November 30th, 2011

#3077: Is Israel getting ready for a war?

They're doing some unusual things, like moving missiles.
Jericho III’s are believed to be guided by radar and reportedly give Israel nuclear strike capabilities within the entire Middle East, Africa, Europe, Asia and almost all parts of North America, as well as within large parts of South America and North Oceania.
So if Israel needs to, say, nuke a city or two in Iran, they can manage it quite handily.

* * *

Robosigned foreclosures are a scam.

Looks that way, doesn't it?

Vox Day notes that a notary who blew the whistle on robosigning has turned up dead. "have little doubt the coroner will determine that she committed suicide by shooting herself three times. In the back of the head," he says.

* * *

Global warming causes record cold snap in American south.

* * *

I went to bed last night right after completing the last post, and I slept until after 1 AM--perhaps three hours. I haven't been to bed since.

Guess what I'm going to do next.

#3078: They had an economic rally and all I got was this lousy t-shirt.

490 point jump in the Dow today. Two reasons:

1) Greece has been fixed. (Again.)

2) The latest employment numbers failed to suck radioactive toxic waste.

I'm beginning to think that the markets are rising solely on the strength of bailing wire and chewing gum futures, because the fiscal collapse of Greece has been staved off and held back for more than a year now. At some point your jalopy ceases to be less a car and more a collection of twine and duct tape; I think Greece has passed that point and the markets are blind to ol' Bessie's faults. "She's cherry! She's an awesome antique!"

Vox Day suggests that the most recent fix is one of the final desperation ploys to avoid being stranded by the side of the Damn Ryan at rush hour.

The move to save a major European bank averted disaster, but how does that make for a huge bounce? Is it the result of some kind of adrenaline rush? Like in an adventure film: "Hey, we narrowly escaped death just now! Let's make a baby!"
These are the type of actions that were being taken during the financial crisis in 2008. Now most knowledgeable experts agree that not rescuing Lehman Brothers was a mistake. The authorities are not about to make the same mistake again. The only explanation for the massive action is that central banks were concerned about a pending failure that is not publically known.
The big banks aren't going to allow another Lehman-level failure, and the markets responded...but sooner or later something on the old jalopy is going to blow out, and it's going to blow big.

Here's Wednesday's DOOM! post, and one link suggests the jalopy's about ready to blow its transmission all over the highway.
I [Wolfgang Münchau] have yet to be convinced that the European Council is capable of reaching such a substantive agreement given its past record. Of course, it will agree on something and sell it as a comprehensive package. It always does. But the half-life of these fake packages has been getting shorter. After the last summit, the financial markets' enthusiasm over the ludicrous idea of a leveraged EFSF evaporated after less than 48 hours.

Italy's disastrous bond auction on Friday tells us time is running out. The eurozone has 10 days at most.
Emphasis mine, because I've noticed that myself. I was surprised that the idea he mentions (leveraged EFSF) collapsed as quickly as it did, but it collapsed nonetheless.

So the huge step function rises in the Dow over the past couple of days? I fail to see how it can even continue to maintain the new level its found, much less attain new highs in subsequent days. There's been a painfully high incidence of sudden changes at open over the past few months, driven by the futures which themselves respond to world economic conditions. Most of the time these sudden changes have been driven entirely by events in Europe: when things look good, there's a step up at open; when they look bad, there's a step down...and regardless of direction the market then fluctuates around the new level.

Over the past couple of months, when a trading day has seen a big move, most of it has been a step function. Like today: 391 of the 491 points the Dow rose today occurred in the first half-hour of trading.

This can't be a sign of a healthy economy.

* * *

Why has our standard of living been on the wane? The simple answer: government has taken it by allowing inflation to occur.

* * *

...I had a big rant going in response to that last link; I deleted it because it was going in the wrong direction. Denninger's point is that inflation has robbed us of the fruits of our increased productivity, and he's not wrong.

There really are a few things to consider when you ponder our standard of living. Economic output is only part of it.

Consider: the richest person in the world in 1900 could not have the conveniences I have, such as the computer I'm bloggeratin' from, the printer that sits on my desk and produces copy on demand, the blab slab on which I watch anime, the cheap-ass cell phone I carry around and rarely use, air conditioning in the summertime--none of it.

Joe Gottbucks III, 1950, could have a private movie theater in his house, sure...but it wouldn't be HD video with Dolby 7.1. If he owned a computer, it filled a room and required an advanced degree to operate; but there was nothing like my cell phone available in 1950, no matter what the price. (Radiotelephone, maybe...but my cell phone will make and receive calls all over the United States, and even in Guam. How about your radiotelephone service?) He could have air conditioning in his house, but it was expensive.

Go back to 1900. Joe Gottbucks Jr. couldn't have any of this stuff at any price. (Maybe a movie theater: black and white, not even "talkies".) He'd have a desk phone, perhaps, and he might even have a market ticker in his office. But cell phones? Computers? TV? Air conditioning? Pipe dreams at best.

Jump back fifty more years. Old Joseph Gottbucks Sr. didn't have electricity. His house was heated by burning wood or coal. He could send messages via telegraph but only as far as the coasts; further than that messages had to travel via ship. No phones, no movies.

...Croesus may have been the standard for wealth in the ancient world, but he couldn't sit in a well-lit room on a winter evening in his shirtsleeves and fiddle around with his computer.

So: why is our standard of living in decline if we're so rich?

Because there are two types of poverty: absolute and relative.

Absolute poverty is when you have trouble putting food on the table. The kind of situation where you bust your ass every day just to ensure you and your family have enough food to eat, where you might be living in a shack without electricity or plumbing and you're glad to have it. That's real poverty.

Relative poverty is when you live in a place which is heated in winter, which has indoor plumbing; when you own a cell phone and a blab slab and a car and a computer, when you have trouble staying slim because you eat a few servings of high-calorie food per day rather than high-fiber low-calorie food, because the latter costs more...but you haven't bought a new car for a decade or so when the guy down the street just bought himself a new BMW--

Most Americans who are considered "poor" are only relatively poor. Me, for example; I am relatively poor because my income has been "slim to none" for a couple years. Yet Croesus, for all his money, could not live as well as I do.

Which is not to say that there is not real poverty in America; there is. But it's very, very uncommon. For the most part, if someone is hungry, it's because he hasn't taken advantage of all the government programs that are out there. It's there, but it's invisible against the backdrop of the relative poverty that most of the American poor live in.

Compared with 1950, there are just more things available to us. You couldn't get a cell phone or an Xbox or a personal computer in 1950. There wasn't satellite television or World of Warcraft or iTunes.

So: is Denninger right? I think he is; but I'm not sure it's the whole story, either. What I do know is that the government has gamed the statistics so they can claim there's no inflation, when there for damn sure is...and it's further gamed the statistics such that inflation looks like economic growth, when it is in fact economic contraction.

* * *

The life expectancy of manufactured goods is in decline. How much is intentional, and how much is just due to people being idiots?

I do know that the MTBF of a machine declines as a function of the number of its parts. If you have five parts in a machine and each one has a reliability of 90%, then the overall reliability of the machine is going to be 59%. If each part will work 99% of the time, the entire machine will work 95% of the time.

Most parts are engineered so that they're more reliable than 99%--much more--but no part can be made 100% reliable and the more parts you put in a machine, the greater the chance that something is going to break, eventually.

(I just want to pause to reflect on how close to 100% the reliability must be for every single transistor in a modern computer's CPU. LIM 1, no doubt.)

Stuff that is made in America--if it requires a lot of human labor to manufacture--must compete with stuff made elsewhere that is manufactured with much lower labor and environmental costs. At this point, the only possible place that gives manufacturers some wiggle room is--you guessed it--R&D and engineering.

In order to make a profit on, say, a refrigerator over the expected market lifespan of the design, you must expect to sell X many at price Y before you come close to making a profit. Most of the time you cannot set your price at Y; you must look at what the market offers and decide, "We'll build a new model for the Y price point."

And then you tell your engineers to make it happen. They do their best. Out comes your new model, priced right at the limit of the Y price point, and it's got all the bells and whistles of a refrigerator that costs $Y.

...and it falls apart in five years, because you must pay your union employees $Z per hour and you must jump through all these hoops that the EPA and OSHA and-and-and have set for your business--which also costs you a lot of money--and you have to use this extra-expensive refrigerant because Freon is illegal, and....

You see?

Although penny-pinching bean counters are part of the problem they are not the only part.

* * *

Vox Day says that McCain would have been worse than Obama. On the other hand, if McCain were in the White House he couldn't have co-sponsored this unConstitutional end run around Posse Comitatus.

* * *

Francis Porretto says men are the superior sex. Wow, he's going to get a burning Venus symbol on his lawn for that one.

He's not wrong, which is why.

* * *

Put another quarter in
in the quarterodeon

...but there's no inflation.