Ending another era

Reaching the conclusion that I have no more use for my Exalted books, I am auctioning them in a large lot. The starting bid is $1 and there is no reserve. When you consider that the cover price for the bunch is over $500, that’s should turn out to be a pretty good deal.

As with my earlier auction, I am keeping a couple of things: the gilded Limited Edition and the Dreams of the First Age box set.

(Also, I’m selling a surplus microphone as well, if that interests you.)

Globalization rules

The life-altering news is apparently not new, but I only learned of it last night, when my wife returned from a routine run to Target. She said nothing, only smiled, reaching into a environmentally irresponsible plastic bag. From the bag she pulled pure joy, and then the incredible message was clear: Arnott’s Biscuits, the Australian cookie maker, now distributes (through Pepperidge Farm and Target) Tim Tam cookies in America.

Let me say this again: you can now buy Tim Tams at Target.

Some readers may not appreciate the importance of this news. Perhaps they have never been in an international airport in Australia and witnessed the stores containing nothing but Tim Tam cookies, and watched as visitors buy cases of them for their return home, or open their large carry-on bag to reveal only an empty void they then fill to the brim with Tim Tams. Perhaps they have seen this, but never have done a Tim Tam slam with tea, coffee or hot chocolate so don’t know what all the fuss is about.

On the other hand, maybe you do know about Tim Tams, but think the American versions are inferior. All I know is that even if that is true, the American versions still induce involuntary biological reactions. I had nearly repressed the memory of Tim Tams to avoid the pain of not being able to get them locally.

Repress no more.

Settling into a warmer future

It is pretty clear that the world has been warming up over the last 150 years. It doesn’t really matter if you just shoveled two feet of snow off your driveway (as I did). It also doesn’t matter whether you believe the temperature increase is caused by human activity or not. Nor does it really matter that 150 years is nothing on a geological time scale; chances are that these higher temperatures will reign for the majority of your remaining natural life.

Teams from the various governments of the world, most of which do believe that this warming is man made, nevertheless failed to take any meaningful action when they met in Copenhagen last week. Most are blasting this as a “failure”, a “disaster” or, at least, “disappointing”. Instead, though, it really should be viewed as exactly what it was: the result of a number of diverse, self-interested parties acting completely rationally. That no magical concord came out of this is totally unsurprising. Likewise, no such concord will come out of the next such meeting, nor the one after that.

In other words, get used to it being hotter.

So, how to best do that? People seem to assume that every aspect of global warming is automatically bad. This is certainly not the case. How best to take advantage of its advantages? And how best to minimize its disadvantages?

What follows suggests some advice on how to prosper in a hotter world. One caveat: it is tailored to people living in the United States. Some of it might happen to be applicable to those of you reading from other countries, but you’re on your own. Which brings us to the first point:

  1. Assume that nationalism will increase. As the ecosystem adjusts to higher temperatures, the status quo of resource allocation will change. In some places it will get better, in some places worse. Nations will want new sources for what they used to have, and will want to take advantage of and protect what they have gained. In the short term, interruption of existing systems and their rearrangement will result in a net decrease in whatever the system produces or manages. So, not only will nations be trying to rearrange the shares of the pie, the pie will be getting smaller. This will make many countries grumpy, insular and tribal.
  2. Budget more for food. The “shrinking pie” will be most noticeable in the area of food production. It will be shocked hard, and will take a while until people figure out what works the a higher temperature world. While some have thought a lot about preventing this, it will probably happen anyway. In addition to the shrinking pie, pushes for renewable energy will divert more of the river of corn that feeds America into fuel production. (Since it seems like corn is killing us, this may not be a bad thing.) All of this will conspire to raise food prices, which have already risen quite a bit. You might want to start looking for local food or start growing some of your own to offset the higher costs.
  3. Move slightly north. At a very loose approximation, if you want to stay living in the climate you grew up in, you’ll need to shift a few degrees of latitude toward the pole. If you stay where you are, it will get hotter. But north of you is already colder, so moving there as it also heats up will keep your average temperature the same. Obviously, climate is more complicated than this, so you need to allow for terrain and such, but the basic idea is that if you find your current location becoming unbearable, somewhere more palatable is probably not that far away.
  4. Move slightly inland. If you are living right on the beach, you might want to sell now. While the really alarming maps of sea levels rising turn out to be BS, no one is really that sure about how sea level change works. If you look at a bunch of different effects and guess a bit, you reach a reasonable estimate of a one meter rise in sea level by 2100. This would be pretty bad news in Asia and parts of Europe, but not so much the U.S., unless you live right on the beach. Or in Florida. And, I wouldn’t move back into New Orleans. But, in general, the map doesn’t change much for a one meter rise, so just moving back a bit from the coast should be sufficient.
  5. Don’t be overly concerned with species extinction. So far, billions of species have gone extinct (something like 99.9% percent of all species that have ever existed are no more). Hundreds of species (90% or which were never cataloged) will go extinct this year. One will probably be extinct by the time you finished reading this post. Naturally, this species probably will be something dull, like a plant, or ugly, like a beetle, so won’t get as much press as, say, a polar bear, but it’s dead just the same. Yet this has happened every day of your life and, somehow, the remaining 10 million species on the planet have soldiered on (even if we’ve only cataloged three out of every 20 of them). Now, one of the concerns about this hot spell is that, geologically speaking, the temperature change is quite rapid and it is the rapidity of the change that speeds extinction, not the change itself. The idea is that a change can be so fast than nature can’t keep up. For example, assume a forest 25 miles across lives in a “viability zone”, beyond which it’s plants cannot survive. North of the zone, it is too cold; to the south, too hot. Suppose this zone is slowly shifting north. This isn’t really a problem for the forest. Even though the plants don’t move, the forest can “migrate” is by spreading north with new seed, while letting the southern border die off. But, assume that this zone instantly, magically shifts 100 miles to the north. That forest (and the species that rely on it) is now screwed because it can’t keep up. Even if the rapid temperature rise shifts these zones faster than nature can keep up, however, one force probably will be able to work around this: man. You can bet, for example, that corn will “migrate” north as temperatures increase as fast as man can carry it. (Also, it turns out that the “shrinking forest” problem is not likely anyway, as plant populations expand in conditions where temperature and CO2 rise in tandem.)
  6. Have faith in science. Assuming CO2 really is killing the world, the worse it gets, the more likely (i.e. cost-effective) it will be that science can solve the problem. Imagine, for example, a magical machine that sucks in CO2 and uses energy from the sun to pull out the carbon atom, releasing O2 into the atmosphere and embedding the carbon in some fixed medium. With enough such machines, CO2 is reduced, life goes on. Considering that billions of these “magical machines” already exist (they are called “plants”), it’s not much of a stretch to guess that science will be able to replicate (and probably improve) this idea synthetically as artificial trees or some such.
  7. Assume environmentalists will rail against solutions that don’t involve environmentalism. Solutions like artificial trees are collectively known as geoengineering, and environmentalists generally tend to hate them. Sometimes, such as when the idea is particularly bad, this hatred makes sense (usually because there are some obvious unintended consequences). But some environmentalists, usually the most vocal, will reject even ideas that demonstrably meet the goals they claim to have, if the idea uses a method other than the one they are really pushing. As an example, even if the artificial tree concept was able to meet any arbitrary CO2 concentration goal for, say, three dollars, there would still be environmentalists shouting it down and saying that clearly we should instead be spending billions to prevent the evil corporations from producing CO2 in the first place. (Such objections would, among other things, ignore the notion that, once emitted, about half of the CO2 stays in the atmosphere for 40+ years, so even stopping all emissions wouldn’t have any effect for generations while, meanwhile, artificial trees could be removing that CO2 immediately.) Bank on furor like this happening and causing political strife. Also bank on the profit that will be realized by those that ignore it.
  8. Don’t count on science. Faith in science isn’t like faith in religion: it is only rewarded when it was warranted in the first place. Faith in something like artificial trees (which is basically just a chemistry problem that already has at least one known solution) shouldn’t be blindly extended to everything, especially when there is good reason to doubt that science can help. As an example, science appears to be reaching the limits of how much it can improve crop yields, not necessarily due to limits in science, but rather limits in photosynthesis. Likewise, sometimes even low-cost science that sounds like an interesting idea treats the symptom, not the disease, so leaves much of the problem unsolved. The message here: learn more science, so you can tell the difference.
  9. Avoid political goals that require global agreement or action. There will probably be a time when the whole planet will be able to agree on something enough to act mostly in unison, but you are unlikely to live to see that time. (Or, if you do, it will be because things have become so bad that there is no other choice, which is beyond the scope of this post.) Consequently, political action expended towards goals that require this will be more profitably spent elsewhere. As one example, if all of the money and effort currently expended in the U.S. in pursuit of some kind of global climate policy (something the U.S. does not and cannot control by itself) had instead been spent attempting to to rid the U.S. of its dependence on foreign oil (something the U.S. can control by itself), we would have gotten a lot more bang for the buck (and, ironically, would have likely reduced our CO2 emissions more than we did barking futilely up the global climate tree). This goes hand in hand with the point above about nationalism.
  10. Assure a supply of fresh water. This is harder than it sounds, and will become moreso. Whiskey’s for drinking, water’s for fighting. Since 20% of the world’s fresh water is in the Great Lakes, you might want to mosey that way. (And, hey, that’s probably north and inland from you as well.) While it isn’t one of the six drinks that changed history, water is about to be the seventh.
  11. Realize that climate change is not the only (or even the most important) issue. Many of the concerns mentioned above really come down to issues of resource scarcity, and population growth is likely to put much more stress on such resources than climate change will. Mostly likely, while climate change is reducing the supply of things like food and fresh water, population growth will be driving up demand at the same time. In fact, it may be small consolation to realize that all of the problems “caused” by climate change would probably be getting worse even if the temperature wasn’t rising, because the population is still increasing. So, enjoy the weather.

Signs of ill health/will

Can anyone offer me a decent explanation of why, at this very moment, every major bank in the United States is offering a savings account with a higher interest rates than they give for certificates of deposit (CDs)? Go take a look. It makes no sense.

In a healthy economy, the CD should always have a higher rate. For those that don’t know, a certificate of deposit is a sort of “long term” savings account. The idea is that you deposit some amount in a bank for a fixed length of time (often three months, six months, or one to five years) and, in its simplest form, you are penalized if you withdraw from the CD account during this time period. The idea is that the bank has a guaranteed source of funds. This illiquidity is good for the bank, but inconvenient for you. To make this inconvenience worth your while, the bank should give you a higher rate.

But I can’t find any banks that are actually doing so, at least for CDs with a reasonable term length. Citibank, for example is advertising an “Ultimate Savings Account” with a rate of 1.01%. Meanwhile, their CD terms are much lower: 3-month 0.25%, 6-month 0.5%, 10-month 0.5%. At 12-months, you get the same rate as the savings account: 1.01%. Only at 18 months do they do better, and then not by much (1.1%). For three years, they’ll give you 1.5%. Other banks have much the same setup.

So, what the banks are saying with their behavior is that it is better for them if you have a savings account, rather than a CD with a term less than a year. (Or, put another way, they are saying “if you want a CD with a term less than a year, then we don’t really want your business”.) Why would this be? On the surface, it would seem that money locked in to them even for a short period would be better for them than money that can be withdrawn at any time. I can only think of a few possibilities this would not be so, most of which are unsatisfying:

  • Loss leader: Perhaps it isn’t that CD rates are too low, but that savings account rates are artificially high, with the idea that banks are inflating them to gain customers, with the intent of lowering the “teaser rate” drastically after some (short) period and hoping the customer doesn’t notice. It seems like if you make the assumption of classical economics that people are rational, this seems likely to fail. On the other hand, this classical assumption is almost always wrong, so maybe the bank knows they can get away with this kind of thing.
  • Overhead: It could be that the costs of offering, setting up and maintaining CD accounts are larger than they seem. For the current behavior to be rational, it would have to mean that only if a CD lives for 18 months does it become worth the extra effort for the bank, compared to a savings account. I find this hard to believe, but, on the other hand, about the only time I’ve talked with a human at a bank in the last few years was to do something with a CD, so maybe it’s true. If you look at the way various ladder strategies work, you can imagine that a higher cost for customer interaction is plausible.
  • Flexibility: Typically, rates of savings accounts are not fixed, while those of CDs are. This means that a bank that has lots of customers with savings accounts has a bit more flexibility than one where the customers all have CDs. That is, if things go bad, they can set the rate of the savings accounts to zero to control their costs, while the cost of the CDs would remain a constant drain. It seems to me that if this is really the reason, then these banks are in worse shape (or, at least, think they are) then we thought.
  • Contempt: It could just be that banks think their customers are too dumb to notice. Maybe they are even correct. For example, I opened a CD a number of years back at over 3%. As the term on this CD expired, I let it automatically renew. At some point during these renewals, the rate dwindled below 1%, yet I did not realize this until recently. I’d like to think not enough of the country is as dim as I was to make this a viable strategy for banks, but I’m probably wrong.

Maybe all of these ideas have some truth? Whatever the case, it is fairly baffling. I’d love to hear from someone who knows better.

Repeating incentive failures

My Google news homepage tells me that the U.S. to increase pressure on mortgage industry. According to the article:

The Obama administration said Monday it will crack down on mortgage companies that are failing to do enough to help U.S. borrowers at risk of foreclosure, as part of a broad effort to ramp up participation in its mortgage assistance program. The Treasury Department said it will withhold payments from mortgage companies that aren’t doing enough to make the changes permanent.

I mention this just in case it wasn’t clear that the “Obama administration” has forgotten every economics class it ever took from people who know better.

Remember six months ago? The “Obama administration” doesn’t seem to. Remember when it seemed like all the banks were failing and screwed? Remember how that wasn’t actually true? How some banks were doing just fine, because they didn’t make stupid loans? Remember how those banks were given crappy ratings by the government due their fiscal responsibility? Oh… you don’t?

Well, consider Massachusetts bank East Bridgewater Savings. Back in March, when all the banks were going to hell, East Bridgewater Savings was doing fine:

Bad or delinquent loans?

Zero.

Foreclosures?

None.

Money set aside in 2008 for anticipated loan losses?

Nothing.

“We’re paranoid about credit quality,” Petrucelli said. The 62-year-old chief executive has run the bank since 1992.

East Bridgewater Savings ended 2008 with $135 million in assets and deposits of $84 million.

The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts.

In other words, rather than do the “predatory lending” and “sub-prime” shenanigans that the government and media would lead us to believe caused all this trouble, this particular bank only made reasonable loans, and avoided the problems entirely. But, for its trouble, the FDIC “slapped East Bridgewater Savings with a rare ‘needs to improve’ rating after evaluating the bank under the Community Reinvestment Act.”

The CRA is a set of laws that have been revised over the past 30 years to “encourage” banks to lend to local, low- and moderate-income borrowers. Because East Bridgewater Savings judged that giving loans for large houses to low-income families was not worth the risk, the FDIC essentially published a statement saying they were a bad bank.

Now, it is unlikely that the banks pushing subprime loans did so to avoid this FDIC ranking; they probably would have done it anyway. But it certainly is not particularly useful that, should you want to manage risk correctly, the government will tell the world you are an idiot for doing so. It is a totally misdirected incentive.

This current push from the Obama administration works in a similar way, offering incentives to force exactly the wrong kind of behavior.

Reasons to heist Shove Box

You may have heard that there is a new MacHeist in the works, this one offering six applications for free. While I don’t post about these things very often, the peculiarity of one of the apps in this bundle warrants some explanation (and praise). After warming up to it a bit, I use it quite a bit, so thought I’d recommend it to everyone, particularly iPhone users.

The application is Shove Box, and it is a little hard to explain. It is pitched as a “nicknack box”, where you put stray stuff that you want, but don’t have a great place to store, like text snippets, sticky notes and that kind of thing. Personally, I don’t really find that all that interesting. Instead, I’d pitch it like this: it provides an extremely easy method for syncing random stuff for viewing on your iPhone.

So, for example, say you have a PDF or e-mail of a hotel reservation, or your flight information, or whatever. You drag it into the Shove Box, launch the companion iPhone app, the data syncs, and you can view whatever it is on your phone. So, when the check-in person asks you for a confirmation number, it’s right at your fingertips. Maybe there is a single paragraph of text on a web page (like an address or confirmation number or something). You select it, drag it into the Shove Box, launch the companion iPhone app, the data syncs, and you can view whatever it is on your phone. This also works with webarchives, rich text, images (for some reason, I use it for maps a lot), URLs and a bunch of other stuff. I keep webarchives of reference material on HTML entities, web colors and so on.

Naturally, the iPhone app costs extra (normally $4, but only $2 until 9 Nov 2009), but getting the Mac side of it for free makes this a much better deal. The interface element is built around a menu that is added into the right side of the menu (with the clock, wifi status and so on). The menu works like a typical menu, but also as a drag and drop target. This pretty jarring at first. It’s definitely not like other apps. Just like my experience with Quicksilver, I wasn’t that enthusiastic about changing my ways to use it at first, but it has now changed the way I work for the better.