off the line destined for energy companies drilling in the Marcellus Shale natural-gas formations that rest below much of southwestern Pennsylvania. Production for so-called tubular goods used for pipes, tubes and joints in gas drilling has doubled in two years, says Scott Bucksio, the general manager of the plant in the sprawling Mon Valley Works, as drillers have raced to extract ever-larger amounts of gas from the shale deposits.
As significant, or more so for energy-intensive steelmakers, is that newly plentiful natural gas "is also keeping costs down" said Mr. Bucksio of U.S. Steel.
In other words, U.S. Steel is building the material needed to drill the gas but it's also winning more broadly because the existence of the gas is making it cheaper to make steel. Apparently shifting out of coal and into newly cheap gas as the fuel of choice to run the furnaces reduces the cost of producing a ton of steel by about five percent.
What blows me away is how much lower gas prices are in the U.S. than most other parts of the developed world.  I'm assuming that shale gas isn't limited to the United States, so I am surprised gas development hasn't spiked in other parts of the world.  Whatever the reason, it definitely benefits U.S. industries.

More Than Just A Knuckleball

Sports Illustrated:
It tacks in inexplicable and unpredictable ways. It sometimes resists the desired path, no matter how much control you try to exert. When you think you've solved the mystery and discerned the secrets, it confounds you anew. When hope diminishes, it has a way of cooperating and breaking right.
Yes, life mirrors the knuckleball, just as the knuckleball mirrors life. R.A. Dickey is singularly well-suited to appreciate this. The Mets righthander is the lone knuckleballer in a major league rotation. He is the keeper of the flame carried by the Niekro brothers, Charlie Hough and Tim Wakefield -- inasmuch as there's anything flaming about a pitch that dips and dives and dances and usually travels slower than the speed of interstate traffic. Plus, at age 37, Dickey has done his share of living, his tortuous -- and sometimes torturous -- path to the majors marked by gratifying highs, and lows that had him pondering suicide.
Beyond that, Dickey is literate and literary in the extreme. His clubhouse locker doubles as a library, filled at any given moment with anything from C.S. Lewis to Tolkien to, as was the case last week at the Mets' camp in Port St. Lucie, Fla., F. Scott Fitzgerald's The Beautiful and Damned. He is the rare ballplayer whose interviews are parsed on the vocabulary.com blog, whose voice gets thick with emotion when he discusses his love of words. With a full beard and an unruly head of hair, Dickey even looks like an English professor. "Writing has enriched me in so many ways," Dickey says, "and one of those is that I really tend to think in metaphor."
Dickey's memoir comes out this week.  He's getting headlines because he confesses that he was sexually abused by his babysitter as a child.  He's also a pretty damn good pitcher.  This marks two years in a row a knuckleballer releases a book, and hopefully Dickey won't follow Tim Wakefield in retiring the season his book comes out.

Three Mile Island

March 28, 1979:
Operators of Three Mile Island's Unit 2 nuclear reactor outside of Harrisburg, Pennsylvania fail to recognize that a relief valve in the primary coolant system has stuck open following an unexpected shutdown. As a result, enough coolant drains out of the system to allow the core to overheat and partially melt down. On March 28, 1979, there was a cooling system malfunction that caused a partial melt-down of the reactor core. This loss-of-coolant accident resulted in the release of a significant amount of radioactivity, estimated at 43,000 curies (1.59 PBq) of radioactive krypton-85 gas (half life 10 yrs), but less than 20 curies (740 GBq) of the especially hazardous iodine-131 (half life 8 days), into the surrounding environment.
The nuclear power industry claims that there were no deaths, injuries or adverse health effects from the accident, and a report by Columbia University epidemiologist Maureen Hatch agrees with this finding. Another study by Steven Wing of the University of North Carolina found that lung cancer and leukemia rates were 2 to 10 times higher downwind of TMI than upwind.  The Radiation and Public Health Project, an anti-nuclear organization, reported a spike in infant mortality in the downwind communities two years after the accident.
The incident was widely publicized internationally, and had far-reaching effects on public opinion, particularly in the United States. The China Syndrome, a movie about a nuclear incident, which was released just 12 days before the disaster, became a blockbuster hit.
Well, now that Southern Company is actually starting construction on a new plant in the U.S., we can't say the accident killed the nuclear industry in the United States, but it came damn close.

A Beautiful Tribute

Allen Barra remembers boxing writer and legend Bert Sugar, who died Sunday at age 75:
Here's a Bert Sugar story you can believe. I know—I was there. In 1987 a friend and I flew to Las Vegas to do a story on the Sugar Ray Leonard-Marvelous Marvin Hagler fight. All the hotel rooms were long gone so Bert let us sleep on the floor of his room. On fight night, the odds against Leonard went up to 5-to-1, which seemed to me to be a sign from God. We bet all of our available cash—we even, like idiots, bet our expense money. I don't think I've ever been more nervous at a sporting event, but the gentleman seated to my left kept assuring me that Leonard was indeed wining and the decision would go our way. "Don't worry," he told me, Hagler couldn't hit Leonard with a handful of stones." He was right. We won, and I came back from the betting window with more money than I've ever held in my life. When we walked into the press room, Bert -smile on face fedora on head and cigar in hand—said, "I'd like you to meet a friend of mine, the most knowledgeable fight expert I know." I turned to shake hands with a beaming Don Rickles, "Nice to meet you," I said. Bert snickered and poked me in the ribs, "You met him two hours ago. You were sitting next to him during the fight."
The worst part about Bert's passing is the tons of information and memories he took with him. He held Mixed Martial Arts in contempt—"Really bad boxing combined with one guy sitting on top of another, punching him in the face. Where's the martial part? Where's the arts part?" Now that Bert's gone they may as well pack up boxing for good. To meet him for a steak at O'Riley's before a fight was to hear stories about fighters like Joe Louis, Billy Conn, Jack Dempsey, Jake LaMotta, and Willie Pepp and trainers like Angelo Dundee and Eddie Futch and even gossip about the media personalities. I once heard him discussion some controversy with Howard Cosell. "Well, you know, Bert," Cosell said to him, "I'm my own worst enemy." "Howard," Sugar replied, patting him on the shoulder, "Not while I'm alive." He was kidding, of course—they were pals.
He knew all the gyms and all the fight clubs, all the trainers and hangers-on, all the politicians, gangsters, and movie stars who came around at fight time. I once went to a fight at the Garden with him, where introduced me to Bill Murray then reached into his briefcase to hand Bill the latest copy of Ring magazine. "Have you seen the March issue yet?"
I have to say, if somebody remembers me like this after I'm gone, I'll say I lived a damn nice life.  You only live once, enjoy it.

Why Are You Taking Away My Pink Slime?

Des Moines Register:
The social media-driven frenzy that caused supermarket chains and fast food purveyors to quit using so-called “pink slime” beef additives will likely drive up hamburger prices further, cattle traders and a supermarket spokeswoman said Tuesday.
“The industry is telling us that the removal of this filler is the equivalent of losing 1.5 million head of cattle, and cattle already are in tight supply,” said Hy-Vee spokeswoman Ruth Comer. Hy-Vee is pulling ground beef with the “lean finely textured trimmings,” also referred pejoratively as “pink slime” from its shelves.
Comer said industry guesses on hamburger price increases range from 3 cents per pound to 25 cents per pound. Hamburger prices already have risen by 70 cents per pound, about 25 percent, in the 24 months since February, 2010 because of tight U.S. cattle supplies.
Beef Products International of Dakota Dunes, S.D., said it was closing three of its four plants at least temporarily after a firestorm erupted on social media in the month over “pink slime,” the lean beef additives made from scraps at slaughterhouses.
Although there have been no reported cases of illness or disease traced to the product, a collective revulsion factor fed by postings on Facebook, You Tube and an ABC News series prompted the withspread halt to use of a product that has been on supermarket meat counters since the early 1990s.
“It’s crazy,” said Des Moines meat wholesale Phil Barber of Brewer Meats, which he said has not knowingly used meat with the filler. Barber nonetheless said of the fillings, “they’re free of e-coli, and they’re 95 percent fat free.”
I don't really get the outrage.  I mean, really, I eat sausage, hot dogs, bologna, chicken fingers, and I have apparently been eating "pink slime" in my burgers, which I love.  Sure, the process sounds gross, but come on, try describing sex to someone, it isn't exactly all neat and clean, but people really enjoy it.  This pink slime outrage is lost on me.  Give me some pnik slime in my burgers.

Tuesday, March 27, 2012

Studying Avalanches And Ice Cream

BBC:
Samples of ice cream have been scanned with an X-ray machine more typically used to study the ice crystals which are key to avalanche formation.
Nestle is hoping to reveal the exact conditions under which ice crystals merge and grow.
When the crystals get big enough they change the texture of ice cream and alter how it feels when it is eaten.
The study of ice crystal formation has been carried out with the help of scientists at the Institute for Snow and Avalanche Research in Davos, Switzerland.
The X-ray tomography machine at the institute is one of the few that can take images of tiny structures at sub-zero temperatures.
"Previously, we could not look inside ice cream without destroying the sample in the process," said Nestle food scientist Dr Cedric Dubois.
Via the research, summarised in a paper published in the journal Soft Matter, Nestle hopes to find a way to combat the gradual degradation of taste ice cream often suffers. As with many foods, the structure of ice cream is the key to the way it tastes.
X-raying ice cream.  Never thought of that.  Why don't they study why vanilla is the best?

The Cincinnati Courthouse Riots Of 1884

 Interior view of the Court of Common Pleas in the Hamilton County Courthouse after it was damaged by fire, Cincinnati, Ohio, 1884. The fire was started during a riot sparked by public outrage over the outcome of a murder trial.

March 27, 1884:
 A mob in Cincinnati, Ohio, US, attacks members of a jury who had returned a verdict of manslaughter in a clear case of murder, and then over the next few days would riot and destroy the courthouse.
The Cincinnati Riots of 1884, also known as the Cincinnati Courthouse Riots, were caused by public outrage over the decision of a jury to return a verdict of manslaughter in a clear case of murder. A mob in Cincinnati, Ohio, USA attempted to find and lynch the perpetrator. In the violence that followed over the next few days, over 50 people died and the courthouse was destroyed. It was one of the most destructive riots in American history.
Cincinnati in the 1880s was a tough industrial city with a rising crime rate due, in part, to general dissatisfaction with labor conditions. The Cincinnati police force had 300 men and 5 patrol wagons. In this period they arrested 50 people for murder, but only four were hanged. By January 1, 1884, there were twenty-three accused murderers in the jail. The political system was corrupt, with leaders notorious for controlling elections and manipulating judges and juries. A full page article published in the Cincinnati Enquirer on March 9, 1884, said: "Laxity of laws gives the Queen City of the West its crimson record. Preeminence in art, science, and industry avail nothing where murder is rampant and the lives of citizens are unsafe even in broad daylight."
On December 24, 1883, a young German named William Berner and his accomplice, a mulatto named Joe Palmer, robbed and murdered their employer, a livery stable owner.  The murderers dumped the body of their victim, William Kirk, near the Mill Creek in Northside. After the men had been arrested, 500 potential jurymen were called before Berner's lawyer accepted the jury of twelve. After a prolonged trial, on March 26, 1884 the jury returned a manslaughter verdict despite the testimony of seven different people to whom Berner had admitted his cold-blooded planning and execution of the murder.  The judge, who gave a sentence of 20 years in prison, called the verdict "a damned outrage." The next day, the newspapers called for a public meeting to condemn the verdict.
A New York Times article, dated March 27, 1884, reported that James Bourne, one of the jurors, had spent the previous night at Bremen-street police station after being threatened by a mob. Returning home on the morning of March 27, a crowd threatened to hang him but was dispersed by the police. Later he was severely beaten and was again taken to the police station for his own safety. Another member of the jury, Charles Dollahan, was pelted with rotten eggs and dared not return home. Louis Havemeyer was told he was fired when he went to work. A crowd tore the blinds from the house of L Phillips in Liberty street, and threw dead cats and rotten eggs through the windows before discovering they had the wrong Phillips, not a member of the jury. The foreman of the jury, AF Shaw, had gone into hiding.

Tax Expenditure Costs By Type

From Yglesias:


I'm surprised the capital gains preference isn't higher.  Let's see, I take advantage of the health insurance, pension mortgage interest, capital gains preference, state income tax and charity breaks.  I guess I'm pretty well represented on this chart.

Supreme Court Prognosticating

Via Ritholtz, Dahlia Lithwick opines on what to expect from the Court:
Given that line up of future cases, the five conservatives may want to keep their powder dry for now. I think they will. Poll released this week by the American Bar Association agrees, saying that most courtwatchers (85 percent) believe Obamacare will survive. And why is that? Not just the fact that—as I’ve said at the outset—the law is constitutional, well within the boundaries of Congress’ Commerce Clause authority. It’s because for the court to strike it down, the justices would have to pick a fight that wasn’t theirs in the first place.
The challenges to Obama’s health care initiative didn’t begin in the conservative legal academy. They didn’t even really blossom in the conservative legal media or think tanks. The real energy of these challenges arose out of those Tea Party town halls throughout the summer of 2010, in response to a longing to return to constitutional values, states’ rights, and ideas of individual liberty that have been dead for almost a century. That isn’t to dismiss the validity of the passionate public opposition to this law, or even to denigrate the truly heroic efforts of Randy Barnett, the Cato Institute, or the millions of Americans who deeply believe that this is a case about liberty, broccoli, and the short hop from the individual mandate to federal tyranny. It’s simply to say that it’s no accident that these cases were filed by state attorneys general and governors swept up in political currents, willing to make novel arguments in the form of what was always a constitutional Hail Mary pass. It’s no accident that until the lower district courts started striking down the act, none of the challengers really believed that they could succeed. And it’s no accident that three of the most influential and well respected conservative jurists in the land have ruled that of course the law is constitutional, even if they hate it as a policy matter. It’s no accident, either, that Charles Fried, Reagan’s Solicitor General and Harvard conservative legend, said in an interview with Dan Rather Reports this week the case would be decided 8-1—in favor of the law. The conservative legal elites don’t believe in the merits of this challenge, even if the public does.
I just don't know what to expect from the Roberts Court.  They've taken judicial activism to at least Warren Court levels recently.

Will Tebow Go Rogue?

Ben McGrath:
“Every starting quarterback has a backup,” Mike Tannenbaum, the Jets’ general manager, said, insisting that Sanchez was still his man, and Tebow the also-ran, after the contractual squabble had been resolved. This was true in the same way that every Presidential candidate can be said to have a spouse—and Hillary’s just happened to be Bill. The Rolling Stones were once Brian Jones’s band. Tebow has now been cast as the world’s most famous supporting act. How many interceptions can Sanchez throw before Jets games come to resemble those McCain-Palin rallies in the summer of 2008, with everyone clamoring for the understudy? How long, in other words, before Tebow goes rogue?

“There can always be weirdness,” Jeremy Kushnier, an understudy on Broadway, said late last week, forecasting the complicated Sanchez-Tebow dynamic. “It’s a hard job, because you’ve got to take ego out of the equation. But, at the same time, everybody wants to be the hero.” As it happens, Kushnier had just been called into heroic action, when Josh Young, one of the leads in “Jesus Christ Superstar,” came down with a cold—during press previews, no less. “I trained to cover Jesus and Judas both,” Kushnier said, almost sheepishly. Guess which role he wound up playing? “Judas is kind of the quarterback of the show,” he said.
The Broncos were very smart to get away from this freakshow, especially with all the religious crowd out in Colorado Springs.  Better to let Tebow get pummelled by the New York media than have to deal with the hype in Denver.  The Peyton Manning move was brilliant on the Broncos part.

Betting On Baseball Over-Unders

Jonah Keri:
But a few years ago, a friend introduced me to the magical world of baseball over/unders. All I knew about baseball betting at the time was that teams were given certain odds of winning the pennant and/or the World Series. Always seemed like a sucker bet. The heavy favorites and fan favorites (often the same team, often the Yankees), would be given extremely unattractive odds to win. You could also put a C-note on a gigantic long shot, fantasize what you'd do with a hundred grand if your miracle bet paid off, and never see that picture of Ben Franklin again.
Over/unders were different. This was close to a straight-up bet, minus the vig the sports book or online gaming sites would usually take; if you looked hard enough, you could get even odds or positive odds on a bet. In essence, all that mattered was your ability to outsmart the line maker and, in a way, the general public. Casinos, like online betting sites, will set lines to attract maximum betting action. They're playing on everything from player and team reputations to the splashiness of offseason moves to the popularity of certain teams (often the Yankees and Red Sox, though Los Angeles-area teams seem to get weird betting lines often, possibly due to the ease with which you can hop over to Vegas from L.A.). For any baseball fan who thinks batting average was a quaint idea that stopped being useful 30 years ago, it's a golden opportunity to put your money where your stat-stuffed mouth is.
One of the most popular advances in the sabermetric community over the past decade has been the proliferation of projection systems. Baseball Prospectus's PECOTA, Dan Szymborski's ZiPS, Bill James's brand of projections, as well as CAIRO, Oliver, Marcel, and the no longer publicly available CHONE all crunched players' past results, combined those stats with age, injury data, and in some cases scouting information, and spit out forecasts for every player. (For more on how these systems work, see this writeup by FanGraphs' Steve Slowinski.) By combining all those player results on each team then adjusting for strength of schedule, you could build standings projections for all 30 teams. By combining those team win predictions with your own additional analysis, you could find and exploit inefficient betting lines, and make money off them.
I was hooked. And for the first couple years, I did really well. Last year … not so much. My highest-confidence pick, by far, was the Phillies under 97 wins. Chase Utley's injury frightened me, as did the team's aging core and the generally extreme nature of the line: Betting on a team to win damn close to 100 games (or lose that many) is usually asking for trouble. Philly won 102.
I go about the over-under bets more simply.  I throw a number out to Cubs Dad, or ask for one from him, then we negotiate a bit, then I usually take the under.  Last year, I took the over on the Reds for 89.5 wins, and was eliminated by about September 15.  This year, I'm taking the under on 87.5, so the Reds will probably win 90 or more.  That's fine with me.

The Long Depression And American Empire

The Archdruid Report makes a few intriguing observations, via nc links.  This section is of interest to me:
North of the Rio Grande, though, the potential for further conflict was hard to miss. It’s a commonplace of history that the aftermath of a war normally includes quarreling among the victors, since all the disagreements that had to be kept at bay while there was still an enemy to defeat typically come boiling up once that little obstacle is removed. That’s what happened across the North in the wake of the Civil War, as the loose alliance between industrial and agrarian interests began to splinter about the time the last of the confetti from the victory celebrations got swept up. Alongside the ordinary sources of economic and political disagreement was a hard fact better understood then than now: the farm states of the Midwest were unwilling to accept the unequal patterns of exchange that the industrial states of the East required.

To make sense of this, it’s necessary to glance back at Alf Hornborg’s analysis of industrial production as a system of wealth concentration. To build and maintain an industrial system takes vast amounts of capital, since factories don’t come cheap. All that capital has to be extracted from the rest of the economy, placed in the hands of a few magnates, and kept there, in order for an industrial economy to come into being and sustain itself. That’s why, in a market economy, the technological dimension of industrialism—the replacement of human labor with machines—is always paired with the economic and social dimension of industrialism—the creation of unequal patterns of exchange that concentrate wealth in the hands of factory owners at the expense of workers, farmers, and pretty much everybody else. The exact mechanisms used to impose and maintain those unequal exchanges vary from case to case, but some such mechanism has to be there, because an economy that allows the wealth produced by an industrial system to spread out through the population pretty quickly becomes an economy that no longer has the concentrated capital an industrial system needs to survive.

That’s the problem the United States faced in the latter third of the 19th century. The rising industrial economy of what would eventually turn into the Rust Belt demanded huge concentrations of capital, but attempts to extract that capital from the farm states ran into hard limits early on. The epic struggle between the railroad barons and the Grange movement over shipping rates for farm commodities made it uncomfortably clear to the industrialists that if they pushed the farm belt too far, the backlash could cost them much more than they wanted to pay. During the Reconstruction era, the defeated South could have what was left of its wealth fed into the business end of the industrial wealth pump, but that only worked for so long. When it stopped working, in the 1870s, the result was what normally happens when the industrial wealth pump runs short of fuel: depression.
I think that with deflating cash wages, inflating health care costs (which is where wage increases have been given, in employer provided health insurance) and inflating commodity costs, we've reached the point where consumers just can't consume.  Without real cash wage increases, we're going to just sputter along.  Middle class wage earners have become the Midwestern farmers of the 1870s, and our system just isn't working.

Monday, March 26, 2012

Covering The Robot Takeover

Marketplace focuses on the robot takeover of our economy:
We're gonna take some time this week -- all week, actually -- and spend it on technology and jobs. Arguably, the two biggest factors in where our economy's going. We're going to call it, "Robots Ate My Job." Who's winning and who's losing as technology becomes an ever bigger part of our lives. It's not unreasonable to think, here in late March of 2012, that you might be able to drive clear across the country and never interact with anyone. No humans. Only machines.
Marketplace's David Brancaccio is trying to do just that. He put the Atlantic Ocean and the great state of New Jersey behind him on Saturday.
David Brancaccio: I'm refueling in Sugar Hill, Tenn., 2,229 miles to go to the Golden Gate Bridge. Technology only, avoiding human contact. Sleeping at Hyatt Place hotels that have the option of robot receptionists. Swiped myself in with my card and the key to the room comes out a slot. We're told that on balance, good and better jobs come from all the technology that makes a trip like this possible. But experts are warning this is now changing. In Pittsburgh the other day...
Brancaccio: This guy right here. Who's this?
I ran into a robot that takes queries.
Brancaccio: Here's a great question: Will robots take over the world?
Andy Roid: Will robots take over the world? Yes, and the revolution is set for a week from Saturday. Ha. OK, I'm kidding. It's this Thursday! I'm kidding again, haha.
That's "Andy Roid," the human-shape, human-sized centerpiece of at the Carnegie Science Center's Roboworld, the biggest robot exhibit on the planet.
We need lots of stairs to slow these bastards down.

100 Years of Sausage Making

Not in DC, but in Des Moines:



Graziano’s celebrates its 100th anniversary next month. Few places like it remain. The Italian foods specialty store is a legacy handed down by a generation who followed their countrymen to a new world. They came clutching little more than their dreams and a passion for faith, family and food.
Today, Graziano’s stands out as one of Iowa’s most enduring family-owned retail and wholesale operations. The south-side fixture, which has occupied the corner of South Union Street and Jackson Avenue since the day it opened in 1912, means different things to different people.
To hundreds of loyal customers, Graziano’s is the place to shop for the family’s famous sausage. There also are sandwich meats and cheeses cut fresh by deli workers who can crack a joke with the best of them, but tend to be all-business and no-nonsense when the lines get long, as they often do on Saturdays, when a single-file line can stretch through the store.
One of the beauties of the U.S. is the wealth of good ethnic foods brought to these shores by the waves of immigrants to this country.  No wonder we're all so fat.

The Economic Outlook

Maybe not so good:
And those global PMI reports!  Just awful, no way to spin ‘em, chooch.
First we heard from BHP Billiton, the massive mining concern, about weak mineral demand in China.  This was followed by an HSBC Flash PMI reading of 48.1 – the fifth consecutive reading under the all-important 50 level (which indicates contraction as opposed to expansion).  It’s important to remember that HSBC’s PMI survey looks mainly at small and mid-sized enterprises.  This as opposed to the official PMI numbers from the government which cover larger firms that have bigger global trade involvement and better access to bank capital.  Those official stats come out on April 1st and they are usually market-moving, FYI.  The bottom line on China is that anything below 48 implies less than 8% growth – which is a death sentence for all the countries who were hoping to sell into that region.
And worse than China was what we heard out of Germany.  As Randall Forsyth so perfectly puts it in Barron’s this weekend, Germany had finally diversified away from selling to its weakling neighbors in Europe and moved on to exporting more into China – just in time for China to begin rolling over.  The Euro recession is worsening as is China, this is important because of how highly correlated global GDPs are.  Also from the Barron’s piece by Forsyth, a killer quote from RBC’s economists:
“Lest we think the U.S. has the ability to avoid any of the negative reverberations from weak growth outside its borders, remember that the rolling five-year correlation of 32 countries’ GDPs have been on the rise and presently stand at over 90%.”
Bad China news will probably weigh heavily on grain prices down the road.  On the plus side (about the only thing on the plus side), oil prices should decrease.