Month: September 2011

Friday, 30 September 2011

08:09 – There was a little jap in the air this morning when I took Colin out at 0645. Autumn has arrived in Winston-Salem, with low temperatures over the weekend expected to be in the low 40’s (~ 6C), with winds of around 20 MPH (30+ KPH).

There’s a great deal of celebration over Germany’s approving the measures agreed upon at the 21 July summit. It’s difficult to understand why anyone cares. It was obvious at the time that the measures agreed then were grossly inadequate to address the crisis as it then stood, and the crisis now is orders of magnitude greater than it was then. Two months ago, it was a crisis of tens or hundreds of billions of euros; now it’s a crisis of trillions of euros.

Meanwhile, the “troika” representatives have arrived in Greece, charged with auditing the Greek government to determine if it’s complied with the terms required for the release of the final €8.5 billion tranche from the first (2010) bailout. It hasn’t, of course, and has no prospects of doing so, but one would think the Greeks would be doing everything possible to convince the troika auditors to give up the cash. Instead, the Greeks are rioting and preventing the troika representatives from doing their jobs, or even meeting with the Greek finance minister. It’s as if the Greeks want the troika to refuse to provide the final tranche, which in fact is exactly what many Greek citizens want. They perceive, correctly, that the bailout funds will not benefit ordinary Greeks. Instead, they’ll simply be used to pay off foreign bankers.

Europe now has the same problems that affected the US during the Lehman crisis and events following it. A refusal to recognize reality coupled with a refusal to allow the free market to operate. What Europe should do now is what the US should have done then: recognize the losses and allow the banks to suffer all of their accrued losses. Allow the banks to go bankrupt, in other words. Wipe out 100% of shareholder assets and as much as it takes, up to 100%, of bondholder assets. Fire all of the bank management, and allow the banks to reconstitute with all of the bad debt off their new books. Those equity and bond holders invested with the intention of making a profit; shifting their losses onto taxpayers is inexcusable.

12:32 – There was an article in the paper this morning reporting that Time-Warner Cable had increased the download speed of their standard RoadRunner broadband service from 7 Mb/s to 10 Mb/s, and their “turbo” service from 10 Mb/s to 15 Mb/s. That was a who-cares for us. We have the standard service, and were typically getting 10 to 12 Mb/s download speeds anyway. I was really hoping they’d also boosted the upload speeds, which have been typically 45 to 50 KB/s. So I rebooted our cable modem and found that indeed they had boosted the upload speed. I’m in the middle of uploading a 447 MB directory to my Dreamhost server right now, and the upload rate seems to be averaging about 115 to 130 KB/s. That’s with 125 MB already uploaded, so it isn’t the temporary speed boost they allow you for the first MB or so of any upload. It’s sustained. Still pathetically slow, but less pathetically slow than it used to be. It would be nice if it were symmetric, with upload speeds matching the 1,000 to 1,200 KB/s download speeds we typically get.

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Thursday, 29 September 2011

09:04 – If you’ve been having trouble getting to this site, you’re not alone. Apparently, there are some network issues. I did a traceroute this morning and was able to get to Dreamhost, after which the pings disappeared into a black hole. I have no idea how long this has been going on, other than that everything was working as of about 2200 ET last night. I checked the Dreamhost status page, which mentions no problems.

This is not the first time this has happened. I’m not particularly happy with Dreamhost, but I suspect they’re probably as good as most commercial hosting services and better than most. It’s just hard to get used to this much lower level of service and reliability after having been hosted for a decade by Greg and Brian, who often went from one year to the next without even a minor glitch. Or at least none that I could see; I suspect Greg and Brian spent lots of time and effort dealing with problems behind the scenes so they didn’t turn into our problems.

11:53 – Another word for zero-tolerance is zero-judgment. As we increasingly become a zero-judgment society, the gross injustices become increasingly clear.

Here we have a case where several Georgia boys are to be changed with multiple felonies: manufacturing and possessing destructive devices. Their parents are being charged with Georgia’s equivalent of disorderly conduct because the parents knew what the boys were doing but considered it just “harmless fun”.

Which it was. These boys had no intention of harming anyone, and what they were producing were not destructive devices by any meaningful definition of that term. They were putting aluminum foil and sodium hydroxide (lye) solution in plastic water bottles. The reaction of the hydroxide and aluminum produces hydrogen gas, which eventually reaches a pressure sufficient to rupture the plastic bottle with a loud bang. In other words, these kids were just messing around, having fun.

I’ve written about these hydroxide-aluminum “bombs” before. A year or so ago, someone in this area was leaving these “bombs” for people to find and pick up. It’s quite possible that they could have caused severe injuries or even deaths, not just from the high-pressure rupture of the bottle, but from sodium hydroxide solution spattering all over the place. (Even relatively dilute sodium hydroxide solutions can permanently blind someone in literally seconds.) But that was an entirely different situation. Someone who was literally a terrorist was placing devices intended to hurt or kill people. What these kids were doing in their backyard was stupid and dangerous to themselves, but there was no intent to commit a crime. It used to be that actions were only criminal if they were performed with criminal intent. We no longer make that distinction, because that would require someone to make a judgment, and making judgments is not Politically Correct. The result is that some innocent teenage boys may be convicted of violent felonies, possibly face jail time and certainly have their lives ruined. All because they were having some innocent fun.

This has to stop. When I was a teenager, the cop who showed up would have told me to knock it off and told me that what I was doing was extremely dangerous to myself. But it wouldn’t even have occurred to him to charge me, let alone my parents, with a crime. (Conversely, being a sensible cop, if he’d caught terrorist punks leaving these things for people to find, he’d have arrested the punks and probably beaten the shit out of them before he hauled them down to jail.) That’s the difference between now and 40 years ago. Back then, people (including government employees) were generally sensible. Nowadays, they’re not allowed to be.

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Wednesday, 28 September 2011

08:51 – Finally, some MSM commentators are saying what should have been obvious to anyone all along. Germany could not bailout the southern tier countries even if it wanted to. Although Germany is normally presented as a “strong” economy, that’s true only relative to the other, pathetically weak, eurozone economies. Much of Germany’s putative strength results from two interrelated factors: its strong export performance and its AAA credit rating. But the only reason Germany’s exports are strong is that it has the rest of the EU as essentially a captive market, with the euro artificially keeping the prices of German exports low in other eurozone countries. Germany has been reaping the benefit of this arrangement while other, less productive eurozone economies have been paying the price. As I’ve said repeatedly, Germany has for years been shipping products to other eurozone countries on what amounted to easy credit terms. And now those other countries find themselves unable to pay their bills. So much for Germany’s vaunted export economy.

And therein lies the problem with Germany’s AAA credit rating. As some billionaire or other commented when the US credit rating was reduced from AAA to AA+, it should instead have been raised to AAAA. Most people probably thought this was just a quip, but in fact it stated a profound truth. There is no country whose credit rating should be equal to the US credit rating, let alone higher, because the US is far more credit-worthy than any other country, most particularly including Germany. As I’ve said, the US can never, ever be forced to default because we’re a real country. We can print our own money. Germany, like the rest of the eurozone, is not a real country because it does not control its own currency, at least as long as it remains a member of the eurozone, and so Germany can most definitely be forced to default. And it will be so forced, eventually, if it’s foolish enough to backstop the gigantic debt of the southern tier nations. Based on the current situation, if I were assigning a credit rating to German “sovereign” debt, I’d place it five levels below the US, maybe six. Call it BBB, give or take. France belongs another several levels below that. And the rest of the southern tier belongs several levels lower still, because all of them will inevitably default. And that is why Germany, along with the other FANG nations, should depart the EU and eurozone as soon as possible. There is some hope for their relatively stronger economies; there is no hope for Spain, Italy, France, Belgium, and the rest.

11:45 – Wow. Four new Kindle models, but what surprised me was that Amazon didn’t discontinue any of the three existing models, at least not yet. I was disappointed that the current Kindle 3 Wi-Fi remains at $139 ($99 with ads) and the Kindle 3 3G remains at $189 ($139 with ads).

There’s a new Baby Kindle 4 for $109 ($79 with ads) that lacks the keyboard of the Kindle 3, and has half as much memory and half the battery. The real new e-ink model is the Kindle Touch, available in WiFi-only ($139 or $99 with ads) and the Touch 3G ($189 or $149 with ads). The main differences between the Kindle 3 and Kindle Touch models is that the Touch models have only touch, replacing the keyboard, 5-way controller, and page-turning buttons of the Kindle 3.

With the prices identical except for the $10 premium on the Touch 3G with ads, I think anyone who buys the Touch models is making a mistake. But perhaps not. I’ll have to think about whether touch is a good substitute for buttons. For browsing around, perhaps. But for reading, I definitely prefer buttons. If the Touch had page-turning buttons as well as touch, I’d go for it, but I really don’t want to be constantly touching the screen to turn pages. As to the Kindle Fire, I suppose it’s exciting if you like that kind of thing, but it looks like it’ll suck as an e-reader, at least compared to the e-ink devices.

As to a Kindle for Barbara, I’ll have to think about this for a while longer. If I had to order today, I’d order a Baby Kindle 4, probably with ads. It’s available now. Barbara wouldn’t care about what the thing displays when it’s asleep, and some of the Kindle Special Offers actually are pretty good deals. But I think I’ll hold off a bit longer to see if Amazon discontinues the Kindle 3. I suspect they will, and if that happens a Kindle 3 Wi-Fi with no ads might sell for $79 or less.

13:41 – Okay, I thought about it a while longer, and just ordered a Baby Kindle 4 with ads for Barbara. Except, as it turns out, I just ordered it for myself. When I called Barbara to let her know what I’d ordered for her, she pointed out that she plays Scrabble and other games on the Kindle, and therefore needs a real keyboard. Oops. Doesn’t matter, of course. She gets the current Kindle 3 and I get the Baby Kindle 4.

The more I thought about it, the more I realized that my first impression of the Kindle Touch was correct. It’s unusable without dedicated page-turning buttons. I think Amazon really screwed the pooch by not including those buttons on the Touch. And I’m not alone. I’ve already read a slew of comments by people saying that the lack of those buttons was a deal-breaker for them, so they ordered the $79 model instead. By saving at most a buck per unit, Amazon has really made the new Kindle Touch unappealing to a very large group of potential buyers. And speaking of saving cents, the $79 model comes with a USB cable, but not with the dongle that allows you to connect the USB cable to an AC power receptacle. That’s no problem for us, because the one that came with the Kindle 3 will work with the Baby Kindle 4, and I can just charge it via USB connected to a computer anyway. But charging $10 for the dongle does seem excessive.

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Tuesday, 27 September 2011

08:37 – Pournelle frequently says that despair is a sin. That may be true, but it’s hard not to despair with the euro collapsing and fools like Obama and Geithner and the US congress butchering the US economy. These morons aren’t going to be satisfied until they’ve impoverished all of us.

Speaking of morons, one of our big maple trees is dropping all its leaves, despite the fact that they’re all still green and none of the other trees, including maples, around here has even started to change. Barbara vacuumed up all the fallen leaves Sunday, so I went out yesterday and had a chat with the tree, explaining that it was supposed to let all its leaves change color before it started dropping them. This morning, the yard was covered with its leaves. I take consolation in the fact that although this tree may be a moron, at least it’s smarter than Obama, Geithner, and the US congress.

Rumor has it that Amazon will announce a color tablet version of Kindle tomorrow, but what’s more interesting to me is the speculation about the e-ink Kindle 4. If the rumors are correct, Amazon will also announce a $99 Kindle 4 without 3G but possibly with a touch screen. The only thing I care about is the $99 price. I don’t have 3G support on my current Kindle 3, and see no need for it. I actually consider a touch screen a bad thing. In truth, I’d be happy with a $99 Kindle 3. And the only reason I care is that Barbara has finally decided that she wants a Kindle. In fact, if Amazon offers deep discounts on the Kindle 3 Wi-Fi once the new version(s) ship, I may just buy her one of those discontinued models. It wouldn’t surprise me to see the Kindle 3 Wi-Fi on sale for $69 or even $59 to clear inventory. I’m perfectly content with my Kindle 3, and I can’t imagine anything Amazon could do to improve it.

11:57 – Ah. I love images of Scots heritage stuff. Here’s an excellent (NSFW) image of a piper and his girlfriend. I wonder if any of my readers can identify his tartan.

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Monday, 26 September 2011

08:52 – Barbara and I put together four dozen of the test tube sets yesterday while she watched golf. We would have done more, but we ran out of test tubes. Each set is half a dozen glass test tubes, each in a 30x120mm polypropylene tube with a screw cap, with half a dozen more 16x120mm polypropylene capped tubes, all in a one-quart zip-lock bag. We’ll use these in the chemistry kits, the biology kits, and (eventually) the forensics kits, so we’ll just build a bunch periodically and keep them on hand for assembling kits.

More details about the EU “shock-and-awe” campaign are becoming available, and they’re not encouraging. One of the big problems the EU has is that the current bailout fund, at €440 billion, is much too small to backstop Spanish and Italian bonds. The FANG nations are unwilling to commit to more funding because their taxpayers/voters are already near revolt. So, the EU instead plans to use the accounting trick I referred to yesterday, which is called leveraging. (Actually, it’s less an accounting trick than a massive fraud, but we’re not allowed to say that.)

Most economists agree that €440 billion is much, much too little, and that the bailout fund needs at least five times that much to present a credible backstop to Spanish and Italian debt. So, the new plan is to leverage the existing €440 billion at 20%, which magically (and fraudulently) increases the size of the bailout fund to about €2 trillion. With such a massive warchest, the EU hopes to stop runs on Spanish and Italian bonds (and banks) before they can get started. The problem is, it’s all smoke and mirrors. There’s no more money there than there ever was, and if push comes to shove that will quickly become evident. The fundamental problem is that the EU believes it can “fool” the markets. Good luck with that.

Meanwhile, it’s crunch week for Greece. The “troika” decides this week whether to approve the next portion of bailout money for Greece. All along, the troika has insisted that Greece must meet the agreed goals for spending cuts and tax increases if that payment is to be approved. Greece has not and cannot meet those goals, so if the troika stands by their ultimatum the payment will not be approved. If that happens, it’s game over for Greece, and we find out what a disorderly default looks like.

It’s extremely likely that a disorderly Greek default would be followed immediately by Spain and Italy coming under extreme pressure. Yields on their bonds, even with ECB intervention, are now nearly as high as they were before the ECB intervened, near the utterly disastrous 6% level. If Greece topples, yields on Spanish and Italian bonds will immediately skyrocket, which will require a huge bailout to avoid an immediate collapse of the euro. The EU authorities and the IMF are as aware of this as anyone, which argues that the troika will approve the next bailout payment to Greece despite the fact that Greece hasn’t come anywhere near meeting the required goals.

If that happens, Greece could choose to default anyway, and may well do so. Greeks rightly perceive that the bailout payments aren’t for the benefit of Greeks. This next €8.5 billion bailout payment, like all of the others, is simply a transfer payment via Greece of EU money to banks that hold Greek debt. The EU doesn’t care about the suffering of the Greek people or the destruction of the Greek economy and society. They believe, with justification, that Greece brought this calamity on itself. Many Greeks understand this, which doesn’t make their suffering, now and for the foreseeable future, any the less.

I told Barbara the other night that it wouldn’t surprise me if a real, hot revolution broke out in Greece and if before long we see UN peacekeeping forces deployed there. In a country the size of North Carolina and with a population of less than 11 million, there have been about 70,000 small business failures so far this year, with many more to come. The Greek middle class is well on its way to joining the ranks of the poor, with doctors, attorneys, teachers, shopkeepers, and college professors now participating in riots (which we’re supposed to call demonstrations). Greece really is a powder keg, with the burning fuze nearing the touchhole.

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Sunday, 25 September 2011

09:55 – Barbara had to take her mom to the emergency room yesterday. Her mom was in pretty severe distress, but refused to go to the hospital, so Barbara rushed over to take charge of things. Fortunately, the problem turned out to be relatively minor, or at least as minor as such things can be for a woman in her 80’s. The doctor put her on antibiotics and sent her home, where she’s now doing fine.

I see that the EU authorities and the IMF plan to introduce another smoke-and-mirrors campaign to fool investors into holding worthless government bonds a while longer, thereby staving off the inevitable catastrophic eurozone defaults for a few weeks or months longer. They’ve announced that they’re boosting the last-resort bailout mechanism to €1.7 trillion. Three problems with that: First, €1.7 trillion is still much, much too little to backstop the worthless eurozone government debt. Second, the additional money is imaginary; it doesn’t actually exist other than by an accounting trick. Third, investors are already fully aware of points one and two.

As I’ve said repeatedly, I hope the US government is not foolish enough to throw money down this rathole, either via direct subsidies or via the IMF. Unfortunately, the available evidence tells me that the US government is likely to jump in with both feet. It’ll be much too late to help, of course, but it will at least succeed in transferring a considerable portion of EU liabilities to US taxpayers. Which has probably been the agenda all along.

A cautionary tale about Greek politicians

12:01 – I just did a field-expedient packaging test on the new arrangement for test tubes. I put together six assemblies, each of one glass test tube inside a 50 mL polypropylene centrifuge tube with the cap screwed on. (I really must start calling these things “large test tubes” or something; few kit buyers have any idea what a self-standing centrifuge tube is.) I packaged six of those assemblies in a one-quart ziplock bag, took it down to the basement, and dropped it on the concrete floor several times from head height (~ 2 meters). There was no damage to the contents, and even the bag looks no different than it did. That should be sufficient to protect the tubes from shipping damage, especially since they’ll be in a box with additional cushioning.

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Saturday, 24 September 2011

11:08 – I installed Zen Cart yesterday, and spent some time playing around with it. It’s an e-commerce/shopping-cart package, and it reminds me a great deal of the hosted e-commerce package that Maker Shed uses. Which is to say that I have no clue how it works in terms of setup and administration. I don’t intend to bring up a storefront right away, but I figured it was time to dip my toe in the water. Zen Cart is free (as in speech and beer), and it appears to have more than enough capability to do anything I’d want to do in the foreseeable future. Critically, it appears to work seamlessly with PayPal, which will allow me to accept credit cards without having to establish a merchant account or worry about keeping people’s credit card information secure, since I’ll never see it.

I got a delivery from one of my wholesalers yesterday that includes most of what I need to assemble a dozen biology kits. Over the next couple of weeks I’ll spend some time doing what amounts to a 3D jigsaw puzzle, trying to figure out what size box to use for the kits.

For the chemistry kits, I use Priority Mail large flat-rate boxes, which cost about $15 to ship whether the destination is next door or in Alaska or Hawaii. Those boxes have a weight limit of 70 pounds (~ 32 kilos), which is much more than the kits weigh. But USPS also offers regional-rate boxes, which cost anything from about the same as flat-rate boxes to several dollars less to ship, depending on destination zip code. They’re limited to 20 pounds, which isn’t a problem for the biology kits.

The problem is, there’s a size difference. The large flat-rate boxes are 12″ x 12″ 5-1/2″, or 792 cubic inches (about 13 liters). The large regional-rate boxes are 12-1/4″ x 10-1/2″ x 5-1/2″, or 707 cubic inches (about 11.6 liters). The chemistry kits as currently packaged simply won’t fit the smaller regional-rate box, but the biology kits might. In fact, to keep the price down, I may make some changes in the contents of the kits, if necessary to fit the box. Any changes I make won’t compromise the utility of the kits, but it’s often possible to make substitutions that provide equivalent functionality but fit the jigsaw puzzle better.

Once of those changes will be in chemical packaging. The chemistry kits currently use a styrofoam block that contains 44 15-mL PP centrifuge tubes. The six vacant positions in the block are filled with glass test tubes for protection during shipping. For the biology kits (and eventually for the chemistry kits) I’m going to substitute a mix of plastic dropper bottles for liquid chemicals, wide-mouth plastic “pharma packer” bottles for most solid chemicals, and coin envelopes for some items such as tablets, seeds, and so on. The bottles are actually significantly more expensive than the centrifuge tubes (which aren’t cheap to begin with), but they’re also easier and quicker to fill and seal. The coin envelopes are much cheaper than tubes or bottles, typically three to eight cents each, depending on size and type.

Of course, that leaves me with the question of how to pack test tubes for the biology kit. If I don’t have the foam block to protect them, the obvious answer is to wrap the half-dozen test tubes in bubble wrap. Doing that is time-consuming, and it also yields a bulky component that would have to be fitted into the 3D matrix. It occurred to me that I could bump the number of 50 mL PP centrifuge tubes included in the kit from four to six, and pack each glass test tube in a 50 mL centrifuge tube. That bumps my total cubic for 50 mL centrifuge tubes from about 0.2 liters to about 0.3 liters, but reduces the cubic by the volume that would otherwise have been needed for the bubble-wrapped test tubes.

As usual, solving one problem creates another. I have been using 15×125 mm glass test tubes in the chemistry kit, but those are too long to fit into 50 mL centrifuge tubes. So, part of what’s in that order that showed up yesterday is a couple gross of 16×100 mm glass test tubes, which do fit into the 50 mL centrifuge tubes.

One thing about starting a small business is that it’s forced me to learn to deal with details, which is not my strong suit. Well, it is when I’m writing or working in the lab, but not in my personal life. Running a small business, especially what amounts to a small manufacturing business, leaves no option but to deal with details. I’m doing it, but I’m still not very good at it.

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Friday, 23 September 2011

08:25 – Well, it’s official. I just read an article that says Greece’s finance minister says there are three possibilities, one of which is that Greece will default and pay off creditors at 50 cents on the euro. The article didn’t mention the other two possibilities, but my sources tell me the first is that Greece will default and pay off creditors at one cent on the euro, and the second is that Greece will default and pay off creditors at zero cents on the euro. I’ll let my readers decide which of the three is most likely.

There have been millions of words written about the euro crisis, but few of them about the root cause of the problem. As I’ve been saying for 20 years or more, European cradle-to-grave socialism simply will not and cannot work. The reason that Europe is bankrupt is that the costs of these social programs are coming home to roost, paid for with borrowed money. As bad as the sovereign balance sheets of Europe look now, they’re nothing compared to what they would be if unfunded pension and healthcare liabilities were being shown at their actual present values.

Making matters worse, the horrible demographics of Europe ensure that the downward spiral will continue. Europe’s population is old and getting older. Fifty years ago, for example, German women bore an average of something like 2.5 children each. That figure is now down to something like 1.5 children each, not even replacement level. The rise in government employment is equally ominous. The ratio of productive workers to retirees and government workers is falling fast, and that trend is accelerating. There’s simply no way this can continue.

Which reminds me of last night. We were watching an episode of Desperate Army Housewives (or something like that). One of the characters was a 30-something nun. I commented to Barbara that that must be the youngest nun on the face of the planet. She said that was ridiculous, that there must be plenty of young nuns. I said I thought the average age of US nuns must be something like 70 years old, and she said that was ridiculous. So I did a quick Google check and found that the average age of US nuns is currently about 77 years old. And that’s Europe’s problem. It’s full of 77-year-old nuns.

10:43 – Someone asked me what I’d estimate actual European debt loads to be if “hidden” liabilities were included. That’s impossible to answer with any accuracy, for several reasons. First, because much of the data remains hidden. Second, because events can cause huge changes in the underlying data, almost always for the worse. Third, because any net present value calculation has to make many assumptions, some of which inevitably make the error bars larger than the calculated values. If someone forced me to answer that question for, say, Greece, I’d say that the nominal sovereign debt load is currently around 1.5 times GDP (which itself is falling, thereby increasing debt as a percentage of GDP), but the actual debt load including bank and personal debt as well as unfunded liabilities (the biggest chunk) is probably around 15 times GDP. The same factors apply to the debt loads of the US and other countries, albeit at considerably different multipliers.

14:12 – If you’re wondering why I haven’t commented on the recent news articles about neutrinos traveling faster than light, it’s because I don’t believe it. As Sagan said, “Extraordinary claims require extraordinary evidence”, and we don’t yet have that evidence, as the original investigators were the first to admit. In fact, they presented their data as something they themselves didn’t believe and asked other scientists to help refute it. If it turns out that this phenomenon is reproducible, much of what we think we know about physics goes out the window. It is unlikely that scientists have been that wrong for so long, so the inescapable conclusion is that this phenomenon almost certainly does not actually exist, but is a result of experimental error.

Actually, although I don’t believe they will be, I hope these scientists are proven right. What an exciting world it will be if FTL is real. Perhaps one day we really will learn how to send ships through wormholes, and we can begin colonizing first the galaxy and then the universe.

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Thursday, 22 September 2011

08:17 – Greece is shut down by strikes today, in response to the announcement yesterday by the Greek government that it intended to make some trivially small spending cuts. The problem is that Greece has been living far, far above its means for many years now, partying on borrowed money that it never had any hope of repaying. Now that lenders are no longer willing to continue subsidizing the party, Greece is going to have to admit belatedly that it is poor. Not just poor, but dirt poor. Living standards will plummet to third-world levels, and all the strikes and riots in the world can’t change that. Greece is a basket case, and is likely to remain so for decades.

Greece, about the size of North Carolina and with a population of only about 10.7 million, has about 800,000 government employees. (Just to put this in perspective, if the city of Winston-Salem was in Greece, our share of that would be about 18,000 government employees.) About 800,000 Greek government employees, all of whom are paid what would be considered a good salary in the United States, let alone a third-world country, and all of whom can retire young with excellent pensions. Is it any wonder that Greece is bankrupt? And, despite its repeated promises to the EU and IMF, Greece has done essentially nothing to cut government employment and spending. It’s no surprise that Germany and the other wealthier northern-tier nations have had about enough.

Work on the biology book continues.

12:07 – Someone asked me what I’d do if I were the Greek government. First, I’d continue lying, as the Greek government has been doing for more than 10 years now. I’d promise the EU/IMF authorities anything to get my hands on that next $10 billion tranche of aid, and I’d ask for it in small bills with non-consecutive serial numbers. As soon as I had my hands on that money, I’d announce immediately that Greece is defaulting on all foreign debts, whether owed by the government or by Greek companies or persons, and that it plans to pay zero cents on the euro. Instead, it will pay off in new drachmas, with those new drachmas valued at one drachma per euro, and only if the debt holders agree that that payment constitutes full and complete payment. The new drachma would quickly lose a bit of value, of course, probably from 1:1 drachma:euro to something in the 100:1 range and falling in the first day or so. I’d also announce an 80% cut in government employee headcount, and that henceforth all salaries and pensions will be paid at their former levels at one new drachma per euro. Oh, and I’d confiscate all real property and financial assets held by the church, which has been a leech on Greece for far too long.

That done, I’d immediately apply to the UN for emergency humanitarian aid to feed the starving people of Greece, which is to say nearly all of them. And I’d plan for a slow recovery that will probably take literally decades. Meanwhile, I’d run ads to let Americans and Brits know that they could enjoy a fantastic Greek vacation for only a few dollars (or a few million new drachma) per day. Because tourism is going to be about the only way that Greece will be able to earn foreign currencies for the foreseeable future.

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Wednesday, 21 September 2011

09:00 – It’s official. I’m crazy, or so says the IMF. Those of us who think a eurozone breakup is likely are engaging in crazy talk according to the IMF. The eurozone situation is fixable, they say, if only the EU will take certain actions. The article didn’t go into details, but as it happens I have a mole within the IMF. He or she tells me that the IMF’s proposal to fix the euro situation includes the following:

Tell them to make us a cambric shirt,
Without any seams or needlework.

Tell them to wash it in yonder dry well
Where water ne’er sprang, nor drop of rain fell.

Tell them to find us an acre of land,
Between the salt water and the sea strand.

Tell them to reap it with a sickle of leather
And tie up the sheaves with a rope made of heather

If they tell us they can’t, we’ll reply,
Let us know that at least you will try.

EU, when thou hast finished thy task,
Parsley, sage, rosemary and thyme,
Come to us, our loans for to ask,
For then thou art a true love of mine.

The bank runs are spreading. Greek, Portuguese, Spanish, and Italian banks have been under siege for some time. No one–people, companies, or other banks–wants to have money on deposit with a bank that is likely to go bust. And now French banks are coming under siege. It was announced yesterday that Siemens had withdrawn $6 billion–that’s billion with a “b”–from the French banking system and put it on deposit with the ECB, a strong indication that Siemens expects the French banking system to fail. And Siemens is by no means alone. Capital flight has become critical, with Europe being sucked dry by depositors fleeing to the US dollar, UK pound, Japanese yen, and other currencies that are perceived as safe havens.

Modern economies are credit-based. To state the obvious, no one can borrow if no one is willing to lend. In Europe, increasingly, that’s the case. So, on top of a debt crisis, we now have a liquidity crisis. Germany is moving to recapitalize its own banks, allocating available funds to that rather than to more subsidies for Greece and other debtor nations. Although doing that is sensible for many reasons, it’s also the first step Germany would take if it intends to withdraw from the euro and introduce a new DM or thaler. That could happen today, or it could happen six months from now. But one way or another, I think it will happen. Parsley, sage, rosemary, and thyme.

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