Gimme Drugs

On more than one occasion, these missives have cited research that at least many (many people say 'all') *new* drugs over that last decades have been from research done on your tax paying dime. Now Mathew Herper (as I type, not behind the paywall) has taken up the cudgel. He cites the research, but tosses a grenade at the implication.

In the early 1960s, government research at the National Cancer Institute delivered human beings their first real victory against cancer. At the time, two NCI researchers, Emil Frei and Emil Freireich, showed that giving children with acute lymphoblastic leukemia a combination of four high-dose chemotherapy drugs could make cancer temporarily vanish in two-thirds of patients. A third would see their remission last years, and some were cured. It was the first time "cured" and "cancer" could be used in the same sentence.

For the next few decades, the NCI was the epicenter of cancer drug development. Cancer drugs were invented there or discovered by researchers sent on globe-trotting jaunts.

One example he cites

Take Vertex (VRTX) Pharmaceuticals' new drug Trikafta, lauded by the Food and Drug Administration as a "breakthrough" when it was approved in October. Based on research originally funded by the Cystic Fibrosis Foundation, a philanthropy, it can help 90% of the people with this deadly, lung-clogging disease, but costs $311,503 a year, 34% more than the median listing price of a house.

So, I'll be so bold as to state the obvious: healthcare is a Social Good, and includes drugs obviously, thus a Back to the Future movement might be in order. Strip out the obscene profit gotten, pay the scientists well (they're the ones who do the actual work, of course), and still save gobs of money. In the end, we all pay for these expensive drugs, whether it's overt Socialism (the Damn Gummint pays directly for the research and for the eventual compounds), and the covert kind practiced by the drug and insurance industries in collusion. Much of it foisted on Medicare and Medicaid, and thus you and me, and the rest on private insurance policy holders, ditto. It's not a coincidence that drug companies have been flocking to CMS covered indications and 'orphan' drugs in the last decade or so. For all their mewling, they're among the most risk averse. They'll do 'research' only if payment is guaranteed. That's how the multi-billion dollar price tag comes about; they stuff in the costs on duds into the costs of approved ones. It's a no lose proposition.

Figures Don't Lie, But Liars Figure - part the third

It should come as no surprise that I noted this piece in the news. Many's the time I've noted that most decisions, even when titularly data driven, are really agenda driven. The manipulations of public data is ripe for such excess.

You might see lists on the internet that shout out this or that statistic about the safest or most dangerous cities in America. It can be tempting to use crime data to compare cities and identify trends.

You owe to your inner data nerd to read up the piece. It is one of many published over the years that affirm the title.

Thought For The Day - 12 December 2019

Here's an idea. Let's stop pussyfooting around and just name them Russpublicans? And, for that matter, how many of them (much less you all) would want to live in Russia? A diet of potatoes and vodka? Eh?

First The Sugar High

Then comes the crash. One week's report shouldn't be taken as such, but it must be recognized as a canary.

In the week ending December 7, the advance figure for seasonally adjusted initial claims was 252,000, an increase of
49,000 from the previous week's unrevised level of 203,000. This is the highest level for initial claims since September
30, 2017 when it was 257,000. The 4-week moving average was 224,000, an increase of 6,250 from the previous week's
unrevised average of 217,750.

Many people have been predicting that the Trump Tax Giveaway was merely a massive sugar dose to the economy. Mostly by taking from the poor and giving to the rich. May haps The Manchurian President will suffer, along with the 99%, the same fate as Dubya? And lose the Senate in the bargain.

Stone Cold Poney

Out of the mouths of babes:

I'd like to say to Mr. Pompeo, who wonders when he'll be loved, it's when he stops enabling Donald Trump.
-- Linda Ronstadt

Stone. Cold.

Red Bull

It gives you Wiiings, according to the adverts. So, in honor of that, I give you today's Krugman. Somehow I've managed to miss this wonderful term some years: wing-nut welfare. If only I could have coined it.

[T]he modern U.S. right contains many institutions — Fox News and other media, right-wing think tanks, and others — that offer sinecures to former officials. However, this "wing-nut welfare" — which has no counterpart on the left — is available only to those who continue to toe the line.

One might also observe that red bull is synonymous with Russian Propaganda, which The Manchurian President and his minions have been eager to spread. Dr. Hill made both points clear.

The Asymptote of Progress - part the sixteenth

Brrrr!! Baby it's cold outside.

Yet another bit of reporting on the effects of hitting the wall of Progress. You read about it here first; just not the reporting.

Recently regulators have become especially concerned that insurers have been loading up on a kind of investment known as collateralized debt obligations, or C.L.O.s for short. C.L.O.s are mortgages and other loans that have been packaged into securities. They bear ominous similarities to the securities that helped cause the 2008 financial crisis.

This is what happens, as you learned in your Econ 101 class (you did take that class, right?), that The Law of Supply and Demand really does exist, even if/when the levers of Mr. Market are obscured. The CxO class still hasn't found profitable ways to deploy fiduciary capital into physical capital. So they go chasing Treasuries or, in this reporting, they're so desperate to cover unfunded insurance liabilities (which Gummint Bonds used to take care of) that they load up on any kind of trash that 'promises' them the needed moolah. Good luck with that. There was a recent NYT piece (and elsewhere if you'd rather) on the China problem: way too much real estate development, both residential and commercial. Reporting on the problem goes back years. The current situation is the cancer recurring. Real estate is a non-producing asset; the only way to make money from it (both commercial and residential, in fact) is if the tenants/owners have sufficient excess cashflow to float the notes. And for that to happen residents have to have better paying employment today than they did before buying, and businesses have to have growth driving their cashflow. Unlike a spiffy new kind of machine which is X% more productive, and fills large unmet demand for the widgets it makes. That's how capital really makes money, rather than just taking it from sources that actually make money.

TIAA has been hawking its annuities in TeeVee adverts recently, promising 'guaranteed' income for life. Just buy our annuity!! Just one bad court case from vanishing. Poof, there goes your 'guaranteed income'. As with any private sector annuity.

Like A Bureaucrat

Have you ever heard, or said, something like, 'those bureaucrats are lazy and stupid and wouldn't last a day in the private sector'? Turns out that it is scientists at CDC who have figured out how vaping damages the lungs. Not those vaunted drug company folks. And that most new drugs exist based on research by, or paid for by, government.

Turns out Intel is just as lazy and stupid as your average bureaucrat.

The researchers said Intel had chosen an ineffective way to address its chip vulnerabilities. Rather than fix the core issue, which would possibly require redesigning the processor, it has patched each variant as it is discovered.

"There are tons of vulnerabilities still left, we are sure," Mr. Bos said. "And they don't intend to do proper security engineering until their reputation is at stake."

So, I guess Boeing isn't the only cabal of private sector bureaucrats.

Boeing Boeing - part the tenth

Did you see the early reports about the 10? They stretched the tube once again, so much so that the dang thing couldn't takeoff! Those stubby legs meant that if the plane tried to rotate in the standard way, it would bang the tailcone on the tarmac. Every time!! "Nice plane you've got there. Too bad if something bad happened to it?"

So the early report I saw told how the Boeing engineers came up with this neato solution to the problem: a telescopic strut for the wheel truck. Aha! thinks I. Here's the solution to the Worst Case Scenario. Mostly. This strut adds 9.5 inches of distance off the tarmac, so they don't have to redesign the entire wing (they've done so, more or less, a few times before). All they need is a lowered pylon for the LEAP, just enough that the nacelle gets below the top of the wing, and so the thrust vector off the bottom. No more need for MCAS with an aerodynamic fix for the problem.

But... Then I saw an animation of how this neato new strut works. From the first report I saw, it sounded like the strut collapses when stowing the gear into the tube, but is locked extended otherwise. Nope. The strut extends during rotation only, allowing the tailcone to clear the tarmac. It wasn't clear whether the strut extends in a positive fashion, i.e. pushes up on the tube or simply releases allowing the tube to 'float' above the trucks during takeoff. Either way, dang.

So MCAS is still needed to keep the plane flying. Sort of.

Chubby Checker

Everybody, twist
-- Chubby Checker/1960

By no means the first version about twisting, that's the one I grew up with. Barely. A piece in today's NYT caused me to let my fingers do the walking through the Yellow Googles. Wound up, not surprisingly, at the wiki.

Regular reader might recall my adage that exponential progress hit a wall when we humans finally filled up the periodic table and understood the Bohr Atom. From the first, I didn't take that notion at face value, because the covalent bond of organic chemistry means there's, to all intents and purposes, an infinite number of molecules in the organic side of chemistry.

Graphene, magic angle division, demonstrates that C itself is highly fungible.

Paradise Hill

Back in the late 50s and early 60s, there occurred a resurgence of folk music, but mostly antithetical to the Commie tinged version of Guthrie, The Weavers and such. Best known, and most commercial so far as I recall, were The Kingston Trio. Squeaky clean, very young, all boys, and all white. They did one song, though, that isn't in the mainstream of the mainstream Chamber of Commerce version of folk music.

Stubble and stone make a hard row to how. What little will grow, the drought will kill.
The summer folks call it Paradise Mountain but we call it Poverty Hill.
-- Fred Hellerman/Fran Minkoff

The title of the ditty is, no surprise, 'Poverty Hill'. But, of course, they didn't write it. Hellerman was a Weaver and Minkoff collaborated (he he) with him often.

Now, we pilgrimage to Block Island most every year for some years. This year we went twice: Memorial Day week and the past one. Interestingly, each trip has shed some light on what it means to live in God's Own Small Town America. Accommodation on the Island runs from Saturday to Saturday, and the island's weekly newspaper does too. So, on the ferry Memorial Day Saturday we read up the new issue with the screaming (2 inch type) headline that the medical center doctor had quit. Yes, an island with ~900 residents (but, it is widely said, 10,000 visitors per day during High Season) has just one medical facility and one doctor. Over the next few weeks, reading the on-line version of the paper, one found that the doctor: first, extended his last date; second, stated he would remain "indefinitely'; and third, rescinded said resignation. Letters to the editor of said paper, and subsequent chats with islanders, led to the belief that the doctor had merely extorted more remuneration. In this time frame it was reported that the town had increased its payment to the medical center by $40,000 over the previous year. Post hoc ergo propter hoc? Or dots that must be connected? So, that was the state of the island as we journeyed last week.

Last week, weather was mostly pleasant, and mostly fisherman from the mainland as visitors. Restaurants were closing earlier this year than previously, but luckily some remained open through our week. Phew! It's just one week after Columbus Day, for crying out loud!!

We got our trip back on Saturday, and, of course, read the island paper on the boat back to the mainland. Didn't get 2 inch headline, but this time it was the recently hired town manager who resigned. Lasted about a year and a half. He had been chosen in late 2017, but didn't start up in earnest until into 2018, since he couldn't find a place to live. Not that there aren't places to live on the island, but if you read the real estate section of the paper, much of what is up for sale is $1.5+ million summer cottages. In fact, during our week, the latest affordable housing lottery was done. Five winners were announced; from merely 12 pre-approved applications (mostly, applicants have to prove permanent residence on the island and accept re-sale covenants). The houses are 2 and 3 bedroom prefabs. The 2 bedroom goes for $250,000. Talking with the staff at Bethany's Airport Diner (best breakfast on earth), it turns out that the housing issue has been recognized for some time. One had won her home some 27 years ago. And, I'll bet, you thought only big cities like San Francisco had a 'housing problem', didn't you?

Will the town manager be persuaded to stay? Find him some baksheesh? Only time will tell.

Much of prime time TeeVee sit-coms has over the decades has been set in GOSTA, as if nothing could be finer. Very against type, "Cheers", set in not small-town Boston, has "Where Everybody Knows Your Name" as its theme song.

But consider the import of that idea. Block Island is an exemplar of GOSTA. Those ~900, with the obligatory 2.2 kids leads to about 400 adult voters, and a known handful of families owning most of the commercial establishments and membership in town government. IOW, those growing up in small town America are enured to living in autocracy. Now you know why some folks accept The Manchurian President as legitimate. Just their GOSTA writ large. While pleasant to visit, and not usually involved in the machinations of the medical center or town government, what would it be like to live under the boot heels of a handful of doges? No thanks. Give me the anarchy and polyglot of cities.

Boeing Boeing - part the ninth [update]

OK, yet another hint that The Worst Case Scenario is right around the corner.

Sources told Reuters the Boeing internal messages raised questions about the performance of the so-called MCAS anti-stall system that has been tied to the two fatal crashes in five months. Boeing declined to immediately comment.

Let's see??? Could it be that some engineers finally admitted, to one another, that LEAP engines mounted so high on that 1960s wing couldn't reliably be compensated by software. And that the real fix is to extend the landing gear so that the engines are under the wing and off the damn tarmac? Ya think?

The FAA said it found the messages "concerning" and "is reviewing this information to determine what action is appropriate."

How much lying has been going on??? I guess we'll find out soon.

[update]
Yet more reporting.

"This is the smoking gun," Representative Peter DeFazio, Democrat of Oregon, said in an interview. "This is no longer just a regulatory failure and a culture failure. It's starting to look like criminal misconduct."

So, was the plane fine and the simulator broken? Or the simulator worked as designed, and showed the plane was unstable?

Yeah think Boeing's gonna get a break?

Boeing Boeing - part the eighth

Well, David Gelles, et al are at it again. More perfidy from Boeing. What a surprise!

But I didn't come here to bury Caesar. I came here to remind folks that MCAS continues to be misrepresented with regard to the two climb-out crashes. It's important to understand this.

Boeing CEO Dennis Muilenburg said "[MCAS] has been reported or described as an anti-stall system, which it is not. It's a system that's designed to provide handling qualities for the pilot that meet pilot preferences."[4] The wiki. This is the ref.

IOW, MCAS was originally designed to provide a 'backstop' to AoA issues in normal flight at 30,000+ feet. It was only later that MCAS was modified to activate at climb out.

Some more

[MCAS] would trim the airplane in modest increments for up to nine seconds at a time until it detected that the airplane had returned to a normal AoA and ended its steep climb. It seems simple enough — on paper, that is.

And, do you like aggression?

On paper, MCAS was only supposed to move the horizontal stabilizer 0.6 degrees at a time. In reality, it could move the stabilizer as much as 2.5 degrees at a time, making it significantly more powerful when forcing the nose of the airplane down.

Not all of the reporting makes clear that MCAS's initial task was to compensate the MAX's handling during cruise flight back to 'classic' 737 behavior. This one does

MCAS is "activated without pilot input" and "commands nose down stabilizer to enhance pitch characteristics during step turns with elevated load factors and during flaps up flight at airspeeds approaching stall."
[my emphasis]

I Love My Barzilian, Don't You?

The Brazil problem has been mentioned here in the past, as it relates to racial mixing and the loss of many fish-belly white populations. If this race-mixing doesn't stop, everybody will look like a Brazilian. But there is another aspect to Brazil that bears repeating.

Lo those many years ago, when I toiled for CSC, there came the announcement that one of the major data centers (perhaps the main one?) would be decamped to Australia. Now, since at least my undergraduate days, I've known that Australia is (and always has been in human times) the driest piece of real estate with people on it. I was astonished, of course.

For about as long, I've also been aware that Brazil's agriculture has been of the slash and burn variety. Bolsonaro, being a rightwing idiot, has promoted it even more. Exactly how long Brazil has used slash and burn, I haven't found, but

Available literature indicates that deforestation rates in the Amazon Basin of Brazil increased after the early 1960s due in large part to national policies supporting road building, tax and credit incentives to large corporations and ranches, and colonization projects for the rural poor.

So, at least half a century.

Back to Australis. Comes new reporting that climate change deniers are in full throat rampage, even as the effects diminishes their lifestyle.

In few places is the challenge of adapting to climate change more immediate than in Australia, where 80 percent of the population lives within a few dozen miles of a coastline susceptible to rising seas and more punishing storms, and where the arid interior bakes under record temperatures.

I guess conditions haven't gotten much better since I left CSC?

In sum, then, from an ecological point of view, we're already all Brazilians. We treat the environment as a short term impediment to instant needs, not giving a shit what we'll leave to our kids and grandkids. All this from 'conservative' politicians. Obviously, they don't admit what the word they use to self-describe actually means.

Pill Popping Pin Heads

Some stereotypes are based in actual (if limited) experience. One such is that 'the drug problem' is an urban and brown problem. It's never been such, but once the white ring around the city started getting ever more loopy to an extent that not even the most racist old white guy could deny, 'the drug problem' was no longer a police problem, but a health problem. Go figure.

Thanks to r-bloggers, we have some more data exploring the state of drugs. Here's the punchline:

The more white a county is, the higher the rate of controlled substance prescription there. The more Hispanic a county is, the lower the rate of controlled substance prescription there. Effects with Black and Asian race are not clear in Texas.

I guess there aren't all that many drug addicts coming in wet back. Ya think?

Dee Feat is in Dee Flation - part the thirty eighth

September Core PPI -0.3% vs Briefing.com consensus of 0.2%; August was 0.3%
The key takeaway from the report is that the price declines were broad based, and not just energy-related, which is indicative of an environment characterized by weaker demand.
-- briefing.com/8 October 2019

Makes me Laffer all the way to the asylum.

Sin Ergy

Every now and again, there'll be reporting on Sutter Health, which dominates northern California. Today's NYT report is one of many. Letting my fingers do the walking through the Yellow Googles finds allegations of bad behavior going back to at least 2016.

The long-time justification by American Capitalists for their ever-increasing M&A swallowing of competition is that 'synergies will lower cost and price'. Well, the former by rarely the latter.

Sutter Health, long accused of abusing its market power in California, is squaring off against major U.S. employers in a closely watched legal fight over health care competition and high prices.

From today's NYT report

In 2010, about a quarter of physicians, both specialists and primary care doctors, worked in groups owned by hospitals, according to the researchers, who were funded by the California Health Care Foundation, a nonprofit group. By 2018, 52 percent of specialists and 42 percent of primary care doctors were employed by practices owned by a hospital or hospital group.

The researchers point to that "market concentration" as a critical factor spurring "the fast growth of prices in California." They describe the gap in health care costs between the northern and southern parts of California, which lead to higher insurance prices paid by employers and individuals.

As that olde saying goes, "Give 'em an inch, and they'll take a mile." The banks were decreed to be too big to fail, as well.

Hunting the Russian Bear

So, I guess you want to know whether Hunter Biden was paid exorbitantly? Yes? Well not so much:

The median director pay at the largest U.S. companies was above $250,000 in 2015. This means that half of the directors of major corporations earned more and half earned less.

Yes, above the median. But no, not corrupt.

Now, look at USA Today's table.

Again, above median, but not out of the league.

Payola

The California law signed yesterday has the NCAA, and its blessed brethren, up in arms: you're ruining the student-athlete!!! Well, as all this conflagration has gone on the last few years, each new event prodded my lower brain stem memories. Which memories were that in the 1800s, and perhaps into the early 1900s, colleges regularly paid their teams. It took my fingers more than a quick stroll through the Yellow Googles to find a paper discussing this. I guess none to few want to admit that college athletics was for a long time a professional enterprise.

Chicago, of course, was not the only school driven to excess in promoting its football team. The payment of athletes, many of whom had little pretense of being students, was widespread. A 1906 article by Charles Deming, a former Yale athlete, detailed the findings of a Yale faculty investigation into the school's athletic practices. It uncovered a $100,000 trust fund that had been used to tutor athletes, give expensive gifts to athletes, purchase entertainment for coaches, and pay for trips to the Caribbean.

Another report:

Athletes during the early and mid-1900's were routinely recruited and paid to play; and there were several instances where individuals representing the schools were not enrolled as students. For example, there is one report of a Midwestern university using seven members of its team that included the town blacksmith, a lawyer, a livery man, and four railroad employees(5). the ref: Bronson, A. G. (1958). Clark W. Hetherington-Scientist and philosopher. Salt Lake City: University of Utah Press.

The reactionaries so want the USofA to go back to the future of the 1800s. Here's another chance. Pay 'em.

Towering Inferno

Sedition: incitement of discontent or rebellion against a government. here

I've kept my tongue longer, perhaps, than warranted, but yesterday's paranoid raving was the end of the road. The mainstream pundits keep wondering why The Manchurian President continues to cover both his and Russia's ass over 2016 and now 2020. They all, for what I can see, are ignoring the core of The Manchurian President: money. It was, is, and always will be about his money. Or money he believes is his due. He desperately wants that Trump Tower Moscow, and is quite willing to sell off any and all things American to get it. Follow the money, folks.

Empty Spaces

The truly lying tweet from The Manchurian President compelled me to respond. But I saw it on my CNN homepage, and it was just the intro to some reporting. I can't say it much better, so I'll let it go at that. Well, almost.

Trump - 62,984,828
Not Trump - 73,684,448

Boeing Boeing - part the seventh

Talk about serendipity. My home page is CNN, where we see two stories that relate, more or less, to The Worst Case Scenario.

First, the distant one, but mentioned here a few times. Computer control and aircraft don't always mix well. FWIW, thanks to some 'Air Disasters' episodes, Airbus planes have experienced accidents when man and machine didn't mesh as expected.

The second of more direct importance.

"Boeing notified the agency of the matter after it discovered the cracks while conducting modifications on a heavily used aircraft. Subsequent inspections uncovered similar cracks in a small number of additional planes. The FAA will instruct operators to conduct specific inspections, make any necessary repairs and to report their findings to the agency immediately," the agency said.

The cracking was found in the plane's pickle forks, which attach the plane's body to its wing structure, CNN affiliate KOMO reported.

IOW, the CFM56 is more than the wing can handle. It weighs less than the LEAP-1B used in the MAX. Yes, Boeing spokescritters say the MAX is not affected. Do you believe that?

CFM56-7B used on the NG: ~5,300 lbs. takeoff thrust ~23,000 lbf.
LEAP-1B used on the MAX: ~6,100 lbs. takeoff thrust ~29,000 lbf.

So, the MAX engine puts more static stress on that poor wing, and more dynamic stress.

The fog comes
on little cat feet.
-- Carl Sandburg

And, so too, the chance that The Worst Case Scenario appears. Out of the fog.

One fact(s) it would be helpful to know: from the original model to the MAX, how many times and in what way, was the wing modified? The wiki says that, as the fuselage was lengthened, so were the wings, three or four depending on how you measure. But other structural changes aren't described. I had my fingers do the walking through The Yellow Googles, but that information didn't come up. I suppose it's, at least, buried deep in FAA files.

Thought for the Day - 25 September 2019

All you need to know, courtesy Warren Zevon

I'm hiding in [Mar-a-Lago], I'm a desperate man
Send lawyers, guns, and money
The shit has hit the fan

Send lawyers, guns, and money
Send lawyers, guns, and money

I Didn't Win!

This year's McArthur grant winners are revealed. Alas, I didn't win. Since I'm not known to the Movers and Shakers who do the nominating (supposed to be unknown to the recipients), not a surprise.

The notion of note: nearly all are from either cities and/or college towns. And Blue States. Birds of a feather and all that. Smart people like to be around other smart people; the more the better. I wonder when The Manchurian President will threaten McArthur Foundation's non-profit status?

Aesop - part the second

What Powell should say, "We're having to do all this backstopping and other gyrations because that fucking moron in the White House keeps shitting the bed."

What Powell will say, "".

[update 24 Sep]

The researchers found that over the past year, Trump's tweets have lowered market expectations of interest rates by a tenth of a percentage point. Although that may sound small, the academics argue this is significant given that a typical rate cut by the Fed is a quarter of a percentage point.
...
"Our findings suggest that market participants believe that the erosion to central bank independence is significant and persistent," the researchers in the NBER working paper wrote.

Corruption is corrosive.

Boeing Boeing - part the sixth

The recent news that Indonesia is circulating it's results, to the pain of FAA and Boeing, led me to, once again, let my fingers do the walking through the Yellow Googles. Much to my surprise and glee, it turns out the Worst Case Scenario isn't my idea alone. No, the head of Boeing aircraft said just that during the walk up to the MAX:

"Every customer I talk to has a real hard time understanding why a re-engined airplane makes sense," Albaugh said. "Airbus says it will cost them a billion Euros to re-engine [the A320, 737 equivalent]. My guess is it's going to cost them considerably more than that. The engines are bigger. They are going to have to redesign the wings, the gear. It's going to be a design change that will ripple through that airframe."
[my emphasis]

Case closed, I suppose. If you read the piece, you find that Boeing CEO over-rode Albaugh. Not to mention that the MAX is lower, by a bit, than the A320. Ya think? A commercial passenger aircraft isn't a X-29.

Stability was provided by the computerized flight control system making 40 corrections per second. The flight control system was made up of three redundant digital computers backed up by three redundant analog computers; any of the three could fly it on its own, but the redundancy allowed them to check for errors.

OTOH, the A320 (and Airbus planes since) is fly-by-wire, which boils down to computer controlled.

Dee Feat is in Dee Flation - part the thirty seventh

Specifically, the eurozone's flash September Manufacturing PMI declined to 45.6 from 47.0 in August, and Germany's flash Manufacturing PMI fell to 41.4 from 43.5. A reading below 50.0 denotes a contraction. In turn, growth concerns have contributed to the increased demand for U.S. Treasuries, driving yields lower across the curve.
-- briefing.com/23 September 2019

And how, pray tell, is Powell supposed to stop this rush to Treasuries?? Hmmm?

Speedy Fiat

The current tale of the Fed pushing cash into the money-market should be all you need to know to see that fiat currency, with any ills so associated, is the only game in town. Specie currency would have crashed the global economy in two days. Wouldn't that be fun?

Aesop

What Powell should say, "We're having to do all this backstopping and other gyrations because that fucking moron in the White House keeps shitting the bed."

What Powell will say, "".

Boeing Boeing - part the fifth

Another step closer to The Worst Case Scenario. David Gelles reports on some shucking and jiving.

In August, Boeing met with officials from the F.A.A. and other global aviation agencies to brief them on its efforts to complete fixes on the Max. Regulators asked detailed questions about adjustments to the Max's flight control computers, the Boeing representatives were not prepared to answer.
Instead, the company representatives began to display a PowerPoint presentation on the efforts, according to people briefed on the meeting who spoke on condition of anonymity because it was not public.
At that point, the regulators ended the meeting. Weeks later, Boeing still has not answered all their questions.
[my emphasis]

If that sounds like a bunch of crooks looking to avoid the death penalty, well... yeah.

Mightier Than the Data

"The word is mightier than the sword."
-- Ahiqar/700 BC

And, naturally, the word can be mightier than the data.

In today's words of Robert Shiller

If enough people begin to act fearfully, their anxiety can become self-fulfilling, and a recession, sometimes a big one, may follow.

Once again, what, pray tell, does the quant brigade have to offer? In fact, recessions are identified by the quants well after they begin.

There is no fixed timing rule. The committee waits long enough so that the existence of a peak or trough is not in doubt, and until it can assign an accurate peak or trough date.

I Told You So - 9 September 2019

Some, if not most, of the Dear Reader Clan may have felt my view of Trump as The Manchurian President was just a tad too conspiracy theory based. I'll gently remind the Clan that I spent about a decade (mid 70s to mid 80s) in DC. And a bit of that reporting with the Jack Anderson posse before he went totally all in with Reagan. Said reporting involved some gun running through Ghana. Who knew?

So, now we know.

In a previously undisclosed secret mission in 2017, the United States successfully extracted from Russia one of its highest-level covert sources inside the Russian government, multiple Trump administration officials with direct knowledge told CNN.

A person directly involved in the discussions said that the removal of the Russian was driven, in part, by concerns that President Donald Trump and his administration repeatedly mishandled classified intelligence and could contribute to exposing the covert source as a spy.

Is this impeachable? It sure as shit ought to be. The President isn't supposed to be a Russian Asset. Ya know?

State's Rights

One of the, perhaps signal, assertions of the Right is 'State's Rights'. In fact, the assertion of State's Rights happens only when the state in question seeks to empower the powerful and control the rest of us. One current example is the The Manchurian President's attempt to stop California, other states, and automakers from implementing sensible auto mileage/emissions standards. 'State's Rights'? Of course not.

But, wait, there's more! We spend a week or two on Block Island each year, mostly very off-season without the stupid crowds of fumbling mainlanders; they had 21 Life Star evacuations this just-ended season! So, of course, I've signed up for the 'Block Island Times' innterTubes edition. It is, mostly, very Islander specific reporting. And so it is today, except that what is 'just' Island news has larger implications.

For the last few months, there has been a number of reports about upgrading the innterTubes infrastructure on the Island. It's not clear, to me, whether this new infrastructure is to be a Community Internet when implemented or whether the study being conducted is the only town supported effort while the actual net will be just another private, for profit, ISP.

In any case, this new reporting highlights the controversy of 5G. Since I didn't attend any of the community meetings, I only know what has been reported, and the notion of '5G everywhere' is shown to be bogus.

Given that Block Island is about 10 square miles in size, "to roll out [Real] 5G cell you'll need 25 cell towers per square mile. That means 250 cell towers on Block Island for that 5G technology. I'm guessing this will be a problem for the island," said Rogers.

"Yes, good guess," said members of the audience.

The thing about Block Island, and the other New England islands, is that the year-round population is a small fraction of what happens when it's inundated with fumbling mainlanders during high season; there are about 900 Islanders while there are multiple thousands per day during high season. Much earlier reporting about Real 5G has made it clear that it's only going to be economically feasible in densely populated areas where there's existing elevated infrastructure, aka telephone poles and/or street light poles (many, if not most, cities have communication and power cables buried), so Mother Nature (or God, if you're so inclined) wins.

Of course, Sub-6 5G is far cheaper to implement, and might be doable on the existing cell tower. The island is, in envelope, a narrow rectangle so beam shaping along a north-south axis might support enough Sub-6 antennas. It seems odd, based on the report, that the unfeasibility of Real 5G didn't lead straight to a discussion of Sub-6. Perhaps the consultant makes more money this way?

Some background:

Over 14,000 wireless ISPs globally have quietly proven in rural areas that the sub-6GHz bands are extremely effective at delivering fixed wireless services at long distances. Plus, unlike the relatively high costs of high frequency 28GHz, sub-6 GHz costs come in below $100 per subscriber, making it a cost effective alternative.

Is Real 5G feasible when there's only 900 folks, in let's say 200 domiciles, that have to pay under penalty of law, for so much infrastructure with no recourse? Should the Island institute a '5G Tax' for visitors? Along with other municipal services, there are a couple of orders of magnitude difference between number of Islanders and high season visitors. It is kind of a conundrum. On the one hand, it simply isn't economical to have a full-service hospital or Real 5G innterTubes just for those 900 Islanders, but on the other hand at what point will visitors choose to summer elsewhere without such services? After all, Block Island (or The Vineyard or Nantucket or the Hamptons) isn't in the middle of nowhere. It only seems that way.

The President and CEO of the U.S. Conference of Mayors issued a statement on the day of the ruling that said, in part,

"The U.S. Conference of Mayors conveys its strongest opposition to today's final Order issued by the Federal Communications Commission. While The U.S. Conference of Mayors supports the nation's efforts to win the race to 5G, today's FCC action misapplies federal law to federalize local public property as part of its efforts to bestow upon a class of private companies special rights to access local rights-of-ways and public property."

"Despite efforts by local and state governments, including scores of commenters in the agency's docket, the Commission has embarked on an unprecedented federal intrusion into local (and state) government property rights that will have substantial and continuing adverse impacts on cities and their taxpayers, including reduced funding for essential local government services, and needlessly introduce increased risk of right-of-way and other public safety hazards... The Conference believes this aggressive, and surely unlawful, intervention will prove counterproductive."

Since this is another example of Effete States seeking to be intelligent, how do you think it will end up? I expect the Presidential Sharpie© will re-draw some map to justify forcing Islanders to subsidize some carrier entity.

The Quant's Problem

Every now and again it looks very much like some famous pundit is reading these missives and producing a clone. It seems that the NYT has a standard for the printing of op-ed pieces (at least, in the deadtrees version), which includes putting the lede sentence in tall italics in the midst of the text. Such happened in Krugman's last column. Here's the sentence that I couldn't avoid:

It's hard to make plans when the rules keep changing.

A recent bugbear in these here parts is that quants keep stepping on the same banana peel: predictions made from quant, rather then specific events, require that the data generating process remains stable over the time horizon of the prediction. Those skyrocketing home prices really were inherent in the decades long mortgaging process. We know that the 1% have been putting all that TARP, QE, and tax giveaway into Treasuries. This was true under Obama, who the CxO class saw as a pawn of the Right Wingnut Congress. Now they look at The Manchurian President and wonder what cockamamie order will happen next.

[Y]ou need some assurance that the rules of the game will be stable, so that whatever investments you make now aren't suddenly make worthless by future shifts in policy.

God's rules are, if nothing else, stable. Those of our stable genius, not so much.

Predicting Beyond the Data

A Sharpie mind at work.

Need I say anything more?

The Tyranny of Fixed Cost - part the first

Today's reporting brings two manifestations of The Tyranny of Fixed Cost©. First: hospitals.

When somebody goes out of town, that revenue is lost. And because it's lost, the hospital has to charge everybody else more.
-- John Heaton

When I had the first, subsequently failed, repair to an important part of me, the geezer surgeon volunteered that his fee was $500, but, of course, the insurance paid some number of thousands. And there has been an increasing number of reports that it's really unfettered spending by the hospital cabal that's been driving healthcare costs. Not so much pharma. Having also had the experience of dealing with medical needs on Block Island, which, as one might suspect, has but one medical facility, monopoly in healthcare is not a good thing. For the public at least.

That quote sums up The Tyranny of Fixed Cost© starkly. And that's not the only way exploitation happens. In the insurance bidnezz, it has been the practice for decades (and more aggressively in the last one or two), to segregate the insured population into ever more homogeneous pools, charging those identified as more likely to need services rather more than those identified as not so much. Insurance is being transformed from 'pooled risk' into 'prepaid consumption'. The econ types call this 'extracting the consumers' surplus'. That's not good eats.

Second, the 'benefits' of tariffs. Anyone who bought that argument ought to be stripped of voting right; only a fucking moron would state it or believe it.

Trump says he wants to bring manufacturing back to the states. How does that work exactly?
-- Lena Phoenix

Xero can't pay for the fixed cost of a production facility of its own, anywhere; least of all the rich USofA.

So, Xero shoes doesn't actually make any shoes. Are you surprised? And, as many have said and reported, blocking China production through tariff will not, repeat not, mean that production will move to the USofA. It will move to other slave wage countries, mostly in Asia. The right wing has been waging war on labor for decades, if not a couple of centuries (remember all those New England manufacturers that ran to the South, and then farther South?), and still these morons keep voting right wing. "We don't need no education!" Blue collar wage earners gained entry to the middle class because of WWII's ethos of community and power of labor unions. The CxO class of the 50s and 60s having departed the scene, 19th century Social Darwinism has reared its ugly head (and body). It's worth knowing that the income tax, first instance, was explicitly on the 1% of the day. And it also was the vehicle to end reliance on tariff to fund the Damn Gummint; tariff wasn't enough moolah to run a real government.

Our Stable Genius at Work - part the first

August ISM Manufacturing Index 49.1 vs Briefing.com consensus of 51.3; July was 51.2
The key takeaway from the report is that it will foment economic slowdown concerns, as well as worries about the deleterious impact of tariff
actions on business investment.
-- briefing.com/3 Sep. 2019

Once more with fervor: it doesn't pay to have a fucking moron in charge.

Splain This to Me

Just saw another advert for an in-home exercise machine, Nautilus I guess. These sorts of adverts started, near as I can recall, with Peloton. These adverts show a sweaty thin and comely female on the machine in an upscale apartment, with a vista view and smack dab in the middle of some living space. This Nautilus advert had the treadmill a couple of feet from the dining area.

Now please tell me: why would a sane and rational human want their dining area to smell like the bottom of a gym locker? Or do sweaty thin and comely females smell like orange blossoms?

Luddites Unite!

Yet another reason to treat your smartphone like a mobile telephone. Sheeple bedazzled by bling.

Thought for the Day - 30 August 2019

Oh, wouldn't it be loverly if Dorian makes a direct hit on Mar-a-Lago, and Puerto Rico sends a bunch of folks to toss paper towels at The Manchurian President?

My Frient

Long before I read the Gordon book, I found it intuitively obvious that overall progress from the middle of the 19th century through most of the 20th could be traced to filling out the periodic table. Turns out, which I had long forgotten, that the table as we know it today is credited to Mendeleev. And the year was 1869.

A helpful review is in today's NYT.

"In a physical mixture, you get the sum of the parts when you mix A with B. In chemistry, you combine A and B and you get something qualitatively new."

Counterintuitively perhaps, is the fact that much of the table was constructed without understanding how atoms were built. That didn't happen until Bohr (1913). Kind of like a blind monkey typing out "Macbeth".

Tilt-A-Whirl

Regular reader of one version of these endeavors is confronted with the following each visit:

It's the Distribution, Stupid

Yes, Bubba re-purposed. But the reality of that notion increasingly becomes, in the words of Dr. McElhone, "intuitively obvious to even the most casual observer".

The problem, however, is significant to both the soft-hearted lefty and the cold-hearted quant. Both groups need stable, yet increasing, macro demand in order to gain their ends. Those ends, at least superficially, are contradictory, yet just a cursory look at the data from the USofA from the 19th century shows how life goes when the 1% really do rule the roost.

Which brings us to Binyamin Appelbaum, now above the pay grade of economics reporter.

[T]he difference in average life expectancy between poor and wealthy women widened from 3.9 to 13.6 years [from 1980 to 2010].

This piece makes the point, the first time I recall from a mainstream pundit, that quant is hamstrung vis-a-vis the real sciences in the way frequently mentioned here:

Markets are constructed by people, for purposes chosen by people — and people can change the rules.
[my emphasis]

That sentence is a big deal. Quant analysis requires a stable set of rules, and events driving data within known limits. I talking to you Contrywide and Blythe Masters. They bent and changed the rules in ways that didn't enter the data until it was too late.

When wealth is concentrated in the hands of the few, studies show, total consumption declines and investment lags. Corporations and wealthy households increasingly resemble Scrooge McDuck, sitting on piles of money they can't use productively.

Again, a frequent observation here. Inflation is rampant in Treasuries just because the McDucks are scaredy cats and are all chasing said Treasuries. Price goes up when demand goes up. Add to that pressure of the Tyranny of Fixed Cost©, and the demand for increasing consumer demand, and the capitalist's gonads get sucked up. As production becomes ever more capital intense, the only way to drive down average cost is to increase output, since variable (aka, labor) cost becomes a decreasing proportion of BoM. The cost structure can't respond to falling demand proportionately. However, eliminating labor means, certainly, eliminating middle and lower class earnings. The other option is to shift production to services tailored to the rich. I bet you saw that coming.

The Final Solution

Mueller (75), likely because he saw he had no skin in the game, chose to slink away, gonads left on the ground. Not the Mueller we were led to believe.

Powell (66), on the other hand, has very much skin in the game. And he knows it. And, further, he knows that his quant buddies in the hedge funds, banks, and CxO class who need a stable economic platform on which to execute their wizardry, are finding their fancy models don't work when there's a paranoid six year old driving the machine.

Unless Powell makes a straightforward statement that the carnage happening both in the asset markets and the real economy are being caused by The Manchurian President's stupid behavior, he can't help them. The Manchurian President has to be slapped down by the adults. Powell has to be the first to do his job. Just because The Manchurian President gave the 1% so many gifts, doesn't mean he's a stable, rational genius. He is a fucking moron, and Powell has to go on the record. If he doesn't, the global economy is in the toilet. We'll see.

"[T]rade wars are good, and easy to win."
-- The Manchurian President/2 Mar 2018

Merchant of Crash

Not for the first time, but yet another event to re-kindle fair reader's interest in Mercantilism. And, since this is the era of The Manchurian President, we know that he's stepped into a pile of shit. And the rest of us get the slime and stink.

China's gone after oil. As well they might. They ain't stupid. They know the balance of Mercantilism is largely in their favor. The USofA exports raw resources to China, and imports finished goods from China. Archetypal wrong end of the deal. That being a bad deal was understood by The Real Adam Smith lo those many centuries ago. The Right Wingnuts still think that the 19th resource gorging USofA economy can be re-kindled if only we slay our enemies. Good luck with that.

Oil futures dived Friday morning after China announced it would impose retaliatory tariffs on $75 billion worth of imports from the U.S., including a levy on crude, amplifying concerns about the global economy and demand prospects for crude.

West Texas Intermediate crude for October delivery CLV19, -1.88% on the New York Mercantile Exchange — the U.S. benchmark — fell $1.64, or 3%, to trade at $53.71 a barrel, suffering the worst of the selloff after reports said China's tariff list includes a 5% levy on imports of U.S. oil.

Book Larnin - part the second

A couple of, one might think, disparate threads woven together today. We'll start with a long piece in the NYT delving into The Manchurian President's hitman at the Fed opening the barn door so the horses can run wild. All in the name of loosening the reins on our fantastic capitalists.

Some of the changes, seemingly incremental and technical on their own, could add up to a weakening of capital requirements installed in the wake of the crisis to prevent the largest banks from suffering the kind of destabilizing losses that imperiled the United States economy.

You know, the bankers would never put the rest of us at risk so they can make more than the market rate of return. Now would they?

The tinkering is being driven by Randal K. Quarles, the Fed's vice chair for supervision, whom Trump nominated in 2017...

We all know, of course, that he has our best interests (he he) at heart. Here's a short bio

As [George W. Bush's] Under Secretary, Quarles led the Department's activities in financial sector and capital markets policy, including coordination of the President's Working Group on Financial Markets, development of administration policy on hedge funds and derivatives, regulatory reform of Fannie Mae and Freddie Mac, and proposing fundamental reform of the U.S. financial regulatory structure.
[my bold]

In other words, an architect of the regime which crashed the world's economy.

Which brings us to Gary Marcus, who's in the news recently about his growing angst over what AI is and what AI can do. This not hot off the presses, of course.

And when I look at current AI through a perspective of human cognitive development — how children learn — I'm very dissatisfied by the state of AI. There's no AI that's remotely as clever as my four year old or my six year old.

Which reminds me of something My Pappy included in his war stories (WWII). For most of the War he was in North Africa, Algiers. He was in the Signal Corps building aircraft beacons. His unit was housed in a commandeered mansion, complete with houseboy. Said houseboy was somewhere about 10 and, according to Pappy, spoke about 6 languages. I recall hearing this when I was in high school, trying to learn languages. For a long time I was puzzled by this, but eventually the answer dawned on me: a child learning language isn't learning *a* language at all. The child is learning communication with humans, associating sounds with concrete things and even more abstract concepts. As such, each discrete language from the adult point of view, is just the sounds needed to communicate with certain adults; it's all one language to the child. So the sounds for the Brits are different from those for the French and from those for the Arabs. And so on ad infinitum. It's only later, when language becomes text, that difficulty arises. Can AI do that? I do wonder.

And of course, the coup

I have been saying for several years that deep learning is shallow, that it doesn't really capture how things work or what they do in the world. It's just a certain kind of statistical analysis. And I was really struck when Yoshua Bengio, one of the fathers of deep learning, kind of reached the same conclusion. I used to say this and people looked at me funny and got mad at me. And then suddenly here was one of the leaders of the field noticing the same thing.
[my emphasis]

Another recent piece tells the tale of how all that big data gets built to train AI. It's not high tech.

In all, we find the fact events drive data, not the other way around. Surprise, surprise.

Thought For The Day - 15 August 2019

How's about the USofA swapping Puerto Rico for Greenland? Denmark gets a winter wonderland vacation spot, and we get an air force base to bomb Russia back to the stone age. Not that The Manchurian President, or Moscow Mitch, would consider that. But, they could build a glacial golf course, with an Ice Hotel on the first hole.

And it makes an equal swap: both countries still have the same number of territories.

GE Whiz

OK, so the GE shit has hit the fan. The thrower has face validity, in that he exposed Madoff before anyone. What's odd, at least to me, is this statement:

General Electric CEO Larry Culp released a statement following the release of Markopolos' report, saying, "GE will always take any allegation of financial misconduct seriously. But this is market manipulation — pure and simple. Mr. Markopolos's report contains false statements of fact, and these claims could have been corrected if he had checked them with GE before publishing the report. The fact that he wrote a 170-page paper but never talked to company officials goes to show that he is not interested in accurate financial analysis, but solely in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit."
[my emphasis]

One might take that bold text to mean that GE has some non-public information which 'explains' the accounting questions. That statement, in and of itself, might give one pause.

I Still Hate Neil Irwin - part the fifteenth

Neil keeps inching toward the truth, which is, of course, that the CxO class has been shivering in their boots for years. As has been predicted here for years, rate inversion was inevitable, just because those holding all that TARP, QE, and tax cut moolah accumulated over the last decade (and longer, to be honest) have been chasing fiduciaries rather than buying plant and equipment. And, naturally, driving up the price of Treasuries and driving down the interest rate. The Fed has only the most tenuous control of any interest rate, and that is a very short term one. Jawboning by fiddling with the Fed rate only works when doing so makes a modicum of sense. Only the Right Wingnuts foist the pablum of 'investment by business will end income inequality and create more, and better jobs'. Laff my ass off. And so on. Killing off the middle class consumer makes the Masters of the Universe feel better, which is to say, superior, but ends up killing the whole kit and kaboodle. It's been the American way from the get-go.

If you're a corporate C.E.O. making investment decisions, the environment in which operate is shifting beneath your feet. Even with a seemingly bottomless supply of cheap capital available and a very low corporate tax rate, it feels awfully risky out there.

And indeed, through the first half of the year, falling business investment was a drag on American economic growth.

And, by the way, the environment hasn't really shifted. Yes, The Manchurian President's tariffs are stupid and paid for by the USofA consumer, but the assault on the middle class has been ongoing since the start of the Housing Bubble. Hell's bells, the bubble happened just because the Masters sought risk-free (or, at least, risk-nearly-free) returns after the DotBomb. Fiduciaries looked like the best bet, since they didn't depend on finding profitable physical placements. What sort of fiduciaries should they embrace? Well, home mortgages have been rock stable for decades, so why not make lots of high priced ones, and package them up in securities? Just write some paper, and all those strung out lower middle class dopes would keep paying their escalating ARM mortgages and make the Masters rich. They wouldn't all default at once, would they? Of course they won't.

Laffer, where are you? If ever Supply Side Economics would be proven correct, the last decade of super cheap capital should have proved it. The unleashing of massive investment in physical capital by the Masters of the Universe!! Nah. The Masters have all chased Treasuries, happy to take the guarantee of paltry interest (paid for with the taxes of the underclass, of course). Masters, my sphincter.

Researchers from Wall Street financial firms and the Federal Reserve have concluded that companies used repatriated funds mostly to buy back stock.
-- Jim Tankersley/2019

Lots of knuckleheads bought a piece of some bridge over the East River.

The Red and The Blue - part the second

Well, what has been prophesied (there are only three rural-majority/Red) states in these endeavors has come to be recognized by the mainstream pundits. Good on me.

Now if only the Dems can get it through their thick skulls that rabid rural rednecks are never going to be anything but rabid bible thumping (they consistently quote scriptur defending slavery and racism, dontcha know?) racists, and concentrate on the cities/suburbs where somewhat more open minds live. Again, it was a mere 78,900 rednecks that put The Manchurian President on his throne. If the Dems can't find that many recalcitrant voters in Blue Cities even in Red States...

The stakes in the struggle for Texas' big metro areas are rising because they are growing so fast. While the four major metro areas cast about 60% of the statewide votes in the 1996 presidential election, that rose to about 69% in 2016 and 2018, Murray and Cross found. Murray expects the number to cross 70% in 2020.

And the concentration of Texas' population into its biggest metropolitan areas shows no signs of slackening. The Texas Demographic Center, the official state demographer, projects that 70% of the state's population growth through 2050 will settle in just 10 large metropolitan counties. Those include the big five urban centers that O'Rourke carried as well as five adjacent suburban counties; those adjacent counties still leaned toward the GOP in 2018 but by a much smaller cumulative margin than in the past. Overall, O'Rourke won the 10 counties expected to account for the preponderance of the state's future growth by a combined nearly 700,000 votes.

As the report does point out, Southern college education generally and Texas in particular, is more Bible thumping than in the liberal (in the classical meaning of the word) states. So just being educated doesn't strongly mean intellectual honesty. But it's a start. And the simple fact that polyglot cities in due time expose even rednecks to diverse peoples and leads to ever less discrimination.

Just Your Average Joe

A few times over the years of these missives, there's been occasion to point out the difference between average cost pricing and marginal cost pricing. In particular, the differential effect of a high fixed-cost burden on pricing. Well, here we go again, with a report in the NYT about medical tourism.

Of special interest is the part the doctor's fee plays in the scenario:

Dr. Parisi, who spent less than 24 hours in Cancun, was paid $2,700 or three times what he would have received from Medicare, the largest single payer of hospital cost in the United States.
[my emphasis]

Once again, we see the Tyranny of Fixed Cost© in action.

In the United States, knee replacement surgery costs an average of about $30,000 — sometimes double or triple that — but at Galenia, it is only $12,000.

So, it's clear that the cost differential isn't labor, since the doctor got triple what he would have in the US. It's support of the hospital that's the devil in the details.

How are the extra dollars spent? Perhaps some group of health economists have/will manage to do a comparative study, although I doubt many hospitals will be willing to spill the beans. Does most of that large difference go to the CxO class of hospital admin? Or does it subsidize useful, but little used, equipment like MRI or hyperbaric?

And, oh yeah, the patient got a check for $5,000 on top of it all.

The unintentional (one hopes) side-effect of syphoning off such patients from US hospitals is that average cost of such interventions here will go up; there's just fewer patients using these interventions. Since total revenue diminishes, other interventions may also be re-priced upward to cover the 'shortfall'. Guess who'll likely be those patients? The poor, of course.

The Tyranny of Fixed Cost© visited my household. For reasons best left unsaid, the roof of the house is now covered with solar panels. The local electric company dragged its feet for months in the process of wiring in the panels. So far at least, electric companies are required to permit clients to co-generate. They don't like that, since it limits their revenue. The number of solar houses in any given utility's area is likely just in the noise, but once the number of installations begins to have a measurable effect on defraying the fixed cost of generation, transmission, and maintenance the lobbying to prohibit new installations and disenfranchise existing installations will gain much speed. There's no such thing as a free market when it threatens vested interest.

The utilities have successfully waged battles to squelch rooftop solar in states such as Arizona and Indiana, mostly by wielding political muscle to reduce compensation to customers for electricity fed back into the grid.

And, in yet another case of, if you can't beat 'em join 'em

For all the conflict surrounding rooftop solar, solar energy last year generated just under 1 percent of U.S. electricity, and utility-scale solar farms have three times the generating capacity of residential solar installations. That disparity is likely to grow.

Finally, the coup

And as more and more customers install solar panels, utilities earn less and less revenue, which means that rates for remaining customers must increase — which drives even more of them to rooftop solar. As battery storage becomes cheaper, some customers will be tempted to leave the grid entirely. A paper published by the Edison Electric Institute in 2013 famously warned of this vicious circle, giving rise to the expression "utility death spiral."

Hemmed in by their business model and regulators who expect adherence to it, many utilities have concluded that they have only one alternative: stop rooftop solar. In this battle, utilities have sometimes behaved oafishly, sabotaging themselves.

I Still Hate Neil Irwin - part the fourteenth

FINALLY!!! Mr. Irwin has found a pundit/expert with the gonads to say what needs to be said:

"The dollar being the primary global currency has enormous benefits for the U.S., but with the side effect that when the U.S. tries to depreciate, there are limits on how much it can do that," said Adam Posen, president of the Peterson Institute for International Economics.

FWIW, The Peterson Institute is bigly right of center, so admitting that Bully Uncle Sam is a bad thing means something.

The Peterson Institute has been at the forefront of research on the proposals by the Trump Administration of reforming the tax code.

If you really want something to chew on

Which brings us to the case of the Peter G. Peterson Institute, which, according to SourceWatch, is "founded, chaired, and funded" by Pete Peterson, a conservative Republican billionaire who made his money as a Wall Street hedge fund manager and served as secretary of commerce under President Richard Nixon. He has devoted himself and his billions to promoting deficit hysteria and convincing the public that programs like Social Security and Medicare will destroy the economy.

Boeing Boeing - part the fourth

David Gelles reports on the latest Max news, that a group of survivors have petitioned FAA to fully re-certify the Max, which is to say certify the Max scratch as a new aircraft. I guess that means the Worst Case Scenario. Actually, worse than what I've inferred is needed. Redesigned wing and landing gear is the extent of my Worst Case Scenario, which would not mean a new aircraft cert. We'll see, but it appears the momentum is building.

This could, note 'could', become an arrow in the quiver of whoever is the Dem candidate: the Right Wingnuts favor the Big Corporations over the Little People. The trend to outsource cert to Boeing et al didn't begin with The Manchurian President, but the amended type cert for the Max is in his closet. As recalled in an earlier installment, the signal change to the cert process happened under Dubya.

To earn certification for the 737 MAX 8, Boeing undertook a comprehensive test program that began just over one year ago with four airplanes, plus ground and laboratory testing. Following a rigorous certification process, the FAA granted Boeing an Amended Type Certificate for the 737 MAX 8, verifying the design complies with required aviation regulations and is safe and reliable.

Again, is it possible to fly an inherently unstable aircraft with managing software? Yes, sort of, with the X-29 being exhibit 1. But even in that case, the notion was to exploit instability to generate otherwise impossible maneuvering, which didn't happen.

[T]he whole system as flown (with the flight control system in the loop as well) could not be characterized as having any special increased agility.

It's hard to make the case that the Max design, with engines where they ought not to be, had any benefit to anyone. Just more moolah in Boeing's financials.

Vas Deferens

So, that didn't take long. Again. In Sunday's NYT Business section is a full page puff piece (each is) on Vas Narasimhan, CEO of Novartis. I considered typing a missive on the piece, but let it go, since the sole significant thought I'd had (scrawled under his photo) was:

Why would you want a McKinsey graduate running a drug company?

McKinsey has the well earned reputation as the capitalist's Social Darwinism wet dream defender. Kind of like a high price defense attorney. Confuse them when you can't convince them.

A few days later, now, we know that Novartis has been playing fast and loose with trial data for a $2 million gene therapy. The notion of "I save your life, give me all your future earnings" is so McKinsey. I guess we know why he's running a drug company.

Here's an Axios piece on Novartis and the faked data drug

The future of medicine is in personalized and scientifically advanced drugs, meaning that Zolgensma's imminent approval is just the beginning of the seven-digit price tag era. While drug companies say the drugs' effectiveness justifies their costs, some experts are pushing back.

Later in the article it is mentioned that the underlying drug tech will be used for other drugs. IOW, Novartis isn't on the hook for the drug's R&D for this one indication. Surprise, surprise. And, of course, no forensic accounting exists, publicly, of that R&D spend.

Here's report that lays out the scheme

As Novartis' departing CEO Joe Jimenez noted in a November 2016 editorial in Forbes, "We want to be rewarded for the tangible outcomes that our products provide the patient, not for simply selling pills."

Left to inference is the simple question: what's the value of "tangible outcomes" in moolah terms? Two possibilities are at the top of the totem pole:
- avoided costs of alternative, existing therapies
- the net present value of a patient's earnings

The first metric is, generally, not a kerfuffle. The second sure is. If there is a truly orphan population at risk, then only the 1% need apply, since their lifetime earnings are much higher. Not that they'd actually turn over any of it, of course. Only that the bean counters can put said 'amount' in the 'value' side of the equation. Thus justifying that multi-million dollar price.

Finally, a dense and detailed review of the drug by medical professionals.

I Told You So - 7 August 2019

Well, the rollercoaster has gone uppy-down (not for the first time over the course of these missives), to quote a Boss Man I had in a food factory long ago. My job was to pull straps of bread pans (thoroughly greased inside and out) stacked on a skid and throw them on a conveyor belt where they were pulled under the dough formers, and thence to the proof racks. Being all of 140 lbs. soaking wet, and the fact that the pans were generally banged up, they generally didn't like being separated. Thus some amount of angst on my part, and so, every so often a strap would end up with the cavity side facing the belt when the process got behind. Then, of course, the doughs would jam up the former, since the doughs had no where to go. So Boss Man would run over to clear the mess and scream "Uppy Down!!!" at me. Not that I cared a whole lot.

Your casual rate inversion is something we should all care about. Thanks to The Manchurian President and his cabal of "the best people", who don't have one complete brain among them, Treasuries are soaring and interest is plunging, even below the 'cut' of a few days ago. The CxO class, still in the realm of really cheap moolah, still can't find profitable places to put all that cheap money. What a wonderful world it would be!

The US Federal Reserve cut rates last month for the first time in a decade. That helped precipitate the decline in long-term bond yields, although yields had been trending lower for some time.

That's a worrying sign: The yield curve, which plots the interest rates across the maturities of debt, is currently inverted. Shorter-term debt is paying higher rates than longer-term bonds, as investors remain fearful of a US recession. An inversion of the yield curve has preceded every recession.

New Gold - part the ninth [update]

Mr. Market is having a nervous breakdown as I type, all the result of a fucking moron running the Damn Gummint. 78,900 other morons put him there. The Fed just put its thumb in the dike, hoping to stave off the flooding recession resulting from The Manchurian President's stupidity.

The amusing part of all this has been the whining from the farm states; 'we can't sell our growing to China!!'.

"The Chinese market is something we've built up over years, and it's been washed away in a short time," said Marcy Svenningsen, who grows soybeans, corn and wheat in North Dakota.

If The Manchurian President really paid attention in his baby econ class (either Fordham or undergrad Wharton), he will know what mercantilism really, really is:

Mercantilism helped create trade patterns such as the triangular trade in the North Atlantic, in which raw materials were imported to the metropolis and then processed and redistributed to other colonies.

IOW, The Manchurian President and his cabal in bidnezz have put the USofA on the wrong side of mercantilism. With all the benefits.

[update]
As usual, that didn't take long.

China's halt of US agricultural purchases will hurt America's farmers in dire need of relief. The trade war has forced Washington to come to the rescue of farmers with billions of dollars in aid. Delinquencies on agriculture loans have tripled since mid-2015 to eight-year highs, according to the St. Louis Federal Reserve Bank.

And

Investors piled into government bonds, driving the 10-year Treasury yield to 1.75%, the lowest level in nearly three years.

Are you surprised?

When will the Damn Gummint send free-money checks to all those city workers put out of work? Once again, the Red states sponging off the Blue.

Probably? Not

It's no secret that I've some problem using pure quant in the arena of human events. The cause and effect of human events are determined, almost entirely, by the rules surrounding said events. And said rules can and will be changed even in-flight if those who seek to benefit from said events see that the desired outcome is not forthcoming. I'm talking to you, Blythe Masters. Time series analysis to predict booms and busts in the economy principally among them. Given The Manchurian President's behavior, would anyone be surprised if he'd managed to threaten BLS and Census Supergrades (aka, SES)? Of course he's tried. Could the really, really rosy numbers coming out of BLS be fudged? If the Secretary of an agency can clear out the Supergrades with a snap of the fingers, what do you think?

Well, here are a couple of reports that might be of interest to those who share my chary attitude.

Should Probabilistic Inference be Thrown Under the Bus?

The real problem is that entire practice of Bayesian inference, and its Information Theory relative, is surprisingly fundamentally flawed in non-linear domains.

The second is older, and closer to the Great Recession "Kill the Quants?": Why risk analysis fails.

The financial crisis featured both models that were wrong and models that were right but were ignored by managers. Modeling errors vied with deliberate misstatements. Federal agencies deferred to the expertise and presumed non-malevolence of private firms.

I really like "presumed non-malevolence of private firms". As if!! Blythe Masters, Blythe Masters, Blythe Masters

Boeing Boeing - part the third

Well, some recent reporting that bears reading. Supports the increased likelihood of The Worst Case Scenario.

[A]fter intense lobbying by industry, [FAA] adopted new rules in 2005 that would give manufacturers like Boeing even more control.

Are you surprised that this was during a 'Business Friendly' Republican president? Didn't think so.

The salient fact of the crashes is that MCAS was not intended or designed to deal with the phase of flight when the crashes occurred. It's one thing to blame the AoA sensor, but it has to be recognized that MCAS is designed to compensate for dangerous aerodynamics, due to engine position, in level flight phase.

The review described a system that would activate only in rare situations, when a plane was making a sharp turn at high speeds.

One might say, when the Max was flying like an F-15! Or, perhaps, the Grumman X-29; given that it was controlled by 80s computers, it might perform using today's components. But, even so, should a passenger aircraft need so much compute just to keep it flying? Not to assert that the Max is as troublesome as the backward wing X-29, but how close is too close? IOW, some more, automation to accomplish otherwise tedious pilot input is one thing, using unbidden automation just to stay in flight is quite another.

Which brings us to the lede, appropriately buried near the end of the article:

The overhauled version would move the stabilizer by as much as 2.5 degrees each time it triggered, significantly pushing down the nose of the plane. The earlier version move the stabilizer by 0.6 degrees.

Yes, that's a bunch different. For those only vaguely familiar with how aircraft wings work, the rear wing, aka horizontal stabilizer in standard wing designs, has two moveable parts. One is the elevator, which is the trailing edge hinged, just as the main wing aileron and is managed by the pilot's control, the yoke. It provides fine control over the nose angle in flight. On larger aircraft (and some small private aircraft), such as the 737, the whole tail wing can be rotated. Setting the stabilizer is normally done to balance the aircraft in level flight. Such rotation, being the entire wing, produces very large force. This is what MCAS moves around. I can't find any numbers on the relative max force of elevator deflection and stabilizer rotation, but given the very large difference in area of the two and the fact that rotating the stabilizer also changes the AoA of said stabilizer, it's no surprise that pilots couldn't counteract the MCAS generated stabilizer rotation by moving the yoke/elevator.

The Worst Case Scenario remains in play.

Artificial Energy

Artificial energy
Is wrestling my mind
I've got a strange feeling
I'm going to die before my time
-- Chris Hillman, Roger McGuinn, and Michael Clarke

OK, so a bit of misdirection. As if missive titles in these endeavors ever did that? A piece on Stat News contains this nifty graph:

Healthcare is a prime venue for AI?

So, why might that be? Kind of simple: what passes for much of what is called AI is just minimized squared differences in many ways. Computers are really good at that sort of thing. Given that health diagnosis is all about mapping myriad symptoms to a single cause, doesn't massive correlation analysis have a chance to top human experience and cognition? Of course it can. The thing about health diagnosis is that it might appear to violate these endeavor's prime directive: correlation analysis, esp. time series version, dealing with human venues is a waste of time. Just read the New York Times and Wall Street Journal and professional journals. Right? Well, no. These data are generated by Mother Nature, so it's merely a matter of sufficient understanding of Her rules. Humans are the target of the data generating process, not the source. Which process, in most of the remaining dark corners of medicine, is really dark.

Boeing Boeing - part the second

Some further and missed thoughts from part the first on the Max problem. Is the Worst Case Scenario likely?

First, as reported variously, MCAS was not designed to correct pitch-up in climb mode. The issue was discovered in flight testing, and MCAS was handed the responsibility.

Second, I let my fingers do the walking through the Yellow Googles, and found that 'let the software fix the hardware' attitude was come in for some scathing rebuttal. From engineers and pilots, of course. Here's one example. I find this particularly telling

Ultimately, Travis also bemoans what he calls "cultural laziness" within the software development community that is creeping into mission-critical systems like flight computers. "By laziness, I mean that less and less thought is being given to getting a design correct, and simple — up-front," he wrote. "What needs to happen, I think, is for liability to accrue where it is generated."

If that sounds like something you've read in these missives, you're right. Being a die-hard RM advocate, which necessarily means 'measure twice cut once', I've long railed against the mode of writing code in the debugger. That works, of a fashion, with purely software systems. Not so much in aeroplanes.

Travis is unequivocal in his assessment of the Boeing 737 MAX. "It's a faulty airframe. You've got to fix the airframe [and] you can't fix the airframe without moving the engines" back and away from their current position.

Clearly, the more time passes without a (chagrined) FAA re-cert of the Max with a software-only fix, the more likely it becomes that FAA has to say to Boeing, "get those fucking engines off the tarmac!!" And the means, at least, a complete wing re-design. Will Boeing bother? Or will they just go back to vending the 737NG? We'll just have to see.

Well, D'Oh!

OK, another admission today that neither the pundits nor policy makers nor press get it

Central bankers around the world, including in the US, are also struggling to understand why inflation has remained muted, propelling officials to move toward cutting rates to get ahead of any economic calamity.

Gad. You have to have more moolah chasing output today than you had yesterday to get inflation. We know, without doubt, that CPI/PPI inflation is near non-existent and has been for some years following The Great Recession. We also know, without doubt, that the moolah pushed into the USofA (and global) economy by Washington has gone to the 1% predominantly. We also know, without doubt, that asset inflation has been raging the whole time.

So, here's the deal:

IT'S THE DISTRIBUTION, STUPID!!!

Boeing Boeing

No, not the silly movie from the 60s starring the 707 (which, by the bye, the US taxpayer paid for because Boeing just took the KC-135 and added windows and seats), but the current issues with the 737Max. Reporting all over the place today that Boeing may stop making any. Until it's approved, again. What none of the usual pundits have asked is, what's the Worst Case Scenario? I'll ask.

First, why is the 737 such a funny looking plane? It's got dwarves' legs, aka landing gear that's obviously shorter than any other commercial aircraft. How come? Turns out that the original plane was intended to be usable at the smallest airports, typically without jetports, those moving articulated passageways from plane to terminal. IOW, airports where passengers have to walk off the plane to the tarmac. And, worse, airports that don't have a fleet of movable staircases. What to do? Boeing decided to make the original plane with internal stairs, just like your average business jet. In order to do that, the fuselage has to be not much farther off the tarmac than a business jet.

If you do the wiki, you can see a picture of the 737-100 with its stair extended. Really.

This design requirement also made it necessary to embed the JT-8D (a low-bypass turbofan type) into the wings. This is an engine with a max diameter not much more than military turbojets. This cozy relationship between fuselage and tarmac has persisted ever since.

And all was well for years. If you've flown a 737 in the last couple of decades, it's had the CFM56 engine (high-ish bypass) with that flat bottom front. This engine is mounted on a pylon hanging well out in front of the wing.

The latest engine which makes the Max special, the CFM LEAP-1B, has even a bigger max diameter than the '56. What to do? The '56 has a fan 60 inches, while the LEAP is 69 inches. Oops. Among other things, Boeing was determined to slide the Max through the existing certification, which is to say no additional training on type-specific simulator. Them dings be expensive. Among other things, the LEAP had to be placed even higher and more forward than the '56. The upshot was that the flight characteristics of the Max differed from previous 737s. What to do? Cheat.

Ok, that's harsh, but what Boeing really did. We know, now, that they slipped in this MCAS software to make the Max behave like previous 737s in conditions where the testing showed discrepancies in behavior. And now we know that didn't work. We also now know that a simple change to the software isn't in the cards. If that kind of fix would fix the problem, we'd be there by now. There be dragons in that plane.

What to do? What's the Worst Case Scenario?

In simple terms, the Max can't be certified as is, MCAS or otherwise. Software can't always rescue hardware. In other words, my suspicion is that Boeing has been lying about the degree of aerodynamic problems the LEAP engine does to the airframe. If that's the answer, Boeing has to go back to the drawing board. At the very least, the landing gear and wings have to be redesigned. From the original plane, the main trucks just tuck into the fuselage, without doors. Longer legs mean the trucks have to be anchored farther out on the wings, which brings all kinds of aero questions. Can the existing wing form support landings where the hinging has to be? Does the existing wing form even have room for trucks farther out? Will the longer legs interfere with engine mounting? That's a really big oops. And so on and on.

Worst Case Scenario.

The Measure of A Man

The Joy of Quant gets no better than observing when Mother Nature, manifest in the laws of physics, and every now and again, economics, gives the Single Finger Salute to those who try to break the rules. Once you get past calculus, if you do, there is a long list of 'higher mathematics' courses open to you. Most don't actually make much use of calculus, but do strain your memory of algebraic manipulation you last did faithfully in high school. That's the reason such courses are daunting. That and the fact that each makes up its own, arcane, jargon. One of my favorites, at least by name, is measure theory. Herein some examples of measuring the costs of man.

We start by delving into the rich trove of man's perfidy as manifest in 'Law & Order' with the episode 'Mega' wherein Annette O'Toole frames husband Michael McKean for murder. They play a pair of self-help/created religion grifters (aka, Scientology/EST). McKean's character is convicted of the murder, but post-trial the DAs realize that he's likely been set up, and the most likely candidate for that is O'Toole's character. The DAs meet with her to attempt to figure out the problem. She parrys their questions, but does tell them her motive (if she did it!):

There was never enough, enough power, money, attention, women, enough control.
(Why did you speak up in his defense and let him live?)
So he would have to sit very quietly for a very, very long time, and know that now I had it all.
I wanted him to know that, for him, there wasn't going to be any more.

If you see the video, note that O'Toole drags out that last as 'moooooooore', with lips deeply curled. Which brings us to three situations where 'more' is something of an issue.

First, my adventures with medical care on Block Island. We decided to do an additional week this year, Memorial Day week. Normally we visit in spring and fall when the number of Mainlanders isn't much more than the 900 Islanders, so this would be a visit closest (for us) to High Season. Would we like all those crowds? On the whole, the weekend was tolerable and the rest of the week much better as most Mainlanders had been sent back to where they came from. On Memorial Day afternoon, I managed to drive a huge splinter into my foot, which meant medical intervention. Fortunately, the Island has a Medical Center, and I found it staffed. In the end, I was able to get around well enough for the rest of the week. My doctors here found yet more stuff in my foot, so recovery took longer than it might have.

What made the whole situation interesting is that we had come over on the Point Judith ferry on Memorial Saturday, and, as usual, read the latest issue of 'The Block Island Times'. This is a weekly tabloid, and the huge headline read 'Dr. Clark Resigns'. At the time, on the ferry, the drama was amusing, but of no concern to us. Boy howdy, was I wrong about that!! Since then there have been many twists and turns in the saga of Dr. Clark, the Medical Center, and the controlling Block Island Health Services (BIHS). You can follow it on the site, if you wish. Which, of course, I have since I've got some skin in the game. So to speak.

In short order, the clear dysfunction led me to send a letter-to-the-Editor at the Times. He replied asking for some additional information, but I had by then concluded that a Mainlander's view of the issue might not be welcome, so asked him to spike it. But, of course, as more reporting (news, editorials, letters) appeared in yet later issues, I took to the keyboard and composed a longer and more specific missive (more than one draft, as more news poured out). No response from the Editor this time. Didn't surprise me. So, here is the bit relevant to this missive:

None of the reporting since Memorial Saturday has spoken to the principle issue: health care for a community of the size and isolation of Block Island will only work if it's run as a community service. Based on reporting, some number of Islanders consider the Board to be the problem. Others say that the Medical Center should prioritize PCP services. Well,

"We don't physically have enough bodies on the island to make up for the deficit," said Miller. "If you only have 800 to 1,000 people on-island, you will only see them once a year if they're not sick. You can't bring them in for nothing."
-- Times 2/2/14

So, clearly, at one time the conflict between serving Islanders and getting revenue from Fumbling Mainlanders was understood.

The conflict boils down to: who should control? Clearly, the town government provides substantial funds, but, once again based on reporting, has little to no say in the running of BIHS/Medical Center. Why? Islanders must know how the arrangement was consummated in 1989 ceding control. Reading the latest financial report, I didn't see any numbers delineating the split in revenue between Islanders and Fumbling Mainlanders over the year. But I think it fair to guess that we Fumbling Mainlanders manage to get into all sorts of predicaments both at a higher rate and simple count, given the widely asserted number of 20,000 of us per day during High Season. Naturally, this last visit was the only one even near High Season; way too many Fumbling Mainlanders. (Yes, I get the irony.)

Health economics has been a sub-specialty of the field for some time. According to the wiki: "A seminal 1963 article by Kenneth Arrow, often credited with giving rise to health economics as a discipline, drew conceptual distinctions between health and other goods." One of the differences between health and other kinds of production is that is largely fixed cost. In the case of my injury, the direct costs were:
- a disposable scalpel
- some gauze
- some lidocaine
- some latex gloves
- a tetanus booster
- and, eventually, some antibiotic (turned out that more splinter was left in)

So, of course, as I was polishing and editing the fourth iteration of this missive, The Editor publishes the story about the 'slipup' with the multiple Stovers. Which, of course, led me to look up as much history of Mr. Stover as the innterTubes provided. Of particular interest was his later rebuttal of financial shenanigans. As you can see from the latest (calendar 2016, in innterTube territory) BIHS financial report, direct costs of service are a minuscule part of the income statement at $37,249.34 (line 5650-30 Medical Supplies) from a total expenses of $907,309.75; given the number of patients times the consumables in my case, that number is well within the ballpark. The rest, or vastly most, of expense is fixed cost. Note also the %39.000 in depreciation, which is a non-cash item, or should be. With a patient load of 5,126 (page 1), direct cost of service works out to $7.27 per patient. It is likely that fully 5,000 of those visits were Fumbling Mainlanders. As you can see, it's an overwhelmingly fixed cost operation. With such a structure, the only way to reduce *total average cost* per patient is to run as many patients through the system as possible, spreading all those fixed costs as thinly as possible. There aren't enough Islanders to pull that off. Fumbling Mainlanders to the rescue!! You're welcome. If this back of the envelope analysis, dependent as it is on sparse innterTubes available data, comes as a surprise to anyone, well...

In all, likely less direct cost than the co-pay for my insurance. I don't know, and may never, how much my insurance paid the Medical Center, but nearly all of that reimbursement went to pay down the fixed costs of the Medical Center. Unless the staff are paid on a piece work basis ($X per patient, scaled by severity of condition) even labor costs are fixed. Well, until someone gets canned? :) The point, of course, is that Fumbling Mainlanders have to be the largest source of revenue, or second behind the town contribution/memberships. Yet neither Fumbling Mainlanders nor the town have any control over the Medical Center.

Here on the mainland, within some limits, folks can change providers if they become dissatisfied. I suppose (and was likely true before the current regime existed?) Islanders could hop a plane to Westerly in an emergency or take the ferry for scheduled appointments. Having a PCP practice on-Island is clearly of benefit to Islanders. But it can't be funded just by Islanders on an out of pocket fee-for-service model. Early this year I asked my PCP (he has a few others working for him), just for yucks, how many patients he carried. He said 2,000. An HMO just for Block Island?

In sum, health services on the Island is a public good, not like a tee shirt concession. It is a monopoly that is currently unregulated. Staffing is at the whim of, by all reporting, one person. It is funded largely, if not almost entirely, by the town and Fumbling Mainlanders such as myself. Does this make any sense to anyone?

So, how does fixed cost dominant production survive? And the answer is: make it up on volume. The three days of Memorial weekend demonstrated how stupid Fumbling Mainlanders are on the narrow pavements, crossing in front of vehicles and riding bikes and mopeds into traffic. It's a wonder that there's not a death every day during High Season. Or is there...? There can't be 'more' health care for Block Islanders without more Fumbling Mainlanders' insurance coverage being billed. Or just go all socialist by having the Town government take over the Medical Center and BIHS. Or less stringently, putting BIHS under closer regulation. Which seems to be ignored by Islanders. Some times 'more' requires changes.

Which brings us to Second: 5G smartphones. Will there ever be 'more' than 4G/LTE? Not likely, most places. First off, what does 5G mean? The telecoms are baiting and switching like mad over the very definition. 'Real 5G' is in the microwave bands and higher, while 'Fake 5G' just uses an extension to LTE bands. mmWave transmission goes almost no where. Even humidity deflects it. Will there be 'real 5G' outside a few metro areas? Nope. And even in metro areas, inside use will work only with some expensive tweeks. As Barnum said about suckers.

And now, hot off the press, Third: Netflix going all marginal cost in India.

Netflix customers in India watch a higher percentage of videos on their phones than anywhere else in the world, and a greater proportion of Indian customers sign up to the platform via mobile than any other country, Ajay Arora, Netflix's director of product innovation, said Wednesday.

"We want to really broaden the audience for Netflix, want to make it more accessible, and we knew just how mobile-centric India has been," he told reporters in New Delhi.

The push to widen its audience in India, which now has more smartphone users than the entire population of the United States, comes a week after Netflix reported lower-than-expected subscriber growth.

This is exactly the behavior of a producer with high fixed costs: do anything to attract revenue that's greater than the marginal/variable cost of the next widget, thus amortizing a bit more of that fixed cost burden. For the likes of Netflix, that variable cost is indistinguishable from zero.

It's not nice to fool Mother Nature.