09:12 – The official forecast for the next two weeks is that I’ll be in a Bad Mood, as I begin doing the taxes tomorrow. This year, I’ll be in a Badder Mood than usual, because the government is stealing more than usual this year.
08:35 – The situation in Cyprus is rapidly turning worse, a lot worse. On Thursday, the government was saying that capital controls would be in effect for a week; on Friday, they were saying capital controls would be in effect for a month. In reality, they’re likely to be in effect forever. I’m trying to think of even one example where capital controls were removed once implemented. The most recent close example is Iceland, which announced “temporary” capital controls at the start of its banking crisis. Five years later, they’re still in effect. And the knock-on effects of Cyprus imposing capital controls is already being felt in Malta, which also has an out-sized banking sector. Even Luxembourg, which has the highest GDP in the world, is extremely concerned, and rightly so since its banking system is more highly leveraged than any other in the world. And capital flight from southern-tier banks continues to accelerate. No sane person wants to keep their assets in southern-tier banks, so they’re moving them to German, Dutch, and other northern-tier banks as fast as they can, making the imbalance steadily worse.
And the situation in Cyprus itself continues to deteriorate quickly. The second-largest bank, Popular Bank, is in the process of being shut down. Accounts of €100,000 and under are being transferred to Bank of Cyprus, the largest bank. Equity and bond holders in Popular Bank lose 100% of their investment, except the ECB, which holds about €9 billion of Popular Bank debt. That debt is also being transferred to Bank of Cyprus, and is sufficient to doom that bank. Meanwhile, Cyprus announced yesterday that the “haircut” to be suffered by unsecured Bank of Cyprus creditors (other than the ECB) will be a nominal 62.5%. It’s actually much worse than that, because the remaining 37.5% will be converted to shares in the Bank of Cyprus at an inflated valuation, which shares are already nearly worthless and will quickly become entirely so. So, excepting of course the ECB, unsecured creditors in Popular Bank will suffer a 100% haircut, while unsecured creditors in Bank of Cyprus will suffer a nominal 62.5% haircut, which in reality is a 100% haircut, or so close to that as not to matter.
07:43 – I got email from Paul Jones yesterday afternoon shortly after I’d finished reading this article: X-Ray Structures Of Everything. Without Crystals. Holy Cow. As Paul said, if this technique holds up, it changes the world.
And you can be sure that we’ll soon know just how well the technique holds up. Right now, this morning, other scientists are attempting to reproduce these results in thousands of labs all over the world. I asked Paul if Wake Forest University had what he needed to test this technique. He replied that his only concern was that he didn’t know what computational resources would be needed and if WFU had access to them. If this is for real, and there’s no reason to think it isn’t, structural analysis of molecules, possibly including proteins, has just entered a whole new world. The implications are staggering.
How staggering? When I read Derek’s post, I literally checked the date to make sure it wasn’t April 1st.
09:45 – Amidst all the furor about Cyprus, few have commented on the real implications of the imposition of capital controls to prevent capital flight from Cypriot banks: the euro has been shattered as a common currency.
The fundamental characteristic of a common currency is that it can be spent anywhere within the common currency area and has the same value anywhere within the area. This is now officially no longer true of the euro. Euros in Cyprus are now worth much less than euros elsewhere in the eurozone because they cannot be spent freely, either in Cyprus or in the rest of the eurozone.
For the last three years, the eurocrats have been trying desperately to prevent the collapse of the euro. Now, at a single stroke, they themselves have destroyed it. The euro is a fiat currency, and like all fiat currencies has no inherent value. What apparent value it has exists only because people pretend that it has value. Without that pretense, the euro is worth literally only the paper it is printed on. By preventing Cypriots from spending their euros, the eurocrats have destroyed that pretense.
Barbara mentioned to me the other day that she’d been talking with Amy, one of the neighbor kids. Amy starts 9th grade next autumn, and told Barbara that she was taking all honors and AP courses next year, including biology. She’s very interested in science, and want to pursue a career in science or medical research.
The other day, I ran into her dad, Steve, while I was walking Colin and mentioned to him what Barbara had told me. He’s very pleased that Amy is doing well academically and plans to go on to major in science in college and grad school. I told him that if Amy wants to get a jump on next year’s science that we’d be happy to give her one of our biology kits, assuming he and Amy’s stepmother, Heather, approve.
Yesterday I was walking Colin when Amy got off the school bus. We talked and she said her dad approved, although Heather was a bit concerned because one of her own experiences in high school chemistry had resulted in an explosion. I suspect Heather isn’t really strongly opposed to Amy doing home science, since Heather herself is a licensed pyrotechnician. And, like nearly all sciency kids, Amy would love to blow things up.
So I gave Amy a copy of our biology lab book, and told her that, if her parents approved, Barbara and I would give her what she needed to do the lab sessions.
08:10 – I see that Netflix streaming now has series 5 of Mad Men available. I’d almost forgotten we had that title in our queue. We watched series 4 on DVD in April 2011. I seem to remember that there was a delay in shooting series 5.
And I’ve just started re-reading Colleen McCullough’s First Man in Rome series, the first book of which centers on Gaius Marius and Sulla. It’s as good as I remember it. McCullough is a first-class historian, and this book, although fiction, reads like a serious history of Republican Rome. McCullough put more time and effort into just her glossary than most authors put into an entire novel.
I did the same calculations last night that I remember doing the first time I read this book, back when it was first published. McCullough is talking about the cursus honorum, the sequence of offices held by Romans on their ways to becoming consul. Sulla, who is high-born but poor, is dreaming of pursuing the cursus honorum, but has no hope of accumulating the wealth needed. To be a senator, he needs to prove to the censors that he has an income of at least one million sestertii per year, and even to become a knight he requires 400,000 sestertii per year. So I calculated that in today’s money. As it turns out, with the spot price of silver currently around $28/ounce, one sestertius is pretty close to one current US dollar. So, Republican Roman equites (knights) had incomes that would put them into today’s 1%, and Republican Roman senators would be today’s IRS millionaires.
When Barbara got home yesterday and found I’d unpacked those 11 boxes and put away their contents, she said I should have waited for her to help because she’s stronger than I am and in better shape. I scoffed, and pointed out that I could still bench-press 90 pounds. Aha!, she countered, she could bench-press 90 pounds. Aha!, I pointed out, 90 pounds is what a girl bench-presses. In reality, I could still bench-press guy weight, call it 250 pounds. Okay, I admit it. I don’t know for sure that I could still bench-press 250 pounds, but I suspect I could.
10:24 – Geez. Hard on the heels of demanding that Cyprus commit suicide in exchange for a $13 billion “bailout”, the eurocrats are now demanding a $15 billion increase in their budget for 2013. Not a budget of $15 billion, you understand. A budget increase of $15 billion.
Cameron and the Tories are livid, and Farage and the UKIP are whatever beyond livid is. This budget increase translates to UK taxpayers “contributing” about $2 billion more, or roughly $125 per UK family. Just what they need in this economy. What’s worse, Cameron has no national veto, because this budget increase can/will be passed by majority vote. It seems to me that it’s long past time for the UK to make a definitive statement by withdrawing entirely from the EU. The only benefit the UK receives from EU membership is the Common Market, and that would survive a UK withdrawal. Cameron has delayed much too long holding a referendum on UK membership in the EU because he knows a referendum would go heavily in favor of withdrawal. Despite the evidence, Cameron remains a committed europhile. If he continues on this course, it wouldn’t surprise me to see Nigel Farage and the UKIP go from a minority party to running things. Cameron and the Tories scoff at that idea, but I think they’re just whistling past the graveyard.
09:21 – Our ready-to-ship stock of chemistry kits had dropped into single figures yesterday, so I decided to raid my carefully rationed remaining stock of polypropylene beakers to make up another batch of ten chemistry kits, which was all I had sufficient beakers for. We have 600 each of the 50 mL and 100 mL polypropylene beakers on order, which are supposed to ship the end of this week or early next. I’ll just continue building more finished kits this week, except they won’t have the beakers in them. It’ll be easy enough to drop in the missing beakers when they finally arrive. And UPS showed up at dinnertime yesterday with 11 large boxes of stuff from another wholesaler. I had the UPS guy stack them down in the basement, so Barbara had to run an obstacle course this morning to get to her car when she left for work. They’d better not be there when she gets home, if I know what’s good for me.
We started watching a new-to-us series on Acorn streaming last night. It’s an Australian series called Miss Fisher’s Murder Mysteries. The series is set in 1920’s Melbourne, and the lead character is a 40-ish aristocratic feminist James Bond analog. The (wo)Man with the Golden Gun, literally. It’s a fun series, with all the standard supporting characters one would expect. It’s not a parody, exactly, but obviously no one was intended to take the series seriously. At a million bucks an episode, it’s very high budget, particularly for Australian TV. I suspect they spent a large percentage of that on wardrobe and props, including the Hispano-Suiza that Miss Fisher drives. Netflix doesn’t have this series on DVD yet, let alone streaming. Barbara said maybe we should just subscribe to Acorn TV.
12:46 – In addition to being the chief cook and bottle washer for our company, I’m also the warehouseman. So I was just unpacking and checking in those 11 boxes that arrived at dinnertime yesterday. I’m getting too old for this. A case of 50 boxes of 72 microscope slides masses about 50 pounds (23 kilos), and is about the size of a shoebox. Those are dense little suckers.
13:44 – I see that the arguments about same-sex marriage before the Supreme Court are complete. Now we have to wait months for SCOTUS to make and publish its decision.
I honestly don’t see what all the to-do is about. The correct answer is obvious on the face of it. SCOTUS should rule that government cannot prohibit same-sex marriage in the same way that it ruled almost 50 years ago in the Loving case that government could not prohibit interracial marriage. Obviously, there are no arguments against same-sex marriage other than religious arguments, which the government is prohibited from considering. Those who support equal rights for gay couples are being reasonable; those who oppose those rights are utterly unreasonable. I’ve never heard any supporter of gay marriage insist that churches be forced to marry gay couples, nor even that religious bigots be forced to abjure their hateful beliefs. All supporters of same-sex marriage are asking is that the government not deny them the same rights that are taken for granted by heterosexual couples.
The truth is that the government has no valid interest in marriage, period. Government should be neither encouraging or discouraging marriage of any type, let alone requiring or forbidding it. If some gay people are offended that Barbara and I are married, tough luck. Their being offended should be of no concern to us, just as a heterosexual being offended by gays should be of no concern to gays. Offense is not injury, and attempting to use the force of government to require people to behave in ways you find inoffensive is intolerable abuse of power.
09:55 – If you believe Merkel and the eurocrats, the Cyprus Crisis is now “over”, and with only one fatality. Cyprus itself, which has been gutted. Off-shore banking, the core of the Cypriot economy, has been killed deader than King Tut, leaving only tourism as a significant source of revenue. (Until now, banking was about 70% of the Cypriot economy and tourism 30%. So, literally overnight, 70% of the Cypriot economy has disappeared.) In a nation of about one million population, the banking collapse alone will eliminate tens of thousands of high-paying jobs, leaving mostly only low-paying service jobs in the tourism industry. The follow-on effects, including plummeting property values, are likely to be as bad as the bank collapse itself.
Meanwhile, the €10 billion bailout boosts Cyprus’s indebtedness to about 150% of GDP. The former GDP, that is. As the GDP of Cyprus collapses with the loss of off-shore banking, its actual indebtedness is likely to end up at 300% to 400% of the new GDP. And the IMF says this is sustainable? What planet are they living on? In the next two to three years, Cyprus will inevitably suffer an economic collapse that will make the Great Depression look like a minor blip. And the worst of it is that this is only the first bailout. Just as with Greece, Cyprus will inevitably need more bailouts, with increasingly harsh terms. Cyprus is now on life-support, just waiting for Germany to pull the plug.
12:39 – This morning Jeroen Dijsselbloem, head of the Eurogroup of eurozone finance ministers, announced that the Cyprus bailout, with its seizing of depositors’ assets, is a template for future bailout actions within the eurozone. This afternoon Angela Merkel, big boss of the eurozone, ordered Dijsselbloem beheaded for being foolish enough to reveal her plans in public. Meanwhile, Putin and (particularly) Medvedev, who are livid at the eurozone’s confiscation of Russians’ assets, very probably including some of their own personal assets, already have plans well underway to punish German companies who do business in Russia by freezing and confiscating their assets. And a little mole tells me that capital flight from Southern Tier banks including French ones, already high, is fast increasing. I expect that by the end of this year the capital controls currently being implemented in Cyprus will spread to the Southern Tier countries. This isn’t going to be pretty.
09:00 – The patience of Germany for continuous bailouts of other eurozone countries has now obviously been completely exhausted. At this point, Germany obviously doesn’t care whether Cyprus meets its terms for a bailout, believing that the “contagion” can be contained. They’re wrong, but that’s what they believe. For Cyprus, the point is moot anyway. Either way, Cyprus has been written off. Its economy is based on off-shore banking, and that no longer exists whether or not Cyprus is bailed out. To Cypriots, it must seem as though this catastrophe has occurred overnight, but there’s no question that Cyprus has now become the new Greece, with all that implies. And Cypriots are pissed, feeling abandoned and betrayed by the rest of the eurozone, particularly Germany. They’re screwed either way, and my guess is that this week they’ll tell the EU to get screwed. That means Cyprus defaults, crashes out of the euro, and returns to its local currency, but at this point I think most Cypriots no longer care.
09:09 – Spring arrived here as expected on the 20th, with sunny skies and warm temperatures, but it’s disappeared again. Our highs over the next several days are to be in the mid- to upper-40’s (< 10C) and lows near freezing.
Colin and I almost got into a fight yesterday afternoon. I was walking Colin on the 10-meter roller leash and he was sniffing around in Kim’s front yard when we spotted Jack, a neighborhood dog, approaching at a dead run. Jack is a full-size poodle, roughly Colin’s size. Jack circled around a large bush in Kim’s yard, came to a stop between me and Colin, and then snarled and lunged at Colin. Colin’s hackles rose and he responded with a snarl of his own. It was looking like a serious dog fight was about to break out, and I was getting ready to kill Jack with a snap kick. I yelled as I began the kick, and Jack took off running toward home.
09:50 – I’ve never paid much attention to visitor stats. I write this page for myself. If people visit and comment, great. If they don’t, I’d still write it. But I just checked my visitor stats this morning, and the contrast between now and the Good Olde Days is striking. Nowadays, I get maybe 30,000 visitors per month, and maybe 1,200 on a good day. Back when I was writing computer books, I got much more traffic. Days with 8,000 to 10,000 visitors were routine, days with 15,000 to 20,000 visitors weren’t uncommon, and I think my best day ever was more than 30,000 visitors. In other words, back then I got about as much traffic on a very heavy day as I get nowadays in a month.
07:51 – Congress has given the US Postal Service no relief, insisting that it must continue 6-day service. However, some in congress, along with USPS officials, have pointed out that congress has not specified which types of mail must be picked up and delivered on Saturdays. So the USPS currently intends to proceed as planned, dropping Saturday pickup and delivery of all types of mail except Priority Mail and Express Mail, primarily packages, as of this summer. This change would have zero effect on our business, as we ship our kits by Priority Mail.
I asked our mailman yesterday how this change would affect him, other than the fact that he’d then be working only Monday through Friday, with weekends off. He said it wouldn’t affect him or any the other full-time staff that had permanent routes. The main effect would be on the employees who covered those routes on the full-timers’ days off. I asked him how many of those would have to be retained to cover Saturday Priority/Express Mail pickup/delivery. He said that our zipcode has 36 routes, all of which could be covered on Saturdays by only two or three people.
The USPS unions are utterly opposed to any changes to Saturday delivery for the obvious reason. If dropping Saturday delivery of first-class and junk mail allows the USPS to reduce staff by a factor of 12 to 18, from 36 to 2 or 3, what would be the effect on employment of the USPS discontinuing 2nd-class and junk mail entirely? Only a small percentage of our mail is first-class. Nearly all of it is 2nd-class (catalogs) and junk mail. If those were eliminated–leaving only first-class, Priority, and Express mail–the USPS could reduce its delivery staff by some very large percentage. If 2 or 3 people can cover this zipcode for Priority/Express mail pickup/delivery, how many more would be needed to add first-class mail to the mix? Four or five?
10:11 – I’ve just been running some numbers, trying to get a handle on what’s likely to happen for the rest of 2013. One of the comparisons I ran was on kit revenues by month versus year-ago. In December 2012 kit revenues were 4.4 times those of December 2011. In January, February, and March 2013 versus the same months in 2012, kit revenues were 6.9X, 2.8X, and 8.8X, respectively, for an average of about 5.7X.
One commenter the other day suggested that I just buy a year’s supply of everything and keep it inventoried. The problem with that is two-fold: first, I don’t really know what a year’s supply is. If I order in enough for 5.7X last year’s kit sales, that’s 1,500+ kits’ worth. Second, there’s the issue of storage space and working capital. So I’ve decided to buy large quantities only of those items that are single-source and, based on our previous experience, are likely to be backordered at some point. Stuff that I can get from two, three, or four of our wholesalers I won’t worry about. So I may end up with 1,500 spatulas in stock, 600 dozen of the thick cavity slides, and so on. That, we can deal with. What I don’t want to have to deal with inventorying is 40 gross of beakers or 750 dozen test tubes or 125 dozen 100 mL graduated cylinders.
12:26 – I just ordered another two cases of the Sterilite 6-quart plastic storage bins from Home Depot. With the case of 60 we just received, that gives us 180 total bins, plus the 37 that I’d bought earlier in the store. I’m going to keep 30 of the bins for building chemical bags, small parts bags, and so on. The other 187 will be used for storage. I just checked and found that the Sterilite bins will easily hold more than 60 of the 30 mL bottles and twice that many of the 15 mL bottles. With our current kit lineup, we have 142 chemicals to store and roughly 100 more equipment and component items. Many of the latter don’t need storage bins. For example, we order goggles by the case of 100, and they stay in those cases. Same deal for items like beakers and so on. Subassemblies like chemical bags and small part bags are much too large for these small bins. A batch of 30 of those bags fills a good-size box, so we store them in, uh, good-size boxes.