Tuesday, November 30, 2010

A solution for European markets

Fears among European bondholders spread Tuesday from the weakest members of the euro zone to other countries, including Italy and Belgium, spurring a stepped-up search for a solution to a crisis that is increasingly putting political as well as financial strain on Europe’s decade-old monetary union.
From somewhere.
Simple solution. 1) Have bankers take an online course in property management 2) Set up and open internet market for bank owned property swaps, 3) Seek to coagulate foreclosed property into manageable groups. 4) When a group of foreclosures looks like a business, sell it.

Why is the Netflix CEO so wealthy?

The data spike isn't surprising: Netflix represents more than 20% of download traffic during peak hours, according to a new study by Sandvine.
Because you buy all that expensive bandwidth for them, with your actual money sent to actual telecom companies. Under a pay for service contract, movie companies could shop around for bandwidth, and consumers would have a greater variety of down load options.
It is time to rebel against this lunacy. We have a case of well meaning socialist with their net neutrality forcing average middle class folks to send billions to ridiculous CEOs.

When Hayek buys an extra coat

Brad mentions this story about the economist Hayek:

There was silence in the seminar room. Richard Kahn broke it. "Do you mean to say," he asked, "that if I were to go out tomorrow and buy a new overcoat, that it would increase unemployment?"
"Yes," said the man in the front of the room, Friedrich von Hayek, "but it would take a long and complicated mathematical argument to explain why."
And naturally Hayek defenders accused Brad of revisionism. But, I wonder if there is a math and what it says.
Here is my comment at the time:
The disturbance wold be local in the corridor hypothesis. No change at the retail level; but some other customer, seeing a slightly longer line will keep her old coat another year. Retail inventory stays within acceptable uncertainty so no change in wholesale delivery. Yes, Shannon channel theory gives exactly that math, and it isn't complicated.
Tis is the QM response. Just like Neils Borh and the trace of correlation, I present a theory that the two customers, though never having met, coordinated their actions, the one buying two coats and the other skipping this years coat. How did they Secretly coordinate? Through the queue at the checkout lines, two independent agents exchange information via the relative wait for a sales clerk.

Economic agents and sectors never completely decorrelate activities, and queuing adjustments can happen about local production without reaching the threshold of global supply, even fractionally.

Menzie says money velocity is unstable

I stole his chart, he is right.  of course, with velocity unstable, then term structure is unstable and the Taylor  rule will only work in a corridor of temporary stability, an equilibrium.  We can see right up to the crash, the wholesale money market had to move large amounts of money at faster rates, it did not have the bandwidth and we crashed, and after the crash the economy adjusted the relative velocities to make a better smooth approximation of a fluid economy.  The chart we want to look at is transaction size vs transact rate for the Mx aggregates because that is the production spectra, the band pass of the economy.    Velocity is the inversion of inventory cycle.

What is a good model here?  The one I want to see is an M2<->M1 distribution network, with queuing mismatches as Ms flow mostly from M2 to  a fanout of M1s.  But this is money, so we expect reverse flow can happen, assume symmetry.  Thus we have two inventory nodes, and our quantum assumption is that mean/sigma for the inventory is constant across both nodes.  So, in the chart we have the M2 and M1 changing the quants, and thus the velocities in such a way as to balance their respective share of the bankers yield curve, actually sharing power spectra in standard frequency form.

Monday, November 29, 2010

The problem with software patents again.

One basic function, perhaps the main function of computers is to store data into consecutive byte memory locations,  since we were in caves, whatever we compute inevitably involves a list of character in a row. So far so good.
Another timeless function of computing is to keep a list of character pointers, storing the index of a particular character in asequence of characters.  Thus, the user can scan a liost of index pointers and grab part of the text starting at that index.  So far, so good, Greeks computed this way, the bible was organized this way.

This ability to keep a list of pointers into some array of characters has been acceped and adapted by almost all software since we begin writing software.  Now a company called I4i says that we cannot use this common technique within our XML web pages.  This company did not invent XML, they did not invent the indirect lookup, but they were the first to go to the patent office and describe how this standard practice is implemented in XML.

Consumers are being ripped off by the bogus software patent system.  It is a bogus system, stupid when created and a constant source of problems.  It has few defenders.  Consider the case where you and I agree on a restaurant reservation protocol for tablets.  Because we have a new syntax, that means all of the common things you and I might do with our tablets and or reservation systems, all those thing become patentable and restricted property.  So, you and I agree to take up the tablets and order a hamburger, using a protocol we invented.  Then a police officer comes, takes our tablets, and said the idea of looking up a restaurant using my own protocol has a patent!

Oil imports still dropping

But the DOE data reports wholesale inventories, not retail.  Global trading still has not settled on  stable oil quotas.  The good news is that we are showing a 2.5% real growth while this oil delevering proceeds.

Socialist entrepreneur Bill Gates?

The U.S. government should review and update its energy policies every four years in the way that it does with its military policies, a group of scientists and technology experts who advise President Barack Obama said in a report today.

The administration should also more than triple the amount of money it spends each year on energy-related research, development and deployment – possibly through new fees or taxes on gasoline or electricity, the panel concluded.

The findings by the President’s Council of Advisors on Science and Technology represent the latest effort by big names in academia and business to persuade Washington to spend more money on energy innovation. Similar exhortations have come in recent months from Microsoft Corp. founder Bill Gates, the American Enterprise Institute, the Brookings Institution and the Breakthrough Institute.
WJS reporting.
I heard the original deal between Microsoft and IBM was a rigged socialist deal. Maybe socialism works if it generates $54 billion personal fortunes.!

Market rejection of the Irish bailout

This Bloomberg report has the new spreads today, they are up and the bond holders are expecting higher risk in the future.  Then Mish finds this gem:
Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout. Until now Irish and EU law had made it illegal for Ireland to use its pension fund to cover current expenditures. This move means Ireland will contribute euro 17.5 billion to its own salvation.
This is the age of the Internet, we get the connection that Irish pension funds guarantee bad investments by US bankers. Irish pensioners? You like this deal? If not, e mail me and we can start a campaign.
I still like the Euro, why? Because, in the end, on the continent, the major problem is that Germans bankers are afraid of getting stuck managing Spanish and Italian real estate. If that is all we need to hold most of the major Euro nations, then I am optimistic.

A full scale federal assault on the medical industry

That is what we can do, says Yglesias, get the IRS police, backed by sheriff, and go seize the medical equipment of doctors who refuse the commands.
The larger point is that there’s nothing stopping us from creating a de facto system of national price controls for what we pay to health care providers. There are a lot of reasons why we don’t do it, some good and some bad, but the option of “controlling health care costs” by telling the health care industry it needs to start charging prices that are closer to marginal cost will “work” fine. The whole industry is systematically dependent on explicit and implicit government subsidies (direct public spending, tax subsidies, patents, etc.) so there’s not some shortage of levers you could apply if you wanted to.
This is a different approach then the Obamacare waiver approach, so I won't say this is yet part of Obamacare.

How good were microprocessors in 1940?

Well, they were metal, at least solid state.  Their clock speed was 1 cps, and they were ten digit decimal.    They likely had the equivalent of ten digits of disc storage, manual multiply

Otherwise, they were identical to today's Intel Pentiums.

Banking parade

100,000 Irish citizens debate the finer points of EU banking policy

Sunday, November 28, 2010

A real life entropy encoding of assets

In order to under stand the concept of entropy encoding, I take as an example a real property on the edge of a middle class downtown city.  We start with the hydraulic model and seek to decompose the value spectra of the property.

On ten year cycles we might expect that property to support restaurants, retail grocery, or even a specialty auto.  But on 30 year cycles we would expect the basic building to hold its shape and functionality.  On  60 year cycles we would expect that property to gain some value simply from road access, as a warehouse even.  Over a hundred years its nearness to the city gives is some retained utility.  Separating value into term bands is spectral decomposition.

Expected utility drops the farther out we look, so on a real hydraulic yield curve, the 30 year yield would be higher than the 60 year yield, unlike what we see in the investment bankers curve  The hydraulic spectra of that property is a Gaussian distribution, a wave packet. Bell shaped (Gaussian) the most efficient packer of value over time A typica hydraulic economy is a bell shaped curve with a peak at about ten years.

[Warning, all this is true only if the term is converted into transaction rate (=1/term)]

Where is that curve for real?  We bundle spectra into lines.  The 60 year yield is bundled into the 30 year, and that band covers 30 to infinite term.  Another band is bundled about ten, and the about 7; up to about 4-5 bands.  The result is a positive definite yield curve with information compressions.  We do this for economies of scale, packing those values into the 'real property lot' quanta, and marketing it on the 30 year inventory markets.  So, when I sell my house, I sell might be selling all the spectra from 10 to 100 years, but bundling it with a 30 year line.  When you buy a condo in NYC, you are paying the 200 year inventory cost of that city, its 200 year entry fee.

But we can see both the necessity of bundling value over time and its result, the need for asymmetric information.  One of the hidden costs of property purchased is the 50 year economic trends of the city, it is not something I can buy. But in the hydraulic model, I could, I could simultaneously bet on  both the 50 year city and the 30 year property, both of these component values marketed separately..  . I would first measure the best city, then buy a 50 year entry pass. The find the best 30 year property match.  So, in my life plan, I actually have a bell shaped savings and investment plan, actually setting aside 50 year money, at lower rates,  to buy into my next city.

Libertarians get stuck here, great idea, infinite liquidity, except for the transaction costs.  We can see there is some efficiency of scale in term bundling that causes us libertarians heartburn, it ties the near term use of property into long term constraints from bundling. What I mean:  If I bet my property is a restaurant  for ten years, with the banker; I am likely to secretly bet my property is a restaurant for 20 years,  taking advantage of inside knowledge of what is bundled into the property's spectral line.  I might seek a shadow market in corruption with zoning officials.

Consumer products and their Android brain

Google provides this pic as an overview of the Android computer system.  All of this is software, underneath is generally a very fast processor of a variety of architectures.  Let me go through this.

The Linux kernel, I have gone through this code.  It is an open source module that manages the time of the processor,  assigning the processor to various applications as needed.  The Linux kernel is well tested on a variety of architectures, and is a well known source code used in most of the Internet servers.
What does a kernel look like?  Well, when read in text form it will: 1) check a list of tasks 2) select the task with the most urgent need 3) have the processor execute the application code.  And, in fact, a software compiler of the proper design could take those three sentences and generate binary kernel code for an Intel processor.  Computer systems in a nutshell.

Next up is really the Virtual Machine, VM. Because that software allows web enabled Java application code run on any Android device, on any web enabled machine really, in any browser.  It is the key to mobility of software and flexibility in application development.

Then there are the libraries, but too much for now.

Good grief

European finance chiefs ended crisis talks in Brussels yesterday by endorsing a Franco-German compromise on post-2013 rescues that means investors won’t automatically take losses to share the cost with taxpayers as German Chancellor Angela Merkel initially proposed to the consternation of bond traders.
The negotiations are funny, this goes back and forth. Bond holders should get the shaft, no they shouldn't, yes,...

Bond holders get the shaft, less often, but when they get it, they get it big. I predict the Irish deal is in doubt, protection goes way up in Spain, and Merkel reemerges with a bond holders getting the shaft statement.
And this:
The German push ran into criticism from policy makers elsewhere, who called it mistimed, and from European Central Bank President Jean-Claude Trichet, who warned it would unsettle bondholders. Germany yesterday backed away from the pitch for an automatic penalty, agreeing to give the International Monetary Fund a role in determining losses on a case-by-case basis.
There is an inventory bulge on the globe, and at some point, Belgium bankers are going to manage Spanish rental property.
This guy knows about cows:
“There’s plenty of herd behavior in the market,” EU Economic and Monetary Affairs Commissioner Olli Rehn said. “We want to clarify any possible confusion.”
Us and the cows learned it from the same source. We know it as economies of scale. The euro bond market is now incomplete, trades have coagulated on either side, and the trading becomes akin to bankruptcy negotiations. Why does this coagulation take place? Quantum economics tells us why, next chapter.
The Irish aren't stupid:
A day after more than 50,000 protesters marched through Dublin to denounce Cowen’s budget cuts to stave off financial ruin, the EU gave Ireland an extra year, until 2015, to get its budget deficit to the euro limit of 3 percent of gross domestic product.
This is very smart, kudos for Britain:
Close banking links led Britain, a non-euro user that didn’t contribute to Greece’s 110 billion-euro rescue in May, to contribute 3.8 billion euros to Ireland’s package.

“That is money we fully expect to get back,” Chancellor of the Exchequer George Osborne told reporters in Brussels. “It’s in everyone’s national interest and it’s in Britain’s national interest that we get some economic stability in Ireland and indeed across the euro zone.”
I see a big win for British bad property in Spain traded for German bad property in Ireland. British bakers being happier to manage Irish property on behalf of British pensioners.
Parrot talk:
Spanish Economy Minister Elena Salgado yesterday also reiterated that her economy -- the euro zone’s fourth-largest and almost twice the size of Portugal, Ireland and Greece combined --

Better idea Europe! You have tried all sort of bankruptcy mechanisms over the centuries. Europe, the continent, needs a natural continent wide bankruptcy market. Your gonna need a more fluid cross border property market.

These quotes came via Bloomberg I think.

Off the top of my head

I propose another central banker rule. The central banker should seek to make the maximum profit for central government, act as a cash income source for the legislature. An interesting rule would have the central bank buy bonds when it feels they are cheap, and sell them when they seem high. Here we make the central bank the cash business of government, the more the central bank earns, the more government spends.

In this scenario, the money driver is a circular flow through Congress. Congress earns lots of money via a profitable private sector, thus the virtuous cycle. Congress and the private sector will seek the most harmonious and profitable business flow, they will inevitably match their real production spectra to maximize efficiency, for that leads to the greatest velocity and the most cash flow.

How is that QE(n) thing working?

Looking at the dynamic yield curve, treasury yields have risen about a half point, integrated across the curve. Even the short term rates nudged. So on this round can we say the Fed bought bonds high and sold them low? Unless other news has been overwhelming the curve, it is true, the Fed lost money, that is inflationary and indicates real growth.

Round one goes to the primary bond dealers, who get bonus pay for floating the excess cash. And to the firms which found real thing to do.

I do not know how much the Fed has spent this round, I assume they are spending at the usual rate of late.

The growth is confirmed:
It is worth noting the recent improvement in economic news:

• The October employment report showed a gain of 151,000 nonfarm payroll jobs, the most since April ex-Census. Expectations are for a similar gain in November, although probably not enough jobs added to push down the unemployment rate.

• The BEA estimated real GDP grew at a 2.5% annual rate in Q3. This is still sluggish, but an improvement from the 1.7% growth rate in Q2.
Calculated Risk
So, I have Ben wining a bet that he could lose money in a growing economy. Score one for Sumner. The Fed still has ammo this round, more ammo then it has spent. And the curve is noticeably steeper, we are expecting long term inventories to increase as near term consumption goes up.

Ireland gets a partial equilibrium

Step one, the ministers agreed that each Irish citizen will borrow $20,000 (113 billion/4.5 million).
Step two: Get the Irish parliament to agree with a majority of 2.
It is not over yet.

And this good news:
Creditors of euro-zone countries that face insolvency after 2013 will see their bond holdings restructured—and may be forced to take losses—under a proposal agreed by the leaders of France and Germany, and top European Union officials, according to people familiar with the matter.
This little gem is a good idea, putting the bond risk onto markets not government. It does set a planned date for mass bankruptcy, but why not? Get it all done at once.

Saturday, November 27, 2010

Roubini is a Quantum Mechanical?

Roubini believes that further attempts at intervention have only increased the magnitude of the problems with sovereign debt. He says, “Now you have a bunch of super sovereigns— the IMF, the EU, the eurozone—bailing out these sovereigns.”Essentially, the super-sovereigns underwrite sovereign debt—increasing the scale and concentrating the problems.

Roubini characterizes super-sovereign intervention as merely kicking the can down the road.

He says wryly: “There’s not going to be anyone coming from Mars or the moon to bail out the IMF or the Eurozone.”

But, despite the paper shuffling of debt at the national level—and at the level of supranational entities—reality ultimately intervenes: “So at some point you need restructuring. At some point you need the creditors of the banks to take a hit —otherwise you put all this debt on the balance sheet of government. And then you break the back of government—and then government is insolvent.”

What is he saying? As the imbalance gets pushed up hill, the transaction sizes get larger and the transaction rates drop; we get more illiquid.

Limitations of debt deflation

QM theory says something here. Quantization means an imbalance, uncorrected, will be ever more concentrated into infrequent trades of large size. Eventually the market participants become few and the trade becomes a bankruptcy negotiation. Balance sheets, arranged in hierarchy, pass the imbalance up the chain, to the boss. As it passes up, the market get ever less liquid. Inevitably the trade comes to a single transaction between a few bond holders and the voters acting en masse, otherwise known as a default deal.

Why is Homeland Security defending intellectual property?

This story.
I was against the DHS department because I knew that some idiot like a delusional Obama will misinterpret its purpose. And sure enough, Obama does the exact most stupidest thing a hubric could think of. If Obama is this stupid to abuse Homeland Security then two things should happen Obama voted out of office, and the DHS abolished.

I mean, the first qualification of elected office is to avoid the addiction to hubris, otherwise we throw you out. Hillary has the same problem.

We all stood around and pointed to Obama and said his Senate experience will make him a hubric and abuser of Homeland Security. That was exactly the problem when the boongodle was created, what would a naive Obama do with the department. Now we are faced with the truth.

Shadow banking in Ireland

A link from Naket Capitalism tells the story of German banks colluding to un special purpose investments in Ireland without regulation. The author of the Debt Generation exposes the scam. Key quote:
The same banker told me this. She was aware of instances, and so was everyone else, of banks, German banks, who used to fly their people from Germany to Ireland in order to do deals that were not allowed in Germany.

German banks set up subsidiaries in Ireland. These subsidiaries were often registered as completely Irish companies. Back in Germany the German regulator (BaFin) had strict and enforced rules. Very good rules for the most part. Far, far better than Britain or Ireland. But these good rules, properly enforced meant German banks could not do many of the most lucrative and in hind sight reckless kinds of deals.
The business was regulatory arbitrage, making money of the margin between tight regulations in Germany and loose in Ireland. So we can see that senior debt holders will take the hit when they themselves entered into isky regulatory arbitrage. After all, these senior bond holders must have wondered why they had to fly to Ireland to deals with German banks.

Friday, November 26, 2010

GOP harrassed by Communist religious psychotics

The tension is particularly visible in Kansas, where the victory by Gov.-elect Sam Brownback, a strong opponent of abortion and gay marriage, has created strong expectations among evangelical supporters.

A similar scenario is taking shape in strongly conservative Oklahoma, where a Republican governor will replace a Democrat, and to a lesser extent in Michigan, Wisconsin and several other states.
Yahoo news is tracking these mentally ill believers in magic.

Americans don't like religious psychotics, whether they are the Islamic or Christian types. We especially hate those evangelical freaks who want to enshrine religion into government, the Sharia crowd, like Pat Robertson.

The robot raced Pikes Peak

Audi's driverless TT-S has completed its maiden run up the famous Pikes Peak Hill Climb.

The car was developed by Volkswagen's Electronics Research Laboratory in conjunction with Stanford University.

The autonomous Audi covered the 20-kilometre twisting mountain road in 27 minutes, with Audi claiming a human driver could manage the course in 17 minutes.
Advertisement: Story continues below

Having conquered Pikes Peak, the designers and engineers are looking for a suitable racetrack on which they can test the computer's ability to tackle high-speed driving.
Drive Today

Not months, but weeks to fix the scanners

Atlantic Monthly's Alexis Madrigal says experts cannot generate automatic threat detection software for airport screeners.

But they do detect anomalies, and these anomalies can be slightly distorted for the TSA screener to view. Not only that, the possibility of image warping in general has been proposed without limiting the ability of humans to detect anomalies.

The Dutch use the L3 which attempts to identify explosives:
If the software identifies a passenger carrying explosives, an outline of the problem body area is displayed on a generic mannequin figure instead of on the actual image of the passenger's body. The mannequin image, which appears on the operator's control panel, "can then be used by security personnel to direct a focused discussion or search," the company website reads.

But, even with a high false positive rate, the system should be at least better tha the full nudy scans.  So, OK maybe a month, but certainly not months.

Alexis also reviews the image distortion method
Technologically, image processing to distort a body's form is trivial. You take the image that comes in from the scanner, pick some reference points on the body, and then elongate, resize, and stretch the image. The images come out looking less human very quickly -- and that's precisely the point. .

The State of California and shipping subsidies

If you think the Sate of California subsidizes its foreign imports?  Here the Toll Road News discusses the half billion dollar Calofrinia is spending so shippers can get easy access to Terminal Island LA.  The new bridge shuld be tolled.  California is going to end up paying 7% on that 30 year loan, a commercial operator with a toll guarantee can get it build for cheaper.

Dunno what the LA port authorities are thinking, but the deal will have to be redone, the California legislator is in session with a $25 billion deficit.

I am reminded of the Oakland Airport connector. These transportaton institutions are living in an equilibrium that no longer exists.

Are we still a gold backed nation?

The US government supposedly holds 8,000 tons at 35 million a ton is about $2.5 trillion, otherwise known as ten years of oil imports.   Also enough to backstop the Fed's balance sheet.  In an ultimate default, this stuff will be traded for debt relief.

Economics and semantics

Reading Paul Krugman, like reading Yglesias, facts become colored.
Paul says:
But this[Great Moderation], too, was unstable. For one thing, there was bound to be a shock, sooner or later, too big for the central bankers to handle without help from broader fiscal policy.
I would say that when we leave the corridor of stability, government also adapts along with the private sector. Why would I say government is the stabilizer? All sectors have to stabilize.  Convincing people that one side of the trade is better is a negotiating tactic, not an economic theory.

Net neutrality no longer works

All of the social media hype has, to some degree, diverted attention from the bigger storyline to emerge over the last few years - the meteoric rise of long-form, streaming video viewing.
Steve Rubel has the post.
As the net gets divided between two different flows, price discrimination will be paramount.

Thursday, November 25, 2010

Malthusian honesty

Stumbling  and Mumbling discusses the topic.  Malthus gets the progressives up in pitchforks because it is their voters who are being Malthused away:
Demographer and economist Thomas Malthus also felt that the Poor Law ought to be abolished, since it limited the mobility of labour. Although he conceded that if there had been no poor law there would be "a few more instances of severe distress," he still felt that "the aggregate mass of happiness among the common people would have been much greater than it is at present." However, he was one of the first to advocate so called 'indoor relief' in workhouses for the poor as opposed to handouts.

In England, Malthus pointed out that the socialists can breed as many poor up to a point, and like a Fischer debt spiral they all die from disease, hunger and genocidal government reaction, or war.

The truth is that nature kills off the proper amount at the proper rate after considering quantization error, and man just follows orders.

No one will believe the Irish budget is real

Like the citizens of Iceland the citizens of Ireland will repudiate government debt. The Irish default is real, and more power too Ireland.

CDS swaps on muni bonds

A report from the Bond Buyer:
Anyone considering buying a taxable municipal bond might want to get a quote on some municipal credit-default swaps first.
Chances are, the CDS is a ­higher-yielding way to play the municipal market.
Consider Illinois. According to Bloomberg LP, it costs 290 basis points a year through a CDS contract to insure the state’s five-year debt, which itself yields 2.85%.
This is in flagrant violation of the “law of one price,” which states that the same cash-flow streams with the same risk should cost the same in different markets.
An investor with $10,000 could buy a five-year Illinois taxable bond yielding 2.85%. Or, he could buy a $10,000 five-year Treasury note yielding 1.53% and sell a CDS on Illinois yielding 291 basis points, collecting 4.44% for the same investment and the same theoretical risk as Illinois’ cash bonds.
The deal here is to buy federal debt, and put that up as collateral to insure a muni bond holder against default. There is more money, temporarily, in insuring risky muni debt then in holding it.

One might ask, why doesn't the muni bond rate reflect risk? The local/federal government goods channel is screwed up and neither the federales nor the locals can get the rates and quantities quantized properly. So the mismatch has to be handled by the insurance companies. You can blame this situation on stupid politicians. What is my evidence? The stimulus, it went mostly to rebalancing the federal/state funds flow, indicating an imbalance likely created by unfunded mandates.

Wednesday, November 24, 2010

Consumer basics on the Android tablets

The new thing here is the bytecode system about which Android relies.
Here rough summary:
The bytecode system buries much of the difficulty of organizing all the computer memory, yet still allows applications developers to make new software.  The idea is a very good match to web technology and the ability to make web page applications.  This memory management insulates the software from the hardware memory system, so the application can be moved around to different hardware, perfect for running inside a web page on the user computer.

This is all great news.  The better news is that hardware developers can focus on making much faster, but simpler machines, allowing the byle code to provide the match to  applications.   Memory managed application systems are the way to go, a big improvement, and bytecodes are an integral part of that, so Android is the right direction for the desktop, as well as netbooks and tablets.

Microsoft has an equivalent, and very good memory managed structure in the .com and c# framework.  I actually like it.  If Microsoft wants to get back into the game here is a suggestion.  Like Apple and Google did, grab the Linux kernel.  Get that C# framework running, get it out there, then rework MS Office to go through the same application framework, and bingo, you can dodge the bullet.

But, all the desktops are going to be bytecode soon. Look at how fast the tablets and netbooks are eating away at notebooks.

Yield mismatches across currencies

Aggregate Demand in the US is increasing by 4.2%, however, production is increasing by only 2.5%

While in Britain and Germany consumer purchases are flat to low but production is growing. It is no wonder that the fear a falling dollar.
This from Modeled behavior
Low yields relative to other nations make a weak dollar. The German bond curve is elevated relative to our, but is that a persistant force?  Yes, the rate differences put persistent force on the dollar down, that is why it is called a trade imbalance.

Here is a bit of technology disruption

Thomson Reuters is using satellite imagery from Remote Sensing Metrics to look at mall traffic patterns, and it finds reasons for [holiday sales] optimism.
WJS RealTimeEconomics

Technology shock played a role in finance, all the way through, from the on line mortgage market, in real estate sales, to rapid fire sector analysis by inspection. One of the things I noticed was that the Baltic Dry index was picking up trends before they were aggregated into a balance sheet for finance. When bankers feel like they were swindled, there might be a technology lag effect.

Ben and the dollar

“As currently constituted, the international monetary system has a structural flaw: It lacks a mechanism, market based or otherwise, to induce needed adjustments by surplus countries, which can result in persistent imbalances.”
From a Ben Benanke speech. What is the alternative?

HT FT Alphaville

Jerry Brown fights the mess he created

SodaHead has the history.
Jerry Brown allowed public sector employees to be able to unionize decades ago. California is paying the price today for that terrible decision.
Jerry Brown has to take California backwards through his decisions 30 years ago. What a mess!

Doing the Kabuki with Vladimir and Wen

China Daily says they are going cold turkey on the dollar.

When the US is a long term customer than watch differential shipping costs

David Leonhardt wants to answer the puzzle above, why does America grow faster than Europe.  The anwser is in the spread.  The closer to the customer, the more persistent advantage.  If Germany wants to grow faster than sell more to Russia and Asia.

The MadHedgeFund trader has Cisco underpriced.

I think he is right, I know that company amd the MadHedgeFund guy is a good picker.

Anyway, this all helps us combine science

If the link between statistical mechanics in physics and economics was Gibbs and Samuelson, then the link between quantized economics and physics to be Shannon.

The metaphor in both systems: In order to measure events, they must be quantized. One cannot quantize just one part of the experiment, for the result then violates maximum entropy. So a quantum physics experiment and an economic distribution have the ultimate limitation of quantization noise.

There is another Hick's Law!

You have to love Wiki. I am searching Hick and get this. He measured and constructed the information theory of trade, a psychologist. He asked, how many items can we sort in any given time, then worked backward knowing the neuronal response time, to get at the structure of the neural net.

He found out in 1951 that we are finite precision entropy detectors. He discovered the hierarchical graph matching machine that is our upper brain. The depth of that neural network, like the rank of a graph, tells us the number of items we can sort in a trade, before we get aliasing errors, (counting things twice).

This guy did his work ten years after Shannon. Externally we sort from various alternatives. So the economy must organize production such that the alternatives of any give market do not exceed the 'rank' of the traders.

Today is risk gone away day?

All the politicians have had their say about Nuklorea, the shootings died down. So, yields are up as investors leave safer bonds and go to equities. Still not sure I have this right.

Why is the bond market safer? More aggregated, hence more resilient. In hydraulic mode, bonds have lower bandpass, in QM mode, bonds have greater economies of scale, higher transaction sizes at lower transaction rates. In measure theory, bonds measure longer term trends which should be more stable.

Each of those segments on the dynamic yield curve is a Hick's partial equilibrium. The sequence of Hicks's equilibriums along the curve should be the best, constant precision match to the hydraulic model.

Ray LaHood, jackass and hubric

Quoting the anti-planner as he describes the spending disaster of the HSR bullshit:
When they return the federal high-speed rail monies, the governor-elects of both Wisconsin and Ohio (whose high-speed train is expected to average a speedy 38.5 mph) have asked the federal government to dedicate those funds to deficit reduction. In response, Secretary of Immobility Ray LaHood has threatened to simply give Wisconsin’s and Ohio’s money to North Carolina or some other state to blow on their moderate-speed rail projects.
Ray LaHood is too incompetent and too political to be dealing with transportation. But, the cause is a Senate dysfunctional. Most of the HSR bullshit and many of the grand failures are born in the decrepit home for the delusional, the US Senate.
Each House member should be spending for his own district. If neighboring districts have a good idea than share the federal loot. Keep the Senate weak and out of the policy business, and make this the key plank in the Tea Party.

Tuesday, November 23, 2010

Here come the Anrdoid tablets

From, Acer.

Tax rates in Ireland

This is household tax for typical families. From an Irish economy blog. Adding to the Irish discussion. The government evidently fanned the flames of default by borrowing to advance citizen payouts, and encouraged the home boom to collect property taxes.

Foolish bankers on the continent loaned too much money to the Celts.   Still the Irish have the best energy efficiency among Euro nations, about 30% better then  Germany and they are a top performing nation.  Interesting.

When we gain efficiency, how much do we lower prices?

Tax Loopholes Are Corrupt and Inefficient, but They Should only Be Eliminated if Every Penny of New Revenue Is Used to Lower Tax Rates

From CATO's Dan Mitchell on tax policy.

If the enterprise does not keep some profit from its greater efficiency then where is the incentive? CATO should know better, but if they presume some natural tendency toward socialism, then give us the evidence because this sounds a lot like Animal Spirits.

Score one for Yglesias.

Ireland still produces

Ireland bucked a trend of falling production rates across Europe by recording a 7.9pc month-on-month increase in industrial production.
Across the euro zone, production rates were down 0.9pc for September, when compared with August.
However, year-on-year, increases of 5.2pc were seen across the euro area. Ireland also fared well in annual comparisons with the fifth highest year-on-year increase.
Business and Leadership

Ireland's energy efficiency is quite good.

They have this next external debt per person problem:
1 - Ireland ($442,961.33)
2 - Switzerland ($176,745.56)
3 - UK ($171,469.14)
4 - Netherlands ($136,795.26)
5 - Belgium ($126,202.06)
6 - France ($68,625.53)
7 - Germany ($54,498.29)
8 - USA ($40,319.31)
9 - Spain ($26,771.35)
10 - Japan ($11,721.41)

If the financial mess cleans up, Ireland will be low priced.

The 'Build America' Debt Bomb

Congress has been subsidizing interest rates for local government bonds.  I like the program.  The WSJ warns that too many incompetent city managers are going to default.    Great, we have been warned and bond investors would actually look at the political idiots who are behind the bond.  If bond holders need forensic accounting to root out bozo bond deals, they have the internet and an Army of Davids.  If you are a foreigner interested in American bond deals, e mail me and I will do a research on bond managers who  root out government rot.

But, still, this BAB program is closer to a stable equilibrium than most other programs coming from the Senate.

The energy of spiraling economies

I had a problem understanding Keynes because of my usual complaint,  one cannot develop an ongoing deflationary shock in a leakless model.  In other words, one has to leave the realm of measurement economics to get an ongoing deflationary spiral, and that is where Animal Spirits come in.   I saw the new cartoon on the subject.  The cartoon suddenly explained that Animal Spirits are a growing, non-economic force internal to the agent, a persistent devolution.

Am getting this risk on/off thing?

Laymen have trouble with trader terms because traders often leave out the passive or active sense,  or the direction of the trade, they just name an event.   One of the reasons I get sign dyslexic.

OK, so today there is risk to run from, Nuklorea is shooting off artillery.   Equities are down, the dollar is up, people run to safety and the yield curve get flat or steep?  Yields are dropping across the curve, so the curve gets flatter.

So, is that the definition? Do we say this is risk on because there is visible danger, or is it risk off because the market is turning away from the danger?  See why I am sign dyslexic?

Negative real yields and asymmetry

Going negative is hard for the economy, but we do it, much less efficiently than we do positive rates.  How do we go negative?

Forced mergers, bankruptcy, default and workout, expensive repurposing of buildings, expensive repackaging of excess inventory, corporate takeover, evaporative losses in  inventory (some stuff does get trashed), dissolution of labor unions, government restructuring and expensive political battles, labor migration, sometimes war, downgrades of labor value.

Even customer return of defective products is a negative flow, but this we are efficient at it.  So, in standard negative production, like customer returns, we over fund the department as an expense of other departments, a utility.  Then the customer return department can do the negative about a positive bias, it looks like positive production.

So we  do the negative. We are simply very inefficient at it.  And we know this, we actually plan conservatively so we spend most of our time with positive yields.  Planning against negative yields forces the economy to work about an equilibrium, keeping inventories magically up above negative inventory.

But long term smoothness means these equilibriums have to be broken now and then and rebuilt as technology changes the shape of production networks. Mathematically this is true, smoothness requires the ability to make short reversals and take different options.

Combine negative yields with positive efficiencies of scale and we get Recalculations, maybe they should be called Requantizations.

Monday, November 22, 2010

TSA accepts a simple scanner fix

Wa Post:
The researcher, associated with the Lawrence Livermore National Laboratory in California, said he was rebuffed when he offered the concept to Department of Homeland Security officials four years ago.
The fix would distort the images captured on full-body scanners so they look like reflections in a fun-house mirror, but any potentially dangerous objects would be clearly revealed, said Willard "Bill" Wattenburg, a former nuclear weapons designer at the Livermore lab. The scanners normally produce real-time outlines of the naked human body, and the Transportation Security Administration has been embroiled in controversy since installation of the new scanners began last month
Now I can say with confidence that even Ray LaHood can contact this guy and get this fix in right away. This is not a national emergency, it is a software bug in version 1.0 and Ray LaHood must use his brain and pretend to be a software manager.

Notice this scientist proposes something similar to my proposal. See, I know this stuff.

Android and the byte code

I know the history of bytecodes and my opinion is that they are good things.  Android uses a bytecode.  As Android migrates to the desktop from the notebook we will hear a debate about bytecodes.  I am in favor of bytecode, and I am in favor of Android. 

Hint: If Microsoft does not want to get clobbered, a suggestion.  Move the .com and C# environment onto the Android bytecode system.  Then Microsoft will dominate Android because their C# apps and existing Java apps will be compatible.  The only  unique thing that Google retains is the Linux kernel, and I can mail Steve Balmer a copy of that.

Hicks partial Equilibrium!!

What the Tea Party is doing in Congress is completing the other half of a two part deal, two consecutive Hicks equilibriums.  Rajiv turned me on a partial Hicks equilibrium in his blog.

The idea of partial equilibrium is that we take the best of the alternatives and call it a day. So, Nancy Pelosi calibrates how much give she will produce on round two, then she knows ahead of time when an Obamacare is good enough, she knows the uncertainty levels of the next Congress.

A Hicks equilibrium is an incomplete version of an inventory node in the Shannon channel model of economic production.  I drilled down into that literature a bit, and the talk in Hicks equilibrium is the idea of an uncertainty level.  To partially equilibriate implies there is an advanced  amount of tolerable uncertainty.  In any given trade we have to know when good enough arrives, that we may pass the goods down stream. We QM theorists call this the herding constant of the human species,  because it is ultimately traced back to the ability to mammal to match the spread of the herd to the resources in the environment.

The existence of an uncertainty constant implies an ordinal system, in the market, hence an entropy norm.  When it is about time to go to market, we go to market and choose the best of limited alternatives.  Inside the firm or household, we monitor the variances ot total inventory, minimizing variance across inventory types.  The variance we tolerate in the firm inventories must match the variation in alternatives good over alternative market timings, it is constant and biological. Production is required to complete the equilibrium in stages.  We humans are biologically forced into economies of scale.  Now e mail me a Nobel prize.

Robert Rubin had a scaredy poo

Warning of the risk of an "implosion" in the bond market, former Treasury Secretary Robert Rubin says the soaring federal budget deficit and the Fed's quantitative easing are putting the U.S. in "terribly dangerous territory."

Read more: http://www.businessinsider.com/rubin-bond-market-implosion-2010-11#ixzz164q6el6p
This is what one might call a mass hysteria of short duration, common among bankers and related to penis panic. Bankers generally fear their penis is shrinking, seriously, its a real problem causing them to sudden attacks of fright.

Euro finance

I stole this chart from Stanley Black's excellent article on the Eurozone problems.  As the crisis unfolds, the debtor countries get worse and the creditors get better, they diverge.  Whoops!  Trying to fix things, they made them worse.

I still like the Eurozone though, the Euro is OK on the continent.  After centuries of forced military labor movement, the continentals have settled down.  Ireland doesn't fit, Ireland should peg to the British currency, a better fit.

ChicagoBoys imply trucking taxes are way too low

Ralf Goergens from 2007:

There are other good reasons for public-private partnerships and toll-financing. A little known but crucial fact is that wear and tear of roads tends to increase to the fourth power when axle loads go up:

The relative damaging effect of an axle is considered to be approximately proportional to the fourth power of the load [1, 30]. However, this has been found to be an under-estimate for flexible pavements on weak subgrades such as peat [3, 23], where damage has been found to be proportional to the sixth power and higher.

In other words, a 40 ton truck can easily cause as much damage to a typical road as 60,000 1 ton cars. The fourth power rule isn’t carved in stone, of course, but it happens to describe damage to roads most accurately. Factors that influence the concrete amount of damage a road suffers are besides subgrades the tires and the paving materials and their specific (di-)stress modes (Link to a 114 kb PDF-File). Distress modes of road pavement include damages such as surface cracking, surface roughness and rutting.

Well, this is a big whoops! I am working the problem, but go read the post, it is good. Look what the report predicted in 2007:
As the article at Reason Foundation points out, freight transportation is increasing even more rapidly than passenger transportation, with a severe capacity crunch not to far in the future. It may therefore be worthwhile to separate cars from trucks along major roadways and trucking firms should be happy to pay for them.

The fickle issue of web revenues

Truck and Barter posts about the income of web video delivery, in particular about a company called HULU.
This implies 300M vids served in Jan 2009, and an average increase in 50M every month through 2009. An average of 600M per month over 12 months is 7.2B videos. $100M/7200M implies 1.3 cents of revenue per video served. If 50% is shared with owners, we're talking about 0.65 cents per vid served. Wow.
Web companies take advantage of web capability and use the web to round up lots of customers for cheap video. The video producer is then stuck with a system that, temporarily, controls a huge chunk of customers. The video producers end up with a pittance, as does the web company. But the video producer made a film, the web company put up a web site.

This condition is temporary, because HULU will be replaced by a protocol that lets every video viewer look directly into the video producer servers, bypassing the web company. The streamlined process embeds the web into the producers business, and the video producer ends up buying great software tools for film making, and they control their own delivery, the public protocol providing a common customer interface.

Business Economics has a neat graph

Money is piling up but no takers.  Yet Bill Conerly likes the Fed releasing more dough.

If we taxed pollution there would never be high speed trains

Yglesias simply adopts deception as a standard debating tactic:
But how many [HSR travelers] would obviously depend heavily on how the price compared to the price of those flights. And that in turn would have a great deal to do with how we price pollution.

The problem he has is that he cited a Ray LaHood puff piece that says HSR is energy efficient without reference to the calculation. The University Of Calif Berkeley has trashed the life cycle energy costs for the HSR in California, and Yeglesias has no compuction about re-releasing Ray LaHood' ignorant puff piece.  When we actually start taxing pollution, Yglesias  train is the first to go.

Mississippi governor is cuting and taxing

Says Haley Mr. Barbour, governor:
Many within the state are now worrying about 2012, which is expected to be the toughest budget year yet as federal stimulus dollars dry up. Even Mr. Barbour sees a limit to the tough love. "I am concerned that we're approaching the point where across-the-board cuts will no longer be as effective and that we need to restructure some things," he says.
Eventually the bond holders have to give in and do a workout.

Karl Smith on printing money

Karl talks about James Hamilton's description of QE, the Fed is not actually printing money said Jim.
Karl responds that the conclusions is a short cut, the Fed generally prints money, that is how it works.
I respond to Karl. The Fed has to occasionally unprint money if we are to follow a smooth path. The part about unprinting money is vaguely explained, but that is the problem, how do we unprint money if we want to a smooth changing economy?

Regulatory capture, asymmetry and economic crashes

Here is a quote from an SEC official classifying venture funds under the new proposal. Truth in Market is posting on the subject.
The rule grandfathers existing funds that have represented themselves as venture capital funds “because it could be difficult or impossible for advisers to conform existing funds, which generally have terms in excess of 10 years, to the new definition.”

What happened is that the VC community went to the regulators in inserted an illiquidity in the system, an asymmetric trade in which federal police enforce the unbalanced trade, in favor of grandfather fund holders.

If regulators continue to insert destabilizing policies, then eventually the economy has to adapt by overthrowing the regulators.

Sunday, November 21, 2010

Android destop users

We need a user group for a specific computer user. Users who have adopted the Anrdoid tablet and want to back convert their old computer to Android for compatibility.

The patient vs the impatient

In the model Krugman set up, what are we likely to find.

Two separate classes, the patient and the impaitent making different bets on the future. The future is suddenly revealed. Depending upon who bet right or wrong, the relative future change will be apportioned. That is the first apart.

What does it give us? The ability to select two possible classes, match their initial conditions to the real economy, and apply the change to see what should have happened. for example, should housing prices have fallen so far. His model would tell us what happens if we know how many were impatient to buy a house vs those patient to wait. If too many were impatient, then they drive the price up, and the too few who were patient drive is back down; the potential energy of the misplaced betting causes overshoot and undershoot. So far, hydraulic model.

How does he get Fischer debt spiral? The hydraulics must have a leak. That is OK, but we have to recognize that the model starts with a smoothness assumption, then introduces an illiquidity assumption, so use the model with care.

New white paper on traffic innovation

Executive Summary
Improving transportation efficiency through operational innovation is critical as our population grows and ages, budgets tighten and consumer preferences shift. Now, as Congress prepares to review and reauthorize the nation’s transportation program, an array of innovations that were either overlooked or did not exist at the time of previous authorizations can be incentivized.
Case studies here and abroad show how savvy investments can help the U.S. save money while reclaiming world leadership in developing a transportation network for the 21st century. Smart technologies are available to improve travel efficiency, provide accurate real-time information, make pricing and payments more convenient, and customize travel to meet individual needs.
The complete, 39-page whitepaper is available for free download in PDF format, here (PDF file). The report was co-sponsored by Transportation for America, ITS America, the Association for Commuter Transportation, and the University of Michigan’s SMART Initiative.

Linux grabs another automobile platform

The nonprofit organization dedicated to accelerating the growth of the Linux operating system, The Linux Foundation, has announced that a leading developer of open source automotive systems, Pelagicore, is its newest member. The Swedish company is joining The Linux Foundation to collaborate specifically on MeeGo and its In-Vehicle Infotainment (IVI) reference design. IVI is a rapidly growing field that encompasses the digital applications that can be used by all occupants of a vehicle, including navigation, entertainment, location-based services, and connectivity to devices, car networks and broadband networks. According to ABI Research, 20 million drivers in the USA now have in-car video, which is raising consumer expectations for other in-car applications and devices.
Traffic technology

What is going on is that the Open Software Industry is doing the right thing, organizing a reference platform for future obocar technology. A ot of the initial applications are personal table applications associated with travel, one can see that navigation underpins the killer app. The merging of Map technology and Robocar technology is happening quite smoothly.

The second thing to notice is that the adoption of Linux improves Google's position in the robocar technology, they will be at the center of the reference software architecture.

How far out in the future do we look?

Well the market looks 30 years out according to the yield curve, because the 30 year bond is the longest effective term we use. But inside the firm or household planning could be going out to 40 or 50 years, but the quantization effects mean this internal 50 year accounting is bundled in the revealed 30 year inventory cycle.

The concept is important when reading this post by Brad. How do we apportion the cost of climate change across individuals today and tomorrow? We see the first problem right away, the individuals affinity for the future is revealed only for 30 years. The scientist and policy maker are looking 60 years out, and dealing with an economy that is not quite as accurate.

Mathematically, the dilemma is this. Any long term equilibrium occurs because of one or more fluid markets. The definition of long term stability is liquidity in a sample space. To see farther out in time, one has to sample faster in the present. If the economy is to 'see' the long term equilibrium of climate change, then the present must have fluid market that provide accurate samples. Policy enforcement beyond the 30 year view will be inefficient in the short term because it removes liquidity and shortens the future outlook.

Another analyst expects Android domination of tablets

“Ultimately, we think that Apple won’t have the majority of the (tablet) market share. It’ll probably be with Android-based tablets.”
Senior Research Analyst Gene Munster
HT EricTric

If Android is going to dominate tablets, then Steve Balmer should be ready to concede the desktop, no?

Saturday, November 20, 2010

Minsky, debt and asset prices again

Stephen Williamson points us to a Kocherlakota paper on government guaranteed debt. His point is that subsidies overprice the scarce resources. In housing the scarce resource is land, so land prices rise with a mortgage subsidy.

The case is a bit more subtle, we make longer term investments in the scarce resources. The gain comes from owning the scarce thing for longer, the essentials of overcoming scarcity is to makes its presence visible for longer into the future. As the price differential accumulates, the desire to consolidate the long end and gain economies of scale become overwhelming.

So, I would think that keeping rates too low for too long causes a bubble to grow and move to the long end, until steepness demands a consolidation of gains. On July 15, 2008, OPEC wanted to consolidate their gains.

The hydraulic model predicts no crash, the balloon is elastic in both directions. Incomplete quantization really does not cause a crash, it just causes short volatility during requantization. There is one thing left, asymmetry, especially asymmetry when the economy has to requantize. It is hard to set up a special bankruptcy system for liquid dissolution of assets when the economy never plans for negative growth rates.

California makes a bond sale

The state’s net cost, after the federal subsidy, is 65.3 basis points lower than the 5.54 percent yield on its 30-year tax-exempt general-obligation bonds reported yesterday by Municipal Market Data, said Tom Dresslar, a Lockyer spokesman.

Can California government grow tax revenues by 5% to cover borrowings? No, not yet, maybe not for a long time. But the assumption here is that California will get growth back to 5% and greater within the next few years. As long as California keeps accumulating long term debt the pressure for short term growth intensifies. We can see the pressure when the Gubinator called back the legislature. Any more bond sales will require some real short term revenues gains, an impossible situation for a state that has been ruled by civil and labor judges for four months. Even this latest snag was contingent upon a trial judges ruling in the liquidation of government buildings. That fits form and function of bankruptcy.

I still do not get the airport screening problem

The solution is simple, a binding agreement between the screening software and the passenger. The passenger agrees not to wear any hard objects around their private parts, and the software agrees to erase the images of private parts that are clutter free. Make it a legal agreement, by law, both parties bound with penalties.

If you are a government official, and this is confusing to you; then e mail me for some pedantic education.

Friday, November 19, 2010

A better metaphor for the Minsky moment

Using the hydraulic metaphor, we can say a negative shock occurred with wider bandwidth than the economy could process. The result we got was that sharp inversion in the curve, due to backlash,  prior to the crash. However, in the hydraulic model, remember, with reversibility there is a negative spectrum in the yield curve. And that curve inversion on the positive end would have been matched by a peak at the negative end (the end hidden by asymmetric information). We had a unexpected reversal of financial flow, the system backed up when the shock happened faster than finance could adapt.

Read Brad's latest essay on the crash and he talks about financial intermediaries getting stuck with an inventory of MBS chunks when demand for them dries up. What happens is that prior to the crash, those MBS chunks were properly sized for the expanded financial market. After the crash and contraction, the the effective terms in the yield curve were different, and there was a frequency/quanta mismatch; in other words, there was no market with the proper inventory cycle to match the existing inventory, and MBS has to be repackaged. 

I think the demand for safety should properly be modeled as a demand for term matching between finance and the real economy. Investors are not looking for safety along the Treasury curve, they are looking for Treasury and the real economy to get back in sync.

The Krugman model

Krugman wants to model the Minsky moment, that moment when we discover that the next trade won't go through and cash will run out. It is a non-linear event and we cannot get there via stochastic equilibrium.

I think the heart of the Minsky moment is the effect of increasing debt on increasing monopolization.

California bond panic

Says the Phoenix Examiner:
Yesterday we reported on a the PIMCO California Municipal Income Fund II symbol PCK. It showed that interest in California bonds was crashing at panic levels. Basically, the credit markets are putting California municipal governments on a diet. This is the same as cancelling a consumer’s credit card for being a bad credit risk.

Today, we learned that Orange County had issued a new bond offering to raise hundreds of millions. Well guess what? There were no buyers for the bonds and Orange County managers pulled the offering and abandoned all hopes of raising any money.

It is hard to explain how historic this is. The credit markets have no confidence in California’s ability to repay. This is not surprising since a close look at the recent elections would confirm all. The voters of California denied via proposition the state legislature the ability to raise taxes by simple majority. Currently the legislature can only raise taxes by a 2/3rd majority which the democrats do not have. Taxes therefore cannot be raised very easily.

California was unable to borrow to get through the year because of the budget impasse. The officials were about to pull out the laser printing machine, again, but the legislature came through with ten days of fiction. Now this bond panic puts things off farther, and if not resolved California will be locked out and living on laser.

Computer vision does more polite passenger screening

Computers can check for bombs without embarrassing the passenger.

The computer vision processor can deliver just the potion of the human image that may contain a bomb, erasing the rest never to be seen. Under this computer vision approach, we just tell passengers to keep their bomb away from their junk and the computer won't flag it.
Airport managers should e mail and I can get a company funded or get an existing company to create this real quick.

On line sales are disruptive

E-commerce sales in the third quarter of 2010 accounted for 4 percent of total retail sales, according to a Census Bureau report released yesterday. That’s the highest share on record since the government began keeping track

Says Economix, and they post a chart. Go see.

Note that this is going to be a different class of products, products that can justify shipping costs. The loss of this distribution has a differential effect on local stores; transportation costs relative to product prices for local distribution go up faster.

Now the rate of share growth for online sales is about a half point a year, so we can see a tipping point. We cannot invest in local distribution and individual shopping by auto when the most valuable products are UPS delivered. Nor can UPS efficiently deliver the remaining lower cost household goods without technology aids.

Tablets are disruptive says Nvidia CEO

And what's the fate of notebooks and Netbooks? "By being able to connect a wireless keyboard and mouse--the difference between a tablet and notebook is pretty marginal," he said. "[Tablets] will be quite disruptive to notebooks and entry-level desktops," he said.
Huang also waxed eloquent about tablets during the company's earnings conference call. "Our tablet and phone business is going to ramp. And it's going to ramp hard. The amount of activity in our Tegra business is simply too great right now. Come the beginning the [next] year is when you'll see what we have been so busy working on," he said.

Read more: http://news.cnet.com/8301-13924_3-20022471-64.html#ixzz15jx0iubw
This is why Microsoft is in trouble, the cross over.  Tablets come out of web applications, mostly point and click, so Microsoft has no barrier to entry here.  The cross over takes Android into the PC market space, and there Android can hold its market , which is going to be greater than 50%.

Thursday, November 18, 2010

Will Microsoft topple?

Android and Smart Phones:
During the quarter, Google's (GOOG) Android captured an astounding 25.5% of worldwide market share for smartphone operating systems, up from 3.5% a year ago. Apple's iOS market share, by contrast, dropped to 16.7% in the third quarter, down from 17.1% last year. In all previous quarters, the iOS has posted year-over-year growth, according to Gartner.

Apple (AAPL) was not alone. All other mobile operating systems, from market leader Symbian to Microsoft Windows (MSFT) lost ground as Android sucked up market share to leap to the No. 2 spot over Research in Motion.

See full article from DailyFinance: http://srph.it/9okXJI

If this is true, then this estimate of 28% of Android tablet share is understated:
Bangalore: Taking a large bite out of Apple iPad sales, Google's Android operating system is predicted to have a market share of 15.2 percent in 2011 and is expected to grow to 28.4 percent in 2015, reveals the industry tracker IMS Research.

IMS has way understated the Android share of the tablet space. The two devices go together, they share applications and development and are likely to take the same shares in each market.

The point is what?  These tablets are taking market from lap tops and Microsoft is no where on the map. Web apps are dominating, not native apps. Google looks to be in a great position to topple Microsoft right now, and Linux, by connection,  becomes a major desktop OS..

Yet another Robocar

The ZMP Robocar

IBM picks an E Traffic vendor as the smartest of the startups

IBM’s smartcamp global entrepreneur competition culminated in Dublin today with 9 startups from all around the world competing for the title of the “world’s smartest startup”. From 660 original applicants the final winner was Streetline, which helps cities track parking violations and drivers to find parking spots.

Ultra-low power sensors are installed in parking spots, which can detect if the space is occupied. Sensors can also be installed in the parking meter to verify whether the meter had been fed and therefore detect violations.
VentureBeat has the story. The technology industry is in on its way, delivering the tools needs for virtual traffic space.

Hyundai Mobis develops chip for image recognition

November 18, 2010 by Computer Vision Central

ET News reports that South Korean auto parts and automation manufacturer Hyundai Mobis has developed two chips, for parking assistance and lane and image recognition. The semiconductor designs were developed in partnership with Hyundai Motor Company, Samsung, and C&S Technology. The project was funded in part by the South Korean government to reduce imports.

Costs will drop and new cars will have Robocar technology. They will need it if the HOT lanes move to lane guidance.

Getting the quanta right in the economy

The economy operates as a measuring device, and it needs measuring units. It obtains measuring units by creating the quant.

For example. The gas tank is a quanta. It is the fundamental unit of account about which gas stations are built. Another quanta is the gas station itself, the tanker truck, the forty foot shipping container, the freight train.

The quantas define transaction sizes, and get them wrong and we have trouble, for example when the median gas tank does not carry the median car the median distance between gas stations. See, the car system fails when the quantas don't match.

We see this every day as economies of scale, everyone use one of the two gas stations at the corner, for example. But a concept called duality allows economists to treat economies of scale as a quantized measuring system. Quantization means that traders can ultimately look at price breaks in a trading range, and when an index goes into a new trading range there has been a discrete shift somewhere in quanta size and transaction rates for the real goods underneath.

Wednesday, November 17, 2010

The biological taxonomy of economics

I got stuck on Brad's consecutive blog posts about both the propensity to exchange and the ability to specialize. Then I follow up with the tendency toward economies of scale.

What are the biological basis of these tendencies,and in what order is their precedence? A pure speculation, but I try here and now. First, lizards have the propensity to exchange, but lizards do not specialize. Mammals have inherited that propensity and also have a propensity toward economies of scale. Forming economies of scale is natural for mammals, but specialization is forced upon the mammals by the conflict between economies of scale and environmental restrictions.

So, in summary. Lizards have great propensity to exchange and weak tendency toward economies of scale. Mammal have both tendencies in abundance. Environmental restrictions force specialization on all mammals.

I am still not sure what separates the human from the other mammals, but I am working on it. Basically it has to do with brain hemisphere separation and right handedness.

Fullerenes, fullerenes

Based on BCC Research's structured market analysis, the $60 million 2005 market should grow to $92 million in 2006, and $1.312 million by 2011, an average annual growth rate (AAGR) of 70%. The annual global fullerene market could be worth over $4.7 billion by 2016.
Go buy the research paper from BCC. I ran across these things when looking at alcohol fuel cells.

Adam Smith, queuing theory, exchange and specialization

I left this comment on Brad's blog and thought it worth repeating.  The topic was Adam Smith, the innate desire to exchange, and an earlier post on specialization.  Brad says without the innate desire to exchange. murder becomes feasible.  (PARAPHRASE) My take:

One difference between murder and exchange is that exchange is repeatable.
If one posits an innate desire for repeatability then one is half way to a coherent theory of exchange. The desire for reasonable repeatability of life would convert the agent into a queue manager, and then build models using queuing theory.
Once we have queue management, then we have the open market. From the open market, getting to specialization is a lot easier. Summary: Innate desire for repeatability leads to open exchange leads to specialization.

Basically this is me always going back to a production spectrum model, a spectrum of transaction rates; and that leads to queuing theory.  So what has developed civilization is our innate ability to queue properly,  to ensure things happen at reasonable frequency. Queuing ability allows common inventory stockpiles to be maintained, it is the basis of cities.

Facebook and Relational Data battles

This, really is what Facebook and rival social networkers are fundamentally about, getting users to adopt their particular format for organizing web activities, their particular relational format.

 Example:  What is the relational form of this blog?    A table of posts with a table of [empty] comments.  Go back a year as I was tinkering with SQLite3, and you will find a simple way to make a data base for posts and comments.  The display of that database, the thing that you the reader is looking at, is done with scripts, ready made to display from relational databases.  In other words, Facebook owns no actual technology or  property of substance, just a magazine format.

It is not clear to me that these are multi-billion dollar battles.  This is an environment in which many geeks can make many versions of social relational structure; and then expand these on the web using MySql, SQLite3, and associated web scripts. Many geeks will do that, and this Facebook thing will splinter in a thousand pieces as web users self select the representational form they need. 

Who said we had no crop failure in 2008?

FT has more details on a potential food crisis.  Remember the riots two years ago?  What is going on?  The shortage of liquid fuels increases the demand for bioacreage and raises the energy cost of food production.

Chase Down the Young and Healthy Act

The state’s health insurance connector — the highly touted agency that aims to bring cheap medical care to the masses — has turned into a legal pit bull by aggressively going after a growing number of Bay Staters who say they can’t afford mandated insurance — or the penalties imposed for not having it.

The Commonwealth Health Insurance Connector Authority is cracking down on more than 3,000 residents who are fighting state fines, and has even hired a private law firm to force the health insurance scofflaws to pay penalties of up to $2,000 a year.
Christine McConville from the Boston Herald.

The Onion gets it!

The Anti-Planner points us to this Onion article, on high speed buses.  One thig the Onion article says is that the new buses will go 165 MPH, which seems a bit high.
As a marketing guy, I am interest in how viral this Onion article gets, I want it in the hands of transit planners.

Also of note, Brad Templeton has one of his series in Robocar essays out.  He gives a great overview of the transportation revolution underway.

Sunni Islamic religious nutcases to explode in Germany

So says the German interior ministry about an impending terror attack.  Let me see, an Arab religious culture generates stupid men who wear belt bombs.  An Imam in Saudi Arabia would have simpler time by just having Arab men tattoo on the foreheads the words: 'Stupid Arab". 

How would Schumpeter view a liquidity trap?

As Krugman thinks of a liquidity trap, the power of monetary policy is weak.  Schumpeter agrees, but adds that trying monetary stimulus makes things worse.  Krugman now thinks a monetary stimulus is worth a try. I am not sure what economic theory goes from  'liquidity trap'  to 'let's give it a try'.

Obama's belief system

The head of Fox news says Obama thinks differently.

My take:
Obama believes in the Senate, but the rest of the US does not, in fact our civil war was started in the Senate. The Senate is the major dysfunction and compromise in the Constitution. Because the Senate is inherently unrepresentative, it is socialist,a rule by elitism.

One thing that sets the socialists from the Tea Party is a belief in the Senate. The Tea Party should view the Senate as a necessary evil and try to weaken it.

The consumer price index is OK

All consumer price index is rising a a 1.14% annual rate, about what we have been getting since the crash. Later I will revisit this post and compare producer prices to consumer prices, that ratio is a key indicator.

Tuesday, November 16, 2010

Buying traffic space in the real world

From an old Bloomberg article of 2006.
Moss returned to his native Australia and prospered as a banker. Until last year, however, few outside Australia had heard of him or his investment bank, Macquarie Bank Ltd. That's when Moss, 56, decided to go on a $14 billion acquisition spree.
Now, Macquarie seems to engineer a new international deal every month -- most of them purchases of public utilities. Among its acquisitions over the past three years: a string of airports from Brussels to Rome to Hainan Island, China; roads and bridges across Australia, Europe, Asia and North America; and Oslo, Norway-based explosives company Dyno Nobel ASA.
Big American investment banks got into the act. From ITs International:
Los Angeles, Pittsburgh and Indianapolis are reported to be rethinking their parking arrangements, in light of a recent partnership agreement in Chicago under which Morgan Stanley will run its parking meters for a 75-year period. Indianapolis is considering a 50-year deal with Affiliated Computer Services. While the Chicago deal will cost drivers around US$11.6 billion, Indianapolis is seeking higher fees in exchange for a reduced up-front cost on the deal, as well as an exit clause that would allow it to end the lease arrangement.

This is how we exit the depression.

Remember Scrooge McDuck?

The duck was famous for wallowing around in piles of money, evidently relieving himself of stress.  Yeglesias talks about this:
Policymakers can observe, however, that if economic actors’ level of uncertainty about the future increases that would manifest itself as an increased demand for money.
An increase in uncertainty makes us want to slow down and conserve inventory. We dilate the present. On the collapse of the yield curve on July 15, 2008 was a sudden slowdown in transaction rates along the inventory chain, the effect of which was a sudden decrease in sales to inventory ratio. Just prior to the crash the curve rates were high all along, signaling what? Signaling that inventories levels had better increase as the risk of shortages was looming.

All during the crash, the Fed was within a month off getting the curve into a smooth upward sloper. In other words, the Treasury curve was never that much out of whack, given that we were cashing. We did not see an aberrant love of liquidity, we saw a standard adjustment from the future to the present as part of a general contraction.

Keynes made the wrong assumption, assuming major crashes are aberrant. No, that is the way we do major change.

I like the GM Volt

The drive system is all electric, the better drive system.  The gasoline back up unit is a self contained generator operating at fixed speed.  This is probably the best combination.  The car just got Motor Trend car of the year.  

Hard digital money

I talk about my digital cash idea a lot.  My digital cash card requires no external network and is perfectly counterfeit proof.  The idea behind hard digital cash is a chip manufactured with a secret code that know human being knows, and the code is destroyed after being embedded in the chip.  The chip is manufactured by a machine that embeds two codes, one common code for communications and one that is unique per chip.  The code is destroyed if the chip is dismembered, and the code is Xray shielded. When this chip is put in a digital money card, the this chip can exchange moeny data with other chips, and have secure exchange with secret codes and the entire system is within the digital realm, no human interaction.

So, the banker issuing cash can have a million chips ordered up, one chip containing the secret codes for the others, which the banker keeps.  The cards come with buttons such that the one card touches the buttons of the other card, direct comm at the button causes an exchange between the cards.  At any point the card holder can take the digital card and exchange it at the bank for external money, using the bankers master card.

Ireland refuses European debt servitude

Zero hedge has the story of Ireland's refusal to take on more and longer term debt as a bailout.  The hydraulic model here is that Ireland wants to be flexible and fast acting, have higher bandwidth.  Thus they can follow economic ups and downs more closely without external aid, avoiding long term debt.

Oil not well quantized

I previously noted choppy oil using the hydraulic model.  In the quantization model, that same choppiness can be seen as a lack of quantization, we seems to have quantized at a noticeable period and price in the series.  Looking above we can see, over time, that prices seem to come in $5 increments. When we observe quantization error, we start to observe individual transactions in the flow, it no longer seems liquid.  Economists have a way of looking at a series of prices like oil and determining the amount of quantization going on, measure the total entropy  captured by quantization.  Oil flow is still not liquid, the global search to find a stable oil allocation goes on.