09:02 – I’m so busy and the euro situation is so hopeless that I’m not going to bother to write about it any more. Merkozy are now talking openly about the breakup of the euro and the EU itself, and they’re talking about it as though it’s likely to occur sooner rather than later. Italian bond yields spiked to 8.1% yesterday, which is far past the point of no return. The 7% threshold is very real psychologically for the markets; once yields reach 7%, investors write off the issuer as so likely to default that it’s simply too risky to invest. That in turn causes bond yields to increase further in a vicious circle. So, Italy is gone, which means Spain and then France won’t be far behind. There’s nothing that can be done to stop the collapse–short of the ECB turning on the printing presses, which they’re not going to do–so it’s pointless to continue discussing it. The patient is brain-dead.
Work continues on the biology book. I’m doing a lab session right now on the effects of pollution on succession in microcosms. What fun. Build a tiny little world and then poison it. Forced selection and survival of the fittest.
07:18 – So, how do I know when I’ve been writing too long? Here’s an example. By late afternoon yesterday, I was getting pretty tired, after more than eight hours of heads-down writing with only a few short breaks to walk Colin. I was writing a lab session about succession in pond-water microcosms, giving a detailed procedure for observing and documenting the microorganisms present in various parts of the microcosms. I mentioned adding a drop of methylcellulose, which is added to water to reduce the motility of some organisms. I actually found myself writing this sentence: “Some of these little fuckers are FAST.” (I actually intended to write “suckers” but I apparently experienced a Freudian slap.)
Now, it’s true that we’re often complimented on our informal writing style, but I thought that was a bit too informal even for us. After thinking about it, I left the sentence as is for then and decided to knock off for the day. I’ll fix it this morning.
08:34 – Ruh-roh. When I checked Italian bond yields this morning, I found they’d already touched 7.4% and seem likely to continue climbing. That’s very, very bad for a country that has about $3 trillion in outstanding sovereign debt, with about a sixth of that coming due in the next twelve months. About the only good thing that can be said is that, at six or seven years, Italy’s average maturity is longer than average for the eurozone. Still, there’s no way it’s sustainable to have to finance half a trillion dollars a year at the current rates Italy has to pay.
The fear all along, of course, has been that Italy is “too big to bail” and that fear is about to come home to roost. The ECB is legally prohibited from helping. In fact, their purchases of Italian and Spanish bonds are illegal, and the ECB is getting very nervous about that. Nor can the EFSF “bailout fund” help. Although it’s usually reported as having a €440 billion war chest, the fact is that it doesn’t really have any money to speak of. In terms of actual cash in the bank, it might have €4 billion. The remainder is in the form of promises from EU governments to commit funds to the EFSF. And one of the major guarantors of the EFSF is–you guessed it–Italy. Other EFSF guarantors include such already-bankrupt nations as Spain, Portugal, Ireland, and … Greece. The only currently-solvent nations backing the EFSF to any significant extent are France–which itself is likely to a bailout candidate–and Germany. In effect, the EU nations are cosigning loans to themselves.
06:49 – I finally finished cleaning off the kitchen table Sunday. I’d had the microscope and various other stuff set up there to shoot the cover image. Barbara’s happy that she has her kitchen table back. I’m happy that I have my microscope back. It wasn’t doing me any good sitting on the kitchen table.
Instead of moving the microscope back onto the microscope desk in my office, I set it up on a stackable table that’s about 18″ (46 cm) high. That puts the primary eyepiece a bit too low to be comfortable, but it also puts the back of the Pentax DSLR at a level where I can see it without standing up. That’s desirable because I’m now shooting images with the Pentax K-r, which is the first Pentax DSLR we’ve had that offers live-view. That’s important because it’s nearly impossible to focus through the microscope using the focusing screen. Without live-view, I often shot literally 15 or 20 images with slight focusing tweaks for each to get one usable image. With live-view, I can instead focus on the 3″ (7.5 cm) LCD monitor, which is both brighter and sharper than the TTL focusing screen, so my success ratio should be a lot higher. Not to mention that it’ll take a lot less time and effort to get usable images.
I’m not exactly going on hiatus, but posts and replies to comments here are going to be short and sporadic for about the next three months. I just talked to Brian Jepson, my editor, yesterday, and we agreed on a drop-dead book deadline of 31 January. Brian needs that to make sure the book will be available in time for Maker Faire next May, and of course I also want that. Not to mention the fact that being available in time for Maker Faire also means the book will be available in time for summer session.
I’ve already been on a seven-day work schedule for some time. Well, the truth is that I’m always on a seven-day work schedule. But now I’m going to ramp it up somewhat, to perhaps eight hours a day of actual writing on weekdays (which is kind of like working 12-hour days at most jobs; ask any writer) and at least six hours of actual writing on weekend days. I won’t have time (or energy) to do much else.
08:03 – The Netflix Fairy, AKA our friends Mary and Paul, showed up this morning and left Sons of Anarchy S3D4 at our door.
For the last three months, the ECB has been buying worthless eurozone sovereign bonds, nearly all Italian but some Spanish, at a rate of $40 billion to $50 billion a month. Despite that, bond yields have continued to climb. This morning, Italian bond yields touched 6.7%, just short of the 7% level that toppled Greece, Ireland, and Portugal into receivership. On the current trajectory, Italian bond yields should pass 7% in the next week or two.
There’s nothing magical about that 7% number other than its effect on market sentiment. If history is any guide, once Italian yields hit 7% we’ll enter a vicious circle, with higher yields causing panic and panic causing still higher yields. If (when) Italian yields hit 7%, don’t be surprised if they rapidly begin skyrocketing into the 10% and even 15% range. At that point, Italy quickly loses all access to the markets, because no one considers yields in that range to be sustainable. And the ECB is dropping loud hints that its patience is about exhausted and it will soon stop buying Italian bonds. Without that prop, yields will skyrocket even faster. Once it becomes obvious that Italy cannot survive without being bailed out, it really is game over for the euro.
08:16 – The G20 conference ended in failure as far as the EU was concerned, with the other nations telling the EU that they wished them well but they were going to have to come up with the money themselves to bail out the euro. The problem with that is that the EU simply doesn’t have the $3 trillion to $5 trillion it needs, just for a start, to bail out Italy, Spain, and France, not to mention the other smaller nations that are under threat. Meanwhile, while the G20 was sitting around the table discussing what emergency measures to take to save Italy from collapse, Berlusconi fell asleep. Twice.
The other G20 nations pushed for the European Central Bank to address the crisis by monetizing the debt by printing euros. Lots of euros. Euros by the ton, literally. At this point, the only solution, bad as it is, that anyone can see is for the ECB to inflate the euro dramatically. But the ECB is having none of it. And they’re right, if not in the short term, certainly in the medium- and long term. At this point, the eurozone is going to take a huge economic hit no matter what happens, as will, to a lesser extent, non-eurozone EU countries, and, to a lesser extent still, the rest of the world. Right now, all the arguing is about who is going to take how much of that hit, and how.
The takeaway lesson from all of this is that government and the economy is too important to be left to the politicians, nearly all of whom are, at best, mediocrities. That’s why we need strong Constitutional protections that will handcuff the politicians, limiting the damage they can do. A rigid balanced-budget amendment that makes no provision for exceptions, including in time of war, would be a good start.
09:08 – One thing about biology is that living things do things in their own time, and there’s little or nothing we can do to change that. That makes writing a biology lab manual a bit different from writing one for chemistry or nearly any other science. With chemisty, I could design self-standing experiments that fit in convenient cubbyholes. With biology, it’s often a matter of hurry-up-and-wait.
For example, as I was working on protozoa labs yesterday, it occurred to me that I needed to start a microcosm series of labs very early in the semester, both because the life cycles of microcosms run several weeks to several months, and because I could use those microcosms at various stages in their life cycles for lab sessions later in the semester. So I just added a group of labs in a chapter before Group I, which I titled First Semester Project. We’ll create two kinds of microcosms: open, aquarium-like microcosms where we’ll grow pond life, including protozoa that we’ll use later, and closed Winogradsky columns that we’ll observe over the course of the whole first semester, if not longer.
08:27 – Here’s the final front cover image for the biology book. There may be a few changes to the text, but otherwise this is pretty much what it’ll look like. Thanks to Mark at O’Reilly, who took the cover image I shot and did his Photoshop magic on it to get rid of the lighting flaws and other artifacts.
About the only change I suggested other than minor tweaks to the text was the background color. The chemistry book uses blue, and I thought it was obvious that the biology book should use green. And the forensics book, once we get around to actually publishing it, should be red (or at least maroon). Physics, when we eventually do that one, should be black.
Barbara worked a full day yesterday, and was delighted to do so. Unexpectedly, Colin was no worse than usual. True, he did pester me constantly to go out, but there was nothing new there. Colin did disappear briefly while we were on a walk. Like all Border Collies, Colin wants to herd anything that moves. This time of year, on breezy autumn days, he has his work cut out for him, herding blowing leaves.
The incident occurred as we were returning from our walk, approaching our house. Our next-door neighbors have a huge pile of leaves at the curb. As we approached it, Colin took off in pursuit of a blowing leaf. He went airborne just short of the leaf pile, and plunged into it. So, there I stood, holding a roller leash that extended into the leaf pile, with no dog visible at all. After a moment, the leaf pile started to ripple and shift, and a Border Collie pup burst out the other side. In his mouth, he carried one leaf. I can’t swear that it was the same leaf that he took off in pursuit of, but I suspect it probably was.
I was working on a new group of lab sessions yesterday, and I couldn’t decide what to name the chapter. As I mentioned to Barbara later, as a librarian she’s used to a well-defined taxonomy that doesn’t change other than to make room for new subjects. Biological taxonomy, on the other hand, changes like dreams, particularly with the advent of DNA analysis. A species may be moved from one genus to another, or indeed may be assigned as the sole member of its own new genus. A genus may move, in whole or in part, from one phylum to another, and even phyla may be moved from one kingdom to another. Even the framework changes. What is a kingdom in one taxonomic system may be a sub-kingdom or even a phylum in another. For that matter, some scientists make a convincing case that the whole kingdom system is invalid and that if we are to have a valid taxonomy it must be on a monophyletic basis. But the real problem is that life is messy and doesn’t fit itself into a convenient two-dimensional matrix. I suppose it might eventually be possible to classify all life in an n-dimensional matrix, but I sure wouldn’t want to attempt it.
Oh, yeah, my chapter title. It started out “Investigating Protista”, changed to “Investigating Protozoa”, and then changed again to “Investigating Protists”. I finally settled on “Investigating Protista/Protozoa/Protists”.
14:45 – I’ve sometimes posted Pat Condell videos here, often noting that I generally agree with Pat but that he’s a bit mealy-mouthed for my taste. Actually, I’m sure that Pat hates and despises islam as much as I do, as evidenced by his latest video.
08:28 – I drove Barbara to an appointment with her doctor yesterday. Barbara drove us home, approved to drive again and return to work. She just left for work, making joyful noises.
The Greek government will likely collapse this week, probably after a vote of (no) confidence tomorrow. Papandreou is down to 149 of 300 seats, and it’s by no means certain that all of those 149 will vote to support him. Papandreou’s finance minister and heir presumptive, Evangelos Venizelos, is now in open rebellion against Papandreou, but again it’s by no means certain that Venizelos would be able to form a new government. What’s really worrisome is that Papandreou has just sacked and replaced the top officer corps of the Greek military, presumably because he fears a military coup is at least possible, albeit not probable at this point. Meanwhile, EU officials are now talking openly about the departure of Greece and the breakup of the eurozone and probably the EU itself, and Italian bond yields reached 6.4%.
12:48 – And now I see that Papandreou has withdrawn his call for a referendum. Merkozy made it clear that the gloves were coming off, not least by announcing that Greece would not receive the sixth and final aid tranche, due to be paid this month, unless Greece did exactly what it had been ordered to do. Without that €8 billion payment, Greece will not be able to pay government employee salaries and pensions, which means Greece would likely be in full revolution soon after the first payment is missed. Merkozy also made it abundantly clear to Papandreou that the referendum announcement was the final straw, and that they were fully prepared to expel Greece from the eurozone. Because it is technically and legally impossible to expel a nation from the eurozone without also expelling it from the EU–actually, there’s no legal mechanism to expel a nation, period, but the one implies the other and Merkozy has certainly shown they have no respect for EU treaties or laws–Greece would find itself not just being forced to convert overnight to the new drachma, but also cut off from all of the benefits of EU membership, such as free trade within the EU.
Not surprisingly, the Greeks are back-pedaling fast, but it’s probably too late for that. Even the mention of a Greek referendum was the small shove that was needed to set the eurozone in particular and the EU in general toppling. Even the fact that the new head of the ECB announced a 25-point cut in interest rates to 1.25% and promised to keep subsidizing Italian and Spanish bonds isn’t going to help stop the collapse. At this point there’s only one solution remaining: the ECB has to start printing euros by the boatload to allow that massive pile of sovereign debt to be paid off in inflated euros. Of course, if there’s one thing Germany won’t stand for, it’s inflating the euro. If that begins to happen, you can be sure that Germany will revert to its own currency, quickly followed by the rest of the FANG nations, leaving the southern tier, including France and Belgium, twisting in the wind. So, one way or the other, it’s a default for sure.
08:48 – Merkozy have scheduled another failed summit for today, calling Papandreou on the carpet to explain how he dared give the Greek people the right to vote on what Merkozy had decided Greece must do. Obviously, the EU elitists can’t afford to allow little things like freedom, democracy, and national sovereignty obstruct their grand plans for EU über alles. In all fairness to Merkozy, though, they’re not just picking on the Greeks. They don’t want German and French citizens to have any say, either. Nor any other EU citizens. If only everyone–especially those troublesome ratings agencies and the market itself–would stop asking questions and just do what Merkozy order them to do, the trains would run on time.
Meanwhile, making it obvious that Greece is just a distraction from the real problem, benchmark Italian 10-year bond yields have now reached a disastrous 6.2% and continue to climb. It’s long past time to stop rearranging deck chairs and start heading for the lifeboats, i.e., converting as quickly as possible back to local currencies.
12:11 –It starts again. One would think big publishers might have noticed the catastrophic results when music companies and movie studios decided to start suing listeners and viewers, but apparently they’re too stupid to learn from others’ mistakes. So Wiley has decided to track down and sue people who share Wiley books on torrent sites.
I suspect that Wiley isn’t even aware that it’s not illegal, in the US at least, for people to download a torrent of a copyrighted work. To the extent that the music and movie industries have had any success against torrents, it’s been to persecute those upload the material, not those who download it. In fact, those industries strove mightily to establish the very questionable legal concept of “making available”, just so they wouldn’t actually have to prove that their targets had actually uploaded any data. For now, merely “making available” that data to others is the crime. Someone who takes advantage of that availability commits no crime. Of course, the music and movie industry would like to see that change to include downloaders, but that’s not likely to happen any time soon.
08:58 – Greek Prime Minister George Papandreou is being universally reviled for doing the right thing: calling for a referendum to allow the Greek people to decide their future. Merkozy are spitting nails right now, because Papandreou has just thrown a gigantic monkey wrench into the save-the-euro plan they came up with at their failed summit last week.
The real problem, of course, is that the EU wrote off Greece long ago as unsalvageable. Their plan has nothing whatsoever to do with helping Greece; it’s all about helping Greece’s creditors, many of whom are German and French banks. Whether or not the plan goes forward, Greece is toast. In either case, Greece faces literally decades of economic disaster and human suffering.
Calling for a referendum really is a stroke of genius. At this point, Papandreou has basically called the EU’s bluff and, at the same time, shifted responsibility for the decision from his own government to the Greek people. It almost doesn’t matter if the referendum is actually held or, if it is, what the outcome is. It is, if not win-win for Papandreou, at least a less-lose either way. The ideal outcome from Papandreou’s point of view would be for the EU to write off Greece’s debts without requiring the austerity measures that they have so far demanded. I have no doubt that that’s one of the options that Merkozy will be discussing during their emergency phone conference today. Alas for Greece, I don’t think that’s what’s going to happen.
I think what’s more likely to happen is Merkozy deciding to drop Greece like a hot potato, even if that does make a chaotic Greek default almost certain. Make no mistake. Right now, Angie and Nick are seriously pissed. From their point of view, they held out an olive branch to Papandreou and he just shit on them. There are so many players involved, not least the IMF, that it’s difficult to predict short-term outcomes, but I think it’s even possible that the EU/IMF/ECB will decide to withdraw the sixth aid tranche that was to be paid to Greece in the next couple weeks.
That would, of course, immediately topple Greece into chaotic default, but ultimately it won’t matter. Merkozy certainly understand by now that that outcome is inevitable, so from their point of view the only real question is whether it’s worth buying a few more weeks before they have to deal with the fallout. Ultimately, the aid payments are just paper shuffling anyway. Each of the bailout payments is simply an accounting transfer from the bailout fund to Greek creditors. Why not take Greece out of the loop entirely and simply make those transfers directly to the creditors? Or, more specifically, why not simply have the German government make bailout payments to the German banks who have Greek payments due, the French government make payments to French banks, and so on? The EU governments, the IMF, and the ECB also hold Greek debt, but you can be sure they’re first in line to be paid, and Greece cannot afford to default on those debts if it ever wants to be able to borrow again before the 22nd century. Of course, that leaves non-EU creditors without anyone to pay them. Too bad. So sad.
09:43 –Rule, Britannia! Believe it or not, the Home Fleet is now down to zero vessels. The once-proud Royal Navy, which within living memory deployed huge battleships, battle cruisers, and aircraft carriers by the dozen, is unable to come up with even a tiny destroyer or frigate to protect home waters.
