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Month: June 2012

Wednesday, 20 June 2012

08:14 – The markets have reacted pretty much as I expected to the announcement of the €750 billion Spain/Italy bailout, which is to say that Spanish/Italian bond yields have fallen by 10 or 15 basis points (0.1% to 0.15%). The markets aren’t stupid. All along, the EU has been trying to fool the markets. Promise them anything, but don’t commit to spending any real money. And this so-called €750 billion bailout–which hasn’t even been approved by Germany and probably will not be–is actually backed by only about €20 billion of real assets. The rest of the money is to come from, you guessed it, selling bonds, at which the EFSF hasn’t been notably successful. Ultimately, everything depends on the ESM being given a banking license, which would give it essentially unlimited credit to borrow from the ECB. Germany is almost certain to veto a banking license for the ESM, recognizing that this would be just a back-door way of allowing the ECB to monetize the debt of the profligate southern-tier countries and ultimately shifting the debt to taxpayers. German taxpayers.

I am still trying to get an answer from UPS and FexEx to what seems a simple question. How much would it cost to have them pick up an ORM-D box of specific dimensions and weight and customs value from our address and deliver it via ground to a specific Canadian address? All I want is a number, but that’s apparently impossible to get. But I’m persistent.

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Tuesday, 19 June 2012

11:35 – UPS showed up yesterday with about 30 kilograms of chemicals. (Of that, about 8 kilos was four liters of concentrated sulfuric acid.) I now have most of the chemicals I need to make up many more biology, chemistry, and forensics kits.

Speaking of forensics, our production editor just sent us the QC1 PDF of the first half of the book. I’ll be working on that heads-down until I get through it.

And speaking of kits, I got an order yesterday for a biology kit and a chemistry kit from a woman in Calgary, Alberta. I emailed her to say that we can’t ship kits to Canada, and that I’d refunded her money. I also mentioned that Barbara and I were watching Heartland and would love to visit the Calgary area one day. She replied that Barbara and I were welcome to stay with them, and could we bring along the kits. I replied that it’d probably be a few years before we’d have time to make that trip, but I’m pretty sure she was serious about her offer of a place to stay. She was obviously disappointed that we couldn’t get the kits to her.

That got me to thinking. I really hate not being able to ship kits to Canada. I really hate disappointing people, and I’ve lost count of the number of Canadian homeschoolers I’ve had to say no to. It seems so stupid. We can ship Priority Mail (air service) to all 50 states under the 49 CFR 173.4 small-quantity exemption, but that’s unique to the US. If these kits are safe enough to transport that the USPS is willing to put them on planes, it seems to me that we should be able to put them on a truck going over the border into Canada.

So I decided to see what could be done. I’ve spent several hours reading Canadian shipping regulations and talking on the phone to FedEx hazmat experts, and I’m going to do the same with UPS. At this point, it seems there may be a glimmer of hope. Although the USPS says that the ORM-D (Other Regulated Materials – Domestic) exemption is unique to the US, FedEx tells me that they’ll accept ORM-D (Surface only) packages for delivery to Canada. The Section 173.4 small-quantity exemption is a subset of ORM-D. For example, under SQE I can ship up to 30 mL of concentrated hydrochloric acid, while for ORM-D I can ship up to (IIRC) one liter. That being the case, the fact that our kits qualify for the Section 173.4 SQE should mean they automatically qualify under ORM-D. But there are a zillion details to deal with, including the fact that SQE and ORM-D have different packaging requirements. And I’m not sure if packaging that is ORM-D compliant for shipments within the US is also acceptable for shipments into Canada. All told, I suspect I’m looking at several days’ work just to determine authoritatively if this is even do-able. And, even if it is, it’d be ground-only, which means a shipment to Alberta or BC might take a week or 10 days to arrive, versus the typical two or three days via USPS Priority Mail. And, no doubt, it’ll cost more to ship the kits, probably a lot more. There may be surcharges for the hazardous materials. And, of course, there’ll be customs declarations and so on to deal with. But at this point I’m hopeful.

15:11 – The EU has announced its latest imaginary “big bazooka”, €750 billion to buy Spanish and Italian bonds on the secondary market, in an attempt to drive yields down. The problem is, that’s the combined nominal assets of the EFSF and ESM, and those assets are mostly imaginary. So now we have the ridiculous situation of Italy, which is bankrupt, guaranteeing the funds needed to buy Spanish bonds, and Spain, which is bankrupt, guaranteeing the funds needed to buy Italian bonds. Or, I suppose we could look at it as Italy co-signing on loans to Italy and Spain co-signing on loans to Spain. Give me a break. This isn’t going to fool investors. There’s no actual money there. Until Germany agrees to pay not just everyone else’s outstanding bills, but future bills as well, this is going nowhere. Which means it’s going nowhere, because there’s no way Germany is going to agree to sacrifice its own wealth to save the spendthrift rest of the eurozone. This shell game has gone on far too long already. Everyone, including the eurocrats, is perfectly aware that it’s a shell game. They just hope investors don’t notice. That’s the cloud-cuckoo land these people are living in.

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Monday, 18 June 2012

07:53 – Greek elections results are in. New Democracy and PASOK between them have enough votes to form a coalition with a slim majority, but PASOK has announced that it will not be a part of any coalition government that does not include the far-left Syriza party. The most likely outcome is a three- or four-sided coalition that will claim to be attempting to comply with the Troika terms while insisting on their modification.

This result was actually the best that the supporters of Greece remaining in the euro could have hoped for, expecting that it would buy Greece and the euro a little more time. That hope has already been dashed this morning. After a very short upturn in the markets, the plunge has reasserted itself, with Spanish benchmark 10-year bond yields hitting new record highs above 7% and Italian benchmark yields again climbing over 6%. In other words, Spain has lost access to the markets and Italy nearly so.

I just read an interesting article: Will ‘showrooming’ kill businesses?

The interesting part is that the author is completely clueless about how showrooming actually works these days. He talks about people visiting stores to look at items they want to buy, recording the details, and then going home to look up better deals on the Internet. That’s so 2009.

The way it actually works is that people point their phones at the barcodes on the items in the stores. An app running on their phones scans the barcode, hits a price comparison site, and lets them order the product on-line while they’re standing in front of it in the store.

Nor is this a new phenomenon. When I was working at Entre Computer Center nearly 30 years ago, we called them SHABEs. Shop Here And Buy Elsewhere. And that was even more annoying, because they weren’t just comparing prices and then buying somewhere else. They were taking up the time of our sales staff–all of whom were very knowledgeable not just about computers and networking but about their application to business–getting detailed advice and recommendations, and then buying from places that could sell at deep discounts because they employed minimum-wage order takers.

Ultimately, there’s simply no way that local stores can survive if they’re selling what amount to commodities. In that business, you have to be efficient, and brick-and-mortar stores are inherently inefficient. When local stores come up against competition that uses a more efficient business model, they’re going to lose. That’s what happened to music stores, bookstores, and video stores, all of which were attempting to sell commodities in competition with more efficient suppliers.

But showrooming really isn’t the problem. Only a tiny percentage of buyers actually showroom. The problem is that for many stores the vast majority of their potential customers are like me. They don’t bother to visit the store at all. They don’t even consider buying locally. They just use the web to find a good price from a reputable vendor and order the product.

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Sunday, 17 June 2012

09:13 – We should have preliminary results of the Greek elections by about mid-afternoon EDT. My guess is that they’ll be inconclusive, pretty much a re-run of the last election, six weeks ago. ND will probably lead the results, with Syriza not far behind. Given the 10050-seat bonus awarded to the leading vote-getter, it’s possible that ND will be able to form a coalition government with PASOK. If that happens, it’s likely that Greece will continue to pretend to attempt to comply with the Troika’s requirements and the Troika will continue to provide funding, allowing Greece to remain in the eurozone for the time being. But it’s also very possible that no coalition government can be formed, in which case Greece will continue its rapid descent into chaos.

I hope that the elections bring an end to this farce, and that Greece crashes out of the euro and returns to the drachma. That means a decade of unimaginable suffering for the Greek people. That’s bad, but the alternative if Greek remains in the euro is unimaginable suffering for the Greek people for two or three decades. In any event, Spain and Italy will follow Greece into default, with France not far behind. Even Germany will suffer, although not to the degree that the southern tier will. That’s what inevitably happens to anyone or any country that spends lots of money that it doesn’t have.

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Saturday, 16 June 2012

07:52 – And now we have former UK PM Gordon Brown warning that the euro crisis may lead to Italy and France requiring bailouts. There’s not a whole lot of “may” about it. Italy and eventually France will require bailouts; only the timing is in question.

Much depends on the outcome of the Greek election tomorrow. If New Democracy and PASOK win enough votes to form a coalition government, that may delay the collapse for a few more weeks or even months. If the anti-austerity parties, led by Syriza, gain enough votes to form a coalition (which is unlikely, even if Syriza is the top vote-getter), things will go downhill faster. Regardless of the outcome, Monday morning is likely to be exciting on the markets.

If the anti-austerity parties win, that will be perceived by the markets and by the EU as a vote in favor of Greece abrogating the bailout terms and leaving the eurozone. If that happens, the markets will turn their focus to Italy, which could be forced to seek a bailout as early as next week. Of course, there’s no money available for such a bailout, which will simply increase the pressure on the ECB to inflate its way out of the problem, a fix that’s worse than the underlying disease. The EUrocrats have painted themselves into a corner from which there is no escape.

Everyone, including Obama and other world leaders, is demanding that Germany Do Something. Merkel, the only one in this group of “leaders” who has any clue, correctly points out that there’s nothing Germany can do, and that even if Germany did what is being demanded of it, it would have no beneficial effect and merely doom Germany along with the rest. At this point, there’s no doubt that Merkel is perfectly aware that the euro is going down. Her only concern is, as it should be, to minimize the effects of that collapse on Germany and German taxpayers.

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Friday, 15 June 2012

08:02 – As of this morning, we have only 22 biology kits and 19 chemistry kits in stock, albeit with another 30 of each in progress. Not all that long ago, that would have been a comfortable cushion. No longer.

Homeschoolers are now buying materials for the summer session, and it seems to be ramping up. The scary part is that the real ramp-up hasn’t started yet, and won’t until August, when homeschoolers start ordering materials for the autumn semester. So, at this point, we’ll concentrate first on getting the new batch of 30 biology kits and 30 chemistry kits ready to ship. We’ll then build inventory by doing batches of 30 kits at a time, alternating between chemistry and biology kits. Starting mid- to late-July, we’ll add forensics kits to the mix until we have at least 60 of those in inventory by the time the forensics book hits the stores.

10:46 – Barbara’s going to dinner with her parents tonight and then taking her mom to a 7:00 pm appointment to get an MRI. Apparently, they run that machine literally around the clock. That leaves my dinner up to me.

As my long-time readers know, I’m mildly vegetarian. To be precise, I’m an ovo-lacto-fisho-chickeno-beefo-porko-lambo-almost-anything-that-stands-still-or-moveso vegetarian. Oh, yeah, and definitely bacono. But I do eat vegetables, so to my way of thinking that makes me vegetarian. I hasten to add that I am in no sense of the word a humanitarian.

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Thursday, 14 June 2012

08:12 – Barbara’s dad is back at home with several broken ribs. While they were at the doctor’s appointment, he tripped and fell to his knees and then forward onto his face. Barbara was terrified, not just because he fell but because he started yelling after the fall. He should have been in a wheelchair or using a walker, of course, but Barbara’s dad is obstinate.

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Wednesday, 13 June 2012

09:39 – As we build inventory of the biology, chemistry, and forensic science kits for the coming new school year, I’m thinking about which science to do next. Physics may seem the obvious choice, but the truth is that while most high-school students take biology and chemistry, relatively few nowadays take physics. And many of those who do take a physics course do a lecture-based course rather than a lab-based course.

We could do AP biology and/or AP chemistry, but again the potential market for those is much more limited than the market for the mainstream first-year courses. The same is true for more specialized courses like marine biology, anatomy, and environmental science. We’ll do all of those eventually, I’m sure, but for now we want to concentrate on the more mainstream courses. That means working down to the early high-school/late middle-school level. There are two science courses commonly taken in grades 8, 9, or 10 that we don’t have covered: earth science and physical science.

13:52 – My cell phone didn’t last as long as the effects of the Spanish bailout. I ordered the phone back on 21 March. When it arrived a couple days later, I put it on the charger, but never got around to activating it. So late this morning I stuck it on the charger again. It took all of 10 or 15 minutes to show fully charged. Then I went over to the PlatinumTel website to activate it.

As I was doing that, Barbara called to say that her dad was in the emergency room again. She’d taken him to a doctor’s appointment, intending to get him back home and get to work before lunch. But her dad fell, and so she took him to the emergency room. I think his doctor’s appointment was at the hospital, so they didn’t have far to go. Barbara’s cell phone had died, although she’d just charged it. When we hung up, Barbara was leaving to go get her mother and said she’d see if her phone would work plugged into the car charger.

A while later, I heard the key in the front door and was surprised to see Barbara, who was making a flying visit home to grab something for lunch and then head back to the hospital. Of course, I gave her my cell phone. It was all mine for almost 27 minutes. Now it’s hers.

Her dad seems to be okay. He fell to his knees, and doesn’t seem to have done any major damage. Barbara was terrified because he started yelling when he fell and she thought he was seriously injured. So she’s headed back to the hospital to sit with her mom. If they release her dad before 5:00, she’ll take them home. Otherwise, her sister will come over and pick up their parents at the hospital so that Barbara can meet two of her friends for dinner, which was previously arranged.

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Tuesday, 12 June 2012

07:38 – Benchmark Spanish ten-year bond yields closed the day yesterday at about 6.5% and are now at about 6.7% and climbing. Apparently, that $125 billion EU bailout promise bought Spain only literally a couple hours of respite. Investors aren’t stupid. And Italian benchmark yields are now above 6% and climbing.

Note that the EU is carefully not saying whether this alleged bailout will be provided by the current EFSF or by the ESM, which is supposed to come into effect in July. If it’s to be the EFSF, the problem is that the individual legislatures of the other eurozone nations have to approve unanimously any payments to Spain. That’s not likely to happen. Finland has already said it will want collateral, and it’s not even certain that Germany can approve such payments without a change to its constitution. If it’s to be the ESM, there’s an even bigger problem. Loans from the EFSF aren’t senior; loans from the ESM will subordinate current debt. Having seen what happened in Greece, private lenders are likely to react very badly to having their current Spanish debt holdings subordinated to an EU entity. There’s likely to be a massive sell-off of private debt, which will increase yields dramatically. And no private entity is likely to be willing to buy any more Spanish debt. Or Italian debt. Given that Spain is already essentially cut-off from private loan sources and Italy nearly so, an ESM-funded bailout is likely to be the final straw, putting both Spain and Italy in the position of having no private alternatives at all for refinancing their current debt or issuing new debt. Not that I believe this latest bailout will actually materialize.

11:08 – Benchmark Spanish ten-year bond yields have now reached a euro-era record. No one seems to know what to do, so I’ll offer some free advice that will solve the problem, not just for Spain but for the rest of the world’s governments: start living within your means.

Now. Today. Spend only money that you actually have, and in that spending make allowance for paying back what you already owe, quickly. If you owe a lot of money, as do nearly all governments, plan to spend no more than 50% of what you’re currently taking in. And 25% would be better. Use the excess to pay off what you owe, and under no circumstances borrow more. Period.

Take a meat axe to public spending. Cut everything by very large percentages. Fire 90% of government employees at all levels. Eliminate or drastically cut back on social welfare programs, unemployment compensation, public health care spending, the military, everything. Put all government land and other properties up for sale to the highest bidder. Cut government pensions retroactively to 10% of what’s currently promised. Increase the social security retirement age by one year per year until it gets to 75. String up the politicians and elected officials who’ve taken us down this ruinous road.

Ridiculous, you say? Can’t happen, you say? Well, ridiculous it may be, but it’s going to happen one way or another. Something that can’t go on, doesn’t. The only question is how much longer it can go on. The optimists I know think the collapse may be 20 or 30 years in the future. I don’t think it’ll be that long.

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Monday, 11 June 2012

09:09 – As expected, the markets have responded favorably to the Spanish bailout. That won’t last long. Like all of the bailouts and other actions taken to “save” the euro, this amounts to slapping a fresh coat of paint on a rotting structure. The markets will soon recognize that, as they always do, and Spanish sovereign debt will start heading for the 7%+ range again.

We got fair amount done over the weekend on a new batch of chemistry kits. The only major job that remains is filling a whole bunch of bottles.

09:28 – Wow! That was faster than even I expected. Benchmark Spanish bond yields started this morning just under 6%, and they’re already at 6.2% and climbing. Apparently, investors have already realized that promising a bailout doesn’t mean the money is actually available to do it.

09:31 – And, as of a few minutes ago, they’re at 6.4% and climbing.

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