Decision time for America - and the free world

“By 930, most arable land had been claimed and the Althing, a legislative and judiciary parliament, was initiated to regulate the Icelandic Commonwealth [...] The Commonwealth lasted until the 13th century, when the political system devised by the original settlers proved unable to cope with the increasing power of Icelandic chieftains.” - Wikipedia on Iceland

And the implication for the USA?

Say 930 = around 1910, 13^th century = 21^st century.

Karl Denninger fulminates on the illegality of mortgage transfers into those bundled swindle-packages - and the banks could still win anyway. Jesse reflects on Frank Church's warning from 1975 that the nation could head into a spy-ridden society, and it has; and John Kerry says war can now be declared without Congressional approval, though that is still being sought.

You will have the rule of law, or the rule of persons. You will be citizens, or subjects. You will be safeguarded by a Constitution, or ravaged by untrammeled power.

This is the three-century decision point.

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FACT: dragons really do exist

"A.D. 793. This year came dreadful fore-warnings over the land of the Northumbrians, terrifying the people most woefully: these were immense sheets of light rushing through the air, and whirlwinds, and fiery dragons flying across the firmament."

 

- The Anglo-Saxon Chronicle.

 

In mythology, there are dragons or wyrms, but also two-legged or legless, poisonous or fiery wyverns, or lindworms. I have seen long ago but cannot now find on the Internet an engraving, possibly sixteenth century, of one of the latter, destroying whole villages with its fiery breath. I wondered then how someone could dare invent something on that scale, so disprovable.

 

And then on St Valentine's Day 2013 (or 15th February, depending on the time zone you were in at the time), one visited Chelyabinsk.

 

This time the evidence was direct and undeniable, not merely reconstructed with an artist's imagination. According to James Higham, Russians commonly drive with dashcams because of the risk of fake, compensation-seeking "accidents" like this. And so at last we got the proof, for the world to see.

 

Down it flew, a long, fiery shape with a snake-like body and no legs, its deafening roar sufficient to blow in windows and doors and knock down walls, the flames of its breath bright enough to cast shadows. Had it not landed in an ice-covered lake, but hit solid ground, the destruction would have been enormous, as it had been a century ago in Tunguska.

 

Here be dragons.

 

Images taken from this video compilation, and this.

 

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Britain's food security: the future challenge

Land area needed to feed a family of four. Graphic: Dave Llorens (2011)

According to this Wikipedia article, for each square kilometre of arable land Russia has 117 people to feed, the US has 179, and the UK... 1,077. In a future where energy has become very expensive and other countries feed their own people first, could Britain sustain itself without imports?

The infographic above suggests not. The author calculates that a family of four would need 89,050 square feet of land for food, or slightly over 2 acres. Per 4 people in the UK, we have 39,977 square feet of arable land, i.e. only 45% of the estimated requirement.

We may not always be able to fly in cheap vegetables from Kenya and Zimbabwe, and out-of-season fruit from around the world.

Do we have a plan?

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Salt Power

Where river meets sea we have an opportunity to extract not just tidal energy, but energy derived from the difference between salt water and fresh. Maybe if energy policies were rational we wouldn’t have such opportunities, but we are where we are.

Pressure Retarded Osmosis

With pressure retarded osmosis, or PRO, the idea is to take advantage of the osmotic pressure created when river water and sea water are separated by a semi-permeable membrane.

Under these conditions, water molecules from the river pass through the membrane into the sea water, creating a pressure on the sea water side of the membrane which may be used to drive turbines and generate electricity.

A pilot plant in Norway which has been generating a few kilowatts since 2009. As with so many sustainable energy technologies, the problem is one of energy density. There simply isn’t much energy to be extracted from each square metre of membrane.

Huge areas of membrane, in the order of square kilometres may be required to scale up the technology, but these membranes are also prone to fouling, so the technical issues are formidable.

 

Reverse Electrodialysis

A less developed but simpler and perhaps more interesting way to extract energy from seawater and river water is Reverse Electrodialysis or RED.

In the RED approach, the osmotic energy of mixing fresh and salt water is captured by directing the solution through an alternating series of positively and negatively charged exchange membranes. The resulting chemical potential difference creates a voltage over each membrane and leads to the production of direct electric energy.

As with PRO, there are many technical hurdles and much research to be done, but a Dutch company called REDstack B V began work on a pilot plant in July. Both technologies are clean, highly modular and relatively well understood.

Could the Severn estuary be used to generate both tidal power and power from a technology such as PRO or RED?

We certainly have the ingenuity - pity about the politics.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

The war for the Mediterranean

Simplified version of the Hereford Mappa Mundi (c. 1300). Picture source: Atlantis Maps.com

CNN reports that the number of refugees from the Syrian civil war now exceeds 2 million. Yet Classicfm radio news this morning says that people are showing some reluctance to give money to charities working in that area. I can understand why, since I fear we've already been paying involuntarily through our taxes to create and inflame this disaster.

The US certainly has, according to Barry Ritholtz, for the last 6 or 7 years. But I suspect that the UK, ever keen to show that it still has a real pair, not Neuticles, has been assisting, as it did with the clandestine insertion of an SAS unit into Libya to help oust Gaddafi. The Syrian government has admitted responsibility for shooting down a Turkish warplane it says was violating its airspace, but denies firing an artillery shell into Turkey and rebels in Damascus have allegedly confessed that they were the ones who let off the chemical bomb that nearly precipitated direct US military intervention.

I think history will judge that Secretary of State John "we know" Kerry's reputation is now toast, but it hasn't dissuaded him from a hawkish insistence that Obama can go ahead even if the Congressional vote goes against him. And we now hear that the ruthlessly ambitious and pseudo-affable Mayor of London is proposing a second vote in Parliament so MPs can be given the chance to get it right this time.

Those who set a fire cannot be certain of controlling its spread. Burning round the eastern Mediterranean, the flames could tickle other countries too, as Russia becomes involved in the new Great Game. The same tactics that have destabilised the Arab Street could be used against nations on the northern coast of the Middle Sea, which have been suffering as a result of the overbearing rule of the EU and the predations of international banking. Greece for example, with its high youth unemployment, history of internecine strife and 8,500 miles of coastline, might be a tempting target for subversion and infiltration.

You can lose power through overreaching. I used to have a postwar edition of the Encyclopedia Britannica, and one of its articles traced the roots of the Reformation to the attempt by mediaeval Popes to maintain and strengthen their control while Western countries settled down and their kings grew stronger. Is the US risking upsetting the balance of power by trying to secure the Levant?

Conversely, the collapse of the Soviet Union has allowed Russia to get a better grip on its affairs and its developing energy resources are giving it something to bargain with rather than invade. (She also has a very promising agricultural position: 117 people per km2 of arable land, versus 179 for the US and - dangerous, this - 1,077 for the UK.) The potential economic power is seen in control of gas supplies to Northern Europe, but also perhaps in the events that led to the fall of Greek Premier Kostas Karamanlis in 2008 - he was negotiating with Russia for their South Stream gas pipeline, a rival to the EU/US Nabucco line. There are even allegations of an assassination plot against Karamanlis and foreign threats against the Greek government.

It doesn't take much to drop a country into chaos. It's said that a satphone and $20,000 can get you an African armed revolutionary movement. A organized minority can overthrow and seize a nation. For example, in the Soviet Union of 1986 only 10% were in the Communist Party, of which more than half were industrial workers and farmers; in pre-Purge 1933, maybe 2.5%; in 1918 just after the Revolution, a mere 200,000 members or one-fifth of one per cent.

In Greece, the average electoral turnout for the Communist KKE has been over 6% since 2000, and back in 1958 it was 24%. The average of c. 470,00 votes (not that voting means much to Communists, and some of the most dangerous will stay in cover) represents around 5% of the population aged over 15. The KKE vote halved between May and June last year (from 536,072 to 277,122) and one has to wonder whether there may be some foreign support for some of the alternative parties; but Greeks are quite capable of quarrelling without the help of outsiders. The point is that the politics there are volatile, and there are lots of hormonal youngsters to recruit for one cause or another.

Not that Greece is the only southern European country ripe for trouble. Think of Italy and Spain; and the Balkans. A direct confrontation between major global players seems unlikely, at this stage; but goodness knows what is going on in the world of Spy vs. Spy. And it's not only the US Sixth Fleet aiming to "keep the peace" in the Eastern Med: Russia is reported to be sending a missile cruiser and an anti-submarine ship.

Russia still has only one port that is ice-free all year round, and that is on the Baltic and separated from the Mother Country by the land of three other nations. But she controls land joining the Caspian and Black Sea, and has ethnic Slavic connections with Bulgaria, Macedonia and even currently Turkified Slavs in Anatolia. Oh, for free naval passage through the Hellespont and a base in Alexandroupoli, or even Thessaloniki.

The sides are getting too close to each other. A little less car use and turning down the central heating a bit might save us from unintended consequences in a very perilous game in the centre of the world.

UPDATE (3 Sep 2013): Steve Quayle says the plan is to use Syria to break Russia's plans for gas exports in the region (htp: Autonomous Mind).

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Italy (sort of) taxes high frequency trading

http://www.capitalbay.com/latest-news/297010-new-principal-suspended-2-days-after-showing-students-scary-terminator-spoof-video-he-made-to-introduce-himself-to-school.html

Italy has today put into effect a tax on high frequency trading (HFT). Aside from raising some desperately-needed revenue, it may help make the financial markets a little less unstable. For as firms develop ever faster computer-based share trading systems, we risk something like the financial version of a "Terminator"-style Skynet catastrophe - except that the machines are merely following the rules shoved into them. "Garbage in, garbage out", as a college friend repeatedly told me 40 years ago. It can certainly be terminal for some:

"In 2003, a US trading firm became insolvent in 16 seconds when an employee inadvertently turned an algorithm [automatic trading program] on. It took the company 47 minutes to realise it had gone bust," said Andrew Haldane of the Bank of England in a speech given in Beijing two years ago (pdf). He also noted that for a brief moment during the "Flash Crash" of 6 May 2010, "Accenture shares traded at 1 cent, and Sotheby’s at $99,999.99. [...] The Flash Crash was a near miss. It taught us something important, if uncomfortable, about our state of knowledge of modern financial markets. Not just that it was imperfect, but that these imperfections may magnify, sending systemic shockwaves. [...] Flash Crashes, like car crashes, may be more severe the greater the velocity."

Zero Hedge had been advocating a "Tobin Tax" on HFT before the Flash Crash happened (Keynes had mooted the same in 1936!) to put what Haldane calls "grit in the wheels." A few months after the crash, financial expert Martin Hutchinson also called for it, and he repeated the call a year later, with a proposed refinement that would see one rate for shares, a smaller one for bonds and a higher one on derivatives.

Mike "Mish" Shedlock, writing in January, disliked the idea altogether, citing the experience of Sweden and claiming that such a tax would merely drive trade away from exchanges where it was introduced. But that may not be so simple: big trading firms pay big money to site their own computers right next to the exchange (it's known as "co-location") and given the incredible speed of cyber-trading, this huddling up confers a microtime gunslinger's advantage that may make the tax worth paying - after all, the co-location rent is a tax they're already more than happy to fork out.

"Mish" also objects that the tax will reduce liquidity and make the market more volatile - but Hutchinson counters: "In periods of turbulence, the liquidity that HFT supplies is quickly withdrawn, as the institutions operating the trading systems shut them off for fear of large and destabilizing losses. Indeed, liquidity that switches off when it is most needed is of no use at all. To the contrary, it destabilizes the market rather than stabilizing it." He adds that HFT is all about trading on unfair terms anyway; it "should qualify as inside information, and thus be illegal."

According to the FT today, Italy has plumped for a mixture of charges focusing on HFT and "side bet" derivatives - but exempting transactions by certain kinds of intermediaries. Tyler Durden at Zero Hedge notes that this is a horse-and-cart-sized hole in the rules and traders will scramble to redefine themselves. But according to Hutchinson, "a Tobin tax could severely hamper [the] trading revenue" of some major banks (Goldman Sachs, Citigroup, Morgan Stanley) as "these banks already are in bad shape"; so the market-maker exemption may not be about favoritism.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Shale: Another Nail in Osborne's Coffin

Balcombe Blame Rests Here

Or rather, the coffin of his reputation as a strategist.

Oh yes, it's been dead awhile, stone dead.  But by my reckoning, his screw-up on shale is almost up there with the fatal boundary-change abortion.

In both cases, Master George the master-strategist seems to have identified clearly enough the paramount significance of a particular issue.  But instead of following through, of giving it the undivided attention and planning and execution it merits (being An Issue Of Paramount Significance, yeah ?), he farts in its general direction and assumes that plaudits are in order for his spotting, and farting at, the obvious.  But a real strategist understands that strategic insight is empty without genuine, unremitting, practical application to the task of figuring out everything that follows, in grinding, boring detail - and actual implementation of the needful.  Whatever it takes.  With no loose ends.  Because, hey, it's of Paramount Significance.

We know how the boundary changes ended: so what happened with shale ?  When the initial Cuadrilla discovery was announced, we wrote here: This Is The Big One.   Others (e.g. Mr Worstall) followed our lead, and soon it was recognised by all and sundry. See, George, it is really obvious (& let me quickly add that C@W was by no means alone in trumpeting the matter).  George duly cottoned on too and started running his own energy policy - hatching tax breaks (unnecessary) and a streamlined permitting regime (stupid, at least in the way it's been done), with a bit of gratuitous green-baiting (Juvenile George's stock-in-trade).

But what else obviously follows from the obvious significance of shale ?  Why yes: every Green and Red and general unwashed malcontent and transgressionist across Europe would realise that shale gas (if actually found here) could be the death-knell of their various stone-age / statist dreams.  Accordingly, they would be out in force to try to prevent drilling, with a lot more chance of drawing the crowds than (say) the rather recondite NoDashForGas sit-in at West Burton.  Oh yes, this too was entirely obvious - we predicted it here last year - and is a major vulnerability of the whole UK shale gas prospect.

With the Battle of Balcombe rumbling on, there is no need to rehearse just how far short of a strategy we are: and I unhesitatingly blame Osborne.  There is nothing good to be had from going abut the job clumsily and pissing off conservative Middle England in the process.

Is all lost ?  Well, if this were Germany we'd be in really big trouble, because their greens (and the old superannuated Atomkraft-Nein-Danke brigade, now in well-heeled retirement with time on their hands and misty recollections of their glory-days to perpetuate) have serious stamina, as witness the very long-running Battle of Stuttgart Station.

But our homegrown greens are a little less committed.  I maintain that the UK shale programme is vulnerable to the antis, but there is certainly an optimistic scenario.  Those with long memories will recall the massive pro-coal-mining demonstrations in the early 1990's, when Michael Heseltine (sic) was at the DTI and allowing large-scale pit closures to take place.  A short moratorium, a general return to the sofa to watch whatever was the compelling soap of the day; and after a couple of months all was forgotten and the pits closed as planned.  Likewise in the first year of the NuLab government, some more pit closures were announced: cue massive popular hostility to the Dash For Gas (yes, even then - and that was technically the second D-F-G; the current one is the third).  And what did young Peter Mandelson do then ? (yep, he was at the DTI in 1997).  Why - another moratorium ! - this time on new gas-fired power plant permits.  And after the usual short interval ... well, you know the rest.

So there's at least a chance the great unwashed just pack up and go home**.  Therefore, if there is a decent strategist somewhere in Whitehall (and I very much think there is) there is at least the possibility of getting this show back on the road.  There is, after all, no great rush.

If a real strategist takes charge, there is one final optimistic precedent worth noting.  In the first Thatcher government a truly strategic attack on the NUM was being hatched under a properly thought-out, comprehensive plan (which embraced such details as building coal stocks to unprecedented levels, uprating Felixstowe for coal imports, building the A14 to get them to the Midlands by road, and installing an infrastructure for coordinating the Police nationally.  See, George, that's what a real strategy looks like.)  In 1981, before all this was complete the NUM went on strike for a pay rise.  So Thatcher ordered a tactical retreat - looked like a horrible climb-down at the time - reculer pour mieux sauter, until things were good and ready.  Well, you know the rest.

So all is not lost.  But Osborne ... his failings are inexcusable.  Is there really not a better candidate for Chancellor on the coalition benches ?  That's another job where strategy is at a premium, n'est-ce pas ?


** having a few spare hours last week, I monitored the tweeting on events at Balcombe.  Somewhat to my surprise, having been at frenetic and very high-volume levels all week, it fell off dramatically after lunchtime on Friday.  Does this mean all these tossers are tweeting from work ? Watching the cricket ?  


This post first appeared on the Capitalists@Work blog


All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.