Climateer Investing: August 2011

Wednesday, August 31, 2011

Climateer Line of the Day Runner-up: Heartfelt Prayer Edition

If it hadn't been for the Bulwer-Lytton-esque* quality of today's winner, the obvious sincerity of Small Dead Animals would have taken the trophy.
[we have a trophy? -ed]

O, Sweet Saint Of San Andreas
Hear my prayer.

(when the Saint's moniker is also a geographical feature it's jake-by-me to double up on the sanctity)

*The winner of the 2011 Bulwer-Lytton Fiction Contest:

"Cheryl’s mind turned like the vanes of a wind-powered turbine, chopping her sparrow-like thoughts into bloody pieces that fell onto a growing pile of forgotten memories."

About which the judges write:

...At 26 words, Prof. Fondrie’s submission is the shortest grand prize winner in Contest history, proving that bad writing need not be prolix, or even very wordy.

"...Epitaph For Solyndra"

From Greentech:

Solar pioneer, Barry Cinnamon, weighs in on the tragedy of Solyndra.

The epitaph for Solyndra is significant because of what was not a factor in their demise. It was certainly not for a lack of trying. But more importantly, it was not because of Chinese competition or a lack of U.S. government support.

Chinese solar panels are 10 to 20 percent less expensive than U.S.-made panels; but by some estimates, Solyndra’s panels were 100 percent more. It’s a mistake to blame Solyndra’s problems on our lack of manufacturing commitment or relatively higher labor costs compared to China. Solar panels are commodities being sold on the worldwide market on a $/watt basis — much as aluminum is sold on a $/kg basis. It is crystal clear that cheap and easy to install solar panels are exactly what the U.S. needs to reduce our energy costs and create installation jobs.

For five years or more, the U.S. government was providing support for solar manufacturing in the U.S. The DOE Loan Guarantee program provided critical funding for Solyndra’s manufacturing growth, supported by over $1 billion in private capital. Unfortunately, both these private investors and the DOE made a couple of bets on Solyndra that didn’t pan out.

The first bad bet was that refined silicon, the feedstock for the solar panel industry, would stay expensive. Solyndra invented a solar panel that didn’t use expensive silicon. Unfortunately for Solyndra, and fortunately for all the silicon solar panel manufacturers and customers, silicon has gotten very cheap over the past few years. So the problem that Solyndra solved — expensive silicon — disappeared....MORE

Earlier:
Your Tax Dollars at Work: Goldman-backed "Solyndra shutters manufacturing, lays off workforce; plans to file for Chapter 11 bankruptcy" (GS)

Solyndra: I Forgot to Mention the Company was Also Backed by One of President Obama's Largest Campaign 'Bundlers' (GS; WMT)

Climateer Line of the Day: Meta-metaphor Edition

Mark Gongloff at MarketBeat takes the prestigious CLoD with a walk off home run (4:25 P.M. EDT timestamp):

Well, folks, that was August. Good riddance. From a US credit-rating downgrade to an horrific hurricane, there wasn’t much good about August.

The last day of the month ended in appropriately irritating fashion, with a big early stock-market rally losing air and sputtering around the room like an untied balloon at the world’s saddest children’s party....
-August Ends, Appropriately, With a Giant Raspberry Sound

Added bonus: we have a runner-up!

Solyndra: I Forgot to Mention the Company was Also Backed by One of President Obama's Largest Campaign 'Bundlers' (GS; WMT)

Following up on "Your Tax Dollars at Work: Goldman-backed "Solyndra shutters manufacturing, lays off workforce; plans to file for Chapter 11 bankruptcy" (GS)".

Besides Goldman and the Estate of John Walton I forgot to mention Argonaut.
Digging deep into the link-vault we have this description from Barron's, July 10, 2010

...One of Solyndra's biggest stakeholders is Argonaut Ventures I. Its majority owner is Oklahoma oil billionaire George Kaiser, who was a "bundler"of campaign funds for the Obama-Biden campaign. This means he collected contributions and sent them en masse to the candidates....

ABC News said on May 24 of this year (page 3 of 3):

Did Obama Administration Cut Corners For a Green Energy Company?

...Obama Bundler George Kaiser
Kaiser's Argonaut Private Equity and its affiliates were the largest shareholder of Solyndra as it pushed for the IPO. Kaiser's firm remains a "significant financial backer of Solyndra," Solyndra spokesman David Miller confirmed. The Oklahoma oil magnate hosted a 2007 Tulsa fundraiser for Obama and regularly visits White House staff, visitor logs show.

Kaiser did not respond to interview requests made through Solyndra, and his Kaiser-Francis Oil Company in Tulsa said he declined comment. Solyndra's Miller said political ties had no bearing.

"We do not believe there was any connection at all," said Miller. "We have created a substantial number of jobs with Solyndra and we're very proud of that. I think people are missing a lot of the story getting into the politics."...MORE

The President did a photo op at the company in May of 2010. He said some things he'd probably like to take back.
Maybe some of the photos too.

Your Tax Dollars at Work: Goldman-backed "Solyndra shutters manufacturing, lays off workforce; plans to file for Chapter 11 bankruptcy" (GS)

Despite being backed by the Wal*ton clan and Goldman Sachs (or maybe because of it?) Solyndra was awarded the first Department of Energy loan guarantees, $535 million.
So much for the government picking winners.
From PV Tech:

Cylindrical CIGS thin-film manufacturer Solyndra has announced that it has suspended its manufacturing operations, immediately laid off its 1100 full-time and temporary employees, and intends to file for Chapter 11 bankruptcy. The Fremont, CA-based company cited "the negative impacts of global economic and solar industry market conditions" as the reason for the actions. The firm also said it is evaluating its options, which could include "a sale of the business and licensing of its advanced CIGS technology and manufacturing expertise."

Despite what the company characterized as "strong growth in the first half of 2011 and traction in North America with a number of orders for very large commercial rooftops," Solyndra said it "could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers."

"This competitive challenge was exacerbated by a global oversupply of solar panels and a severe compression of prices that in part resulted from uncertainty in governmental incentive programs in Europe and the decline in credit markets that finance solar systems," the company added....MORE

"Bank of America, Now More of a Robot Plaything Than Ever" (BAC)

The stock is up 1.42% at $8.23.
A relatively lengthy post from MarketBeat:

High-frequency trading firms have found a new favorite stock: Bank of America.

A tumultuous month for the banking group, peppered with troublesome rumors, asset sales and an investment from Berkshire Hathaway, have made its shares a more attractive target for trading algorithms designed to capture profits from the tiniest price movements.

Computer-powered traders’ focus on Bank of America has contributed to an explosion in its popularity. Since late July–when its price fell below $10 per share–turnover in the stock has more than doubled, often making it the most-traded security in the U.S.

“We’ve definitely noticed an increase,” said George Hessler, chief executive of Stock USA Execution Services Inc., an electronic brokerage catering to high-frequency clientele....MORE

Drudge on the Markets

STREET TURNS UP FOR YEAR!

"A Fannie Mae for 'infrastructure.'" (GE)

That is one of the more evocative headlines I've seen in a while.
From the Wall Street Journal:

Bank of Political Works

Here's a novel idea: Have Congress create a "bank" that could borrow huge sums with only a small federal outlay and would be independent of any political interference. If you believe in this miracle, you probably thought Fannie Mae was a private company that wouldn't cost taxpayers a dime.

We're referring to Washington's latest marketing tool to sell spending to a skeptical public, a new federal "infrastructure bank." For the low, low price of $30 billion or so, President Obama says Congress can conjure hundreds of billions in new "grants and loans" to rebuild "roads, bridges, and ports and broadband lines and smart grids."

He says the bank would put "all those construction workers" back to work and "be good for the economy not just for next year or the year after that, but for the next 20 or 30 years." In a cats and dogs living together moment, the Chamber of Commerce and the AFL-CIO are both in favor. Since both unions and construction companies would be beneficiaries, this alone ought to give taxpayers pause.

This is the Fannie Mae model applied to public works. The new bank would be a government-sponsored enterprise, or GSE, whether or not anyone admits it. The bank would have an implicit subsidy for its debt because it is backed by the government. And the debt it issued would be "off-budget," which means it wouldn't show up in annual outlays. When she first proposed the concept in 2008, Connecticut Democrat Rosa DeLauro explicitly described the bank as a "public private partnership like Fannie Mae."

Such an outfit will inevitably be politicized, as similar examples have been all over the world. Japan's postal bank has been used for decades to finance public works. Japan's roads and bridges are grand but its economy has grown little in 20 years. Agribanks, regional development banks, Brazil's BNDES national bank have all become vehicles for the political allocation of credit.

Ms. DeLauro's bill admits as much, stating that the bank must take into account the "economic, environmental, social benefits and costs" of the projects seeking financial assistance. Among the considerations: responsible employment practices, use of renewable energy, reduction in carbon emissions, poverty and inequality reduction, training for low-income workers and public health benefits.

No one disputes that American public works need improving, and government has been spending huge sums to do so. As the nearby table shows, between 2001 and 2011 federal "public physical capital investment outlays" more than doubled to $330 billion from $142 billion. Every major area of infrastructure—transportation, Army Corps of Engineers, energy—is up by at least 75% in a decade....MORE

General Electric's Jeff Immelt proposes a tax holiday with the maximum 5% tax on rapatriated profits devoted to an infrastructure bank to fund projects by companies such as, well, General Electric.
See:

July 13
General Electric's Immelt Calls for Tax Holiday on Overseas Funds, Hows About we Just let Them Leave the Money in China? (GE)

August 23
Economic Policy Journal Doesn't Much Care for the National Infrastructure Bank

"The Next Tech Patent Powerhouses" (CREE; SNDK; PANL; MSI)

From Forbes:

Between the recent auction of Nortel patents and Google’s announced acquisition of Motorola Mobility, technology patents have been much in the news. For months, the same names have been cropping up, including InterDigital, a Pennsylvania-based wireless technology developer and licenser that is believed to be going up for sale in September.

The tangle of current tech patent lawsuits

Analyst Hendi Susanto says several other tech companies, including flash memory maker SanDisk, panel materials supplier Universal Display, LED light maker CREE and government and corporate device maker Motorola Solutions could also be added to the list. Susanto, who analyzes technology stocks for New York’s Gabelli & Co., believes these companies have strong patent portfolios, which could be appealing acquisitions – or partners in cross-licensing agreements – for giants like Intel, LG, Samsung and Sony.

Susanto’s suggestions, which were outlined in an August 24^th research note, come as tech firms’ battles over patents, in and outside the courtroom, appear to be reaching a bloody pitch. “We see an increasing emphasis on intellectual property and high interest in building out defensive and competitive patent portfolios through patent acquisitions,” wrote Susanto in his note.

In these circumstances, strong IP portfolios, Susanto added, can “command a premium on market valuation, serve as a barrier to entry and leverage in cross licensing negotiations, and generate interest for acquisitions.”

What companies appear to wield such advantages? Beyond InterDigital, Susanto counts four. SanDisk is a leader in its field of producing flash memory chips. Because these chips incorporate “multi-level cell technology” as well as “3D memory” technology, the company also has valuable IP, writes Susanto. He says California-based SanDisk has 1,700 (issued) U.S. patents, more than 1,100 foreign patents and 1,100 patents pending in the U.S. (As comparison, Motorola Mobility has 17,000 patents, Nortel had 6,000 and InterDigital has 18,500.) SanDisk’s patents could be of interest to the companies that already license or cross-license its technology, such as Hynix, Intel, Micron, Renesas, Samsung, Sharp, Sony and Toshiba, says Susanto....MORE

Annual Inflation Hits 4%, Bring on the QE3

Professor Krugman, in a valiant attempt to deny that the only effect of QE2 was to raise the price of equities, and more importantly, commodities, advocated the use of "core" inflation measures rather than the headline number.

When headline bled through to core he switched this metric to the Atlanta Fed's "sticky" price CPI (i.e. prices that don't change). I'm not sure how he's going to spin this latest, from ZeroHedge:

There is the CPI... and then there is the MIT's billion price project which, as the name implies, tracks the prices of a billion products in real time. And according to the latter, annual inflation has hit a multi year high of about 4%. Perhaps someone can advise the talented Mr Evans that the 3% inflation he would so love to achieve... has in fact been eclipsed. At least, according to the real world. So take 4% inflation, add $2.5 trillion in "much more" easing, and what you get is only an economic Ph.D.'s guess. Alas, we are unqualified to have an opinion on the matter.

The QE3 crowd is vehement in their denial that they intend to destroy the middle class, that's just a side effect.

Mining: "Sex with Playboy model in bribe allegation"

From our "now for something completely different" file via the Toronto Sun:

Former Playboy model Niurka Marcos — Chicomuselo mayor Julio Calderon allegedly demanded that Blackfire Exploration Ltd.

CALGARY - Mounties are investigating allegations a Calgary company bribed a Mexican mayor, only stopping payments when the official demanded a date with a Playboy model as compensation.
Court records show the RCMP obtained a warrant last month to search the Calgary offices of Blackfire Exploration Ltd. for evidence in a bribery investigation.

A sworn "information to obtain a search warrant" from Const. Terrie Lynn Batycki, alleges Blackfire, through its Mexican subsidiary, paid Chicomuselo mayor Julio Calderon more than $19,000.

Batycki's statement also says Blackfire paid for airline tickets for Calderon, his wife and children, as well as other unknown officials, and only stopped payments when his demands became outrageous.

During the course of her investigation, Batycki obtained a document she believes to be a summary of a complaint filed with the president of the Congress of the State of Chiapas by a Blackfire official.
Among the allegations listed was that "Calderon also requested that Blackfire arrange to have (former Playboy model) Niurka Marcos act in Chicomuselos and spend a sexual night with him."

Batycki said the payments were made to Calderon in order for the mayor to ensure community members wouldn't disrupt Blackfire's mining in the region....MORE

Now back to Federal Reserve news.

Tuesday, August 30, 2011

Climateer Line of the Day: "Babe Ruth of the CBOT" Edition

I usually do a snip and source for the prestigious CLoD but this time it's an extended exerpt.
From Futures Magazine, May 1, 1999:

When a typical trader retires or loses his fortune and never returns to the pits, it is doubtful his name will be remembered among the thousands who have walked through the exchange doors.

But there are always exceptions. Everett Klipp, former owner of Alpha Futures and 50-year veteran of the Chicago Board of Trade (CBOT), recently stepped down from day-to-day trading, preferring to spend his days golfing under the hot Florida sun. But the mention of his name still evokes smiles and praise from the traders he befriended and mentored over the years.

"Everett's the Babe Ruth of the Chicago Board of Trade," says James Zavesky, president of Chicago-based Eclipse Futures. "He's an icon in the Chicago business scene."

Klipp was born in Manteno, a farming town in central Illinois. A self-proclaimed "farm boy," he began working as a runner at the CBOT in 1946 for a firm that eventually became Merrill, Lynch, Pierce, Fenner & Bean. What began as a part-time job to fill his days while he attended Chicago Technical College in the evenings developed quickly into a passion and a career.

Following the traditional course of progression, Klipp clerked with John Morris & Co. for 8 years until a friend in Morris' office loaned him $4,200 to buy a seat in the wheat pit. Before he bid on his first bushel of wheat, though, Klipp sought out some advice from John Morris that later became the foundation of his simple but disciplined trading style.

"Mr. Morris told me anytime you can take a loss, do it. and you'll always be at the [CBOT]," Klipp says, "I lost money that first day and kept losing until I retired in 1998."

...MORE

The Chicago Tribune reported Mr. Klipp's death:

Everett Klipp, 1926-2011

"The cost of a crowded volatility trade" (VXX; XIV; TVIX)

From FT Alphaville (now with new comment policy!):

FT Alphaville just had a very interesting conversation with Ari Bergmann, managing principal at Penso Advisors, with respect to what’s been happening in the world of volatility hedging this year.
And specifically how things have changed since July.

Two points stand out:

1) There’s not been much of a risk/reward in equity-related volatility hedging strategies at any point this year (or post-2008 for that matter).
2) The volatility hedges that made a lot of sense pre-July 2011 were mainly in interest rate, CDS and money market instruments. All of these, however, have since lost their allure due to a major re-pricing of risk in the market this summer.

With respect to the first point, Bergmann is essentially saying that any “black swan” hedging strategy focused on equity options or Vix futures would have proved hugely expensive and thus unsuccessful:

Unless you got the timing right and the levels right it would have been far too expensive. The risk/reward hasn’t made sense. Once the risk is priced in you’re not getting anything for it. It becomes like a trade. You are sure to lose money unless you get your timing right.
The point here is that the “giveup” in terms of the pricing of the insurance proves more expensive than the potential insurance you receive in return.

Currently, says Bergmann, December put options are priced in such a way that you would need a move of 17.4 per cent or more to the downside to break-even on the trade. That’s hardly worth anyone’s while, he argues.

The Vix curve, meanwhile, is a good example of just how crowded and expensive the Vix trade itself has become. For most of the year, the steep contango was reflecting the fact that insurance sellers could command unreasonably high risk premiums in return for the insurance they were offering...MORE

Erratum: In the sentence below I had originally said Roubini instead of Taleb until a pair of younger eyes caught the mistake and supplied the links. Sorry about that.

And that, boys and girls is the problem with Black swan funds and why Taleb lost (risk adjusted) money running his fund.
As Falkenblog put it:

...So after the fund starting grinding out losses, Nassim started calling his fund a 'hedge', not a fund, later, a 'laboratory'. Now he says about the fund:

`Our aim was not to make money,'' Taleb says. ``I make no claims of being able to beat markets.'

But he makes sure any article that mentions his fund notes he made 60% in 2000. The only record of his total fund was a WSJ article on him in 2007, which notes he lost money in 2001 and 2002, made single digits in 2003 and 2004. That averages out to around 12%, and as the risk free rate was about 4% over that period, and the volatility was probably around 17% on a monthly basis, thats a Sharpe of 0.47. Not so good. And that's with his unaudited returns, so it's probably biased high (people have a tendency to round unaudited results upward significantly).

See:
Taleb Makes Hyperinflation Bet and Why You Might Want to Be Skeptical
More on Nassim "Black Swan" Taleb as a Money Manager

"Intel Forms Subsidiary To Tap Public Sector Dollars" (INTC)

But of course.
From Tech Trader Daily:

Intel (INTC) appears to be zigging while others zag, if you will.

The company this morning said it will form a new subsidiary, “Intel Federal LLC,” to “better address new opportunities working with the U.S. government.”

Huh? The rest of the world seems to be doing anything they can to get away from relying on public sector budgets, but here’s Intel upping the ante.

In any event, Intel says it wants to focus on high performance computing needs of the U.S. Department of Energy and other agencies....MORE

The stock has gone nowhere over the last decade, although not matching fellow ~~federal teat-sucker~~ DJIA component General Electric in shareholder wealth destruction:

More On Monsanto's Creation of "Superbugs" (MON; SYT)

Following up on yesterday's "Major , Major Problem: "Monsanto Corn Plant Losing Bug Resistance" (MON; SYT)" here's MotherJones:
Attack of the Monsanto Superinsects

Over the past decade and a half, as Monsanto built up its globe-spanning, multi-billion-dollar genetically modified seed empire, it made two major pitches to farmers.

The first involved weeds. Leave the weed management to us, Monsanto insisted. We've engineered plants that can survive our very own herbicide. Just pay up for our patented, premium-priced seeds, spray your fields with our Roundup herbicide whenever the fancy strikes, and—voilà!—no more weeds.

The second involved crop-eating insects. We've isolated the toxic gene of a commonly used bacterial pesticide called Bt, Monsanto announced, and spliced it directly into crops. Along with corn and soy, you will literally be growing the pesticide that protects them. Plant our seeds, and watch your crops thrive while their pests shrivel and die.

Monsanto focused its technology on three widely planted, highly subsidized crops: corn, soy, and cotton. Large-scale farmers of these commodities, always operating on razor-thin profit margins, lunged at the chance to streamline their operations by essentially outsourcing their pest management to Monsanto. And so Monsanto's high-tech crops essentially took over the corn/soy- and cotton-growing regions of the country.
But now the pitches are wearing thin. Dumping a single herbicide onto millions of acres of farmland has, predictably enough, given rise to weeds resistant to that herbicide. Such "superweeds" are now galloping through cotton and corn country, forcing farmers to resort to highly toxic herbicide cocktails and even hand-weeding. More than 11 million acres are infested with Roundup-resistant weeds, up from 2.4 million acres in 2007, reckons Penn State University weed expert David Mortensen.

And now insects are developing resistance to Monsanto's insecticide-infused crops, reports the Wall Street Journal. Fields planted in Monsanto's Bt corn in some areas of the Midwest are showing damage from the corn rootworm—the very species targeted by Monsanto's engineered trait. An Iowa State University scientist has conclusively identified Bt-resistant root worms in four Iowa fields, the Journal reports.

The findings are not likely isolated to those fields—just like spotting a cockroach on your kitchen floor probably signals an infestation, not that a lone cockroach randomly stumbled in for a visit. Sure enough, farmers in Illinois are also seeing severe rootworm damage in fields planted in Monsanto's Bt corn. And it's not just in the United States: In 2010, Monsanto itself acknowledged that in industrial-agriculture regions of India, where Monsanto's Bt cotton is a dominant crop, a cotton-attacking pest called the bollworm had developed resistance....MORE

This is insanity.

Former Berkshire Hathaway Bigwig David Sokol Continues Buying Middleburg Financial (MBRG)

The speculation is that this is going to be a "mini-Berkshire".
I don't know about that, Dave isn't Warren, but he is a good operator.
Via GuruFocus:

David Sokol Keeps Buying Middleburg Financial

If you didn’t lose your respect for David Sokol during the Lubrizol (LZ) scandal then you have a chance to invest alongside him in his latest venture.

Sokol keeps gobbling up shares of Middleburg Financial (MBRG) and according to the filing below, now owns 22% of the small financial institution:

http://www.sec.gov/Archives/edgar/data/914138/000114036111043444/xslF345X03/doc1.xml

Sokol has a family connection to Middleburg:

“While it’s good to have friends in high places, it’s even better to have family there.

CEO Gary Shook has found both in David Sokol, one of famed investor Warren Buffett’s top lieutenants at Berkshire Hathaway Inc. and a long-rumored candidate to lead Berkshire after Buffett.

Sokol owns some $19.3 million in Middleburg stock, making him the bank’s biggest shareholder. And his holdings may be getting a lot bigger. The company authorized him to increase his ownership stake by 50 percent. ...MORE

TheStreet wasn't as charitable with their headline:

Berkshire Outcast Loads Up on Bank Stock

David Sokol has backed up the truck to load up on shares of Middleburg Financial (MBRG ), continuing to add to a position the investor was holding when he resigned from Warren Buffett's Berkshire Hathaway (BRK-B ) in March....

...Middleburg Financial's shares closed at $14.76 Tuesday, up 2% so far in August and up 4.5% year-to-date, bucking the trend for the largest U.S. banks. This performance compares quite favorable to the KBW Bank Index (I:BKX _), which was down 21% month-to-date and down a whopping 30% year-to-date....

...Middleburg Financial had $1.1 billion in total assets as of June 30, and reported second-quarter net income of $1.2 million, or 17 cents a share, compared to $724 thousand, or 10 cents a share, a year earlier.
The company's provision for loan losses declined to $1.1 million during the second quarter, from $1.3 million a year earlier, however, this improvement was more than offset by an increase in expenses on foreclosed properties to $606 thousand in the second quarter, from $295 thousand a year earlier.

The bank's net interest margin -- the difference between its average yield on loans and investments and its average cost of funds -- was 3.78% during the second quarter, expanding from 3.67% a year earlier. Its second-quarter return on average assets was 0.39%, which is way below the combined U.S. bank and thrift industry's 0.85%, reported Tuesday by the Federal Deposit Insurance Corp....MORE

We had a flurry of posts on Middleburg last March, here are a couple:

March 31
Middleburg Financial Approaching Escape Velocity on Word Sokol Was Buying Within the Last Two Weeks (MBRG; BRK.A)
March 31
UPDATED: "Sokol: Off to Middleburg Financial? (Its Shares Are Soaring)" MBRG; BRK.B

Here's what the stock has done, from BigCharts:

Big-time Repub Bruce Bartlett Makes Case Against Payroll Tax Cut (and inadvertantly any other tax cut)

From the New York Times' Economix blog:
The Case Against a Payroll Tax Cut

It’s rare for Republicans to find a tax cut they don’t support, but last week The New York Times reported on just such an exotic creature. Many leading Republicans, it seems, are extremely cool to the idea of extending the temporary cut in the Social Security tax that took effect on Jan. 1 and expires on Dec. 31. It has lowered employees’ share of the payroll tax to 4.2 percent, from 6.2 percent.

In theory, the payroll tax cut has positive economic effects on both the demand side and the supply side. By increasing workers’ cash flow, it should encourage additional spending in the economy – something that the economy desperately needs.

It also reduces the tax wedge between what it costs employers to hire a worker and the worker’s after-tax reward. Thus, a cut in the payroll tax should increase economic activity and reduce unemployment.

However, there is no evidence that the lower payroll tax has done much of anything to stimulate either spending or hiring. There are a number of reasons for this.

First, the tax cut only helps those with jobs. While many have low wages and undoubtedly are spending all their additional cash flow, those with the greatest need and most likely to spend any additional income are the unemployed.

Second, the payroll tax cut helps many workers who have no need for it and will only pocket the tax savings.

Third, economic theory and the experience with tax rebates in 2001 and 2008 tell us that people are strongly inclined to save temporary increases in income. People only increase their spending when they perceive an increase in their permanent income.

Fourth, even if one assumes that the cost of employment has declined and employers can somehow capture some of the payroll tax cut, there’s little sign that labor costs are the principal factor holding back hiring....MORE

HT: Real Time Economics

Just as a payroll tax cut "only helps those with jobs" a cut in the top marginal rate "only helps those above that income threshhold".

"Second, the payroll tax cut helps many workers who have no need for it and will only pocket the tax savings." really needs no comment.

For "Third, economic theory and the experience with tax rebates in 2001 and 2008 tell us that people are strongly inclined to save temporary increases in income." look at the cash hoards being accumulated by any company that is profitable, including privately held corporations.

Finally "Fourth, even if one assumes that the cost of employment has declined and employers can somehow capture some of the payroll tax cut, there’s little sign that labor costs are the principal factor holding back hiring" seems pretty damning to any corporate tax cut/jobs arguement.

Wo where's the truth? Beats me.

MIT: "Why Were Irene's Intensity Predictions So Off?"

During yesterday's press conference the folks at the National Hurricane Center sounded a bit defensive.
As well they should.
From MIT's Technology Review blog:

While forecasters have improved path predictions, they still have difficulty predicting a storm's intensity.

Hurricane path prediction has enormously improved. Forecasters knew days before it made landfall that Irene would hit the Carolinas and move up the East Coast, reaching New York and New England.

"There have been tremendous improvements in hurricane track forecasts over the past 20 years," says Gerald Heymsfield, a research meteorologist at NASA's Goddard Space Flight Center. Information from aircrafts flown by NOAA and the Air Force provided data, as well as NOAA radars on the ground along the East Coast. "This was an ideal situation compared to storms forming over the ocean or around the islands," he adds.

The Associated Press points out that better computer models and better data for the models have led to drastically improved predictions of hurricanes' paths:

By Monday night, five days before Irene first hit the East Coast, the hurricane center figured the storm would come ashore around the North Carolina-South Carolina border. By Tuesday night, they predicted it would rake the coast. And on Friday morning—24 hours before landfall—they had the storm's next day location to within 10 miles or so.

Twenty years ago, 24-hour forecasts were lucky if they got it right within 100 miles and the average 36-hour forecast within 146 miles. With Irene, that was about the accuracy of the five-day forecast.
While path prediction has steadily improved over the decades, forecasting the intensity of storms still proves tricky. Irene's expected monster intensity—much to the nation's relief—was far less as she weakened a day or so after reaching land. "What made Irene especially difficult for the forecasting models was that she had three landfalls and followed the coastline," says Heymsfield. "We need a lot more research to understand how to better model this land interaction."

Others point to the unusual way Irene's "eye wall"—the inner core of storms surrounding the hurricane's eye—behaved. New York Times reports....MORE

We were fortunate to catch a Wunderblog post and get "Irene's eyewall collapses; further intensification UNLIKELY (ALL; TRV; CB; BRK.b)" in front of our readers early Friday morning, allowing plenty of time to adjust bets.
It worked out well.

Later that morning the NYT's Dot Earth blog posted a partial confirmation that the coastal damage wouldn't be as bad as some were forcasting: MIT: "New York Surge From Irene Looks Bad, But Not Off Charts"

Monday, August 29, 2011

"The Sun Shines on Mosaic" (MOS; SOIL)

I'm getting to this a bit late, it was published on Friday, and the stock is up $3.16 (4.55%) at $72.54.
From Barron's Weekday Trader column:

The producer of key crop nutrients stands to benefit from a growing global population and limited arable land.

Looking for a tasty growth story? Here's some food for thought.

Mosaic (ticker: MOS), with a market capitalization of nearly $31 billion, is the world's largest producer of phosphate and the third-largest seller of potash – both vital crop nutrients. With the global population growing, especially in emerging markets, demand for Mosaic's products should only increase.

"We think Mosaic is a cheap stock now. We have finite land resources in the world, and we need to increase crop production, and Mosaic's phosphate and potash increase yield for grains," says Russell Croft, a portfolio manager at Croft Leominster Investment Management in Baltimore.

Last month, Mosaic announced better-than-expected fiscal-fourth-quarter earnings and a 54% rise in revenue from a year earlier as higher fertilizer prices and increased demand for food boosted results.

Despite the likelihood of continued pricing strength, the stock has been punished by the threat of global economic weakness in recent months.

However, we think it now looks attractive at $69.38, which is 22% below its 52-week high reached in February. In the same span, the Standard & Poor's 500 index has declined 12%. A few hedge funds agree, including Paulson & Co., which invested millions in Mosaic in the second quarter.

Another bull is Ticonderoga Securities analyst Mark Gulley who upgraded Mosaic shares to Buy from Neutral earlier this month and raised his earnings estimates, too. He sees higher-gross margin for potash, which accounts for more than half of earnings. In the U.S., he expects strong profits in 2012 on the back of record commodity prices....MORE

The article concludes with:

•Hedge funds that added Mosaic shares in the period ending June 30 include TPG-Axon Capital Management (2,845,000 shares), Viking Global Investors (2,492,500), Third Point (2,400,000), Appaloosa Management (2,390,027) and Paulson & Co. (2,250,000), according to StreetSight.net.

Major , Major Problem: "Monsanto Corn Plant Losing Bug Resistance" (MON; SYT)

The only reason for allowing Monsanto to screw with the food chain is their assurance that they know what they are doing.
This is proof that they don't. It's time to shut down their open field GMO experiments.
This is a very negative development.
From the Wall Street Journal:

Widely grown corn plants that Monsanto Co. genetically modified to thwart a voracious bug are falling prey to that very pest in a few Iowa fields, the first time a major Midwest scourge has developed resistance to a genetically modified crop.

The discovery raises concerns that the way some farmers are using biotech crops could spawn superbugs.
Iowa State University entomologist Aaron Gassmann's discovery that western corn rootworms in four northeast Iowa fields have evolved to resist the natural pesticide made by Monsanto's corn plant could encourage some farmers to switch to insect-proof seeds sold by competitors of the St. Louis crop biotechnology giant, and to return to spraying harsher synthetic insecticides on their fields.

"These are isolated cases, and it isn't clear how widespread the problem will become," said Dr. Gassmann in an interview. "But it is an early warning that management practices need to change."

The finding adds fuel to the race among crop biotechnology rivals to locate the next generation of genes that can protect plants from insects. Scientists at Monsanto and Syngenta AG of Basel, Switzerland, are already researching how to use a medical breakthrough called RNA interference to, among other things, make crops deadly for insects to eat. If this works, a bug munching on such a plant could ingest genetic code that turns off one of its essential genes.

Monsanto said its rootworm-resistant corn seed lines are working as it expected "on more than 99% of the acres planted with this technology" and that it is too early to know what the Iowa State University study means for farmers.

The discovery comes amid a debate about whether the genetically modified crops that now saturate the Farm Belt are changing how some farmers operate in undesirable ways.

These insect-proof and herbicide-resistant crops make farming so much easier that many growers rely heavily on the technology, violating a basic tenet of pest management, which warns that using one method year after year gives more opportunity for pests to adapt.

Monsanto is already at the center of this issue because of its success since the 1990s marketing seeds that grow into crops that can survive exposure to its Roundup herbicide, a glyphosate-based chemical known for its ability to kill almost anything green.

These seeds made it so convenient for farmers to spray Roundup that many farmers stopped using other weedkillers. As a result, say many scientists, superweeds immune to Roundup have spread to millions of acres in more than 20 states in the South and Midwest....MORE

I was never one to call the stuff that Monsanto creates "Frankenfoods" but I'm getting close.

Disappointed by Irene? "Are Category 6 Hurricanes Coming Soon?"

The formerly staid Scientific American has become something of a hypester.*
From SA:

Tropical cyclones like Irene are predicted to be more powerful this year, thanks to natural conditions, but researchers disagree on how to rate that intensity

Atmospheric researchers tend to agree that tropical cyclones of unusual ferocity are coming this century, but the strange fact is that there is no consensus to date on the five-point scale used to classify the power of these anticipated storms. In what may sound like a page from the script of the rock-band spoof Spinal Tap with its reference to a beyond-loud electric guitar amplifier volume 11, there is actually talk of adding a sixth level to the current Saffir-Simpson hurricane scale, on which category 5 intensity means sustained winds higher than 155 miles per hour (250 kilometers per hour) for at least one minute, with no speed cap.

The lack of an upper limit on the scale results in all of the most intense tropical cyclones getting lumped together, despite their wide range of power. Category 5 becomes less descriptive when it includes 2005's Emily, which reached peak wind speeds of 257.5 kph (160 mph) and six hours in category 5; the same year's Katrina which held peak wind velocity of 280 kph (175 mph) for 18 hours in the category; and 1980's Allen, churning with peak winds at 305 kph (190 mph) maintained for 72 hours in the highest category.

And now the ferocity forecast for the century adds to this classification problem. "The severe hurricanes might actually become worse. We may have to invent a category 6," says David Enfield, a senior scientist at the University of Miami and former physical oceanographer at the U.S. National Oceanic and Atmospheric Administration (NOAA). This new level wouldn't be an arbitrary relabeling. Global satellite data from the past 40 years indicate that the net destructive potential of hurricanes has increased, and the strongest hurricanes are becoming more common—especially in the Atlantic. This trend could be related to warmer seas or it could simply be history repeating itself. Data gathered earlier than the 1970s, although unreliable, show cycles of quiet decades followed by active ones. The quiet '60s, '70s and '80s ended in 1995, the year that brought Felix and Opal, among others, and resulted in $13 billion in damages and more than 100 deaths in the U.S.

The pros and cons of categories: Five or six?
The average difference between the current categories equals nearly 20 mph, so a category 6 label would likely be applied to hurricanes with sustained winds over (280 kph) 175 mph. The speed and destruction of hypothetical "category 6" storms is speculative, despite the hurricanes with winds at that level.

After all, meteorologists and climate researchers may not even choose a category 5 storm from the record books if asked to identify the most powerful tropical cyclone in history, because the Saffir–Simpson scale fixates on maximum wind speed lasting for at least one minute and disregards the many other large-scale components that factor into a storm's level of devastation. The whole index should be thrown out the hurricane-proof window, some say....MORE

*That first paragraph is flat out wrong.
No one knows what impact the currently observed warming will have on either the frequency or intensity of hurricanes. The third grade answer is that "Because hurricanes are heat engines they will be stronger".
A bit more sophisticated fourth grade answer might look at the Atlantic Multidecadal Oscillation.
Fifth grade would include the effects of wind shear. Moving on to sixth grade, you might look at whether less humid air coming off the Sahara would hinder development of any hurricanes.

There will be folks with agendas arguing every point.

Just so you know, cyclones can get very large. Here's [Super] Typhoon Tip from October 1979:

The relative sizes of the United States, Typhoon Tip and Cyclone Tracy (the largest and one of the smallest tropical cyclones recorded, respectively)

See also:
87 Worst Predictions of All Time

A re-post from November '07. A surprising number of them came via the pages of Scientific American.
[and Lord Kelvin seems a bit of a twit -ed]
Here are twenty. Prediction is hard.
From 2Spare.com:

"Stocks have reached what looks like a permanently high plateau."
Irving Fisher, economics professor at Yale University, 1929.

"In all likelihood world inflation is over."
International Monetary Fund Ceo, 1959.

"Read my lips: NO NEW TAXES."
George Bush, 1988.

"Capitalist production begets, with the inexorability of a law of nature, its own negation."
Karl Marx.

"The multitude of books is a great evil. There is no limit to this fever for writing; every one must be an author; some out of vanity, to acquire celebrity and raise up a name, others for the sake of mere gain."
Martin Luther, German Reformation leader, Table Talk, 1530s(?).

"... too far-fetched to be considered."
Editor of Scientific American, in a letter to Robert Goddard about Goddard's idea of a rocket-accelerated airplane bomb, 1940 (German V2 missiles came down on London 3 years later).

"That the automobile has practically reached the limit of its development is suggested by the fact that during the past year no improvements of a radical nature have been introduced."
Scientific American, Jan. 2 edition, 1909.

"It will be gone by June."
Variety, passing judgement on rock 'n roll in 1955....
and many more.

More on 1998 as the Template for 2011's Market Action (DIA; SPX; QQQ)

A mental map.
At least until it gets folded so much that you can't see what's in the creases, it starts to tear, one of the kids tries to make hat out of it, etc.
See links below.*
From Macrofugue:

The Fat Pitch

On August 17th, 1998, the Russian government, decimated by falling oil revenue resulting from the Asian financial crisis, devalued the ruble, defaulted on its domestic debt, and declared a moratorium on payment to foreign creditors. The S&P 500 was almost in familiar territory -- 1062, and had already fallen more than 10% in anticipation.

By early October, the stock market had declined another 14%, and the 10-year US Treasury yield had declined by 152 basis points in the span of 6 months. The VIX hit an astounding 45.74 -- eclipsing the implied volatility from the crash of 1987.

Economic conditions in Russia did not begin to recover until 2000, and were not at the previous nominal GDP peak until 2003, 5 years later.

Fast forward 13 years: in the 3rd straight decade (1990s, 2000s, 2010s), we are flirting with 1120 S&P 500, the 10-year US Treasury yield has declined by 148 basis points in the span of 6 months, and the VIX is at an astounding 42.99.

The restructuring of European periphery debt -- to which its neighbours are intimately connected to, much like a dozen years ago -- hasn't happened, but it's difficult to say that the market hasn't already clearly priced that as likely already.

This is all really bad news, right?
After the market had its watershed moment, it finished the year 33% higher. The market, seeking resolution even in bad news, was able to quickly eclipse its previous highs and rally strongly for several more years....MORE

Here's what the DJIA did in that that long ago summer of 1998:

Volatility: A Double Top in the VIX (VXX; XIV; TVIX)

"How do diamonds the size of potatoes shoot up at 40 miles per hour from their birthplace 100 miles below Earth's surface?"

From PhysOrg:
Tackling mysteries about carbon, possible oil formation and more deep inside Earth

How do diamonds the size of potatoes shoot up at 40 miles per hour from their birthplace 100 miles below Earth's surface? Does a secret realm of life exist inside the Earth? Is there more oil and natural gas than anyone dreams, with oil forming not from the remains of ancient fossilized plants and animals near the surface, but naturally deep, deep down there? Can the greenhouse gas, carbon dioxide, be transformed into a pure solid mineral?

Those are among the mysteries being tackled in a real-life version of the science fiction classic, A Journey to the Center of the Earth, that was among the topics of a presentation here today at the 242nd National Meeting & Exposition of the American Chemical Society (ACS). Russell Hemley, Ph.D., said that hundreds of scientists will work together on an international project, called the Deep Carbon Observatory (DCO), to probe the chemical element that's in the news more often than perhaps any other. That's carbon as in carbon dioxide.

"Concerns about climate change have made millions of people aware of carbon's role on the surface of the Earth, in the atmosphere and in the oceans," Hemley said. "The Deep Carbon Observatory will uncover critical information about the movement and fate of carbon hundreds and thousands of miles below Earth's surface. We call that the deep carbon cycle."

Hemley said this basic research could have practical implications in the future. Using laboratory equipment that reproduces pressures deep within the Earth, which are thousands to millions of times higher than on the surface, scientists in these labs have discovered a way to convert carbon dioxide into a rock-like material called polymeric carbon dioxide. With further refinements, scientists could enhance its stability closer to the Earth's surface.

The findings also may lead to new materials for commercial and industrial products. Hemley's laboratory, for instance, has developed a way to produce "super" diamonds, or high-quality diamonds that are bigger and better than existing ones. Natural diamonds form slowly under the high-pressure, high-temperature conditions that exist deep within the Earth, while today's synthetic diamonds form under similar conditions in the laboratory. Using a process called chemical vapor deposition, Hemley's research group made diamonds rapidly and at low pressure. The new diamonds have superior qualities, including extreme hardness, improved transparency and better electrical and temperature properties. The diamonds could lead to improved computer chips that run faster and generate less heat than existing silicon chips, Hemley said. They also show promise for use in advanced cutting-tools, more durable and heat-resistant windows for spacecraft and other applications, he noted....MORE

UPDATED: Insurance Companies Already Considering Premium Increases (ALL; ACE; TRV; XL) and tomorrow we tie a hurricane record

Update: Morgan Stanley agrees. In a note on Sunday they especially liked the reinsurers.
Original Post:
The best buys are probably the reinsurers Ace and XL but they aren't trading pre-market.
The Travelers and Allstate both look set to open up 2% or more.

Remember when Allstate wanted to raise premiums in Florida by 42% (later amended to a 47% increase) because of global warming?
That was just before the start of the almost 1100 day period when the U.S. suffered not a single landfalling hurricane, the streak that was broken by Irene on Saturday.*

As I said in March 2010's ""No Surprise: Chile Leads to Reinsurance Rate Increase Debate" BRK-A; BRK-B", just after the monster earthquake in:

No kidding.
A brisk breeze gets the boys in Omaha, Zurich, Munich and London (Lloyds) talking about premium increases.
Not to mention the herverzekering crowd in Amsterdam, they're tough bastards.

Here's how Reuters put it, five days ago:

Hurricane Irene, threatening to become the first hurricane to hit the United States in three years, could be the catalyst the insurance industry has been seeking in its quest for across-the-board premium increases after years of weakness.

Like speculators in the futures market who applaud the effects of drought on wheat prices, another disaster could ultimately cheer investors in insurance and reinsurance stocks. Major storms in 2004 and 2005 triggered a surge in insurance stocks after the fact....MUCH MORE

*The number of days in between intense hurricane landfalls (S/S Category 3-4-5) is still running as Irene landed as a Cat2.
Tomorrow we will tie the 2,136 days between landfalls of October 11,1909 and August 17,1915 as the second longest streak in the historical record.
I bet you haven't seen that little factoid anywhere else today.

A Double Bottom in the PowerShares DB Agriculture Fund (DBA) Also GLD; BAC

I'm linking to his main page, scroll down for more (simple, clean) chart analyses.
From Alpha Global Investors:
(click to enlarge)

PowerShares DB Agriculture Fund (DBA) weekly chart analysis ;

1) When you often see "fake moves" above/below a certain price level, you know that you are facing a key support/resistance level
2) Focus on that blue arrow scenario, expecting another break out in about two months....

Sunday, August 28, 2011

So You're MAD About Something on the Internet?

See Not Quite Wrong for the whole thing:

NQW says:

UPDATE: Thanks to everyone for sharing the chart! You can vote for it on Reddit here (please do!), I would LOVE to see it again on BoingBoing, if someone sends me a Submitterator post I’ll add it here as well. If there’s anywhere else you share it to, please let me know!
After months of discussion and planning, Caldwell and myself, creators of the “So you found something cool on the Internet…” chart on giving credit where credit is due, are proud to present this followup, all about Internet arguments.

I think we’ve all seen it before, the argument online that gets out of hand. Our message is simple, the minute you engage you probably should have walked away. So don’t get angry, just chill the fuck out and eat a sandwich. I mean look at Professor Internet. He seems like a smart cat. Better listen to him....MORE

HT: Reason's Hit and Run blog

The Subjunctive and Short Selling European Financials

From Ibex Salad:

Used primarily in modern times to provide the emotional underpinnings of boleros and Johnny Hartman ballads, the subjunctive mood fell into near total disuse in the English language over the course of the twentieth century. One of the regrettable results of this loss of communicative precision is that it has become seductively and irresistibly easy to present purely hypothetical proofs as if they were factual. Had it never taken place the human race might have ended up not being subjected to an unending barrage of contrafactual non-events posing as evidence supporting various indisputable tenets of finance and economics.

The uproar raised by the folks pictured above when, on August 12th, a number of eurozone countries temporarily banned the short sale of financial stocks and derivatives provides a pertinent example. The Millionth Monkey puts it best:

There are those who say the upcoming short selling ban in all stocks in Italy and France, which according to CNBC will take place as soon as after the close today, or in one hour, will be beneficial to stocks. Then there are facts. To those who may have forgotten, on September 18 (ed. 2008), the SEC banned the shorting of all financials here in the US. Below is a chart of the carnage that ensued... The same chart is coming to Europe first. End result: 48% drop in under a month.

Lacking the grammatical tools necessary for the task, what the intellectually challenged (and incredibly confused about the temporal order in which arguments are presented) writer of that piece is attempting to claim is that if the SEC were not to have banned short sales on financials three years ago that the outcome with respect to US banking stocks would not have been materially different. It’s that simple – the SEC kicked out the hyperthyroidic short specs and the market crashed anyway. Kindly, for its part, nature has recently provided us with a second opinion on that relationship – the Europe to which their chart is ‘coming to’.

Assuming, correctly we believe, that the effect of the directive can be measured from the moment that the rumour mill declared it a done deal and the shorts started covering in earnest – the lows of August 11th – the following lists the performance of various Eurostoxx banks affected by the ban through this Friday’s close.

Santander - +8.5%
BBVA - +6.9%
BNP Paribas - +2%
Credit Agricole - +10%
Intesa - +5%
Societe Generale - +6%
Unicredit - +1%

German Banks, however, were not subjected to the indignity of a prohibition....MORE

A Tree Falls in Brooklyn

It's looking as if the insurers and reinsurers both dodged a bullet and have a catalyst for premium increases.
We will more on the insurance companies, for now expect a pop on Monday, and especially among the reinsurers ACE and XL.
From New York Magazine's Daily Intel blog:

Photo: Andy Mirer

It appears that the worst-case scenarios for the potential damage Hurricane Irene could cause in New York will not be realized. But local, small-scale damage has been done: In one instance, a huge and beautiful 80-year-old American Elm tree that had been controversial for years in Brooklyn Heights came down this morning at about 5am, knocking down a tony co-op building's garden wall, crashing across Hicks Street, and coming to rest in the front yard of an early-1800s wooden house across the street. It appears to have knocked down the iron fence in front of that house, and may have crashed through the facade...MORE

Saturday, August 27, 2011

"Historic Hurricanes from New Jersey to New England: 1634-2011"

More than you may care to know, all in one place.
From Weather Underground's Weather History:
Historic Hurricanes from New Jersey to New England: 1634-2011

A very large though not intense hurricane is bearing down on the mid-Atlantic coastline as I write this Saturday morning August 27, 2011. This blog is a review of significant hurricanes that have in the past affected the New Jersey, New York City, Long Island, and Northeastern portions of the United States. I arrange this review in a chronological order beginning with the first European settlement of the northeastern United States in 1620.

17th Century

August 1635: The Great Colonial Hurricane
David Ludlum, America’s greatest weather historian, notes that Rev. Increase Mather reported in his treatise ‘Remarkable Providences’ (1684) that he had heard “of no other storm more dismal than the great hurricane which was in August 1635”. Ludlum writes “this was the greatest meteorological event of the colonial period in New England, coming only 15 years after the settlement of Plymouth Plantation in the Massachusetts Bay Colony”. John Winthrop and William Bedford witnessed the storm. It struck on August 16, 1635 and leveled the forests of the region. The native population agreed no such storm in their lore had been so powerful.

September 1675: A hurricane said to be almost as powerful as the 1635 strikes New London, Connecticut and Boston. Ludlum notes that this storm was equal to the hurricanes to strike Massachusetts and Connecticut in 1635, 1815, 1938, and 1944.

18th Century

No significant hurricanes in the Northeast or Mid-Atlantic are on record aside from the tropical storm that struck Philadelphia on October 22, 1743; Benjamin Franklin measured it accurately using scientific weather measurements for the first time in United States history. The storm was not that significant otherwise. The most significant hurricane of in the 18th century would be the hurricane of September 1775. It “exacted a toll on human lives higher than any pervious American mainland hurricane” according to weather historian David M. Ludlum. 163 lives were lost on the North Carolina Capes and at sea off New England. The path of the storm followed one similar to Hurricane Hazel in 1954; inland over eastern Pennsylvania. Philadelphia harbor reported its highest tide on record.

Chronological list of known 17-18th Century New Jersey to New England Tropical Storms

August 1635
August 3, 1638
October 5, 1638
September 7, 1675
August 23, 1683
October 29, 1693
October 18, 1703
October 14, 1706
October 25, 1716
September 27, 1727
October 22, 1743
October 8, 1749
October 24, 1761
September 8, 1769
September 3, 1775
October 9,1783
August 19, 1788

19th Century

August 21-24, 1806: The hurricane of August 1806 was very similar to Irene. It made a short transit over Cape Hatteras and then slowly marched northeastward affecting only coastal regions (not even noticed 100 miles inland). New York City was “soundly lashed” and at least 21 sailors were lost off the New Jersey coast. Much damaged occurred on Martha’s Vineyard, Nantucket, and Cape Cod.

September 23, 1815: ‘The Great Gale’ This hurricane ranked foremost in the minds of the population in New York and New England at the time. The storm passed east of New York City but hit Long Island soundly. The storm was similar to the 1938 hurricane in that it had a forward motion of 50mph as it plowed on to Long Island. The eye moved over eastern Connecticut and Western Massachusetts. Like the great hurricane of 1938, Narragansett Bay, Rhode Isalnd was most affected. The area was sparsely populated at this time unlike 1938 and only two deaths were reported.

The Great Gale of 1815 inundates Providence, Rhode Island as depicted in this painting by John Russell Bartlett. Rhode Island Historical Society.

September 3, 1821: Last Time a Hurricane Passed Directly over New York City On September 3, 1821 the eye of a hurricane passed directly over New York City. The center crossed Long Island (where JKF Airport is now). Records indicate that this is the only MAJOR hurricane to have passed directly over the city in at least 250 years. The New York Post published this report on September 4th:...MORE

Friday, August 26, 2011

Swap Intel for Con Ed (INTC; ED)

Intel has a higher dividend and a lower hurricane risk.
From Ticker Sense via Abnormal Returns:

Intel ($INTC) has a higher dividend yield than Consolidated Edison ($ED)

Hurricane Irene: "New York City Orders Partial Evacuation"

This gal is turning out to be a real bitch.
From the WSJ's Metropolis blog:

: EVACUATION MAP: Click on the map to launch a larger version.

...MORE

MIT: "New York Surge From Irene Looks Bad, But Not Off Charts"

From the New York Times' Dot Earth blog:

MIT

A simulation of the storm surge from Hurricane Irene (using the Slosh model) shows severe flooding in New Haven and New London, Conn., (the scale is in feet) and parts of New Jersey, with extra sea height of around four feet (on top of the tide) in New York City.

Researchers at the Massachusetts Institute of Technology focused on coastal impacts from hurricanes have run fresh simulations of the possible storm surge as Hurricane Irene hits the New York metropolitan region. Simulations using two surge models (known by their acronyms, SLOSH and ADCIRC) found 1.22 and 1.05 meters of surge (4 and 3.44 feet) of surge at the Battery, at the southern tip of Manhattan.

This would pose serious risks to low installations and the subways but is nowhere near a worst case (think 13 feet, as in 1821)....MORE

1957 Ferrari Sets Record Price for an Automobile Sold at Auction

Not the most valuable (yet). We went with a more precise headline than TIME.
From Time Magazine's Moneyland column:
$16.4 Million Ferrari Sets New Record For Most Expensive Car

Bloomberg / Getty Images
A 1957 Ferrari Testa Rossa
California auctioneer Goodings & Co., sold a 1957 Ferrari Testa Rossa for $16.4 million on Saturday, the highest price ever paid for a car at auction. The previous record was $12 million, also for a 1957 Ferrari Testa Rossa.

The car is the first of Testa Rossa built and was used as a prototype for the many others that came during the 1950s and 1960s. The car has 300-horsepower, a 3.0-liter V-12 engine, a four-speed manual transmission and was used in races in both the U.S. and Europe....MORE

Energy: Costs Matter-- Fusion Edition

Following up on a point raised in "The Columbia Jounalism Review on Green Jobs",
Lifted in toto from Marginal Revolution:

Is fusion power going to work out?

Chris F. Masse sends me many links on this topic, and I am willing to give it a hearing. Here is a new summary article:

“We could produce net electricity right now, but the costs would be huge,” says Cowley. “The barrier is finding a material than can withstand the neutron bombardment inside the tokamak. We could also just say damn to the cost of the electricity required to demonstrate this. But we don’t want to do something that cannot be shown to be commercially viable. What’s the point?”
…on Earth, scientists have to try and replicate a star’s intense gravitational pressure with an artificial magnetic field that requires huge amounts of electricity to create – so much that the National Grid must tell Culham when it is OK for them to run a shot. (Namely, not in the middle of Coronation Street or a big football match.)

HT: Alphaville

The Columbia Jounalism Review on Green Jobs

Is it just me or does this arguement seem soooo last decade?
The essence of the green jobs debate is government subsidies. If the energy produced was cost competitive there would be no reason for utilities to delay implementation.
We see this scenario each time a BTU from natural gas trades for less than a BTU from coal. The electricity producers switch to natural gas.
(with some slippage)

The question with the subsidies is not whether or not they work but whether they are the highest use for finite financial resources.
If the U.S. decided it was in the country's interest to have a nation of whittlers you could, with enough subsidy, put all the unemployed to work. Is that the way to go?
[what if you count the value of the wood chips as biomass to create electricity? -ed]

This is getting to be a long introduction, I'll come back to the policy, fiscal and financial issues next month. In the meantime here's the CJR's The Observatory blog on recent reporting and commentary:
Gamey Green Jobs Coverage

On Tuesday, climate blogger Joseph Romm blasted a New York Times article about green jobs for ignoring “explosive” growth in that sector. It was valid criticism even though Romm, in turn, had some distortions of his own.

The Times’s piece argues that President Obama’s pledge to create 5 million green jobs over ten years, and California Governor Jerry Brown’s promise to create five-hundred thousand clean-technology jobs in the state by the end of the decade, look like “a pipe dream.” Produced by the San Francisco-based Bay Citizen, which provides coverage of the Bay Area to the Times, the article is pegged, in part, to a July report by the Brookings Institute and Battelle’s Technology Partnership Practice, which assessed green jobs nationally and regionally.

“[The study] found clean-technology jobs accounted for just 2 percent of employment nationwide and only slightly more — 2.2 percent — in Silicon Valley,” according to the article, which was published on August 19. “Rather than adding jobs, the study found, the sector actually lost 492 positions from 2003 to 2010 in the South Bay, where the unemployment rate in June was 10.5 percent.”

It’s a selective quotation from the report that supports the thesis presented in the article’s headline: “Number of Green Jobs Fails to Live Up to Promises”—although it’s likely the Times wrote the headline to suit the Bay Citizen’s reporting. The Brookings report repeatedly acknowledges than such jobs are, for now, a “modest slice” of the US total, it is actually quite sanguine about progress in the “clean economy” and prospects for future growth.

“The clean economy increasingly looks like a promising location for the emergence of significant new technologies, processes, and industries that will shape the next economy and generate new jobs…” the report says, “Though modest in size, the clean economy employs more workers than the fossil fuel industry…”
Romm, who runs the blog Climate Progress for the liberal Center for American Progress, correctly charged that the article misled readers by ignoring many details of the report, as well as its overall message. Unfortunately, he too overplayed his hand. At one point, he quotes a contributor to his blog who had earlier reported that the Brookings report showed that, “From 2003 to 2010, the clean economy grew 8.3% — almost double what the overall economy grew during those years.”

In fact, between 2003 and 2010, the clean economy expanded at an annual rate of 3.4 percent, compared to the national economy’s 4.2 percent. It was only during the middle of the recession, from 2008 to 2009, that the clean economy grew faster, at a rate of 8.3 percent, than the rest of the economy. And that was “likely due, in part, to the American Recovery and Reinvestment Act, which channeled large sums of public spending towards clean energy projects,” the report noted.

Between 2003 and 2010, it was only the youngest and smallest sectors of the clean economy—thirteen of the thirty-nine sectors assessed in the report—that grew 8.3 percent annually. This was the “explosive” growth that Romm accused the Times and the Bay Citizen of ignoring. It pertains to the energy-related sectors (wind, solar, smart grid, etc.) that most reporters and the public associate with green jobs. Brookings chose the word “explosive” to describe the pace of job growth in those sectors. It also used the word “torrid.”...MORE