Gedanken Experiment http://www.gedankenexperiment.dk/index.php views on finance, politics and science en admin@gedankenexperiment.dk Copyright 2009 Pivot Pivot - 1.40.6: 'Dreadwind' Mon, 09 Mar 2009 20:47:44 -0700 60 Are we there yet? http://www.gedankenexperiment.dk/pivot/entry.php?id=808&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=808&w=rant#comm wrote that a break of the 7400-7500 on DJIA would be critical and should see a move towards 5800. The past few sessions have seen the market bouncing around the 6500/6600 level so we are certainly close, if not quite at 5800. On the economic front, it seems to us that there really isn't a lot more to shock to the downside - the market expects unemployment to continue to rise and sees no immediate turnaround in GDP either in the US or abroad. The failure to see another dramatic sell off after the payroll report last Friday shows the market has reached some degree of equilibrium.

But there are still other events which can drag the averages down. There is some justified fear of another round of credit crunch, perhaps from problems in the commercial real estate market, perhaps from insurance companies selling bonds which have been downgraded. Perhaps both. However, what we see as the big cloud over the stock market and corporate earnings is pension plans. The market went through a scare not too many years ago about underfunded pension plans and the effect they would have on corporate earnings. For awhile the market suffered but an improved economy brought sunnier thoughts. Should the market once again focus on the need for many companies to add funds to their pension plans at a time when capital is scarce it would not be at all surprising to see the DJIA on a 5,000 handle, if not testing 5,000. This go around there does not seem to be an economic corner to be quickly turned to allow the accountants to say 'never mind!'

This is not to say the accountants still can't play around with the numbers. They most certainly can as the pension rules are convoluted - firms can take averages over many years, have 'contribution holidays' and muck about with discount rates. This may buy time in the short run but if the stock markets do not make a dramatic turnaround the clock will run out and those firms with underfunded plans will be in quite a bit of trouble. Merril has been on top of pension obligations and they are estimating over $35B in pension expenses for 2009 - figured when the averages were considerably higher. What is worse is that if there is a shift out of stocks and into bonds, the capital shift could be in excess of $200B. More frightening still is most of these plans have assumed returns in excess of 8% a year yet government bonds are at record low yields (for now), well below that 8% bogey. And a certain portion of their equity assets are not just paper loses but instead are never to return - AIG, GM, BS, LEH, etc.

But that is just a small tidbit of the pension nightmare. This time, Wall Street may actually pay attention to the underfunded plans of states and local municipalities. Now we are talking some real dough! As an example - the principal retirement funds for New York State have fallen over 50% (no surprise) - $60 billion. While a decade of stock market 'growth' has been erased, has a decade of pension obligations? What of California, a third world basket case of a state which can't seem to keep its regular budget short falls from exceeding the GDP of many small nations. How will it meet its generous public employee pension obligations?

The good news? Well the total capitalization of the US stock market is roughly $7.9 trillion per the Wilshire 5000 index. So there is still money to be found by selling stocks for those who need to raise cash. The bad news? The market cap has dropped by over $10 trillion since the fall of 2007. No wonder everyone is feeling so poor!

Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
808@http://gedankenexperiment.dk/pivot/ finance Tue, 10 Mar 2009 01:47:00 -0700
LHC Restart - Still a Flawed Plan? http://www.gedankenexperiment.dk/pivot/entry.php?id=807&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=807&w=rant#comm
The new schedule foresees first beams in the LHC at the end of September this year, with collisions following in late October. A short technical stop has also been foreseen over the Christmas period. The LHC will then run through to autumn next year, ensuring that the experiments have adequate data to carry out their first new physics analyses and have results to announce in 2010. The new schedule also permits the possible collisions of lead ions in 2010.

In Chamonix there was consensus among all the technical specialists that the new schedule is tight but realistic.

“The schedule we have now is without a doubt the best for the LHC and for the physicists waiting for data,” said CERN Director General Rolf Heuer. “It is cautious, ensuring that all the necessary work is done on the LHC before we start up, yet it allows physics research to begin this year.”

But is the schedule they have now the best for the health of the LHC? We raise this question as it was nearly 20 months ago that we wrote this after the previous magnet faux-pas at CERN:

As we wrote a few months ago (yes, the science column has been getting short shift), the catastrophic failure of the 'inner triplets' in a vacuum test in March would likely delay the startup schedule of the LHC. With a press release this past week, CERN has both denied and confirmed our assessment by keeping the originally planned full startup date of May, 2008 but canceling the initial low-energy test run.

“The low-energy run at the end of this year was extremely tight due to a number of small delays, but the inner triplet problem now makes it impossible,” said LHC Project Leader Lyn Evans. “We’ll be starting up for physics in May 2008, as always foreseen, and will commission the machine to full energy in one go.”

This seems to us a foolish course of action which only serves to make management look 'effective' by keeping to the original full startup date. However, by tossing out the low-energy warm up run CERN risks finding out about more problems the hard way. Prudence suggests that with a machine this complex and costly, caution should be the order of the day and an abbreviated test run should be scheduled to kick the tires before driving the new Porsche off the dealer's lot.

In fact, the ultimate start date was delayed another four months but our fears were well founded as the near full energy runs last fall resulted in significant damage to the collider and at least a one year delay in real physics being done.

Now, we will readily admit to only one brief course ('foray') in beam physics so we don't portend to be even remotely as knowledgeable as those involved in day to day operation of the LHC. However, common sense tells us that this is an extremely complex machine - both in terms of the number of disparate parts as well as its function - and that it is far better to burn two or three months time doing low energy runs than to just flip the switch on full and cross ones fingers, again. Delays due to mechanical failure are incredibly costly, not just because of money spent on repairs but also from the downtime of hundreds, if not thousands, of physicists and technicians. CERN will have wasted over a year because of the events of last September and another similar delay would be devastating coming at a time of budget constraints due to the ongoing world wide economic recession. Well, we'll cross our fingers for you, but perhaps a good old fashioned spirit cleansing is in order:



Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
807@http://gedankenexperiment.dk/pivot/ science Tue, 10 Feb 2009 22:25:00 -0700
Are You Stimulated Yet? http://www.gedankenexperiment.dk/pivot/entry.php?id=806&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=806&w=rant#comm stimulation our government plans for us:
Well if they count everything we will be approaching a 4, yes FOUR, trillion dollar federal budget. The first $1T budget was in 1987. $2T came in 2002. $3T came in, your choice 2006,07,08 as much of the war spending was not 'on budget'. Tack on $900 B and we are at $4T. Note that 30 years ago, in 1979 the budget was about $500B.

This year federal spending will be close to 28% of GDP. The prior, non-WWII peak was 23.5% in 1983. And to put these in perspective, in 1930, Federal spending was 3.4% of GDP, in 1950 15.6%. Is the problem really that the government is now spending too little?

There are two problems at the moment. Unsustainable spending on entitlements and the prevailing need "to do something". We all know about the first. The second though is left in the dustbowl of history - FDR (and Hoover before him). Contrary to popular belief, the massive post 1929 crash / depression time spending did little to change the picture. They were also suffering from the 'we have to do something' problem. While there was an initial rebound in the economy in 1934-36, things tanked again in 37 and 38 with unemployment going back to 1934 levels. Spending however increased 6% in 1930, 8% in 31, 20% in 32, 42% in 34 and 28% in 1936. There is no clear link between the massive increases in spending and resultant changes in gdp and employment.

[UPDATE 2/4/09:From the wires this morning, the Treasury Dept. said it will need to borrow $493 billion during the current January-March quarter, a record amount for this period, following actual borrowing of $569 billion in the October-December period, the all-time record.]

A bit rough and dirty, but the basic points are there. Very large spending programs by the government in dire economic times have historically not had the effect their proponents claim they would have. At best the New Deal spending is a mixed bag and some might argue the 1937 tank was in part a result of knock on effects from the massive stimuli. The current economy has already seen a huge stimulus - a few hundred billion directly to taxpayers under Bush and about $500B in aid to the financial industry. Interest rates are near 0, though that may apply more to the return investors are getting rather than the rate borrowers pay, assuming they are able to secure the financing they desire. We have long maintained that the ZIR policy followed by Japan in the 1990s through today has hurt and prolonged their economic slowdown and we feel the same will be true of the Fed version. We also believe that the end effects of the government running the printing presses at full speed will be inflation (not deflation) and eventually new bubbles. Are there any doctors in high places in our government? Primum non nocere!

We do not, however, summarily dismiss all government spending nor all the new spending proposed by the new Administration. Our highways require significant maintenance as do our many state controlled roadways and bridges. If well monitored, spending in this area will be worthwhile, but is not likely to provide any short term stimulation to the economy. Increased funding to our national labs, in particular to the physical sciences and technologies, will ultimately pay significant dividends both to the economy and our knowledge... just down the road a bit. But these are things which should be addressed in normal, continuing resolutions and not emergency spending bills. These are investments, not stimulus.

Our current spending is unsustainable. At some point our creditors will pull the plug and/or our currency will devalue significantly. The government is on track to become an ever larger percentage of the economy and we all know that the government does very little well. The entitlement bogey man must be addressed, the sooner the better. However, if our politicians feel they absolutely must, must do something now! we recommend significant tax credits for the formation of new (not realigned) businesses. Giving people an incentive to start a business and hire employees is a far better way to go.

Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
806@http://gedankenexperiment.dk/pivot/ finance Tue, 03 Feb 2009 23:34:00 -0700
Iran Becomes More Complicated http://www.gedankenexperiment.dk/pivot/entry.php?id=805&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=805&w=rant#comm Update: From Armscontrolwonk.com "NASA has posted the first orbital elements of the satellite and its third stage rocket body and, running the orbits backwards, they are totally consistent with a launch from the “Kavoshgar” launch site at 18:38 on 2 February 2009 (GMT)."]

As has long been the case with Iran, a potential destabilizing military development is again couched in terms of peaceful scientific and technological advancement. Certainly a space launch capability is an impressive technological achievement and allows Iran to have its own communications infrastructure without dependence on western companies (and their governments). The successful enrichment and processing of natural uranium into fuel for a nuclear reactor(s) is another advance which frees Iran from the normal sourcing of low-enriched reactor fuels. However, both technologies can be used militarily, alone or in combination. There lies the problem for the US and other governments. Is the development of an indigenous space program a legitimate right of any country? Or, because of dual-use, will new technological developments initially seen in the US and Europe be deemed unacceptable for second and third world countries such as Iran, thus fully stepping on the slippery slope where just about anything can find a significant military use alone or in combination? To what lengths should the US (and others) go to stop the development and use of such technologies? Is turning Iran into rubble OK while we accept programs from nuclear capable states such as Brazil and Japan? Were there some form of legitimate peace between Iran and Israel would we no longer fear what Iran intends or could do with these technologies?

There is no immediate national threat from Safir as a ballistic missile launcher for an Iranian nuclear bomb - there are still many hurdles (not least of which is the making of a bomb small enough to be carried by Safir) such as guidance and re-entry which Iran must cross. But for too long the West has stuck its collective head in the sand, repeatedly saying no, no, no to the use of technologies they themselves take for granted. A better approach would be to develop a real and substantial diplomatic framework now to deal with these issues in the general sense so that we do not do this song and dance every time an unfriendly country develops a dual-use technology. To think that nuclear weapons and ballistic missiles will be the most complex developments the West must confront is folly - these are fifty plus year old instruments of power. Science and technology do not stand still and what is a coveted national military secret one day will be readily obtainable to others in the future. There is no lock on knowledge and once obtained, there is no going back.



Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
805@http://gedankenexperiment.dk/pivot/ politics Tue, 03 Feb 2009 12:36:00 -0700
Cold War Intrigue http://www.gedankenexperiment.dk/pivot/entry.php?id=803&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=803&w=rant#comm Spy Wars: Moles, Mysteries, and Deadly Games by Tennent H. Bagley ISBN 978-0300121988

This fascinating book proved great medicine while we were laid up with a cold over the recent holidays. The author was a counterintelligence officer at CIA in the 1950s and 60s, eventually rising to chief of counterintelligence for the Soviet Russia ("SR") Division and Division Deputy Director. While the book looks into many historical Tsarist and Soviet intel operations, the prime focus is on the case of a notorious KGB Soviet defector, Yuri Nosenko which the author was directly involved. The author also spends considerable time on the efforts (cover up?) by the CIA and others to rehabilitate Nosenko's bona fides as a genuine and valuable defector.

The bottom line is this - if you take the author at his word concerning the interviews and documents he was involved in, as well as those of others, there is no way one can see Nosenko as anything but a false defector. However, the question in my mind is why they would willingly send someone so blatantly unprepared - certainly they thought better of CIA than that? I have to wonder if the actual decision to 'defect' was in fact Nosenko's - he was a drunk and womanizer and going no where fast at KGB. His 1962 Geneva trip was probably a real KGB operation, but the subsequent trip could have seen Nosenko go off reservation figuring he had a ticket to a better life (ultimately) in the US if he defected rather than work in place as a 'double' as per KGB orders. This would have put KGB in quite the difficult situation.

Anyone interested in intelligence operations, especially those of the cold war period should read this book. We can only hope now that Nosenko is dead that the CIA will release *all* the files, at least those that were not destroyed in the late 1960s.

Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
803@http://gedankenexperiment.dk/pivot/ books Wed, 07 Jan 2009 13:21:00 -0700
QDB http://www.gedankenexperiment.dk/pivot/entry.php?id=787&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=787&w=rant#comm qdb.us The site can at times be a bit slow and does toss out the odd php or database error but nothing can bring back your memories of IRC better. QDB is a repository of funny IRC conversation snippets submitted by users and gives viewers the option of rating each one as good or bad. Many of them are a bit off-color (too much so for here!) but here is one example:



(myst) so what about you? anything interesting?
(Joshua) i'm writting a book and i just left a naked lady in her bed seconds before her roommates came home.
(Joshua) it was like *pulls on pants* *roommates walk in*
(myst) what's your book about?
(Joshua) lol!
(Joshua) yup, you're a chick
(myst) lol
(myst) rofl

Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
787@http://gedankenexperiment.dk/pivot/ linkdump Mon, 28 Jul 2008 00:48:00 -0700
On Nuclear Terrorism http://www.gedankenexperiment.dk/pivot/entry.php?id=773&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=773&w=rant#comm On Nuclear Terrorism by M. Levi ISBN 9780674026490

If you are not a wonk, move on as this book is not for you. Thoroughly referenced, Levi's book goes into detail on the subject of nuclear terrorism and its defense. What might be surprising is that we now find ourselves somewhat more at ease than before reading it. The physics of nuclear weapons was not new to us yet much of the engineering aspects were and when viewed along side the various controls and defenses now in place, one begins to realize just how difficult a task building a very small rudimentary weapon would be to even the 'best' terrorist group. While not the fastest read due in part to the need to check the extensive footnotes, anybody who either needs to know or wants to know about this subject should read this book and not risk being lost in journalistic hyperbole or worse, government proaoganda.

Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
773@http://gedankenexperiment.dk/pivot/ books Tue, 19 Feb 2008 00:34:00 -0700
Vacuum Diagrams http://www.gedankenexperiment.dk/pivot/entry.php?id=772&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=772&w=rant#comm Vacuum Diagrams by S. Baxter ISBN 9780061059049

Being a fan of hard Sci Fi and not the touchy-feely rubbish publishers push on the genre these days, Baxter's books looked very interesting. Checking quickly on-line for sequencing of his novels (there appeared to be an underlying theme related to an alien race called the Xeelee), we came across this quote from the author:
I’m not a great fan of books that end with cliff-hangers. So you could go in anywhere. One way would be to start with ‘Vacuum Diagrams’, a collection that sets out the overall story of the universe. Then ‘Timelike Infinity’ and ‘Ring’ which tell the story of Michael Poole, then ‘Raft’ and ‘Flux’ which are really incidents against the wider background, and finally ‘Destiny’s Children.’"
Taking his advice, we are now about one-third into Vacuum Diagrams and we like it.

Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
772@http://gedankenexperiment.dk/pivot/ books Tue, 19 Feb 2008 00:12:00 -0700
Kavli Institute for Theoretical Physics http://www.gedankenexperiment.dk/pivot/entry.php?id=653&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=653&w=rant#comm podcasts of many of their conferences, public lectures and colloquia. If the handful of podcasts we have opened so far are any indication, there are a limited number of still photos of blackboards and the like embedded with the audio. Good stuff!

Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
653@http://gedankenexperiment.dk/pivot/ linkdump Wed, 21 Feb 2007 23:41:00 -0700
3D Ski Maps http://www.gedankenexperiment.dk/pivot/entry.php?id=651&w=rant http://www.gedankenexperiment.dk/pivot/entry.php?id=651&w=rant#comm 3dskimaps.com It is surprising nobody has managed to do something like this before now (maybe they have and we just don't know). 3dskimaps shows the mountain map(s) not just with the trails but in 3d perspective with color coding to indicate trail steepness. This is a great thing to print out and bring with you on your trip and tuck in your jacket pocket to answer the inevitable 'how steep do you think that really is?' Only a limited number of mountains so far but hopefully more soon.

Copyright 2004-2008 by Gedanken Experiment (previously Rant Street), all rights reserved. Full terms of use at www.gedankenexperiment.dk ]]>
651@http://gedankenexperiment.dk/pivot/ linkdump Sun, 18 Feb 2007 00:44:00 -0700