Sunday, 4 September 2011

09:22 – I just read an article on FoxNews about the importance of religion in the GOP presidential campaign. According to the article, more than 70% of Republicans and more than 50% of Democrats considered it at least somewhat important that a candidate have “extremely strong” religious beliefs. I guess that explains how buffoons like Rick Perry and Michelle Bachman, both of whom would like nothing more than to remake the US into a theocracy, can be taken seriously as candidates. On the other hand, re-electing Obama might be even worse. Moderates like Ron Paul (a Lutheran/Episcopalian/Baptist) and Jon Huntsman (a semi-lapsed Mormon) have no chance, with the media ignoring both of them as a matter of policy. And, of course, admitted atheists have no chance of being elected to any office, let alone the presidency. (Yes, I know Obama is an atheist, but he won’t admit it; even Democrats won’t vote for an atheist.)

What all this tells me is that, once again, there won’t be any major party candidate worth voting for in 2012. No surprise there. I think the last time we had a major-party candidate worth voting for was when Thomas Jefferson ran.

I’ve read several articles about negotiations between Netflix and Starz falling through. When that hit the news, Netflix stock dropped something like 10%. I can’t see that it’s a big deal. In 2008, Netflix negotiated a contract with Starz for about $30 million per year. That contract expires in February 2012. Netflix offered to increase its annual payment by a factor of ten, but $300 million a year wasn’t enough for Starz. They wanted Netflix to charge a premium for access to their content, and that Netflix absolutely refused to do. Good for Netflix.

All of the articles focused on Netflix losing Starz content, but what none mentioned was that Starz gave up $300 million a year, which it has no prospect of getting elsewhere. Netflix, on the other hand, now has $300 million a year available to buy streaming rights from other content providers. As Netflix said, in 2008 Starz was a major provider of Netflix’s streaming content. Now, not so much. Starz is down well below 10% of what Netflix streaming customers watch, and headed for 5%. Netflix can do an awful lot to replace that 5% with $300 million a year. And, of course, nearly all of what Starz was providing streaming is available on DVD, so Netflix can simply buy the DVDs for its customers. We’re not going to miss out on anything. And, if Netflix really wants to stick it to the studios, it can simply stop giving them a 30-day window after the DVD is released before that DVD is available from Netflix.

Barbara and I are spending some time over the long weekend assembling more chemistry kits.

Saturday, 3 September 2011

09:16 – There was little good news last week on the euro crisis. Even the euro cheerleaders are starting to get depressed.

Even Goldman Sachs Now Expects A Tremendous Financial Collapse

Incidentally, when I mentioned this article to Barbara, I pronounced “Sachs” as “socks”. She said she’d thought it was pronounced “sax”. I told her I really didn’t know, but as a German name I thought it should be pronounced “socks”. That’s nothing unusual. People look at me funny when I pronounce Bayer (as in aspirin) to rhyme with “buyer” or Julius Caesar with the J as a Y, the C as a K, the ae as a long eye, and the last syllable beginning with a hard ess rather than a zee.

We had a strong thunderstorm yesterday afternoon. Apparently, a tree fell over on a power line or something, because we were without power from about 1615 to 2045. Like all of our young Border Collies, Colin doesn’t pay much attention to thunderstorms. Except yesterday he did, because we had a couple of very close, very loud strikes. Those scared him, but once things returned to a dull roar he was back to normal.

I’m doing laundry this morning, and we’re working on assembling two or three dozen more chemistry kits. We can’t get too far ahead of ourselves, because we don’t have room to store all that much finished inventory. Once I get more shelves up, we’ll probably still assemble them two or three dozen at a time, because I have to leave room for biology kits, and eventually forensics kits, AP chemistry kits, and so on. All of which require not just room to store finished goods inventory, but also room for component inventory.

Friday, 2 September 2011

09:08 – I keep a small stock of drugs on hand for emergencies, typically 100 capsules or tablets of each. Antibiotics like amoxicillin, ciprofloxacin, doxycycline, metronidazole, tetracycline, and so on, as well as diphenhydramine, tramadol, and several other common drugs. In the event of a catastrophe like Katrina, I don’t want any of my family or friends dying for lack of a common drug. I keep them in the freezer at -20C, where they’ll remain usable for probably 20 years or more.

So, the other day I (finally) received my order from Home Science Tools, 25 bottles of 30 g each of potassium iodide. It occurred to me that it might be a good idea to stick one of them with my emergency drug stock. If a reactor meltdown occurs and I-131 is released, 30 g of potassium iodide provides 230 adult doses of 130 mg each. I haven’t measured, but I’d guess that a 2-liter soda bottle full to the brim holds 2,300 mL, or close enough not to matter. That means that dissolving the contents of that 30 g bottle of KI in a 2-liter soda bottle full of water provides 230 adult doses of 10 mL each, which happens to be two teaspoons.

Not that Barbara or I or her family has any need of KI, nor do many of our friends. The goal of taking KI after an I-131 release is to saturate one’s body with non-radioactive iodine, to prevent uptake of radioactive I-131 by the thyroid, which ultimately increases the incidence of thyroid cancer. However, thyroid cancers typically take decades to develop, so there’s little point to anyone over 40 years old taking KI.

Jerry Coyne posted yesterday about something I’ve been going on about for years: the incredible rip-off that is academic journal publishing.

Here’s the way it works, at least for science academic publishing. We, the taxpayer, fund science studies. Scientists do the work and write up the results as academic papers. Each paper goes through the peer-review process, in which other scientists–working for free–review, edit, and comment on the paper. The final paper is submitted to an academic publisher, who then copyrights the paper and publishes it, usually both in-print and on-line. The journal then charges very high fees to anyone who wants to read the paper. None of the money the journal charges is returned to the taxpayers, nor to the scientists who did the original work and wrote the paper, nor to the scientists who peer-reviewed the paper.

The companies that own these science journals–notably Elsevier, Springer-Verlag, and Wiley-Blackwell–make massive profits at the expense of the taxpayers and the scientists. The journal publishers contribute next to nothing to the process, and earn profit margins of 30% or more. Not gross margins. Profit margins. As Coyne says, this has to stop.

There are now some open-access academic journal publishers who post their work for free download. The problem with most of those is that they’re paid up-front, charging scientists (which of course means the taxpayers) thousands of dollars to publish a paper. The real answer to this problem is for the US government, Google, or some other large entity to start publishing science papers for free. No charge to publish them, and no charge to read them. I’d go further. Elsevier and the rest have unjustly profited on a huge scale for decades. It’s time for someone like the US government to say enough is enough, and to put all of those old papers to which Elsevier and the others have unjustly claimed copyright into the public domain, where they belong. They were produced with taxpayer funds, and by any reasonable standard they should have been in the public domain all along.

Alaska, where men are tough and women are tougher. This young Alaskan woman let her small dog out to pee one evening, heard a ruckus, and found a large bear in her yard trying to eat her dog. So she did what any Alaskan woman would do: stormed up to the bear and punched it in the snout. The bear, knowing what was good for it, dropped the dog and fled. Woman and dog are fine, and the bear probably learned its lesson.

Which reminds me of the old joke about the young guy sitting in a bar, listening to the old guys talking about what it takes to become a Yuker. The old guys tell him that if he wants to be a real Yuker, he has to kill a polar bear and rape an Eskimo woman. So, a few days later the young guy staggers back into the bar, all torn up. “Okay,” he says, “where’s that Eskimo woman you want me to kill?”

I think I mentioned a few days ago some interesting work that scientists had done on DNA recovered from victims of the Black Death. Abbie Smith speculates convincingly that the Black Death was caused by morons.

I’ve talked before about the strange phenomenon of people’s hands getting smaller. The other night, I happened across this page, which has a graphic illustration (scroll all the way to the bottom) of how to choose the proper grip size for a tennis racket.

So, I measured my hand. Sure enough, the yardstick told me that my proper grip size was right on the line between 4-3/4″ and 4-7/8″, which according to that article is one or two sizes larger than a man with a “really big hand” needs. I don’t think of myself as having particularly large hands. I can just barely palm an NBA basketball, or at least I could before I started to get arthritis in my hands. If you have a ruler handy, measure your own hand and see what your proper grip size is. My guess is that if you’re a guy with small hands it’ll be 4-1/2″ (11.43 cm); if you’re a guy with average-size hands, it’ll be 4-5/8″ (11.75 cm); and if you’re a guy with larger than average hands, it’ll be 4-3/4″ (12.07 cm) or more.

Thursday, 1 September 2011

08:24 – Thanks to everyone who comment on Colin’s image. Several people even sent me modified versions with adjustments to color balance and brightness. The image was shot in open shade, so the cool color balance is accurate. The image is straight out of the camera, with no adjustments other than cropping

As to Colin’s ears, yes, they always stick up like that. Some of the neighbors call Colin “Hat Dog”, because he usually keeps the inner edges of his ears pressed together, resulting in what looks like a triangular peaked cap. As you might expect, Colin’s hearing is superb. (The US government invited Colin to join the distant early-warning line, but he declined.) It’s funny watching him in the evening, lying on his side on the den floor, napping. One ear sticks straight up. Whenever he hears a sound, the ear rotates to localize the sound.

If you own any euro-denominated instruments, now would be a good time to dump them. Next Wednesday, the German Federal Constitutional Court rules on whether Germany contributing to the EFSF and euro bailouts violates the terms of the Maastricht Treaty, the founding document of the EU, and potentially even more damaging to the euro, whether Merkel’s actions so far violate the German constitution. Given that the Maastricht Treaty explicitly prohibits EU nations from assuming debts of other EU nations, the first decision should be a slam-dunk, which in itself would be enough to destroy the euro. If the court also decides that Merkel’s actions have been in violation of the German constitution, it’s really game over.

Meanwhile, a credible rumor has it that Greece has hired a US law firm in preparation for leaving the eurozone and defaulting on its debts. Greek officials strongly deny this rumor, but what else could they say? Given that the second Greek bailout now looks almost certain to fail to gain approval, particularly with Finland’s unrelenting demands for collateral now proving an insuperable obstacle to the bailout going forward, the Greeks are left with few alternatives.

We’ve finished building a batch of chemistry kits that should hold us at least through the middle of this month, if not all the way through the month. That means I need to get purchase orders issued for the components to build more kits. While I’m at it, I’ll order enough components to build a small batch of the biology kits. The contents of that kit are semi-finalized, although there may be minor additions as I continue to work on the biology book.

09:34 – If you’re at all interested in self-publishing a novel, you should read this article on Joe Konrath’s blog. In it, he gives away the secret that has allowed him to sell hundreds of thousands of ebooks.

Well, I guess I can give the secret away here as well. It’s persistence. At the beginning of one summer when I was in junior high school, I decided to learn to play tennis. I took my racket and a can of balls to the tennis courts, where I found a bunch of kids my age and older hacking around. They looked terrible. There was no resemblance to the tennis players I’d seen on TV. None of them could hit a backhand to save his life. Their serves looked spastic. I decided there was no way that I’d step on a court until I was a lot better than they were.

So I took my racket and can of balls to my former elementary school, which was only a block away. It had a nice vacant parking lot of smooth asphalt abutting the featureless brick wall of the school. I started hitting balls off that backboard. When I returned the next day, I had a yardstick and a small can of black paint with me. I measured off the width of the singles court (27 feet, 8.23 meters) and painted hashmarks on the mortar of the brick wall. The tennis net is 3’6″ at the posts and 3′ at the center line, so I compromised and choose the line of mortar that was about 3’2″ off the ground, which I painted black. That gave me something to aim for.

For the rest of that summer, I made the five-minute walk from my house to the school almost every day to hit balls off that wall. Some days I had only 30 minutes or an hour available for practice. Other days, I’d spend hours hitting balls. Forehands, backhands, and serves. Flat, topspin, and backspin. Cross-court and down the line. I must have hit 100,000 balls without ever setting foot on a tennis court.

Come September and the start of the school year, I decided I was finally ready to play tennis. Not surprisingly, I usually won, even when playing guys who were on the high school tennis team. In tennis, persistence pays off, just as it does in writing.

Wednesday, 31 August 2011

09:20 – We’re well into the endgame for the euro. Even with the ECB buying huge amounts of Italian debt on the secondary market, yields on new Italian debt crept above 5% yesterday in the first auction since the ECB began propping up Italy. And one of the German heavy-hitters has finally publicly come out in favor of Germany leaving the euro. (Of course, he’s merely said out loud what most Germans are already thinking.)

German business chief calls for country to quit euro and join new currency with Austria, Holland and Finland

If (when) that happens, the Euro crashes and burns. Those holding euro-denominated debt are likely to lose nearly all of their investments. Without the northern tier backing it, the euro is backed only by countries that are already bankrupt, and will have no option but to inflate the euro into worthlessness. A 100 euro note may buy a cup of coffee, if you’re lucky. Of course, the upside is that Greece, Portugal, Ireland, Spain, Italy, Belgium, and France won’t have to default on their debts. They’ll simply pay them off in worthless euros, after which no doubt these weak economies will soon revert to their former local currencies. The other upside is that having devalued their currencies, these weak countries will be able to export much, much more to nations with stronger currencies, thereby allowing their economies to grow again after many years of zero or negative growth. That may be some consolation to their citizens, who won’t be able to afford to import goods from wealthier countries.

Barbara and I were watching something the other night in which one of the characters was pregnant and several of them were sitting around discussing what a horrible idea it was for a pregnant woman to drink any alcohol at all. This is one of those things that everyone knows that turns out not to be true. There is zero evidence that light to moderate alcohol consumption is dangerous for the mother or the fetus, and in fact there is some evidence that one drink or less per day is actually beneficial. Intuitively, it would seem to most reasonable people that heavy drinking is a really bad idea for a pregnant women, but then it’s a really bad idea for anyone else as well.

When I visited the Wikipedia page on Fetal Alcohol Syndrome, I learned that 30% to 33% of pregnant women who consume 18 drinks per day or more give birth to babies with FAS. I assume they meant 18 drinks per week; at 18 drinks per day the baby would be born an alcoholic. But perhaps they really did mean 18 drinks per day, because FAS is relatively rare, so perhaps a 30% to 33% incidence does require that much alcohol consumption.

Clicking around Wikipedia, I came across something that made me wonder if there are words other than “foot” whose plurals vary depending on context. Not usage; those are relatively common. Context. The phrase in question concerned someone’s height, which it gave as “five feet and eight inches”. My first thought was that the person who wrote the article was not a native English speaker, or at least not a native US English speaker. In US English, when referring to a person’s height, the plural of “foot” is “foot”, “and” is never used between the numbers, and “inches” is always understood rather than spoken. For example, if someone asked me how tall my friend Paul Jones is, I would reply “six foot four” (or just “six four”). Conversely, if someone asked me how tall the Washington Monument is, I would reply “555 feet, 5 inches”. So, are there any other words whose plurals are context-dependent? I can’t think of any.

12:28 – Barbara was playing around with the new Pentax K-r DSLR the other day, and shot a few images of Colin at 28 weeks old. Here’s a crop (about 4.8 MP from the original 12.2 MP file).

There’s nothing in the image to provide scale, but Colin is one huge Border Collie puppy. He’s about as large at 28 weeks as a typical adult male BC. We don’t have a scale, but I estimate his weight is in the 50 pound (23 kilo) range already and he can stand with his paws on my chest.

I may reconsider having the camera set to save both RAW and JPG by default. The JPG images it produces are fairly large (about 5.5 MB), and the camera’s processor does a very good job of compression. I looked at zoomed in portions of various images in RAW and JPG form. RAW has a bit more detail, but not much. So I’ll probably reserve RAW form for times when white balance or brightness range is likely to be a problem.

Tuesday, 30 August 2011

08:00 – The Pentax K-r DSLR showed up yesterday, along with its kit lens, a spare battery, and a memory card. When I opened the battery and charger, I plugged in the charger and plunked in the battery, only to see the indicator light green. I assumed that meant the battery was fully charged, so I installed it in the camera. It had a very low charge, so I resorted to reading the manual. As it turns out, the charger light is green as long as the battery is charging and goes out when the charge is complete. One interesting thing. The manual recommends not storing the battery completely charged, because that reduces its service life. That’s a new one on me. I thought storing a partially-charged battery was bad, but at least for the Pentax battery that’s the recommended procedure.

I’m still working on the biology book and kit. One thing I want to include is several different antibiotic resistance samples–amoxicillin, cephalexin, erythromycin, penicillin, tetracycline or doxycycline, metronidazole, and so on. The problem is, the things are ridiculous expensive to buy.

For example, Home Science Tools sells a set of eight antibiotic test discs–two each of penicillin, ampicillin, neomycin, and erythromycin–for $3.95. These discs are tiny. They appear to be about 3/16″ (4.8 mm) in diameter, about the size of the discs produced by a notebook 3-hole punch. And you only get two of each for $4.

I could buy antibiotic discs from a wholesaler for maybe $10 per hundred, but that’s still $0.10 each. That starts to add up if I include multiple discs of several different antibiotics. So I decided to make my own and supply them in the biology kit as 2X2″ (5X5 cm) squares, which the user can trim or punch to the desired size. With half-centimeter squares, for example, a 5X5 cm sheet would provide 100 test pieces, each 5X5 mm, or 5 mm circular pieces if they used a hole punch. (Sterility is not a major issue; even bacteria that are resistant to a particular antibiotic are typically resistant only to the levels found in blood plasma, not to the levels present in these test papers.)

I can buy filter paper in 8.5X11″ (21.6X28 cm) sheets, each of which will provide 20 squares, each about 5 cm square. I’ll run each sheet through the laser printer and print the type and concentration of antibiotic in small print repeated at frequent intervals. I’ll then sterilize the sheets with dry heat and absorb an aqueous solution of the relevant antibiotic into each sheet. Of course, the issue then becomes how to determine the concentration. To do that. I’ll weigh a sheet of the filter paper dry, soak it in water, allow it to drain, and reweigh it. Knowing how much water each sheet absorbs will allow me to calculate how concentrated to make the solution to reach a given concentration of antibiotic in a specified area of the filter paper. I love devising cunning plans.

09:35 – Well, no more site traffic stats for me. When I clicked on the site stats link, WordPress told me that the stats plugin now required installing and enabling something called Jet Pack and setting up an account on WordPress so that I could get to my stats in the WordPress cloud. I hate clouds. And site traffic doesn’t matter to me. I don’t care if I average 100 visitors a day or 10,000. I write this journal for myself, not for anyone else.

12:17 – I just assembled enough chemistry kits to fill the orders that have been outstanding since I ran out of kits on Saturday. While I was at it, I built a dozen extra kits and put them on the shelf. Final kit assembly goes much faster now that I have all the components organized and ready to hand. Assembling a dozen kits from subassemblies and individual components now takes less than an hour.

Monday, 29 August 2011

08:58 – As regular readers know, I’m no friend of either government or religion, which I consider to be twin plagues on humanity. Either on its own is bad enough; the two working together have historically been the single greatest threat to human rights. As you might expect, I’m a strong advocate of the separation of church and state.

So it may surprise you that I’m also a strong advocate of school voucher programs, despite the fact that these vouchers are often used to support religious schools. This morning, I read an article in the paper about a small school voucher program in Indiana, only about 3,000 students, that’s being decried as the apocalypse by public schools. Then, when I flipped to the editorial page, I found an article by George Will about a school choice program in Castle Rock, Colorado.

These stories have the same thread in common. In both cases, opponents have introduced the red herring of church-state separation. In both cases, religion has nothing to do with the issue, other than peripherally. The real issue is that public schools–whose employees are grossly overpaid, grossly underworked, and grossly underperforming–live in fear of having to compete with private alternatives. They understand that, given the choice, parents will opt for superior schools provided by the free market. There go their ridiculously high salaries and benefits, not to mention their job security. They’re fully aware that they can’t compete.

My solution to this problem has always been simple: establish school voucher programs without limitations on the number of students eligible. Make them dollar-for-dollar programs. Parents who wish to enroll their children in private schools receive a voucher in the amount of the average amount spent per student in the public schools, including facilities costs. That amount is deducted from the amount provided to the public schools. And homeschoolers should be eligible to cash these vouchers up to, say, three students worth, to help stay-at-home moms and dads who are educating their own children at home.

If such programs were widely implemented, the results are predictable. Public schools would wither. The only students who would attend public schools would be those whose parents don’t care enough to seek better alternatives for their children. The overall educational level of children would soon show huge gains, since private schools and home schools are demonstrably hugely superior to public schools. The total cost of education would plummet as public schools died and the voucher amount was adjusted downward to reflect reduced costs.

Less obvious, perhaps, is that such programs would also nearly eliminate home schooling in the current sense. Many, probably most, parents who currently home school their own children would not do so if they could instead send their children to schools that they approved of. Traditional private schools, religious and secular, would initially grow by leaps and bounds, but alternative small private schools would also thrive. Most of these alternative private schools would be founded by homeschoolers who really enjoyed what they were doing and were good at it. Instead of educating just their own children, they’d begin educating other children as well, and eventually become actual schools.

Of course, the teachers’ unions and state government education departments will do everything they can to prevent this from happening. We see that now, with artificial restrictions and regulations enforced on home schoolers to prevent the homeschool phenomenon from developing further. In many states, for example, it would be illegal for a homeschool family to hire my friend Paul Jones, a chemistry professor at Wake Forest University, to come in and teach chemistry to their children. Those state laws consider the parents qualified to teach their own children, but do not consider Dr. Jones qualified to teach them. Similarly, many state laws prohibit a homeschool mom or dad from teaching other people’s children, once again to prevent small private alternative schools from flourishing. At the behest of teachers’ unions and other self-interested parties, many states have ridiculous health, environmental, and facilities regulations for any school that teaches students from more than one family. Again, those have nothing to do with the safety of or quality of education for the students themselves. They’re there only to protect entrenched public education interests.

That’s why I’m encouraged every time I read an article about good things happening for home schoolers and the advance of school choice.

Saturday, we shipped the last two chemistry kits we had in stock. We now have another dozen and a half in the final stages of assembly and have gotten started on the next batch of two dozen. We’ll ship outstanding orders tomorrow or Wednesday.

11:02 – At least some of the MSM are starting to catch on…

Eurozone crisis: ‘I’ve tried A! I’ve tried B! I’ve tried C!…’ Click, and out

Sunday, 28 August 2011

12:17 – Irene nailed the North Carolina and Virginia coastal areas pretty badly, but we saw no effects in Winston-Salem other than a stiff breeze and a bit of rain. This storm had the potential to make landfall as a Category 3 or even 4, so most of those in the affected areas are probably feeling pretty lucky that it was “only” a Category 1. Of course, that’s small consolation to those who were killed or injured by this storm, or suffered severe property damage.

I’m still working on the biology kits (and book). We made up subassemblies yesterday for another 18 chemistry kits, which means I need to start getting orders ready for more components. While I’m doing those orders, I’ll add the stuff I need to prototype the biology kit and produce maybe a dozen of them.

I periodically get emails and a few comments about how the Euro crisis is not really serious. Those messages invariably comment on the size of the US debt relative to Euro nation debts. Now, it’s true that the US is highly indebted, but what really counts is how much each country has to pay on that debt. Assuming that Greece, Italy, and the US all had to refinance all of their existing debt tomorrow at the current bond yields, here are some rough numbers with interest payments as a percentage of GDP.

US – interest payments of about $200 billion a year on outstanding debt of about $15 trillion, with GDP around $15 trillion = 1.33% of GDP

Italy – interest payments of about $200 billion a year on outstanding debt of about $3 trillion, with GDP around $2 trillion = 10% of GDP

Greece – interest payments of about $200 billion a year on outstanding debt of about $488 billion, with GDP around $305 billion = 66% of GDP

I’m making some assumptions here that render these percentages meaningless, because the market would not continue to lend money to any of these countries if they attempted to refinance their entire debts at one time. For Italy, I’m assuming yields of about 6.7%. They’re currently right at 5% on 10-year debt, but that’s with the ECB buying Italian bonds like crazy. They can’t do that much longer, and when they stop doing it the yields on Italian bonds will skyrocket. On Greek debt, I’m using the current 2-year yields, which are north of 40%, because few people are crazy enough to lend money to Greece on a 2-year basis, let alone for 10 years. And, of course, these countries don’t need to refinance all of their debt overnight. But Italy and Greece do need to refinance a huge chunk of their current debt over the next few months, and these yields are reasonable in that scenario. In fact, I’d expect to see yields north of 10% if not 15% on Italian debt when the big chunks come due for refinancing, and yields considerably over 50% for Greece. That won’t actually happen, of course, because both Greece and Italy will default first.

Making matters worse, while the US can print as many dollars as it needs to avoid default, that option is not open to Greece or Italy. There are two potential directions this could go. First, Greece and Italy could abandon the euro and return to the drachma and lira, respectively. If that happens, their local currencies will be devalued hugely literally overnight. They won’t be able to buy enough euros to honor their debts, and they will default. Conversely, Germany and the other northern tier countries may abandon the euro and return to their local currencies. If that happens, the countries that remain in the Eurozone will see the value of the euro plummet relative to the northern tier currencies as well as the pound and dollar. The new ECB can print as many euros as it needs to, and it will need a lot to pay off all those debts. Someone who holds a euro-denominated bond for a billion euros will in fact be paid that billion euros. The problem is, those billion euros will be worth probably at most a tenth of what they’re worth now relative to the dollar or pound or Swiss franc. The remaining Eurozone countries become dirt-poor overnight, while the northern tier countries benefit by paying off their euro-denominated debt in euros that are nearly worthless. Of course, the holders of that debt suffer badly, as will holders of any euro-denominated debt. Northern-tier countries see their exports plummet, but those high levels of exports to other EU countries were never anything other than illusory anyway. There’s no point in sending goods to countries that aren’t going to pay for them.

All of this makes me wonder when our politicians are going to wake up to the fact that J. M. Keynes was completely wrong. If they had any sense, they’d be reading F. A. Hayek, who had it completely right all along. Of course, being politicians, by definition they have no sense. And, to a politician, Keynes’ advice to governments to intervene constantly and heavily in markets is much more appealing than Hayek’s advice to keep their damned hands off the markets.

Saturday, 27 August 2011

11:11 – Irene has made landfall on the North Carolina coast, fortunately as a Category 1. We’ve seen almost no effects from Irene here in Winston-Salem. It was a bit breezy when I took Colin out around 0700 this morning, but we’ve had no rain and aren’t expecting any. Some rain would have been welcome, but not at the expense of the eastern part of the state suffering even more than it is.

I see that New York City has closed its subway system for the first time ever due to weather, and that about 300,000 New York City residents have been ordered to evacuate. Very few NYC residents own automobiles, which makes me wonder how and to where they intend to evacuate these people. Perhaps it’s enough just to move them from low-lying areas to parts of the city that are a bit higher. Let’s hope that Irene continues to weaken. A direct strike on NYC by even a Category 1 hurricane would have disastrous results in terms of both the human and economic toll.

The human toll in particular, because few New Yorkers have experienced a hurricane up close and personal. Most of them probably just think of it as just the sort of storm they’re used to, but on a larger scale. As Mark Twain commented on another subject, the reality of a hurricane compared to normal storms is like the difference between lightning and lightning bugs. Even here in the southeast, where people are experienced with hurricanes, there are numerous idiots who rush to the coast to experience a hurricane. Every time we have a strike, there are at least a few Darwin Awards candidates who end up being injured or killed because they were somewhere they shouldn’t have been, doing something they shouldn’t have been doing.

Paul Jones stopped by yesterday to borrow my Plextor analog-to-digital converter. He has some old personal VHS tapes he wants to transfer to DVD. He asked about the DSLR I’d just ordered, and I mentioned that the AA battery adapter was on back-order so I’d ordered a spare $44 lithium-ion battery. Paul mentioned that he’d ordered three spare batteries when he’d bought his DSLR, and he’d paid only $8 each. My hair stood on end. I mentioned that Chinese DSLR batteries are famous for damaging cameras, if not actually catching fire, and he said he’d had no problems with them in the three years since he’d bought them. Hmmm. This morning, Paul emailed me to say that he was mistaken. It was the IR remote he’d ordered that’d cost $8. The batteries listed for $49 each, but he’d gotten three of them from Amazon for $30 each.

Barbara and I are assembling 18 more chemistry kits today. I’m also going to try to semi-finalize the contents of the kit for the biology book this weekend. At some point, I simply have to declare enough, and stop adding items to the biology kit. One of the primary goals, after all, is to keep the kit affordable. For example, I’m going to include a bottle of sterile pre-made nutrient agar in the kit. Home Science Tools sells the same item for, IIRC, $7, which is reasonable. But I’m going to remove one of the lab sessions I’ve already written, on coliform testing of water, because that lab session would also require either EMB (eosin/methylene blue) agar or MacConkey agar as well as TSI (tri-sugar/iron) agar. Allocating $21 of the kit price to these three agars is too much, so I’ll have to settle for including just the nutrient agar.

Friday, 26 August 2011

09:30 – Colin loves sticks, and we always try to keep a “good stick” on hand. That is, one that’s solid wood and maybe a cm or two in diameter by 30 or 40 cm long. Yesterday, I let Colin off leash while I rolled the yard cart from the curb to the back yard and rolled the trash cart up to the curb. He ran around our and our neighbors’ back yards while I was doing that, and when he returned he didn’t have his good stick. So, while I was taking him for a walk, I looked for another good stick. I found what looked like an ideal candidate, but when I picked it up it was rotten and weighed next to nothing.

Which got me to thinking about Steve Jobs, who has just retired as CEO of Apple. Even with Jobs’ retirement, the value of Apple’s outstanding stock is still greater than the cumulative value of Europe’s 91 large banks. Like the stick I rejected, Europe’s banks appear solid but are actually rotten and lightweight.

The main problem is that those banks have huge exposure to Eurozone sovereign debt. Due to an accounting oddity, sovereign debt, regardless of its actual solidity, is always considered to be default-proof, and so is carried on balance sheets at nominal value. The reality is very different, of course. A bank that holds, say, €1 billion of Greek sovereign debt even now carries that debt on its balance sheet as a €1 billion asset. Current yields on 2-year Greek debt are getting very close to 50%, which means that debt should be written down on balance sheets to a small fraction of nominal, if not written off entirely. But the banks haven’t done that, for Greek, Portuguese, and Irish debt or any of the other peripheral sovereign debt, let alone “core” Eurozone debt issued by France or Belgium. The ridiculous bank “stress test” done a couple of months ago estimated that Europe’s largest 91 banks would require only about €2.4 billion to meet capitalization requirements. The reality is that they’ll need more like €150 billion to meet even the minimum requirements with rosy assumptions including high EU growth and no sovereign defaults.

Back in the real world, the truth is that all or nearly all of those banks are already bankrupt, and the EU no longer has the ammunition to do anything about that. The ECB is already bent completely out of its intended shape, engaging in legally-questionable if not outright illegal purchases of sovereign bonds and accepting essentially worthless paper as collateral. In effect, the ECB itself is in deep trouble, with its nominal balance sheet having no relation to reality. Making matters worse, as the EU lender of last resort, the ECB is now attempting to do what the banks themselves should be doing. The situation in the EU is so bad now that banks no longer trust each other. Banks with a temporary surplus would ordinarily do overnight loans of those surplus funds to other banks, earning some interest in the process. Instead, those banks are depositing the excess funds with the ECB, earning only tiny amounts of interest on them.

So it’s true. The ECB and Europe’s commercial banks are rotten sticks. Even Colin wouldn’t touch them.

I just got orders for the last two chemistry kits I had already built, so we’ll build another dozen or so kits this weekend. We’re still in pretty good shape in terms of components to build more kits, but once this batch of components runs out it looks like we’ll have to increase the price of the kits by $10 or so to cover increased costs. I hate to do that, because we’re trying to keep the kits as affordable as possible, but anyone who thinks these massive so-called “quantitative easings” don’t affect prices doesn’t understand economics. The true definition of inflation is “an increase in the money supply”, and quantitative easing is simply a weasel phrase for inflating the currency. That shows up sooner or later, usually sooner, in the prices we pay for everything.