Month: October 2011

Monday, 31 October 2011

08:44 – Edward P. Lazear in the WSJ points out something that should be obvious to anyone. The EU problem is too much government. Unfortunately, the only “solutions” they’re considering involve more of what’s caused the problem in the first place. It’s apparently impossible for politicians even to consider that government is the problem, not the solution. And the US has the same problem, albeit not quite as advanced.

Instead, EU politicians blame the market, the ratings agencies, and indeed anything else they can think of other than themselves. They’re now apparently seriously considering implementing a horrible idea that’s been simmering on the back burner for a couple of years now. A so-called “Tobin Tax” on financial transactions. Basically, the idea is that by making it more expensive for traders to trade they’ll reduce volatility in the markets.

Their problem is that, as Sweden found out in spades a few years ago, a Tobin Tax must be implemented globally. When Sweden implemented a Tobin Tax, the markets simply abandoned Sweden and moved their trading elsewhere. The vast majority of market activity in the EU already occurs in London, so implementing a Tobin Tax in the eurozone would simply cause essentially all of the little remaining market activity in the EU to relocate to London and New York, where it would not be taxed. The EU’s solution to this is to attempt to force the Tobin Tax on the UK (which has a veto over such things) and to lobby the US to implement such a tax. It’s not going to work, any more than any of the EU’s other “solutions” have worked. We’re really well into the endgame now.

10:51 – Hmmm. I just finished writing up a lab session on Mendelian inheritance, and realized that I might have a serious problem. Back when we were in school, everyone did the PTC tasting thing, but it was typically done with just the students in a classroom. This lab session is a bit different…

“Testing unrelated individuals provides some useful data, but ideally you want to test as many related individuals as possible so that you can follow inheritance of the PTC tasting and non-tasting alleles through generations of families. Testing both parents and their children is good; testing parents, children, and all four grandparents is better still. Best of all is testing the full extended family, with aunts and uncles and cousins.”

Most of my readers will immediately spot a very serious potential problem there, so I added the following warning:

Any human genetic testing, including this lab session, potentially has serious ethical implications. Many families have at least one “skeleton in the closet” that they’d prefer to keep hidden from the world at large. You are obligated—morally, ethically, and possibly legally—to maintain the absolute privacy of your test subjects by refusing to disclose the data you obtain to anyone else, including the test subjects themselves.

For example, in one of your family groups of test subjects you might find that both parents are non-tasters, as are all of their children except the eldest. You might conclude that that child was adopted or had a different father. Disclosing that conclusion TO ANYONE is a serious ethical violation, and may have direct and indirect consequences you cannot imagine. If you discover such an anomaly, KEEP IT TO YOURSELF.

Also consider this: you are not a geneticist, so you may be wrong.

12:02 – Jerry Coyne comments on Science publishing a new phylogeny of the mammals.

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Sunday, 30 October 2011

08:11 – Barbara goes to the doctor for a follow-up visit this week. She’s really hoping he’ll approve her to drive and return to work. She’s still in some pain, but she’s stopped taking the oxycodone and is now taking tramadol. If I were her doctor, I’d approve her to return to work.

The blizzard that hit the northeast didn’t make it this far south. But we had cold rain Friday night and yesterday morning and lows last night about a degree above freezing, so we just missed it. As has been true of all our Border Collie pups, the cold weather invigorates Colin, not that he needs any invigorating. For the last couple of days, he’s been charging around disregarding his leash, sometimes nearly pulling me off my feet. We use a long roller leash, and Colin learned very early exactly how long it was. Ordinarily, he knows he’s about to run out of leash and stops before it jerks him to a stop. Lately, he’s been ignoring that.

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Saturday, 29 October 2011

10:04 – Barbara continues to improve. She’s even taking Colin for short walks down the block and yesterday while I wasn’t looking she rolled the trash cart back down the driveway. She goes to the doctor next week for a follow-up visit, and I suspect he’ll approve her to drive again and return to work. She’s going stir-crazy here. Of course, Colin is going to be a problem because he’s now used to having her home all day every day.

Yesterday I finished up the group of lab sessions on microorganisms and started on a group of lab sessions on genetics. Right now, I’m working on a lab about Mendelian traits and inheritance. There are actually relatively few pure Mendelian traits in humans, but one of them is a classic. The ability to taste phenylthiocarbamide.

Fortunately, I also did a self-sanity check. Beginning biology students often make the false assumption that dominant and recessive Mendelian traits correlate to the percentages of individuals in a population that exhibit the dominant and recessive phenotypes. In other words, a high percentage of individuals exhibit the dominant phenotype and a much small percentage the recessive phenotype. A moment’s thought establishes that’s not the case, at least for anyone who’s aware that Huntington’s disease is a dominant Mendelian trait.

But I made that exact false assumption with regard to Colin and his prick ears, assuming that floppy ears in dogs are Mendelian dominant and prick ears recessive. In fact, floppy ears are a recessive Mendelian trait. The fact that probably only one in ten thousand Border Collies has prick ears doesn’t indicate that prick ears are recessive, but merely that Border Collie breeders have selectively bred a population of Border Collies that are almost entirely recessive with respect to ear conformation. (Not that they were selecting for ear type specifically, but sometimes something you don’t care about one way or the other is part of the package that you’re breeding for.)

Now the only problem is that I don’t remember either Colin’s mother or father having prick ears. Hmmm.

10:42 – Duncan was a giant among Border Collies, standing about 4″ (10 cm) taller than other large males and weighing half again as much despite the fact that there was no fat on him. When Duncan was two or three years old, we took him to a Carolina Border Collie Rescue event held at a farm owned by one of the volunteers. There was a large open field and a herd of about 100 Border Collies running around in it. We could pick out Duncan instantly because he towered above all of the other BCs, except one who was even larger than he was. (Despite the fact that Duncan was registered purebred, we always suspected that he might have some English Shepherd in his bloodlines.)

Barbara just got out a photo of Duncan standing on our front porch that showed the line of his back was at the line of mortar above the seventh row of bricks. She then took Colin out on the front porch while I stood back to see the level of his back relative to the bricks. At eight months old, Colin is already taller than Duncan was as an adult. He’s going to be a very big boy.

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Friday, 28 October 2011

08:48 – One thing that’s always struck me as strange about Netflix practices is that they don’t allow non-members to browse or search their catalog. One would think they’d want non-members to be able to see what they’re missing.

I just downgraded our plan from streaming + two discs to streaming-only, which took effect Wednesday. With the exception of the final disc of series four of Sons of Anarchy, there was nothing left in our disc queue that we cared that much about seeing, so I planned to go streaming-only for a few months to give Netflix a chance to add more discs that we wanted to watch and then bump up our membership to include discs. But, as of yesterday, I can no longer see anything that has to do with discs. Our disc queue is now invisible, although I understand that Netflix keeps it archived for two years. Not that that matters, since I did a screen capture of it before I changed to streaming-only.

But I can no longer search for discs, nor do search results even include series or seasons that are available only on disc. For example, series one and two of Sons of Anarchy are available on disc or streaming, but series three is disc-only. When I search for Sons of Anarchy now, all I see are the two seasons that are available streaming. Not even an indication that series three is available on-disc.

Given that Netflix is trying very hard to force people toward streaming, I wonder if the converse is true. If I had a disc-only plan, would they let me see what’s available streaming even though I couldn’t watch it? It seems to make sense for them to do that.

Actually, Netflix has made things easier for me. Rather than keeping an eye on new disc-only material, I’ll just wait six months or so and then upgrade our plan to include discs. There certainly ought to be at least a month’s worth of new discs we want to watch by then. Not that we’ll have to wait six months to see the last two episodes of Sons of Anarchy S3. Our friends Paul and Mary subscribe to both discs and streaming, and they tend to let discs sit around for extended periods. I asked Mary the other day if she’d mind getting SoA S3D4 for me, and she readily agreed.

Work on the biology book continues. Right now, I’m working on a lab session on culturing drug-resistant bacteria. Once I finish that session, I think I’ll jump over to a different group for a change of pace, maybe the genetics group or the life processes group. Or maybe even one of the survey groups. I’m also down perilously low in chemistry kit inventory, so soon I’ll have to set aside a day or so to build more chemistry kits.

14:55 – Well, that didn’t take long. In the first real test of the “solutions” reached at the EU crisis conclave Thursday morning, Italy has failed miserably on today’s bond sale. The yield was catastrophic, 6.06%, and Italy was unable to sell all of the bonds it offered. To knowledgeable observers, that’s sufficient evidence to declare the latest crisis summit a complete and utter failure. Not only did the non-actions taken at the summit not reverse the collapse of EU finances, they appear not to have even slowed things down. Contagion continues, unabated.

Of course, none of this crisis kabuki really had anything to do with Greece and not much more to do with the euro or the EU. What it’s really about is an attempt to shore things up until Merkozy can get past the next elections–not that either of them has much chance of being re-elected–and, even more importantly, the continuing push by the EU elite for “more Europe”. They’re actually loving this financial/debt/liquidity crisis, because it supports their long-term anti-democratic plans to consolidate Europe as a single political entity, ruled by them. Fortunately, I believe the FANG nations will refuse to go along with their cunning plan, leaving eurocrats holding the empty bag of the southern-tier nations only. Let them see what they can do with that motley collection.

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Thursday, 27 October 2011

08:45 – How could I have been so wrong? The EU authorities announced this morning that they’d hammered out a comprehensive plan overnight to address the euro crisis. And they’re right. They pretended to deal with every issue facing them (except the important ones), and so far the markets are pretending to believe them. I predict that’ll last 24 to 48 hours before reality sets in.

Private lenders agreed to accept a “voluntary” 50% writedown on Greek bonds. In reality, they accepted an 85% writedown, because what they ended up with was 15% in cash and the rest in 30-year Greek paper, which the market will quickly value at zero, or close to it. And I have my doubts about that 15% cash ever actually being paid. But at least Greek debt has gone from unsustainable to, well, unsustainable.

They’ve also announced that they’re pretending to increase the bailout fund to €1 trillion, although they’re not actually going to commit any more of their own money to it. They plan to use a combination of leveraging (AKA smoke-and-mirrors) and hoping that non-EU countries will be foolish enough to put in pots of money to back worthless EU sovereign bonds. Meanwhile, they’ve papered over the ECB issue simply by not mentioning the ECB at all.

So, the net result of this pathetic effort is that they’ve bought themselves a bit more time. I’d guess they’re hoping for weeks, but I think they’ll be lucky if it’s more than a few days. Keep a close eye on Italian bond yields over the coming few weeks for the real story.

Regular readers probably won’t believe me, but last night I was pumping iron–lifting free weights. Barbara called Mary Chervenak yesterday to ask if she could borrow some weights for a week or two, until she could start going to the gym again. Mary stopped over after dinner and dropped off a pair of 15-pound (6.8 kilo) weights. I actually picked one of them up and carried it into the house. Dense little sucker. Barbara carried the other one.

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Wednesday, 26 October 2011

08:49 – Well, as expected, the crisis summit today has turned into a complete fustercluck. Not only is there zero chance of comprehensive actions to address the euro crisis, the participants can’t even agree about what to argue about. And, oh by the way, the Italian government is teetering on the brink of collapse, mainly because of German demands that Italy increase retirement age to 67, as Germany has done. Collapse of Italy’s fragile coalition was narrowly averted yesterday, but it looks like Berlusconi is on his way out, and sooner rather than later. If that happens, it could be months before Italy again has a functioning government.

The collapse of Italy’s government would eliminate even the slightest mathematical chance of saving the euro and the EU. Even with the ECB buying Italian bonds, yields on those bonds are now above 6%, the catastrophic level that convinced the ECB to intervene in the first place. And Italy has to rollover €250 billion worth of bonds over the coming year, just to stay even. Even with a functioning government, it’s extremely unlikely that Italy could sell €250 billion of bonds over the next year no matter how high the yields. If the government collapses, there’s no question that Italian bond sales will also collapse, leaving Italy with no way to pay off maturing bonds. In other words, Italy will default, joining Greece, Ireland, and Portugal. The EFSF bailout fund is insufficient even to cover expected losses on Greece, let alone Ireland and Portugal. If Italy joins the group of bankrupt nations, there is zero hope that it can be bailed out. And it’s looking likely that Italy will join that group in the next few months, if not the next few weeks.

12:31 – Barbara sent me a link to this forensics blog, which looks very interesting. The author, Tom Adair, is a retired forensics guy with 15 years of experience. Unlike most of the forensics sites I follow, which are intended for forensic scientists and technicians, this blog is targeted at fiction authors and readers. I’ve only looked at half a dozen random articles, but it appears that this guy knows what he’s talking about. If you have any interest at all in real crime-scene investigation and criminal forensics, check out this blog.

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Tuesday, 25 October 2011

09:13 – Geez. Anyone who’s even slightly aware of what’s going on believes that the crisis super-summit tomorrow is the absolute last chance the EU has to prevent the collapse of the euro and the disintegration of the EU. And yet the actions of the leaders of the top four EU countries are reminiscent of the Animal House food fight. We have Merkozy lobbing vicious verbal grenades at each other, both of them publicly making fun of Berlusconi (who richly deserves it, actually), and Sarkozy telling Cameron that Cameron “has missed an opportunity to shut up” and that he’s “sick” of Cameron “interfering” in the discussions. It’s fortunate that European countries no longer have much in the way of military forces, or Germany would probably have invaded France by now. And France would have surrendered. And yet, by tomorrow, these “leaders” are supposed to agree to terms that none of them are willing to agree to and by so doing save the euro and the EU. Not bloody likely.

Not that there’s actually anything that can be done to save the euro or the EU anyway. The euro itself has a fatal design flaw, and no amount of gerry-rigging can fix that permanently. The problem now is that the EU is running out of temporary patches, each of which was extremely expensive and ultimately futile. All of the argument now isn’t about how to save Greece and the euro and the EU; even the politicians by now realize that is impossible. What they’re arguing about now is who will pay the costs of the collapse. Everyone except the FANG nations wants the FANG nations to take the hit, cutting them down to size. The FANG nations aren’t willing to do so. The only thing they’re seriously concerned about is how to minimize the damage to their own economies from the collapse. They’ve already written off not just Greece, but Portugal, Ireland, Italy, Spain, Belgium, and France.

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Monday, 24 October 2011

08:41 – Costco run and dinner yesterday with Mary and Paul. Barbara did very well.

If you don’t like to be frightened, turn away now.

This graphic, from this article, makes clear that sovereign debt, scary as it is, is only a part, often a small part, of the total indebtedness of the world’s major economies.

Roy Harvey sent me a link to this article by Ambrose Evans-Pritchard, whose work I’ve been reading for years. Although Evans-Pritchard buys into Keynesian arguments a bit too much for my taste, in general he’s one of the few MSM writers who actually gets it. He’s a journalist of the old school, and there aren’t many of them left.

In this article, Evans-Pritchard makes the same argument that I’ve been making for some time now, that the US, although hurting, is set to come roaring back more dominant economically than ever. As he concludes, “The 21st Century may be American after all, just like the last.” Indeed.

09:24 – Oh, yeah. I should have mentioned that these numbers are only for formal contractual indebtedness. What they don’t include is unfunded pension and health-care liabilities, which are often much larger than formal indebtedness. Greece, for example, is usually reported to have sovereign indebtedness totaling 160% of GDP. That’s true as far as it goes, but once one adds in personal and business debt and unfunded pension/health-care liabilities, it’s more like 1600% of GDP. The major economies aren’t quite that bad, but unfunded liabilities at the federal and state levels as well as corporate unfunded liabilities still make formal indebtedness pale.

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Sunday, 23 October 2011

09:55 – Wow. The EU crisis meeting this weekend degenerated even faster than I expected, with Merkel and Sarkozy literally screaming at each other, so loudly that it was audible over Ode to Joy down the hall in the main conference area. The problem, stated simply, is that Merkel and Sarkozy hate each others guts. Were it not for the critical nature of these meetings, they wouldn’t agree even to be in the same room. Sarkozy wants Germany, directly and indirectly, to pay essentially all of the costs of “rescuing” the euro. Merkel knows that Germany couldn’t afford to do that even if it wanted to, which it doesn’t.

The only significant thing to come out of the conference so far is a preliminary agreement to recapitalize EU banks to the tune of about $135 billion. That’s half of what the IMF said would be necessary, and even the IMF figure is based on rosy assumptions. And, if the last few months is any guide, rosy assumptions are highly unrealistic. My own opinion is that $1 trillion would be just a start on what’s needed.

Meanwhile, we’re in the middle of a huge run on EU banks. Individuals and corporations are withdrawing funds from all EU banks and moving them to perceived safety, often literally under their mattresses. No one–individuals, corporations, or governments–trusts EU banks any longer, and with good reason.

The level of writedowns that banks will be obligated to accept on Greek debt is a huge sticking point. The IMF and Germany are pushing for 50% to 60%, which is itself grossly insufficient. France, whose banks are hugely exposed to Greek debt, is insisting on no more than 35% to 40%. The bankers themselves, via the IIF, are saying that if the 21% “haircut” agreed at the 21 July summit must be increased it can be to no more than 25% to 30%. It’s gotten so bad that the EU authorities are now playing chicken, telling the bankers that if they don’t cooperate the EU is now willing to allow Greece to go into hard default, which means 100% haircuts.

There was never any realistic possibility that this summit would agree to any actions that had any chance of “solving” the crisis, but now it’s clear that nothing of any significance whatsoever can be agreed. It’s now as close to mathematically certain as politics can ever be that the euro will break up catastrophically, and it will be sooner rather than later. I’d bet good money that Germany is preparing, if not already fully prepared, to depart the euro and re-institute the D-mark under whatever name. Finland, Austria, and the Netherlands are probably planning to do the same, either with individual local currencies or as a part of a Northern-tier currency union.

What we’re watching is not just the collapse of the euro or even the breakup of the EU, but the destruction of the whole European welfare state.

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Saturday, 22 October 2011

09:08 – Barbara is doing very well. It’s only been a little more than two weeks since her surgery, and she’s already getting around pretty well. She can’t wait to get back to work, although she’ll have to wait at least a couple more weeks for that. Meanwhile, she’s up and around the house and able to do light stuff. She cooked dinner the last two nights, and walked down the block with me yesterday to talk with Kim.

I just downgraded our Netflix account to streaming-only. Our DVD queue still has 100 or more discs in it, but they’re all low priority stuff. Meanwhile, our streaming queue is full of stuff that we actually want to watch. So, for the next few months we’ll watching streaming material and wait for more DVD-only stuff to accrue. Then we’ll go back to a 2- or 3-at-a-time disc plan and watch that stuff.

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