Monday, December 31, 2012

Kids, If You Weren't Around to Feed on Junk Bond Defaults, Here's Another Chance

If you didn't get the opportunity to short the S&L holders of Mike Milken's creations find out who owns the current batch.
Pragmatic Capitalism via Kids Prefer Cheese:

Holy Negative Spread, Batman!
Golly, this is remarkable.  Click through for commentary...

As Woj puts it:  This chart, more than almost any other, may highlight the potential harm induced by the Federal Reserve’s attempts to push private investors further out on the risk spectrum. Unless junk bond companies have truly become significantly less risky, when the next round of increasing defaults begins, investors will find that current yields fail to even remotely compensate for future losses....

Credit Markets: The Next Big Short
I'm not Michael Lewis and this market isn't as large as the mortgage area was but man-o-mandingo the possibilities are amazing. 

Die Puny Human, Die: Mitsubishi Eclipse Robot Factory

People have been talking about Lights Out Manufacturing for a few decades.
Factories with no need for humans, saving on heating and lighting costs.

Management guru Warren Bennis has said:
"The factory of the future will have two employees: a man and a dog. The man's job will be to feed the dog. The dog's job will be to prevent the man from touching any of the automated equipment."
Fanuc, for example, does it. They have a building where robots procreate, robots making robots.
It gets creepier though, there's another reason that the lights are out at some of these plants, here's Mitsubishi:

Fearless Forecasts From Pimco's Bill Gross

From MarketBeat:

The Bond King’s Fearless Forecasts for 2013
The bond king unwraps his market calls for the new year, and he did it in a very public forum.
In a pair of messages on Twitter, Pimco’s Bill Gross made his calls for 2013.
He predicted the US dollar will lose ground, gold will rally and oil will rise above $100 a barrel at some point in the year.

He also predicted the five-year Treasury yield will end 2013 at 0.7%, a tad lower than 0.718% recently traded.
Gross: 2013 Fearless Forecasts: 1) Stocks & bonds return less than 5%. 2) Unemployment stays at 7.5% or higher 3) Gold goes up……

The Worst 10K Footnote of the Year Was... (GE; CHK)

From Footnoted:

And the worst footnote of 2012 was…
Here at footnoted we do things a bit differently than the Oscars or any of those other silly awards shows. Rather than make you sit through endless recaps and teary-eyed speeches, we’re just going to announce the winner: General Electric (GE), which won the coveted worst footnote of 2012 award for this disclosure filed back in July. In our totally unscientific survey, 40% of you chose that footnote.

As we footnoted at the time, GE decided to give outgoing executive John Krenicki, who announced his retirement as part of a larger series of changes at the Connecticut-based company, a pretty nice going-away gift: $89,000 a month until Krenicki turns 60. There were other goodies as well, but the $89K a month was the big-ticket item.

Granted, Krenicki had been at GE for 29 years and was apparently a top contender for current CEO Jeff Immelt’s job. Still, $89,000 a month for the next 10 years is hardly chump change, even for GE. As the July filing and a subsequent non-compete agreement that GE filed last month noted, Krenicki is prohibited from working, consulting or serving as a board member at 22 companies in the energy space....MORE including the runner-up that I thought Should have won and the all time footnoted fave.

Stratasys as the Leader in the 3D Printing Industry (SSYS; DDD)

There is some European stuff, particularly in additive manufacturing but also in bioprinting, that SSYS will have to keep an eye on if they intend to be top dog.
From Singularity Hub 18Dec12:

After Merger, 3D Printing Industry Has A New Leader

‘Join and conquer’ – this seems to be the strategy behind a recent move by the world’s (formerly) second and third largest 3D printing companies. Stratasys, based in Minnesota, and Objet, based in Rehovot, Israel, have combined to become the new king of the 3D printing mountain, and in doing so, have emerged from beneath 3D Systems’ shadow.

The merger follows on the heals of aggressive moves made by 3D printing giant, 3D Systems, to consolidate the market. After a torrent of 24 acquisitions in just two years, 3D Systems stood as the clear industry leader. But after the merger the new company – now just Stratasys – has a market capitalization of approximately $3 billion, making it the largest 3D printing company in the world, surpassing 3D Systems’ market capitalization of $2.4 billion.

The new and improved Stratasys has three major technologies: Fused Deposit Modeling (FDM) for quick and cheap prototype design, inkjet-based PolyJet for prototypes that require higher-level of detail and a finer surface finish, and Solidscape Drop-on-Demand (“DoD”) 3D wax printers for investment casting. The company now stands alone in being able to manufacture objects out of more than 120 different materials.
According to Scott Crump, executive chairman of Stratasys, the merger enables the company to “address customer needs across the entire 3D design and manufacturing spectrum. The combined company has a deep well of talent and a strong board and management team to lead us successfully as we continue to pave the way forward for the 3D printing industry.”...MORE
The other thing to watch for is manufacturers developing expertise in-house:
GE Aviation invests in additive manufacturing with acquisition

From Post-coital Squid to High-res Playboy Bunnies: The IT in 2012 Quiz

From the register:
Test your knowledge of the year's most stimulating stories

How much do you remember about what really mattered in 2012? You're about to find out.
Last year The Reg chronicled more than just the birth of Windows 8, the rise of ARM, the battle between iOS and Android, the genesis of the buzzword de l'année "big data", Apple's crap Maps app flap, and other communiqués from the front lines of the tech wars.

We considered it our duty, for example, to inform you in March that a Lithuanian court denied Carlsberg brewery workers the right to strike by declaring beer to be "vitally essential," placing it "in the same category as medical supplies and drinking water."

Occasionally a Reg commenter will respond to such stories with a dismissive "IT angle?!" We, however, believe there's more to life than servers, admin tools, and security hassles, so we've cooked up a year-end quiz to see if you've been paying attention to our departures from the IT straight and narrow.

It's time to test your Reg recall on the following questions, and we offer a couple of ways to track your progress: you can click on "Answer" at the end of each question to go to the Reg story that prompted it, or download a printable scoresheet here then check out the Answers page at the end of the quiz.
And, yes, a few IT stories made it into this quiz as well. After all, this is The Reg – what did you expect, consistency?

Fast gas, WIMPs, and Playboy bunnies

1. A man in Seattle, Washington, claimed he was attacked and bloodied by what?
      A. leprechauns
      B. feral pigs
      C. laid-off Microsoft employees
      D. kindergarteners
2. How much did Bill Gates' 1979 Porche 911 sell for at auction?
     A. $8,000
     B. $80,000
     C. $180,000
     D. zero – there were no bidders
3. Why do scammers still employ obviously stupid and transparently fraudulent "Nigerian" scams?
     A. Only idiots respond, so the scams are highly efficient since the victims are self-selecting
     B. The number of internet users is still growing, and newbies fall for scams
     C. The scams are becoming more sophisticated, thus more effective
     D. A recent study has shown that greed suppresses rational thought


Sunday, December 30, 2012

Downton Abbey Economics

First up, Architectural Digest: 

Historic Houses: The Splendors of Highclere Castle 
AD revisits the Earl of Carnarvon’s estate in Hampshire—now the setting of PBS’s hit show Downton Abbey

Highclere Castle: A Look at the Real Downton AbbeyDownton Abbey, PBS’s hit period drama that has become essential Sunday-night viewing, has turned its setting, Britain’s Highclere Castle, into a television icon. Here AD revisits the historic Victorian estate as it appeared in the January/February 1979 issue, long before it was chosen as the home of the fictional Crawley family.
“I am the last link of the feudal system. I’ve done everything I possibly can to keep the ancestral home.” The present earl of Carnarvon, who is the sixth of that title, lives at Highclere Castle in Hampshire, one of the great country houses of England. He succeeded to the estate in 1923, on the death of his father, who financed Howard Carter and discovered the tomb of Tutankhamun, in Egypt.

Maintaining Highclere Castle has been a difficult challenge for Lord Carnarvon, who is the head of the Herbert family. When he succeeded, he inherited about 8,000 acres. Some he sold to pay inheritance taxes, and since then he has made over the remainder to his son, Lord Porchester, and his grandson—but kept for himself the castle and his stud farm, amounting to about 600 acres. There are nine different entrances to this domain, which has a circumference of 16 miles, with three lakes on the grounds, and 56 Cedars of Lebanon, planted a good bit over three centuries ago.

Pictures have had to be sold, family silver and a fine pearl necklace also, and over the years, some of the outlying parts of the estate. But Lord Carnarvon was determined not to sell the family seat, and the status quo is preserved. The red-and-blue flag still waves valiantly and proudly from the tower over the castle.
In spite of the upkeep, life here has always been enjoyed in great style. Much attention is paid to detail. For example, when Lord Carnarvon gave a ball for a thousand guests in the 1950s, he wanted the house to be perfect. So the crenellations around the tower, which were falling apart, were reconstructed for the occasion in hardboard, and then floodlighted.

Lord Carnarvon lives at Highclere with a staff of seven. He is now 80, and remembers well his childhood in this house that has been in the family since the 18th century. When he was a small boy, there was a basic resident staff of 23—including a maid whose life was spent concocting preserves.

Lord Carnarvon went into the army when he was 18, and was posted to India with the Seventh Hussars. The problems of inheritance taxes were devastating, yet he managed to invest a considerable sum in modernization of the castle. The time of the lamplighter, who had orders to fill 150 lamps, came finally to an end....MORE
And from Somewhat Logically:

Celebrating the Height of Empire as Queen Victoria Opens the Great Exhibition of 1851
How much do Public Broadcast Service viewers understand about the economy that led to the lifestyle of the wealthy Edwardian-era family in the hit series Downton Abbey? If one watched only PBS historical dramas, the British history leading up to the Abby era seems to run to the understanding that Horatio Hornblower  (born imaginarily in 1771) and the Royal Navy defeated the French, and somewhere in there, Jane Austen came to her Sense and Sensibility (1811), and didn’t James Watt (1736-1819) invent the steam engine and thus power the Industrial Revolution upon which England built a mighty Empire on which the sun wouldn’t set until World War One came along and upset the elegance and gentility of the Edwardian Era?  Well, there may have been a couple of social issues here and there, along with the Titanic, providing the PBS drama with some good plot points.

The historical truth is markedly different.  The span of relevant history starts out with a major bailout of the landed gentry and the banking system, and ends with the rise of the financial sector providing much of the income for the Downton Abbeys of the time. It progresses through the Industrial Revolution to a late-Victorian English ruling elite that was smug, narrowly educated and scientifically illiterate, rich from the financial sector but with a manufacturing base that had been increasingly starved for the capital to keep up with the technological pace of change.  It spans a time of tectonic social shift from an agrarian economy to one where a rising industrial middle class needed workers for its factories. Because of that fundamental change, the working poor were largely cut off from the land and social structure which produced the food they ate, making them dependant solely on the factories that provided their wages.

The bailout occurred when Parliament passed the Corn Laws, a steep tariff on cheap imported grain   As the eminent British historian Eric Hobsbawm wrote, “The Corn Laws which the farming industry imposed on the country in 1815 were not designed to save a tottering sector of the economy, but rather to preserve the abnormally high profits of the Napoleonic war-years, and to safeguard farmers from the consequences of their wartime euphoria, when farms had changed hands at the fanciest prices, loans and mortgages had been accepted on impossible terms.” The linkage to the sub-prime debacle and subsequent bailouts is obvious. Then, as now, making risky loans based on bubble-inflated real estate was a recipe for trouble....MORE
It wasn't the farmers who were safeguarded, it was the landowners who may or may not have been the husbandryman.
from Architectural Digest:
One of the Great Homes: Eaton Neston

from Somewhat Logically:
Napoleon III, Butter and West Marin

and on the Corn laws:
The End of Cheap Food- What was Old is New Again AND: Profiting from Politics
Global Warming, Politics, Laws and Opportunity
Global Warming, Politics, Laws and Opportunity--Part II