Sunday, March 30, 2008

sneaky Prudential

i think Prudential's Stable Value Fund must be facing tough times.

i got a letter in the mail from them today saying that they were no longer going to use the Lord Abbot Limited Duration US Gov't Securities Fund A because it "has not met the performance standards" set by my company's account manager. because of this, any money in this fund will be transfered to Prudential's own Stable Value Fund.

so far, this fund has lived up to it's name. but, considering that it is composed mostly of mortgage backed securities and corporate securities from companies heavily dependent on the mortgage market, it seems that trouble is inevitable. pushing customer's retirement money into it is a nice quiet way to shore up the balance sheets and push off liquidity issues a bit further. maybe help the bigger customers get out, so only the uninformed small-time investors get hurt.

anyway, i don't know anything about the situation (it seems few people are willing to commit to answers on mortgage-related debt values right now), so i moved my money to the one FDIC insured option available in my account. that seems to be the safest option i have available right now.

point being, Prudential appears to be acting in their own best interest instead of mine and that is shameful.

now would be a good time to read the fine print on any investments you have, if you haven't done so already. any fund that is related to mortgages, commercial loans, or corporate debt is quite likely not worth having money in right now. in the best of time they pay only .5%-1.0% more than an FDIC insured alternative, but carry real risk. if you want risk, you can find funds that will probably give real returns. i see no reason to hold "stable value" anything right now.

Thursday, March 20, 2008

two cheers for NZ

remember back about a month ago, i wrote about a company in Washington state buying trees to convert into fuel for transport and how it seemed like the best attempt towards sustainable transport that i've seen so far?

and it turns out i'm not the only one who is impressed with the concept of growing trees to convert to fuel.

New Zealand' Crown Research Institute went through the idea with a much finer tooth comb than i have the time to find and concluded that they could economically supply all of it's vehicle fuel needs with energy crop trees grown on unutilized and underutilized land in the next few decades. pretty impressive, eh?

personally, i'd suggest that the country might be better off looking at a more electric solution, since they have the capacity for huge piles of hydro and wind electricity and since the vast majority of their population has a short commute. but, given that they are such a small country and import most of their cars used from Japan, they have no choice but to work with the resources available. unlike the US or Japan, they don't have the resources to push the market to produce better cars.

so, two cheers for Kiwi ingenuity. now, to see if the idea goes anywhere.

how embarrassing would that be for the US and Japan?

Tuesday, March 18, 2008

two countries likely to make peace before Israel

i really do think this is the last time that i will refer to this one particularly ill-advised comment about peace in Israel before a certain leader of the free world leaves office.

it strikes me that recent developments indicate that there is a decent chance that two other countries that have long isolated themselves from at least some of their neighbors are likely to establish peaceful relations before Israel does (i don't mean to imply that it is an Israeli problem by referring to it this way. it is an international conflict. it is just easier to list one country instead of the many countries on the other side).

the two long hold-outs:

Cuba: Castro is out of office and his replacement, according to one reporter i heard on NPR, is much more moderate. this should be an easy one to resolve. nobody has any fundamental conflicts with Cuba and both sides have a lot to gain by improving relations. the US would gain major PR points for resolving a conflict long past it's ridiculous date. Cuba would gain access to fresh parts for their fleet of 1950s american autos. i honestly think this could be resolved in about 20 minutes if the right people got together for a round table discussion. i'd surprised if the current leader of the free world (or anyone else, really) could explain why we don't have peace with Cuba right now. momentum of history, i guess. there are probably more Cubans in Florida than there are in Cuba, so there don't seem to be any cultural barriers.

North Korea: we have talks, we have visits, we have cultural exchanges. there are families separated for decades. there fundamentally isn't a conflict, just a crazy dictator who is getting old. i haven't been old or crazy so far, so i can't speak to what his mindset might be, but he must see the comparative wealth in South Korea and the famine in his own country. i can only imagine that he wants to help his people. maybe as he sees his death approaching he will decide that he wants to be remembered as the man who re-united Korea, instead of as the man who caused the deaths of many, accomplished little, and then was replaced by the man who re-united Korea. i think all he needs is a deal that preserves his honor and status.

i'm not saying that either will achieve significant advances towards peace in the next nine months (the leader of the free world's deadline for a lasting peace in Israel), but i am willing to bet the house that both will establish lasting peaceful relations with all of their neighbors before Israel does.

Thursday, March 13, 2008

is somebody trying to tell me something?

i was walking home yesterday (sometimes i get off the bus about 20 blocks early to pick up an item or two for to make my dinner from the local green grocer) and somebody maybe two houses away from me yelled:


i've lived places where this sort of yelling wouldn't be that unusual. in fact, i've lived places where the moments of quiet were odd. but this isn't one of those places. this is an old, quiet neighborhood filled with old, quiet people, nicely kept yards, ridiculously expensive houses, and friendly people walking their dogs and stopping to talk to each other.

so any kind of yelling is unusual.

yelling a profanity more so.

yelling my name? it isn't exactly the most common name.

during the moments leading up to this outburst, i was thinking over the last few weeks and how i basically just work and sleep (i'm doing a fair bit of overtime so that i can take an extended vacation to visit my wife in Oz. an extra 20 hours last week).

the only problem is, i don't really know who it is that i'm meant to go back to ....... or why they think it is appropriate to call me names.

Wednesday, March 12, 2008

too funny: home equity loans

let's say someone wants to borrow money from you. would you give them the money if:

1) you have never met them
2) they have been referred to you, but not by someone you trust, but by someone you pay for referrals (pay not by performance of referrals, either. just a flat rate, say $5,000 per referral and they have no responsibility for the quality of the borrower whatsoever)
3) the amount of the loan is based on the value of an asset you've never seen (and nobody you have any reason to trust has ever seen). instead, it's value has been assessed by a person who only gets paid if they value it according to what the person who gave you the referral tells them to.
4) you have no way to force the borrower to pay and you are unlikely to get any money back at all if they decide not to

if you would, please send me your phone number, i have a good friend looking for a loan.

does it not seem like a laughably bad idea to give this sort of loan?

the first three parts describe many of the real estate loans in the last several years. the fourth is specific to second loans (home equity & and down payment loans).

seriously, in cases where the second loan was given by a lender other than the lender who gave the first loan, they have virtually no ability to force borrowers to pay. they have no ability to foreclose, they have no right to the borrower's other assets.

it is a loan against a house with no ability to take the house.

now, take it from the other perspective:

say you're the home "owner" who had $100k of equity two years ago. say you got a home equity line of credit for that $100k and went out and bought a Volkswagen Phaeton and spent the change on a trip to Germany to watch it be built and drive it at 155mph on the autobahn (because you've worked your whole life and you deserve it). since then, the markets have turned and your house is worth $150k less than the loans you have against it.

what would you do?

a) keep paying your mortgage and home equity loan because that is morally the right thing to do, even though doing it will be the opposite of your best interest

b) just pay the mortgage because you don't want to lose your house (because it might go back up in value)

c) stop paying the mortgage and live mortgage-free for a year when they kick you out (or longer, depending on how overwhelmed the courts are and how good your lawyers are), because there are no morals in business, because you think banks are evil and it is ok to not pay back debts to evil institutions, or for any other reason you can come up with to justify a profitable, but immoral action.

in case b) or c), the lender who gave you the home equity loan is hosed.

this is another drop in the credit problem bucket we're seeing the markets work through right now. the next will be commercial real estate (aka condo construction) loans.

in essence, what i'm saying is this: the people who got us into this are complete idiots, were blinded by greed, or understood what they were doing was idiotic and dangerous but figured they'd get out before the going got tough and take a barrel of cash with them.

unfortunately, i have to go with the third option. if i were underwater on a home loan right now and looking for an excuse to justify the fundamentally immoral act of breaking a promise to pay back a debt, this would be it: they lied to me and tried to cheat me, therefore i owe them nothing.

as a person who wasn't in the country to get caught up in things, i'm not involved in any way except that i get to watch things fall apart. for what it is worth, i think a lot of home "buyers" were lied to by people they had no reason to trust.

Tuesday, March 11, 2008

cellulosic biofuel and paint-based PVs

i was reading Power magazine this morning, an industry rag for Electric Power Engineers (exciting stuff, really) and the table of contents is roughly:

sequestration is ridiculous but the gov't will probably make us do it anyway
look at this insignificant solar project

seriously. this where our power comes from today. more than half of the new electric generation capacity planned in the Western US (a stronghold for renewable energy mandates) will be coal.

so, today, i will share two early-stage-development RE sources that seem to have a chance of impacting our lives:

one set of researchers found a bacteria that very decomposes grasses very quickly and have isolated an enzyme from it that converts cellulose into sugar. this is a big deal because converting cellulose into sugar is the key to practical biopetrol that doesn't compete with food sources. here is a video of it converting a newspaper into sugar. pretty wild stuff.

a set of researchers with very English names in a very English town studying the seemingly incredibly boring question of how it is - exactly - that sunlight breaks down paint, stumbled across the possibility of producing a paint that could capture the energy from the sunlight and convert it into electricity. they claim that it wouldn't be terribly efficient at capturing energy, but that it would be good at producing electricity even in low light conditions such as are experienced in the UK for most of the year. though it doesn't specifically state this, i am assuming that the paint would require neither silicon, nor any of the nasty chemicals (selenium, tellurium, gallium) used in the newest generation of non-silicon-based solar panels.

pretty cool, if anything comes from them.

Monday, March 10, 2008

sufficient grain supply?

an interesting article in the NYT about global grain supply caught my attention because of how superficial it was. my understanding is that virtually all grain prices globally are going up partially because China and India rising out of poverty is increasing demand while supply isn't keeping pace.

Also, some countries (ahem, EU, USA, no point trying to hide in the back) are diverting increasing amounts of food crop towards fueling their commutes through frankly idiotic food-to-biofuel processes. (is the green feeling of driving with biodiesel or bioethanol really worth making food too expensive for the world's poor?)

Those factors surely account for some part of the problem, but there is a much more important factor that has nothing to do with supply or demand and everything to do with speculation which was completely ignored by the article.

Commodities are considered the one safe place to invest money right now. Investors are fearful of the Stock Market because of the financial meltdown for the last few months. They are fearful of or uninterested in the Bond and Treasury Markets because the chances of corporate failures are too high and the yields from US treasuries are too low (some of them may actually be negative, depending on how inflation goes). They are fearful of the Mortgage Market because it is falling apart and nobody knows how much any of it is worth.

So if you're gonna avoid stocks, bonds, treasuries, and mortgage backed securities, what is left to put money in? Commodities. This is why gold, oil, silver, platinum, rice, corn, wheat, and virtually every other commodity are going through the roof. Many of them have more than doubled since last summer when the credit problems started to surface.

I have no doubt that the demand for commodities is increasing faster than supply, but how much has the demand increased in the last 8 months? enough to warrant a doubling of prices? i kind of doubt it.

so, when thinking about the sad situation of the Nigerian man who had to skip the butter so that he could afford to buy a single slice of bread for his breakfast because of rising prices mentioned in the article and when thinking about people having to cut back to be able to afford the gas for their commute, remember who caused the situation.

it has a little to do with China and India, a little to do with misguided (at best, "shortsighted and corrupt" is more likely the appropriate description) biofuel policy, and a lot to do with speculative investors.

Saturday, March 8, 2008

Obama and the unDemocratic party

i try to be party-nuetral and avoid politics in general, but the times we live in have forced my attention to one seemingly exemplary human being and one thoroughly reprehensible system.

it seems that the Democratic party is poorly named. their choice for who is going to be their candidate for the presidency could be close enough to a tie that neither candidate will outright win through the primary process. instead, the Democratic candidate will be selected through the entirely undemocratic process of about a thousand superdelegates hand-picked by the party chairperson choosing who they prefer through negotiation, public ballots, and the inevitable private promises of favors.

how is this different from the party chairperson simply selecting the party candidate like they do in China?

well, this process involves pointless debates, excessive TV time, and increasing amounts of mean, but meaningless slander.

the Democratic party is anything but democratic. it is the unDemocratic party.

as it happens, i think Obama is a cool cat. he sounds intelligent and honest, thinks on his feet, and seems to have a real desire to do what is best for my favorite country (sorry, Lithuania). also, he has a short enough political history that it seems he can still be trusted to actually do what he thinks is right, because he doesn't owe anyone any favors.

but if Clinton gets more primary votes, she should be the party candidate. that is the way democracies are meant to work. if she gets more votes and the superdelegates negotiate to select Obama, he will lose some of his ability to do what he thinks is best because he will owe somebody something.

if Obama can get to November without selling his soul, i think he has the chance of being the first president in several decades that could actually be worth following, who could make it through an entire term without being openly manipulated (Bush), paralyzed by petty scandals (Clinton), controlled (Bush), incompetent (Reagan), so unpopular he couldn't get anything done (Carter), the openly corrupt creator of the credit bubble we are seeing pop now (Ford, when he allowed us to go off the gold standard), a crook (Nixon), or unintentional (Johnson). which brings us back to Kennedy. it has been almost 50 years since we've had a president that we could trust to do what was right and be popular enough to be able to do it.

Obama, if democratically selected by the unDemocratic party and elected by the nation, could be the first person since Kennedy to be able to do some good in our political system. if he is unDemocratically selected, he will be tainted and will become, like Carter, too unpopular to matter or, like most of the presidents listed above, too in debt to his supporters to accomplish anything good.

Clinton and McCain, on the other hand, have both already cut their souls into so many pieces, each sold to the highest bidder, that any good that may come from either of them would be purely by accident. even so, a democratically selected and elected McCain or Clinton would be preferable to an unDemocratically selected Obama.

we need a clean person selected through a clean process, but a dirty person selected through a clean process would be preferable to a clean person becoming a dirty one because of a dirty process.

and that is what happens when i have coffee for the first time in more than a week.

Saturday, March 1, 2008

just plain weird: bacteria induce rain

yeah, you read that right, a recent study has found that ice crystal nuclei* of bacterial origin are the most efficient seed crystals for making the clouds that give us rain.

am i the only person who thinks that is flat out weird?

bacteria make bits of stuff that are an excellent substrate on which to grow ice crystals for the purpose of forming clouds.

* nuclei here refers to the center bits of ice, not the genome-holding center bit of a cell. bacteria don't have nuclei, if i remember my high school biology correctly.