Overwhelmed by a Gust from Gaia

ht: smalldeadanimals

Black-Scholes = Black Hole

My math is far too weak to follow Black-Scholes, but it's been the standard paradigm for pricing of exotic financial instruments for a quarter of a century.

No longer.

Ever since I read Nassim Nicholas Taleb's 'Black Swan', and bought/read his 'Fooled by Randomness' I've had this intuition that there was a big soft spot right underneath the main pillar of the financial establishment. The article notes that, in supplying a plausible mechanism for pricing exotica, Black-Scholes also prompted a massive surge in their supply. Now, we know it was all based on a mirage.....

The fool's bandag-ed finger goes wabbling back to the fire.

Pre-emption: that's the ticket!

The always indispensable Spengler has done it again, with a piece about the wisdom of getting in your retaliation early. And of course the appeasement rhetoric of the ArchBish gets yet another hammering.

As Warren Buffet has siad, it's not until the tide goes out that you can tell who's swimming naked. And with a harder, colder, wind blowing through the world, Spengler's piece is a reminder that there are only bad and worse choices in foreign policy: no good ones. Europe and the UK have a very bleak demographic future, as Mark Steyn and others have repeatedly pointed out, and one has to be pessimistic about their ability to rouse the will to pre-empt anything.

Interesting times...see these places while you can.

Solar is subject to Moore's Law

This piece (ht: Instapundit) is a useful reminder that the good ol' entrepreneurial business is the way forward. Earnest Gummint committess won't cut it. Bit like the UN in Darfur - no skin in the game, so no real incentive to step in and help.

Moore's law: explanation here - capability rises/price halves roughly every 18-24 months. Works for me.

The money quote:

"You may not like their politics, or their attitude, or their style. But if we really do have an energy revolution in this country and free ourselves from our addiction to fossil fuels, it will be because of hard-charging, take-no-prisoners entrepreneurs like T.J. Rodgers — not UN committees, environmental groups, or government officials."

I plan to fully solarise my house in 2-5 years time. Like, net grid-producer, not consumer. Bye-bye to power bills, and much more resilience. There is a host of up-and-coming firms making thin-film solar, and the grid-tie plus feed-in-tarriff contractual stuff is starting to get worked on by the more aware power companies.

I thus don't fret too much about the lakes, the need for more power stations burning whatever - plutonium, coal, natural gas - or the State of Fear pronouncements about pylons, wind power or draining Gaia of all her internal heat via geothermal take.

The Sun will do it for me. Oh wait. It seems to be cooling. Toyota!

If daisies are your favourite flower

The dear sainted Archbishop of Canterbury does seem to have gottem his fluffy self into a spot of bother with his all-too-public musings on sharia law and its applicability to England. Having been to High Wycombe for a radio station client, I had actually rather thought it (sharia) was there in all but name, but no matter.

Anyhoo, this little gem of an extended Burma Shave sign did flash past a couple of days ago. Burma Shave is one of my very fave Tom Waits tracks, a Desert Island Disc, in fact, and the original Burma Shave signs were pure poetry and humour.

It does occur to me that one of BS's original verses can probably be updated for the Bish:

If daisies are
your favourite flower
just keep suggesting
burqa power

Weather cooling?

I follow Anthony Watts, and he's come across this, from the wonderfully named Joe Bastardi. JB sees a re-run of the early-50's pattern of a La Nina which stopped the global warming (which had peaked in the '30's) in its tracks.

Yup, we need to be more worried about cooling than warming. As someone who actually farms for a living notes, one nights cooling can kill your crop. One night's warming never can.

And as NOAA has just noted, this January of 2008 has been 0.35 F cooler than the 20th century average.

Hmm. Add a quiet sun (check the sunspot count and then go figure the Chilling Stars theory) - quiet sun, cool Earth.

Oh, and coolist or warmist, don't forget to Be afraid, be very afraid. After all, a State of Fear is the default setting for the zeitgeist, no?

By the Shadow of our Hand

A chilling but essential read for all who harbour Pollyanna thoughts about the Long War. Belmont Club has always turned out excellent analysis, and the comments thread is simply breathtaking. Especially Zenster. Plus there's a link to dear Steven Den Beste, on Triage.

Compare this thread with the pathetic namecalling on, say, DPF's comments threads. Pick almost any one. Sigh.

Some GDP perspective

I've always been a sucker for maps, and this one (ht: Gods of Copybook Headings) is a bewdy. Yup, we're about the size of the US of A's District of Columbia. Oz, OTOH, is Ohio.

The VooDoo Bucket - Level 3 assets under FAS-157

It all sounds very technical, but it is quite important.

Find out (if you're a shareholder in a bank, financial instituion or even a pension fund of any description, and with KiwiSaver, that's most of us) what value of institutions' assets are in the Voodoo bucket.

There's a most useful primer here, and a bearish article from Asia Times online here.

Because until we know (a) where the financial bodies are buried and (b) that they're really dead, and cannot rise up and, like zombies, cause further mayhem (recall that all these toxic products are highly leveraged, so the risk of chain or domino effects is very real), the uncertainty and the negative sentiments will persist.

Capitalism is nothing if not sentimental, y'know.

That good old stuff

Stewart Brand should need no introduction: Whole Earth Catalog, and a personal favourite: How Buildings Learn.

Edge mag invited a whole bunch of folks to say what they changed their mind about in 2007. Guess what our Stewart came out with? Good Old Stuff Sucks. The obligatory quote:

"The Precautionary Principle tells me I should worry about everything new because it might have hidden dangers. The handwringers should worry more about the old stuff. It's mostly crap."

Do not go Gently into that Zero-Sum Night

Something I'd read ages ago, updated here by the always-estimable Martin Wolf of the FT, and commented by Naked Capitalism.

If there is a crunch or three coming along (energy use, global cooling cos' of Chilling Stars, various tragedies of the commons), we humans won't react all that well. Fights. Wars. The line which best sums it all up:

"People fight to keep what they have more fiercely than to obtain what they do not have. This is the “endowment effect”.

Hmm....

The Food Channel strikes again

This little anecdote has to be one of this season's LOL hits....

How's about:

a huhu grub inside a
rifleman inside a
tui inside a
pigeon inside a
blue duck inside a
little bush moa inside a
New Zealand eagle

I'd just be exerting my customary/culinary/cultural rights.

Oh dear. Some of these here boids seem to have been extincificated.

Culinary rights clearly have a Lot to Answer For.

No, wait. Some of 'em went west during the Little Ice Age. So we'll blame a lack of Globble Warmening.

No, wait...

Woo-Hoo. No Really. Solar panels at $USD0.30/watt

This is just the best news. Big award, for a deserving company.

With current solar at around$USD3-5/watt, buying say 2 or 3 kw of panels is economic madness, particularly when you do the conversion to the Kiwi Peso. Best price I've seen for silicon is around $NZD9/watt. Times that by, what the hell, 3000, and that's a lot of pesos.

No more.

Nanosolar (hmm, I seem to have figured this out early this year) is just, according to the money quote from the PopSci award linked above, "putting down factories instead of blathering to the press and doing endless experiments. These guys are getting on with it, and that is impressive."

And at say $NZD 50c/watt (once supply gets here, say 2009 - Nanosolar have a lot of pre-committed sales), why, that 2-3kw of solid generation you need, looks suddenly quite affordable. $NZD 1,500 for thin-film, versus $NZD 27,000 for silicon - well, I think dat's what dey call a no-brainer.

To be sure, there will be conversion efficiency differences, and other factors which will make the thin-film look less rosy. But there's a lot of wiggle room in that price diferential, to soak up these factors. Even if the thing ends up just being one-quarter of the silicon price, instead of well under one-tenth, the outlay is not too much of a stretch for households.

And that's the secret. really. Widespread adoption. Bring it on.

Abiotic Oil - Gaia's fruit after all?

This is the latest (and, to my mind, clearest) statement about the origin of Oil - it ain't a 'fossil' fuel at all, according to those contararian Ruskies. It's a natural product, created deep within the Earth and slow-erupted up into the crust. Where it can be found by following geological signs, but just not the ones the Western scientific world tends to use.

All this rather does blow a big hole in Peak Oil theories, and indeed in any theory which treats oil as a finite resource. According to the Asia Times article (and I guess, to the book behind it) by F. William Engdahl, the Russians have followed an abiotic-origin theory since Wegener's time - the 1930's. They find oil where Western geological wisdom says there shouldn't be any.

So cars, SUV's and other devil-spawn are going to have four energy sources in future:

1 - oil, the natural, Gaia-created product of the deep
2 - hydrogen - and note the recent breakthrough in making this directly from plant starch
3 - electricity - I'll have a Wrightspeed, please
4 - Liquid fuels with similar energy density to petrol, from biomass

Who says that science isn't fun? Or that it can't save us (yet again - remember that hysterical old ninny Paul Erlich, anyone? "The edge of the crisis - we describe our first encounters with the age of scarcity and outline the greatest threat in the immediate future: the food crunch" - chapter One heading from "The End of Affluence", 1974).

I'll take Science over State of Fear, any day.

Columbia to Ahmadinejad - you exhibit all the signs of a petty and cruel dictator.

At last, a univeristy type with a backbone. This is Columbia President Lee C. Bollinger's address to the hapless Iranian. Mr President, I'll second that.

Drugs - to ban or not - Lee Harris expostulates

This article is the best I have ever seen on the topic. It reviews Theodore Dalrymple's book 'Romancing Opiates: Pharmacological Lies and the Addiction Bureaucracy', and Richard DeGrandpre's alternative approach in 'The Cult of Pharmacology: How America Became the World’s Most Troubled Drug Culture'. Who says history is bunk, after reading Harris' skilful interlacing of the Greeks, John Stuart Mill, and the content of these two books? I must confess that Theodore Dalrymple (a pen name, real name Anthony Daniels) is a personal favourite, yet Harris gently steers away from some of TD's more uncompromising positions. A great article, by a great author.

Standard and Poor's Moment of Truth

The headline really says it all, no? And, dear reader, it's not from a lone blooger in his attic. It's from Dow Jones.

All of us who have wondered, for three years now, just how it is that credit can be freely given for crap furniture ("Buy now! No repayments until your 3-year-old kid graduates Medicine school!"), let alone actual Houses, are receiving an answer from the financial universe.

It's all Smoke and Mirrors. It is financial junk. And it is tanking. Sinking, Flushed, Round der Bend.

Already there is a domino effect in the US:

- Home Depot (fond memories: I bought two Bostitch nail guns there for amazing low prices, and despite some TSA headscratching, got them back to NZ in checked baggage) has announced an earnings downgrade

- Builder D R Horton has orders down 40% and inventory piling up. (Although just how new houses can 'pile up' does make one stop and think. Maybe they just stack them with big forklifts, like containers?)

- Re-rating of sub-prime debt instruments (the now infamous CDO's) is rampant, and guess what they will find - more junk and crap, everywhere they look. As Dr Housing Bubble notes, there's over a trillion US in mortgage re-sets a-comin round the bend.

So the question for NZ is - how soon before the US mortgage train wreck grows wings and flies the Pacific to land here? Oh wait, Bridgecorp was evidently into non-prime-mortgages too. As I seem to have voiced before, it would be schadenfreude if it weren't My country, too.

If I was working for one of the crop of recently opened appliance stores, I'd be polishing my CV. Because it's just amazing what you can do without when you put your mind to it. And vanity spending is the first to, er, vanish.

Boy, am I glad I downsized mid last year.

Update: 20 Jul 2007.

A good summary of the mechanisms behind CDO's and the other financial instruments which are presently in trouble. The obligatory quote:

'Bundling mortgages into asset-backed bonds and then agglutinating those bonds into collateralized debt obligations sliced into different flavors of risk always smacked of a sophisticated pyramid scheme.'

That's right folks - a pyramid scheme.....

Climate Change runs out of gas

This piece of actual science shows the value of actually doing the sums. Essentially, there jest ain't enough recoverable hydrocarbons in the entire world, to support assumptions made in the IPCC's climate model. Like, IPCC assume 11-15 trillion barrel-of-oil-equivalent (TBoe) is going to go up in smoke.

Bzzt...wrong. There's only 2.7-3.5 TBoe left in the whole freakin' world, according to this. That's (counts on fingers) only 38% (3.5/11 - the best case) of the IPCC assumption.

It's really embarrassing, if you are of the Chicken Little persuasion, or (needless to say) a UN bureaucrat or activist scientist on the Gerbil Worming Gravy Train, to trip over such a basic misapprehension about our world.

But wait, there's more.....

And, of course, the real story is well away from the neg-heads, over here. Solar (particluarly thin-film solar) is going to power us in a generation or so.

The Key to All Mythologies

This article (ht: Gods of the Copybook Headings) sums up my own attitude to The Gerbil Worming debate. A teaser quote:

"it speaks in the doom-laden accents of pure certitude of what will happen in 50 or 75 or a hundred years from now - and, with the same ferocious certitude, demands decisions of immense consequence be made now to forestall its bleak and definitive projections."

Right on, bro'.

So That's the problem

Here's a neat piss-take on the Scary (well, scarily bad) Science behind the Beeb's recent trip to the thinner atmospheres of unreason, re WiFi radiation in the home.

Sort of reminds you of all the other Chicken Little fads that we, as dumb humans, seem to need to work through every once in a while:

'A Blueprint for Survival' - I still have a yellowing copy (you'd think they'd have printed the damn thing on Sustainable Paper, no?). Hmm - Amazon have it for $USD78.71...Cash registers signs go up in the eyes. Well, after all, the Sunday Times did say 'nightmarishly convincing - after reading it nothing seems quite the same anymore'. Funny - I had that same reaction about 'America Alone'.

'The Population Bomb' - count the kids in Your household and tell me this one didn't seize hold. Pity they never told those Others...

'The Coming Ice Age' - a perennial favourite.

Why, there's a pattern there!