Coyote Blog

Before he made movies, he apparently was a really good photographer.

I find it sort of hilarious that it is Conservatives that are demagoguing gas prices and Liberals who are trying to explain that they really are not that high.  Yet another example of the Coke and Pepsi parties swapping political positions based on whose team is in the White House.

But I thought this graph was interesting, and supports a point I have made for years (Via Flowing Data)

I have worked in oil fields drilling miles below the surface and on offshore platforms in mile-deep water.  I have seen the Alaska pipeline under construction and worked in a 400 thousand barrel a day refinery.  And I can say with confidence that no other product on this list even is in the same order of magnitude as gasoline in terms of the capital investment, effort, and technology that does into delivering a gallon of gas.  The ability to deliver gas for even $4.00 a gallon is almost unbelievable.   Yet no other industry on this list or any other list gets 1/100th the grief oil companies do for being rapacious, greedy, and detrimental to society.

Apparently the Left is still trying to argue that the stimulus (the process of taking money out of private hands to have it spent by government officials instead) was really a super-fabulous idea and only failed because it was too small.  Here is Kevin Drum:

But another reason [the stimulus failed] is that at the same time the feds were spending more money, state governments were cutting back. The chart below from CBPP tells the story. They have data for all but six states, and on average for 2012, "those 44 states plan to spend 9.4 percent less than their states spent before the recession, adjusted for inflation." That's not just less than last year, it's less than 2008. That wiped out nearly the entire effect of the federal stimulus pacakge [sic].

I have a different take.  A number of states, because they don't own a printing press as does Uncle Sam, actually tried to deal with economic reality and cut their bloated spending, an effort that was largely wiped out by Obama's "stimulus" spending.

The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.

--  Barack Obama, December, 2007

Here is the top 10 in the bracket challenge after the first week.  Sadly, both of my brackets are in the bottom half.  Apparently, it is statistically impossible for me to do better than 15th place  (thank God for technology so that hope is dashed and I can no longer fool myself about my future chances).  Even worse, my son made the top 10.  More results here.

It is good to see the President take time out of his busy schedule to submit a bracket in our competition.

Spent the weekend playing Spacechem while watching the NCAA basketball tournament.  Though nominally about tearing apart and building molecules, its really a simulation of assembly line design, since you molecular engineering happens mechanically (ie carry atom over here, bond it in reactor, move it over there, etc).  There is a kind of built in re-playability, as most of the puzzles are not that hard to solve in some fashion, but can be very hard to solve efficiently.  For example, the level "No Ordinary Headache" will allow the player up to three reactors, but a one reactor solution is possible.  Took me forever to finally get it. This one is not mine but is not too different from my solution.

To that end, the game provides a distribution curve of other player's solutions based on three stats (number of process cylces required, number of reactors required, number of components required).  Even if you get the puzzle right, you may see you solution was way less efficient than other folks, driving one to try again.  I like this dynamic - it is sort of like duplicate bridge, where one is not judged by just winning the hand, but by how well one scored with the hand vs. other players playing the same hand.

Here is another positive review at South Bend Seven.  And just search "spacechem" in youtube to find zillions of videos of various game solutions, it will give you a feel for the game.

Looking over the last 35 years of history, I want to make the following proposal:  the Dictator Retirement Island.

Here is how it works.  The US puts a sum of money in a Swiss account for the dictator.  The US moves dictator to a lush island complete with lavish lifestyle complete with personal performances from US pop stars (this seems to be a very popular activity for both dictators and US singers).  The US guards the dictator from vengeful rebel groups, human rights organizations, threats if extradition, etc.  In exchange the dictator gives up power and allows the US to impose an interim Constitution and supervise free elections.

It used to be that deposed kings/emperors/strong men could find a home in exile somewhere.  The promise of exile probably helped prevent scorched-Earth battles by dictators who know that loss of power will mean torture and death.  The German Kaiser lived in exile for 20 years in the Netherlands after WWI.

Advantages:

• A whole lot cheaper than military action -- the first 10 minutes of our involvement in Libya when we launched a bunch of cruise missiles cost over $100 million.
• Saves a lot of lives, both citizens and US military
• Increases frequency of positive regime changes

Disadvantages:

• To say the least, monetary rewards heaped on ruthless dictators are fairly unsatisfying
• Ticks off human rights groups.  More importantly, ticks off rebel groups in home country (even giving medical care in US to deposed Shah was a huge problem for Iranian rebels)
• Many still might not accept, even when backed into a wall.  It's the power that is compelling, not just the money and lifestyle, and most dictators are really good at denying reality

This is the kind of story I always thought typical of corporate states like France. It is sad to see this happening so frequently in the US

Recently, President Obama selected General Electric CEO Jeffrey Immelt to chair his Economic Advisory Board. GE is awash in windmills waiting to be subsidized so they can provide unreliable, expensive power.

Consequently, and soon after his appointment, Immelt announced that GE will buy 50,000 Volts in the next two years, or half the total produced. Assuming the corporation qualifies for the same tax credit, we (you and me) just shelled out $375,000,000 to a company to buy cars that no one else wants so that GM will not tank and produce even more cars that no one wants. And this guy is the chair of Obama's Economic Advisory Board?

This is the classic kind of cozy relationship between large industrial corporations and government that has been a feature of European states for years.

Via Politico, from the liberty dollar trial

Attempts to undermine the legitimate currency of this country are simplya unique form of domestic terrorism,” U.S. Attorney Tompkins said in announcing the verdict.

“While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” she added. “We are determined to meet these threats through infiltration, disruption and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.

My guess is that QE2 and TARP and the stimulus did a lot more to undermine the US dollar than any efforts by Bernard Von NotHaus.  I would rather accept his silver dollars than, say, the script handed out by the State of California last year when they ran out of money.

Over the last few weeks I have been following the story of the city of Glendale, AZ, in order to protect a previous $200 million public investment in our hockey team, proposing to issue another $100 million bond issue to help subsidize the purchase of the hockey team out of bankruptcy.

The real furor began when the Goldwater Institute, a local libertarian-conservative think tank, said they were considering suing over the bond issue because it violates the gift clause of the Arizona Constitution, which basically bans municipal governments from providing direct subsidies or lending their credit to private institutions.  The gift clause has been frequently breached in the past (politicians do love to subsidize high-profile businesses), but of late Goldwater has successfully challenged several public expenditures under the gift clause.

I won't rehash the whole argument, but I found this bit from Senator McCain interesting

He called on the Goldwater Institute, a Valley watchdog that intends to sue to block the deal, to sit down and negotiate to keep the team

The buyer Matthew Hulsizer and his staff have taken this position throughout the deal -- they have lamented that they are more than willing to "negotiate" with Goldwater, and they are frustrated Goldwater won't come to the table with them.

This claim seems bizarre to me. If Goldwater thinks the deal is un-Constitutional, what is to "negotiate?" I don't know Hulsizer or anything about him, but it strikes me that he is working from a Chicago paradigm, and is treating Goldwater as if it were a community organizer. In Chicago, community organizers try to use third parties to protest various deals, like the opening of a Wal-Mart or a new bank. These third-parties are nominally protesting on ideological grounds, but in fact they are merely trying to throw a spanner in the works in order to get a pay off from the deal makers, almost like a protection racket. The payoff might be money or some concession for the group (e.g. guarantee of X% jobs for this group in project, $X in loans earmarked for group, etc).

Everything I have seen tells me Hulsizer is approaching Goldwater in this paradigm.  Even going out and rounding up the most prominent politician in the state (McCain) to put pressure on Goldwater is part of this same Chicago paradigm.

Here by the way  is what Hulsizer is apparently offering

As one part of the deal, Glendale would sell bonds to pay Hulsizer $100 million, which the Chicago investor would use to purchase the team for $210 million from the National Hockey League.

Hulsizer said he notified Goldwater he would guarantee the team will pay Glendale at least $100 million during its lease on the city's Jobing.com Arena through $75 million in team rent and fees and by covering $25 million in team losses that the city promised to pay the NHL this season, which is included in the hockey team's purchase price.

"We need to move forward now," he said. "I expect that Goldwater and other people who have come out against this deal will hopefully recognize the benefits of it and will now use all of that energy and tenacity and aggressiveness to go out and help us sell these bonds and make hockey work in the desert forever."

Hulsizer said Goldwater had not yet responded to him.

By the way, I hesitate to trust the Arizona Republic to report such deal terms correctly, but if what is reported above is correct, the offer appears to be non-sense

1. What kind of guarantee is he offering?  Is it a guarantee by the corporate vehicle buying the team, because if it is, this is worthless.   The last team ownership group promised to pay the lease for 30 years -- what does that mean once they went bankrupt?  I am sure Borders Books promised to pay a lot of real estate owners money for leases, and many of them are going to end up empty-handed in the bankruptcy.  If this is a personal guarantee, that is a nice step forward, though not enough because....
2. The $75 million in rent is largely irrelevant to the new bond issue -- these rents support the old $200 million bond issue.  What they are saying is "issue a new $100 million bond issue for us and we will guarantee you can make 40% of the payments for the old bond issue."   So?  When Balsillie wanted to move the team, he didn't ask for an additional bond issue and agreed to pay off $50 million of the old one as an exit fee.
3. At the end of the day, if the $100 million is not a subsidy, not at risk, and fully backed by guaranteed cash flows, then Hulsizer should go out and get a $100 million private loan.  Period.

Unfortunately, this might be enough to get the deal through the courts.  Glendale will argue that for the $100 million, they will get $100 million paid against their existing bond issues that would not otherwise be paid if the team folds or leaves town.  This may fly with the courts, unfortunately, but it still sucks for taxpayers.   At the end of the day, nothing about this offer makes the $100 million bond issue any safer.   If the team goes bankrupt, it is lost.  That is an equity risk the city is taking with taxpayer funds, and equity risk for which we are getting no equity.  See here for full discussion of the risks and problems.

Postscript: The following is pure speculation, but I think it is close to correct.  The team is worth about $110 million at best (remember, it has never made money in AZ).  Forbes values it at $117 million but several similar franchises have sold for under $100 million lately.   The reason it is selling for $210 million is that the NHL, which bought it out of bankruptcy, guaranteed its other owners the league would not lose a penny on the team.   But the team has been racking up losses, and the accumulated cost to the NHL is now $210 million.  The NHL is insisting on a price that is $100 million north of where it should be.  In effect, the taxpayers of Glendale are bailing out the NHL for this crazy promise to its owners.

I can just see the negotiation.  Hulsizer, who by every evidence is a savvy financial guy, is not going to pay $210 million for an asset worth $110 million.  Glendale has way too many chips on the table to fold now, so it rides in and says it will contribute the $100 million difference.  In fact, the best evidence this is a subsidy is the difference between the purchase price and any reasonable team value.  Someone has to make up the ridiculous gap between the NHL asking price and reality, and Hulsizer is too smart to do it.   I have been calling this a subsidy of Hulsizer, but in fact this is really a subsidy of the NHL.   The NHL has Glendale by the short hairs, because Glendale knows (from the Balsillie offer, among others) that the only way the NHL can get a $210 million price is from a buyer who wants to move the team.

This, by the way, is EXACTLY the reason I opposed the original stadium funding deal.  Once they built the stadium, and then went further and lured businesses to develop around it, they were wide open to blackmail of this sort.

The problem with doubling down at this point is that the team has never made money and has no real public plan for doing so.  I have talked to NHL executives and none of them see how the turnaround is possible.  So how many years will it be before the new owners tire of their plaything and throw the team back into bankruptcy, so that Glendale will be in the exact same spot except $300 million, rather than $200 million, in debt.

From March 21, 1996 (via Real Science)

Scientists studying Creutzfeldt-Jakob Disease in the field are still deeply divided about whether BSE can be transmitted to humans, and about the potentially terrifying consequences for the population.

"It's too late for adults, but children should not be fed beef. It is as simple as that," said Stephen Dealler, consultant medical microbiologist at Burnley General Hospital, who has studied the epidemic nature of BSE and its human form, Creutzfeldt-Jakob Disease, since 1988.

He believes that the infectious agent would incubate in children and lead to an epidemic sometime in the next decade.

"Any epidemic in humans would start about 15 years after that in cattle, and about 250,000 BSE-infected cows were eaten in 1990. There could be an epidemic of this new form in the year 2005. These 10 cases were probably infected sometime before the BSE epidemic started."

His worst case scenario, assuming a high level of infection, would be 10 million people struck down by CJD by 2010. He thought it was now "too late" to assume the most optimistic scenario of only about 100 cases.

One of the great things about the Internet is that it is going to be much easier to hold alarmists accountable for wild scare-mongering predictions that prove to be absurd.  Though, I suppose Paul Ehrlich still gets respect in some quarters despite being 0-for-every-prediction-he-has-ever-made, so maybe its too much to hope for accountability.

I took my blog post from earlier this week and expanded it to a full-blown column on the NCAA and its efforts to never, ever let its athletes make a dime from their skills.  An excerpt:

University presidents with lucrative athletic programs will do about anything to distract attention from just how much money their Universities are making off of essentially unpaid labor.  Their favorite mantra is to claim they are holding up an ideal of “amateurism.”

The whole amateur ideal is just a tired holdover from the British aristocracy, the blue-blooded notion that a true “gentleman” did not actually work for a living but sponged off the local gentry while perfecting his golf or polo game.  These ideas permeated British universities like Oxford and Cambridge, which in turn served as the model for many US colleges.  Even the Olympics, though,  finally gave up the stupid distinction of amateur status years ago, allowing the best athletes to compete whether or not someone has ever paid them for anything.

In fact, were we to try to impose this same notion of “amateurism” in any other part of society, or even any other corner of University life, it would be considered absurd.  Do we make an amateur distinction with engineers?  Economists?  Poets?

When Brooke Shields was at Princeton, she still was able to perform in the “amateur” school shows despite the fact she had already been paid as an actress.   Engineering students are still allowed to study engineering at a University even if a private party pays them for their labor over the summer.  Students don’t get kicked out of the school glee club just because they make money at night singing in a bar.  The student council president isn’t going to be suspended by her school if she makes money over the summer at a policy think tank.

In fact, of all the activities on campus, the only one a student cannot pursue while simultaneously getting paid is athletics.  I am sure that it is just coincidence that athletics happens to be, by orders of magnitude, far more lucrative to universities than all the other student activities combined.

Princeton continues its designated role in the universe of scaring the crap out of high NCAA tournament seeds, but fell just short when Kentucky took the lead with 2 seconds left.   I engaged in emotional diversification by picking against them in my brackets, so I would have both joy and pain either way.

This soooo reminds me of Dave Barry's Interview years ago with reason.

​The Maricopa County Sheriff's Office busted two guys -- one of whom was an elementary school music teacher -- last month who allegedly used Craigslist to try and have sex with a dog, and the sheriff seems to think it's becoming a trend -- despite it only happening once.

Sheriff Joe Arpaio earlier this week wrote a letter to Craigslist CEO Jim Buckmaster alerting him of his office's findings and advising him to re-examine security policies on the website to make sure people don't use it to coordinate sex with animals -- again, despite it only happening one time that the sheriff knows about.

Here is the quote from Barry's interview: And here is my post on it

John wrote about it and he got into the usual thing where he immediately got to the question of whether or not you can have sex with dogs. The argument was that if it wasn't illegal to have sex with dogs, naturally people would have sex with dogs. That argument always sets my teeth right on edge....

I got a few letters, mostly pretty nice. One or two letters saying, "Here’s why it wouldn’t work to be a libertarian, because people will have sex with dogs." Arguments like, "Nobody would educate the kids." People say, "Of course you have to have public education because otherwise nobody would send their kids to school." And you’d have to say, "Would you not send your kids to school? Would you not educate them?" "Well, no. I would. But all those other people would be having sex with dogs."

We have 122 backets entered in our competition this year.  Here is the pick report by game

To join, go to http://www.pickhoops.com/CoyoteBlog and sign up, then enter your bracket.

Ross McKitrick on "Earth Hour" via Bishop Hill

The whole mentality around Earth Hour demonizes electricity. I cannot do that, instead I celebrate it and all that it has provided for humanity. Earth Hour celebrates ignorance, poverty and backwardness. By repudiating the greatest engine of liberation it becomes an hour devoted to anti-humanism. It encourages the sanctimonious gesture of turning off trivial appliances for a trivial amount of time, in deference to some ill-defined abstraction called “the Earth,” all the while hypocritically retaining the real benefits of continuous, reliable electricity. People who see virtue in doing without electricity should shut off their fridge, stove, microwave, computer, water heater, lights, TV and all other appliances for a month, not an hour. And pop down to the cardiac unit at the hospital and shut the power off there too.

Update:  Here is the whole thing

Spacechem

I know the FDIC is often in a hurry to place assets from failed banks, but this deal appears absurd

The only way I can find that their math might be wrong is if in the loss payment calculation, the contract might add the value of the promissory note to the short sale proceeds, but that does not change the gravy train here.

Will Blue Oyster Cult (gratuitous umlauts omitted) have to go on the lam now that the First Amendment does not extend to telling someone to commit suicide?

Update:  Don't be afraid, BOC.  I read it closer, and they are probably OK.  Only convincing a specific person to commit suicide is unprotected.  General advocacy appears OK.

I have always enjoyed Michael Crichton's books, but sometimes turn up my nose at his science.  I must say though that the chain of seemingly stupid errors that led to the park crashing in Jurassic Park bear an amazing resemblance to what is going on with the Japanese nuclear plans.  I don't buy his application of chaos theory to the chain of events, but its hard not to see parallels to this:

Engineers had begun using fire hoses to pump seawater into the reactor — the third reactor at the Fukushima No. 1 complex to receive the last-ditch treatment — after the plant's emergency cooling system failed. Company officials said workers were not paying sufficient attention to the process, however, and let the pump run out of fuel, allowing the fuel rods to become partially exposed to the air.

Once the pump was restarted and water flow was restored, another worker inadvertently closed a valve that was designed to vent steam from the containment vessel. As pressure built up inside the vessel, the pumps could no longer force water into it and the fuel rods were once more exposed.

The other line I am reminded of comes from the docu-drama "From the Earth to the Moon."  In the episode after the fire on Apollo 1, they have Frank Borman testifying to a hostile Congressional committee about the fire.  When asked to explain the root cause, he said "a failure of imagination."  I don't know if this is a true quote of his or purely fiction, but it resonates with me from my past troubleshooting work.  Almost every fire or major failure we looked at in the refinery resulted from a chain of events that no one had even anticipated or thought possible, generally in combination with a series of stupid human screwups.  I would describe the Japanese nuclear plant problems in the same light.

Update: Failure of Imagination from Wikipedia

From IMDB, how the line was quoted in the mini-series

Clinton Anderson: [at the senate inquiry following the Apollo 1 fire] Colonel, what caused the fire? I'm not talking about wires and oxygen. It seems that some people think that NASA pressured North American to meet unrealistic and arbitrary deadlines and that in turn North American allowed safety to be compromised.
Frank Borman: I won't deny there's been pressure to meet deadlines, but safety has never been intentionally compromised.
Clinton Anderson: Then what caused the fire?
Frank Borman: A failure of imagination. We've always known there was the possibility of fire in a spacecraft. But the fear was that it would happen in space, when you're 180 miles from terra firma and the nearest fire station. That was the worry. No one ever imagined it could happen on the ground. If anyone had thought of it, the test would've been classified as hazardous. But it wasn't. We just didn't think of it. Now who's fault is that? Well, it's North American's fault. It's NASA's fault. It's the fault of every person who ever worked on Apollo. It's my fault. I didn't think the test was hazardous. No one did. I wish to God we had.

Obama budget director Jacob Lew, who wrote this lucid statement about the Social Security "Trust Fund" back in 2000

"These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures—but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government's ability to pay benefits." [bold added]

Needless to say, he has changed his tune now that he is being paid to shout "all is well" as enabler-in-chief of Obama's spending habit.

To join, go to http://www.pickhoops.com/CoyoteBlog and sign up, then enter your bracket.  This year, you may enter two different brackets if you wish.

The deadline is Thursday at noon, Eastern time.

I have posted a number of updates on climate science here.

From today's WSJ:

A House subcommittee will hold an "oversight" hearing today on the new Consumer Financial Protection Bureau, the über-regulator that will soon have jurisdiction over most of the country's credit-making institutions. We put "oversight" in quotes because Congress has little say over either the new bureau or its unofficial czar, Elizabeth Warren.

This unprecedented lack of accountability is by Ms. Warren's design. The bureau was the Harvard professor's idea, and she lobbied the Obama Administration and Congress to make it part of the 2010 Dodd-Frank financial reform. That law calls it an "independent bureau," akin to an independent agency like the Securities and Exchange Commission. But that's deceptive. Unlike other agencies, it isn't subject to annual Congressional appropriations.

Incredibly, the law says the bureau's director gets to set her own annual budget by requesting a share of the "combined earnings of the Federal Reserve System." The total she can request is capped this year at 10% of the Fed's total operating expenses (which in 2009 were $5.4 billion). That cap rises to 11% next year and 12% in 2013, and the Fed Chairman has no authority to deny her request. The director can also request an additional $200 million more per year for the next five years from Congress.

This arrangement may be unconstitutional under the separation of powers, and we hope it is soon tested in court. It was a deliberate political gambit to make the bureau less accountable to either Congress or the rest of the executive branch. In July, when its powers fully vest, the bureau will have supervisory authority over banks with more than $10 billion of assets and independent rule-making authority.

Both are cause for worry, given that the bureau will not have to incorporate the views of other banking regulators into its rules when it comes, for instance, to issues of safety and soundness. While the IRS Commissioner and Comptroller of the Currency report to the Treasury Secretary, Ms. Warren and her successors can tell him to crush rocks.

The affront is compounded by President Obama's decision to evade the spirit of the law by letting Ms. Warren set up the bureau without Senate confirmation. Republicans objected to her potential appointment, and even Democrat Chris Dodd said she would be hard to confirm. So Mr. Obama created a special position for her at both the White House and Treasury, letting her essentially create the bureau and hire its staff without facing the Senate. She has proceeded to sign up a raft of liberal antibank populists, such as former Ohio Attorney General Richard Cordray, former AFL-CIO deputy counsel David Silbermann and University of Connecticut law professor Patricia McCoy

Imposing accountability on public officials is hard enough without laws being structured to purposely evade it.