The Tyranny of Average Cost - part the fourteenth

Well, another episode unfolds. Not surprisingly, the Ever Given's plugging of the Suez is yet another example of overestimating the bigger-is-better mantra. Turns out, not necessarily so.

"They did what they thought was most efficient for themselves — make the ships big — and they didn't pay much attention at all to the rest of the world," said Marc Levinson, an economist and author of "Outside the Box," a history of globalization. "But it turns out that these really big ships are not as efficient as the shipping lines had imagined."

In other words, not only do the shipping companies have to run these ships at, or very near, full capacity to reap the reward of size, but they also shift some externalities to others. Like being able to navigate in cross winds, or demanding deeper channels in ports.

The article ends with a mind meld:

"There's still economies of scale, but less and less as the ships become bigger," Mr. Merk said.

The bigger vessels can also call on fewer ports and navigate through fewer tight waterways. They are also harder to fill, cost more to insure and pose a greater threat to supply chains when things go wrong, like Ever Given's beaching in the Suez Canal. Giant ships are also designed for a world in which trade is growing rapidly, which is far from guaranteed these days given high geopolitical and economic tensions between the United States and China, Britain and the European Union, and other large trading partners.

One might also wonder whether the fate of the A380 portends ill for these ships? Some times hub-and-spoke implemented on behemoth vehicles is the wrong idea. What's further amusing:

[T]the savings from moving to ships that can carry 19,000 containers were four to six times smaller than those realized by the previous expansion of ship size. And most of the savings came from more efficient ship engines than the size of the ship.
[my emphasis]

If that sounds a bit like passenger airplanes, you would be correct. With aircraft, the savings have mostly been due to more efficient engines, which in turn have been due to the ability burn fuel at ever higher temperatures. Turns out metal turbines are approaching passe`. And, here is a more recent blurb from GE. (Note that the basic research and funding came from the Damn Gummint.)

So, in terms of ship engines, not quite so sophisticated technology, but still ever more efficiency. In case you were wondering (I was), the Suez has, since 2015, both a north bound and south bound lane, simultaneously. You guessed it: the Ever Given could have T-boned a south bound fellow behemoth. Wouldn't that have been fun?

Quants Hubris' - part the fifth

Blythe Masters rides again!

By now you all have heard/read about the mess Archegos has made of the financial structure. So far, at least, it doesn't appear to have the horsepower to bring down the whole kit-and-kaboodle the way her credit default swap did. But both situations share a characteristic.

Much of the leverage used by Hwang's Archegos Capital Management was provided by banks including Nomura Holdings and Credit Suisse Group through swaps or so-called contracts-for-difference (CFDs) , according to people with direct knowledge of the deals. It means Archegos may never actually have owned most of the underlying securities — if any at all.

So, just like CDS, a pure bet on 'something'. No questions asked.

CFDs and swaps are among bespoke derivatives that investors trade privately between themselves, or over-the-counter, instead of through public exchanges. Such opacity helped to worsen the 2008 financial crisis and regulators have introduced a vast new body of rules governing the assets since then.

So, yeah, there is the risk that other Big Banks were/are doing exactly the same thing with/for other hedgeis behind everybody else's back.

How do a quant predict the future when the present is completely without data?

Parallax View - part the fifty first

Another week's up, so here are today's numbers:

  >= 1,000 -   326
100 to 999 - 1,275

(New) grand total of counties reads at 3,083. While I've not gotten into an argument with the Topo folks over this re-definition of 'affected' counties, it certainly looks like a move to bolster wannaBePresident Huey Long 2024's perpetual lying.

Once again, these numbers just don't fit with other available data: the usual suspects, NYT, CNN, and Johns Hopkins directly. 31 states, with Michigan leading the pack, have been increasing. What's your bet that "... when you have 15 people, and the 15 within a couple of days is going to be down to close to zero, that's a pretty good job we've done." will be true this time, too?

The really big news, hot off the presses, is that Bolsonaro has out-stupid wannaBePresident Huey Long 2024 and Ronny VirusSeed^©:

Brazilian President Jair Bolsonaro replaced six of his ministers on Monday, in a reshuffle that appears designed to secure greater loyalty as the country's Covid-19 crisis balloons. ... Bolsonaro has refused to endorse lockdown measures, citing the health of the economy and the personal liberty of citizens. For now, most restrictions on gatherings have been put in place by individual state governments; Rio de Janeiro, São Paulo, and Minas Gerais are among the states that have implemented nightly curfews. A recent lawsuit filed by the Bolsonaro administration to lift those restrictions was rejected by the Supreme Court.

So, between B.1.1.7 and Brazil's P.1, will anyone (on the Right, that is) listen to Walensky?

Walenksy reiterated warnings from many experts that the U.S. could be following behind by a few weeks what Europe has been experiencing. Countries there have seen some of their biggest spikes of the pandemic, leading to another round of restrictions and lockdowns.

Just as happened last spring, aided and abetted by Ronny VirusSeed^© sicing all those Spring Breakers on the Eastern USofA and, mostly, wannaBePresident Huey Long 2024 sitting with his thumb up his ass for a couple of months; the self-same months, of course. What's the chance that the USofA never sees P.1? If you bet on 0, you'll win. The only chance, that's not 0, is that enough get vaccinated such that community spread gets really, really close to 0. The only way to stay ahead of mutations is to stop transmission. Too bad the last guy was a fucking moron:

My predecessor. Oh God, I miss him.
-- Sleepy Joe last Thursday

"I just gotta get me a game of darts and unlimited brewskis at the Dew Drop Inn." Not to mention all those white, angry, persecuted, shitkicker Republican old guys who are convinced of their immortality ('they ain't no Covid. it's just flu'; trust me on this one. I saw video of one such cretin saying that). As long as they are the only ones who finish feet pointing skyward soon, well, then OK. But, naturally, they'll get a handful of others sick in the mean time.

It's clear now that even tiny, isolated Bermuda can't stave off Covid. What's the chance we will with the likes of Red state governments going fucking stupid?

"Girl, you're as dumb as a sack of hair."

Parallax View - part the fiftieth

Another week's up, so here are today's numbers:

  >= 1,000 -   347
100 to 999 - 1,316

(New) grand total of counties reads at 3,101. While I've not gotten into an argument with the Topo folks over this re-definition of 'affected' counties, it certainly looks like a move to bolster wannaBePresident Huey Long 2024's perpetual lying.

Total is down a smidge over the last month or so. Will that trend continue? Only the Shadow knows. I am not hopeful.

[17-18 March] I contacted Tectonix about doing the cellphone scan from Lauderdale this year, but got back a boilerplate response. Hopefully, they'll do the exercise anyway. It's important.

[19 March] Remind us all. Where did Covid-19 in New York come from? Oh, yeah, Europe, specifically Italy and France. They're doing it (btw, youshould subscribe) again with nasty variants. No herd immunity before the variant assault, no survive the variant assault. That may sound a bit odd, but here's the logic: the longer a virus remains rampant, the more mutations are generated. Some mutations are meaningless, but others, as we now know, are nasty. The only way around this problem is to get vaccines into arms to quell the spread. The Red State governments can't, or won't, grok such a simple idea. They didn't last Spring Break, and they aren't this one either. Expect another surge in a month.

And, now Bermuda is ramping up infections. In the middle of nowhere in the Atlantic Ocean? Read the comments. There are a horde of Neanderthals, just like our Red States. Wait... Bermuda supported the Rebels, and much of its commerce is from South Carolina.

Will Ronny VirusSeed^© (along with the Texas and Mississippi morons) send the USofA into another surge? Only the Shadow knows. At the moment, were I a betting guy, I'd bet more likely than not, yes. All those Red states are Covid deniers, and vaccine deniers to boot. What else is a reasonable bet? As mentioned earlier, I asked Tectonix to re-run the Lauderdale phone trace. I sure hope they do, particularly considering that this Spring Break assault appears to be even greater than last year's. Need I remind: Miami Beach, not Lauderdale, is anarchy this year. What could go wrong?

[22 March] Looks like there's a canary in the coal mine. Bermuda continues to grow Covid.

It is understood the current spike has been caused by the prevalence of a UK variant of the virus which is more contagious, particularly among children.

Forewarned is forearmed. Or may be not.

The Tyranny of Average Cost - part the thirteenth

Once again, we see this happening. Here's a story about car making

The Volkswagen assembly line in Wolfsburg, Germany. Volkswagen's big advantage over Tesla is its size, which allows it to spread the cost of developing new technologies over millions of vehicles.
[photo caption and my emphasis]

Recognition, once again, that the cost of capital, like the poor, will always be with the bidnezz man. As labor disappears as a cost of production, and machines and tools wax poetic, the only way to survive is to maximize output. Your other options, reducing labor and using cheaper materials, either don't exist or eventually lead to customers figuring out the grift making do without. Thus another reason to pursue monopoly as hard as possible. Once you've cornered the market, then substitute cheap materials. Thus has happened with much of PC compute, especially consumer SSD.

The method until now has been to move production to Asian dictatorships, and the reduced labor cost. But that only works if more primitive production methods (i.e., less capital intensive) can produce sufficient output. Over the last decade and a half, even Foxconn is dumping labor, here (2006) and here (2011).

Should this trend continue long enough and deep enough, demand, along with employment and wages, will disappear. "I alone can fix it."

Holy Shit, Batman!

Many moons ago, I first read of the possible breakdown of the Gulf Stream due to global warming. The gist of the story was that Arctic terrestrial ice, mostly Greenland, was melting, sending colder fresh water into the path of the gulf stream in the north atlantic. Sometimes referred to as a/the heat conveyor belt, the Gulf Stream is the reason Europe isn't as unpleasant as Siberia.

Edinburgh, Scotland is at 56° north. Novosibirsk, Siberia is at 55° north. So, the climate of Edinburgh is classified as maritime and the mean Jan. temperature is 39.6, while over in sunny Novosibirsk the climate is classified as humid continental and the mean Jan. temperature is 2.3. But you can tan. The difference, of course, is the friendly gulf stream.

What might happen if the gulf stream collapses? The scientists already know from the fossil and core sample records. And you don't have to go back all that far in time to see the evidence.

Unfortunately, the on-line version is mostly a pitiful slow motion animation. The dead trees text is much easier to deal with. We can go to the wiki for the overview information that's in the 'Times' article.

A 2015 study suggested that the Atlantic meridional overturning circulation (AMOC) has weakened by 15-20% in 200 years.

The AMOC is the technical term for what we civilians know as the gulf stream. The wiki article references a 2004 piece which seems like the earliest I heard about the situation.

In simple terms, if the gulf stream collapses, Europe is a popsicle, and the East Coast Elites are chilly. Russia isn't happy either, since the warm buffer of Europe to the west fades away. How far east the cooling will go is a good question. Here's a recent techy paper on AMOC. You won't like it.

Parallax View - part the forty ninth

Another week's up, so here are today's numbers:

  >= 1,000 -   405
100 to 999 - 1,453

(New) grand total of counties reads at 3,107. While I've not gotten into an argument with the Topo folks over this re-definition of 'affected' counties, it certainly looks like a move to bolster wannaBePresident Huey Long 2024's perpetual lying.

[11 March] Now we find the Spring Break Covidiots, Ronny VirusSeed division are the gift that keeps on giving

"Over 50% now of all the viruses coming from Florida, Texas, and Georgia, in fact, are this B.1.1.7 variant," said Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, on CNN's "New Day."

Osterholm has been the target of pushback from other 'experts', but so far, from my understanding, he's the voice more likely to be right. We'll know in a few weeks. If he is right...

[12 March] Well, that didn't take long. Ronny VirusSeed is now an international pariah: Florida Man has infected visiting Bermudians.

Members of the Bermuda football team have tested positive for Covid-19 after returning from a training camp in Bradenton, Florida.

[14 March] Not every pol in Florida is an idiot, Covid section

"We're seeing too much spring break activity," Miami Beach Mayor Dan Gelber told CNN Saturday morning. "We've got a problem with too many people coming here, we've got a problem with too many people coming here to let loose."
"We are concerned," the mayor said. "It's very challenging."
In Orlando, Mayor Buddy Dyer urged visitors to practice Covid-19 safety precautions.

One might wonder whether Ronny VirusSeed will attack like Abbott? Between the Spring Break Covidiots and motorcycle gang meeting, the rest of the USofA will now be assaulted, just as it was one year ago. Weigh to go Ronny.