Drill Baby Drill!! The GOP Call to Arms.

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I recall sitting on the sofa watching the 2008 GOP convention and hearing the intoxicating refrain “Drill Baby Drill”. It was like the sensation of sitting in the dentist chair with my brainstem bathed in cool nitrous oxide vapors and face numbed with lidocaine.  I found myself tumbling head over heals in a mild, drooling, narco-twilight state while my twitching eyeballs attempted to focus on McCain.  My fellow citizens had drummed themselves into an enchanted war dance and gathered to hear Colonel Kurtz, but without the banana leaves.

Then I snapped out of it.  Drill baby drill. This was not just a work order or a requisition for drilling staff to please set up a few drilling rigs in the morning. This was an exhortation to rip those smirking tree huggers from their stations, pulp the trees to make a paper dunce cap for Pelosi, and call in the Air Force to oversee saturation drilling of the continental shelves, and do it pronto!

“Drill baby drill ” was a catch phrase along the lines of “Damn the torpedoes! ” or “somebody get a rope! ” Its conception and use was a masterful bit of applied propaganda- A figurative running of the liberals out of town on a rail.

But what was lost in the excitement were the pragmatics of oil production. You need to boost refinery capacity to increase the supply of refined fuels.  And, what oil company is going to attempt to flood the market in a bid to drive down oil prices? What oil company is going to step in and provide cheaper crude to US refiners so that they can, dutifully, distribute cheaper gasoline when the global market price is so high? Only the dumb ones. Do they think that Santa Claus runs Exxon?

I thought GOP’ers were market savvy, laissez faire devotees swingin’ the big stick of Ronnie Reagan tough love? What has happened to these people?

Seems to me that oil in the ground is like money in the bank. Why are we so anxious to deplete North America of its supply??  What about pulling back on demand to counter the high prices? That is the one big stick that consumers have in the market.

China to Demand “IT Accreditation” from Foreign Manufacturers

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Yomiuri Shimbun, September 19, 2008. The Chinese government will soon oblige foreign companies to disclose source code in IT products for sale in China. Foreign manufacturers will be allowed to sell their IT-based products to the Chinese market only after an accreditation body examines the code and finds that it passes unspecified tests.

Products expected to be subject to examination include smart cards, digital copiers, and computer servers. China claims that this activity is needed to shut out viruses and stymie hackers. Companies that decline to cooperate can be barred from both sales and manufacture of the product in China.

I would suggest to China that they spend more of their energies keeping better track of melamine and lead.

Clowns to the Left of Me, Jokers to the Right

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Pity Larimer County in northern Colorado. We poor sods who live here find ourselves sandwiched between two unexploited deposits of natural mineral wealth. To the east of Fort Collins, near the hamlet of Nunn, is a fairly large uranium ore body. In the northwest, there may be an exploitable diamond deposit. Perhaps hundreds of Kimberlite pipes may be lying in the CO/WY region waiting to be exploited.

Diamonds have already been mined in northern Colorado, near the Wyoming border. The Kelsey Lake diamond mine closed in 2002 due to bankruptcy. The Kelsy Lake mine produced the 5th largest diamond ever found. The yield of the formation is reportedly 4 carats per 100 metric tons of ore.

Given that the Colorado Front Range has been substantially gentrified, the discovery of mineral wealth in the vicinity of hobby ranchers and McMansions will make for some interesting times for the county commissioners. Uranium and Diamonds. NIMBY.

Stealers Wheel Video 1972.

Van’s Aircraft Flight Testing the RV-12

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Van’s Aircraft indicates they are in the final phases of flight testing their new entry, the RV-12, into the Light Sport Aircraft (LSA) category. This is a new regulatory category of aircraft that has resulted from some new thinking about what is necessary and sufficient in terms of the regulation of homebuild light aircraft. The new category relaxes certain restraints on operators of homebuilt aircraft.

The new regulatory requirements found in the LSA are welcome to those trying to enjoy aviation on a budget. The video below shows an interview with Dick VanGrunsven, founder of Van’s Aircraft.

BASF Offers to Buy Ciba

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According to the on-line publication Chemical Engineering, German chemical giant BASF has made an offer to buy Ciba Holdings AG, headquartered in Basel, Switzerland. In the public takeover, BASF has offered CHF 50.00 for each nominal share of Ciba stock.  The agreed upon price represents a 32 % premium above the Sept. 12, 2008, closing price. The acquisition will help BASF strengthen its hold on specialty chemicals, particularly in the area of coatings.

A Case of the Vapors

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There is an interesting debate happening in the weather and climate modeling wing of the blogosphere. Seems that over at Wattsupwiththat someone has pointed out the significant part water vapor may play as an absorber of solar energy. All you have to do is look at the absorbance spectrum of water vs CO2 and you’ll see that the game is suddenly more complex than the incessant drum beating about CO2 would suggest.

There are a number of good websites on weather and climate out there. Rabett Run seems well centered in terms of the science.  If you are interested in the level of play happening in the real, behind the scenes debate, check out the references to Kirchoff’s law.  Physical meteorology is at the center of the whole debate. Assumptions about the applicability of certain laws, assumptions about the value of key variables, and other details of equation building can drive the nature of the conclusions. Planetary atmospheres are really quite complex!

I think it will be several more solar cycles before the right modeling assumptions shake out.

Are B-Schools Paying Attention to this Fiasco?

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The dam burst of banking disasters and federal bail-outs of firms “too big to fail” has brought to light the fragility of our banking and investments system. Like a tropical depression that forms in the eastern Atlantic ocean and gradually feeds on the warm waters and moist air until it makes landfall as a rampaging storm, the combination of greed, financial deregulation, and enthusiastic liquidity on the part of the Fed has now spun up into a full fledged economic storm.

In an essay posted on CNN.com, Columbia Professor Joseph Stiglitz, among others, points to some causes of the present calamity on the banking and financial businesses. Stiglitz says-

“One can say the Fed failed twice, both as a regulator and in the conduct of monetary policy. Its flood of liquidity (money made available to borrow at low interest rates) and lax regulations led to a housing bubble. When the bubble broke, the excessively leveraged loans made on the basis of overvalued assets went sour.” 

“The new “innovations” simply hid the extent of systemic leverage and made the risks less transparent; it is these innovations that have made this collapse so much more dramatic than earlier financial crises …”

The mess that taxpayers and investors are left with is the result of greed and recklessness on the part of elite “business leaders” in conjunction with Federal officials only too anxious to deregulate and discount. This is not a failure based on physical reality. It is a failure based on greed and poor judgement. It rests on a morally shallow and sadly misguided philosophy that mere acquisition of currency is reason enough for being and is the sole measure of success.

As a start, it is my hope that the Deans and faculty of our business schools can summon some kind of movement to reform their admissions standards and refine their ethics curricula.

Perhaps certain finance practitioners need to be trained and certified in a manner similar to actuarial professionals?  Seems to me that the people who launch financial instrument schemes with the potential to collapse an economy should be at least as well trained in risk management as an actuary.

A firm proposing a financial instrument for sale to the public should be required to prepare a mathematical model with macroeconomic inputs to model the potential for instability. The kind of discipline needed to do this modeling could help people refine the fund structure so it remains manageable in a broader range of economic conditions. This would also provide for a real transparency to regulating agencies and possibly even investors.  But most importantly, if you want to model it, then you have to understand it. And that is part of what has been lacking.

Fast Food Munching Criminals Leave Corrosive Fingerprints

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University of Leicester, UK.  John Bond, a reseacher at the University of Leicester and consultant to the Northamptonshire Police, suggests that criminals who consume fast foods leave fingerprints that are corrosive. Dr. Bond says that enhanced levels of salt in processed foods can lead to sweaty fingerprints that are more corrosive to metals.

Dr Bond said: “On the basis that processed foods tend to be high in salt as a preservative, the body needs to excrete excess salt which comes out as sweat through the pores in our fingers.

“So the sweaty fingerprint impression you leave when you touch a surface will be high in salt if you eat a lot of processed foods -the higher the salt, the better the corrosion of the metal.”

Dr. Bond went on to say that there was an “indirect link” to obesity and the chances of being caught in a crime. Bond says that corrosion due to fingerprints may be helpful in the tracking of terrorists whose bombs are fragmented from the explosion.