Nailed It

“In five years a number of banks will not be around because of blockchain technology.”

— Joseph DiPaolo, CEO, Signature Bank, 2018

Kumquat?

From ECRI’s Lakshman Achuthan:

WH saying no recession & Sec Yellen saying it’s a “transition” reminds us of Carter admin economist Alfred Kahn who, when forbidden to mention “recession,” used the word “banana” instead. Banana growers protested, so he switched to “kumquat.” What’s the fruit for recession today?

You Can’t Make This Stuff Up

The Biden administration has approved E15 fuel for use during the summer driving season in the hope of reducing gasoline prices. E15 of course contains 15% ethanol and is usually not allowed in summertime. Ethanol is made from corn – food – which is predicted to be in short supply due to the high price of fertilizer, as a worldwide famine develops this winter. So we’re going to get a few cents off a gallon – maybe – at the cost of tighter food supply, leading to higher prices and people going hungry. Good trade, Joe.

Too Hot? Too Cold?

Thanks to 24Richie for explaining this:

If it is hotter than normal this is due to global warming.

If it is colder than normal this is due to global warming.

If there is less snow than usual this is due to global warming.

If there is more snow than usual this is due to global warming.

If there is less rain than usual this is due to global warming.

If there is more rain than usual this is due to global warming.

If there are fewer hurricanes than usual this is due to global warming.

If there are more hurricanes than usual this is due to global warming.

Energy Fantasies

As of 2020, U.S. primary energy consumption amounted to 22.9 Pwh (Petawatt-hours), 84% of which, or 19.2 Pwh is sourced from combustion of fuels. 94% of these fuels come from fossil sources (coal, oil, natural gas) and 6% from renewables (wood and other biomass). The remaining 16% of primary energy consumption is sourced by conversion of other forms of energy into usable electricity – thermal from nuclear fission and geothermal, mechanical from wind and water, electromagnetic in the case of solar. As of 2020 solar’s contribution is about 0.3 Pwh or 1.3% of total.

The electric power industry converts about 8.5 Pwh of combustion energy to electricity for distribution, the remainder is consumed by end users.

So de-carbonizing with solar power would require a new storage and distribution network capable of handling 20.4 Pwh of energy – 2.4 times the current capability. I say new because solar generation would necessarily be widely distributed, but almost exclusively over the southern portions of the US.

And of course capable of generating that much energy, or probably much more, depending on storage efficiency and capacity. By 2035? In 13 years? Planning, financing, acquiring land, permitting and environmental reviews probably couldn’t be completed by then, let alone construction. For example (because my father was involved) it took 14 years from conception to begin construction on the Grand Coulee Dam.

And then there’s the truly massive part, which is converting end users from combustion to electricity. If cars are any indication, this will only increase energy demand. Electric cars are very heavy because of the batteries they lug around. GM’s new Hummer EV comes in at 9,000 lb. Ford’s F-150 Lightning weighs 6,500 lb. These weights simply mean more energy is used to move them. To me, this makes no sense. It is bad enough that people have rejected cars and shifted to massive SUVs and pickup trucks.

Note 1: I converted Quads – quadrillion BTUs – to watt-hours.

Note 2: I drive a Chevy Volt, a plug-in hybrid, which IMO is a far superior engineering solution. It only needs fuel on the occasional long trip and requires no new infrastructure. It weighs about 3,360 lb. according to the scale at the local dump.

Modern Monetary Theory

The government can spend whatever it wants, just printing the money it needs. Any inflation can be controlled without difficulty by issuing bonds. Sure.

Wall Street Wisdom

In the beginning, the investor has money and the stockbroker has experience. In the end, the investor has the experience and the stockbroker has the money.

— Jason Zweig

An administrative complaint filed against Robinhood today by the Massachusetts state securities regulator claims that the firm “allowed one customer with no investment experience to make more than 12,700 trades in just over six months,

Wow. But still, brokers only make money when clients trade. So they encourage customers to trade and some over-do it and hurt themselves. It should not be the nanny state’s job to prevent that because that is a learning experience. Many investment stars went bust early in their careers and learnt from it. Taking risk and managing it is a critical life skill.

Wall Street A Casino?

I keep seeing comments along the lines of “The Fed has turned Wall Street into a casino.”

That is patently false.

• Casino games are played in the open by simple, fixed and well-known rules. Wall Street games are played anonymously and secretively by complex rules which are readily changed and non-public in many cases. Think, for example, dark pools.
• In a casino, everyone plays by the same rules. Only the house has an advantage. Wall Street allows big players to buy an advantage, like a peek at your order before it is public.
• Casinos are vigilant to detect and eject cheaters. Cheaters, such as spoofers and insider traders, are legion on Wall Street and mostly go undetected.

The net of it is that casinos are scrupulously fair. Not because they are angels, but because it has proven to be good business in the long run. Wall Street does not even come close to fair.

Games For Adults

An unfortunate woman discovers that her 6-year-old has put charges of over $16,000 on her credit card while playing an online game, Sonic Forces. After failing to get the chrges waived, she complains:

“These games are designed to be completely predatory and get kids to buy things, What grown-up would spend $100 on a chest of virtual gold coins?”

To which my immediate response is, many of them, it’s called “Bitcoin” and it is a predatory game for adults. And then there’s Robinhood.

Brexit Humor

UK President Ursula von der Leyen says that as of January 1, “it will be new beginnings for old friends.”

I wonder which countries she had in mind. Certainly not the UK and France, who have been at war, off and on, for nearly a thousand years now since the French invaded Britain. (In all fairness, the British did subsequently invade France). Certainly not the Germans and the UK, or any other northern European country, given their aggression in two devastating wars.

Perhaps the UK and the Dutch? Well I count four Anglo-Dutch wars, not including the successful Dutch invasion of England which Enthroned a Dutch king. But the Dutch navy fought for the allies in WWII, that’s something.

The EU is trying to blackmail the UK into a deal it likes – not a Canadian deal or an Australian deal, but a Hotel California deal – “You can check out, but you can never leave.”

GLWT