patrick.net

I hold my nose and do the BofA thing. It's just too ubiquitous in the BA (and too big to fail). Even if I do hate those f-ers.

It would be interesting to consider hydrogen as an energy transportation media. (No matter what the idiot news media says, hydrogen is not an energy "source".) I wonder whether it would be more efficient to separate hydrogen at a spot electric generating plant and ship it via tanker truck to someplace like LA rather than incur the transmission line losses by shipping the electric power directly.

Transmission lines get jacked up to really high voltages so that the currents get greatly reduced.

Actually aluminum isn't that much worse than copper on a cross-sectional basis. The real problem is that aluminum oxide is a damned good insulator, which is the source of all the problems when some bird-brains tried using aluminum for house wiring back in the 1970s. This isn't a problem with the utilities as they are equipped to handle splicing aluminum.

I think there are a number of wonderful decentralized-grid design proposals. The trouble is all in the economics of fixed-costs. So long as fossil fuels exist at their current price point there is no economic justification for those expenditures. Of course we can all see the long-term need. But exactly how to address that need becomes the domain of politics, because the economics are not immediate.

@Randy H,

Thanks - yup, the feeling's mutual.

RE: NCAL blog party. I can host at my new place, but won't be fully moved in for another 2 weeks at least.

Savings in “too big to fail” banks and funds.

You meant "too big to let fail," right?

SP Says:

> As an inter-generational store of wealth, it (gold) has done
> pretty well. About 120 years ago, my great-grandfather’s
> father was rewarded in gold by some monarch. He left the
> gold in a safe-deposit that my dad and uncles inherited.
> Considering all the cr*p that went down in those hundred
> years, I can’t think of much else the old man could have
> saved that would have retained value, least of all some
> paper currency.

I don’t understand why anyone would “invest” in something that did not give them a regular return on the investment. If you were to compare the value of gold (less the cost of renting a safe deposit box for the past 120 years) to income producing real estate (adding in the after tax return from rents for the past 120 years) you would be much better off with the real estate…

"currents get greatly reduced"

That's what I thought. They don't "step-up" the current until it hits a local sub-station, right?

I don't know that 400HZ *wouldn't work? That's typically what your PC converts 60HZ to anyway? Much of the reason aircrap (I mean airCRAFT) run 400HZ is that your system (fuel quantity, auto-pilot etc.) update much more frequently and are much more accurate than using standard household current.

This is just a guess, but the government would let the small fry banks fail since the FDIC has enough resources to bail out the depositors. But the FDIC itself would be strapped to bail out the depositors if a really big bank (B0fA, Citi) failed. I think the government would come out with a prop-up-the-big-bank plan rather than see FDIC face insolvency.

Randy,

While you were on hiatus, there was another discussion that touched upon power transmission losses. I'll quite the pertinent passage from Wikipedia:

Transmission and distribution losses in the USA were estimated at 7.2% in 1995 [2], and in the UK at 7.4% in 1998. [3]

That's a far cry from 50% loss. I'd agree that there is reason to believe that the US electric is overdue for maintenance and general overhaul for reliability and other reasons.

On the other hand, what is up with Wall St recently adapting the mantra "infrastructure, infrastructure, infrastructure". I can hardly turn on PBS without some lame-ass third-rate Wall St analyst trying to sell me on some l"infrastructure" company (e.g. Jacobs Engineering in LA). What is going on? Is this just an attempt to create a new sector and add some momentum to it? I;d like to hear what people think. Fair enough, a bridge fell down in Minnesota last year, but is that going to be the poster child and excuse for lots of government spending? I have to say I'm a bit skeptical about the whole infrstructure thing, if nothing else because the marketing of it seems so well orchestrated.

DennisN,

I think 400Hz in airplanes is not for transmission efficiency but for conversion efficiency. That is, a 400Hz transformer can be made much smaller and lighter than a 50-60Hz one. And weight and volume is of course paramount in airplanes.

Another example of the same: PC switching power supplies chop up the current and transform it at multi-100KHz frequencies for the same reason.

However, don't expect 100kHz power transmission to become popular . The dielectric loss and radiation loss (analogy: longwave radio) will be much too high. The better way to go is DC (0Hz) transmission at high voltage, followed by electronics to chop (aka. invert) and transformers to step the voltage down locally.

There are beacons and low-frequency RF communications services down around 100kHz. WWV runs a service at 60kHz.

400Hz is a good option since it's been tested over time, since WWII if not back further. And yes it's for conversion efficiency. Tube radio stuff needed big heavy transformers to supply plate voltages as well as filament, heater etc voltages, and at 400Hz these transformers can be a lot smaller.

In cars, I keep hearing talk of going to a 48VDC system, not for conversion but to save on copper - at a higher voltage, you need less current to deliver the same power, and since wire thickness is determined by current, raise the voltage, decrease the current, you get the same wattage and less copper. Which is a good thing considering copper is actually worth something.

Infrastructure.... what a joke. New products and technologies were come up with in the 1920s that were essentially frozen through the first great Depression and not taken up again until the 1940s or 50s. Television is a good example. Types of radio modulation like FM are another. We're heading into the 2nd, or Greater, Great Depression and I doubt that in our tent cities we're going to be worried about the latest kind of cell phone that isn't made here anyway. We're also headed for a large population dieoff either through good old war and pestilence, or simply through high child mortality and greatly shortened life expectancy like in the ex-USSR. We're up to our ears in infrastructure and goods, really.

DennisN,

I'd bet big bucks that just transmitting High Voltage DC to LA will beat hydrogen as a transportation medium any day, in terms of overall energy efficiency . Hydrogen is a bitch to deal with.

The main advantage of hydrogen is that it has great public appeal, especially in the "soccer-mom" demographic, who is easily enamored with the image of water coming out the tail pipe.

Hydrogen is simply a ruse to sell the public on nuclear power, which is what it is going to take to produce any practically usable amount of hydrogen. Then, once the nukes are built, hydrogen will be toned down and phased out. What stings is that our government is spending billions on hydrogen research that has no practical application except as a marketing tool for nuclear power.

ex-sunnyvale-renter,

Perhaps that's why Wall St is pushing infrastructure. If the depressions hits, it's nice to be invested in "public works".

Without a major public sentiment shift nuclear is nearly politically impossible in the US. The two ways to counter this are (a) education, (b) slick marketing. Huzzah to anyone who can guess which one is more likely to work in the current US cultural environment.

I just read an interesting bit on the "stealth reintroduction of nuclear" into the US vis-a-vis desalinization plants. In the US West especially, water is quickly becoming a real serious near-term problem. Of course the southeast has shown our water infrastructure is precarious almost everywhere.

The current best solution is desalinization, which at scale requires massive amounts of electricity, which you get from...

There's also some cool desert-water-table desalinization project to pull water from under the deserts. Of course the byproduct is lots of nasty sludge, but it's not like the desert flats are being used for much anyway.

Justme - the Depression is hitting, and guns and ammo are the places to be invested.

RE: wind power, there will always be NIMBYists, as always:

http://www.boston.com/news/nation/washington/articles/2006/04/27/kennedy_faces_fight_on_cape_wind/

Sometimes, the NIMBYists happen to be very rich and powerful...

Without a major public sentiment shift nuclear is nearly politically impossible in the US. The two ways to counter this are (a) education, (b) slick marketing. Huzzah to anyone who can guess which one is more likely to work in the current US cultural environment.

Or we can just completely deregulate electricity prices and let utility companies gouge consumers at will. People will be saying yes to nuclear power in a second.

Danville Woman,

go to the following website for buying directly from Oz Treasury, it is very easy. Oz Treasury has excellent customer service, because I got to talk to / write to real people who took the trouble to explain to me my transactions in great detail.

http://www.rba.gov.au/FinancialServices/CGBondFacility/index.html

Sometimes, the NIMBYists happen to be very rich and powerful…

NIMBYists are the enemy. We should unite oil companies and corporate America to defeat this enemy.

I believe people should have no rights outside of their property limits.

Randy,

do you know of any real life examples of brokerage failure? How long will it takes SPIC to resolve?

What about bank failure? How long was the FDIC processing time during the early 90s?

There are brokerages that are "too big to let fail." Why not put your money there instead?

OK, let's define the too big to fail here.

Is WaMu one of them? Wells Fargo? US Bank?

Only Citi and BoA will fit the bill?

Which ones are the too-big-to-fail brokerages? Merill or Goldman? Does Goldman even handle retail customers?

Salomon Bros under Citi is a piece of crap, I used to use them before, horrible service to the extent of messing up order. Thank you very much.

Sometimes, the NIMBYists happen to be very rich and powerful…

NIMBYists typically tend to be rich and powerful. Who tends to live near dumps, oil refineries, RRs and power plants: rich or poor people? Who has lots of free time on their hands for pet "causes", can afford expensive lawyers, and have the ears of Congressmen, Senators and state legislators: rich or poor people?

Fidelity has a lot of retirement accounts. I assume their owners will be very upset (politically) if anything is to happen.

NIMBYists typically tend to be rich and powerful.

I do not see truly rich people being NIMBYists. Look at Bill Gates and Warren Buffett. Not NIMBYists.

If you want to protect your backyard just buy up the surrounding 10000 acres!

I don't know about multi-generational wealth, but gold was the ONLY thing that got my grandparents out of China before the change of regime.

Back then, only people with enough gold could get a ticket, because that was what the train tickets / liner tickets were priced in. You have plenty of real estate, stocks in factories, sorry, that didn't count. How many gold bars do you have to exchange for a ticket?

Then the fall of Saigon. Gold was the only currency that could get you out of the mess. I know of a couple of real "boat people", each paying one gold bar (12 ounces) for a chance to sail across the ocean to head for America.

I am not saying that the US will degrade to that extent, but if I were to leave this country, USD would not be my choice of currency to carry.

The SIPC has been invoked quite a bit. They have some good historical examples themselves:

http://www.sipc.org/media/release4.cfm

You should assume that your money will be illiquid for many months if SIPC is invoked. The same with FDIC, though since that's directly government controlled, they could move to expedite the process if any failures are widespread enough. For example, if every depositor in BofA suddenly found themselves collecting FDIC (which would never happen under my theory), you can bet that any politician blocking an emergency relief bill would be one wishing to end his/her term in a blaze of glory.

Gold is a currency.

So long as the next greater fool is willing to pay more for it who cares if it does not product an income! :)

RE: nuclear power, I suspect $10/gallon gas and resulting $20/gallon milk *might* change public sentiment towards nukes in a big hurry.

Hopefully, regular Patrick.net readers would fall under the "more swayed by education than slick marketing" camp. On that assumption, I am re-posting an excellent post on this subject from The Oil Drum:

advancednano on January 4, 2008 - 10:39am

rebutting some of this article:
In a comment that I have down below I list two companies (Sparton Resources of Canada and Wildhorse Energy. (5000-15000 tons of uranium per year from European flyash alone.)
http://www.wise-uranium.org/upeur.html#AJKA

Flyash is 160-180 parts per million uranium. 40 times better than granite.

Uranium mining info
http://www.wise-uranium.org/indexu.html#UMMCI

Uranium prices are substantially off of their peak
http://www.uxc.com/review/uxc_Prices.aspx

Only two thorium reactors in 2075 ? There is a project to make thorium fuel rods that can be used in most existing nuclear reactors. This seems likely to succeed in 3 years.
MIT Tecnology Review discusses the efforts to get thorium used in reactors for less waste (unburned fuel)

The Fuji Molten Salt Reactor (which could use thorium) seems to be 8-9 years from completion. The Fuji Molten salt reactor could burn 99.9% of the plutonium, uranium and thorium. So it would handle the waste issue and with profitable energy generation not some made up cost for waste handling.

The Hyperion power generation uranium hydride reactor scheduled for 2012 completion can also use thorium hydride A good hydride reactor design would burn 50% of the fuel instead of current 1-2% reducing fuel demand and leftover waste.

CANDU-type reactors - AECL is researching the thorium fuel cycle application to enhanced CANDU-6 and ACR-1000 reactors. With 5% plutonium (reactor grade) plus thorium high burn-up and low power costs are indicated. CANDU reactors can breed fuel from natural thorium, if uranium is unavailable.

The best way to get rid of the current and future waste is to build better reactors that burn all of the fuel and can generate electricity from existing waste.

The plan to use some expensive method to handle the unburned fuel is like saying if we used dollar bills for a nuclear waste incinerator it would cost a lot of money. Yes that would be expensive and an idiotic plan.

OO - people forget the essential lessons of the 1st Great Depression: Get out of debt, and Don't trust banks. Gold is indeed money, and paper money always reverts to the value of the raw material it's made of. There are lots of families who got out of a lot of places because they had gold - leaving behind others who did not.

I really want to see a nationwide movement to get out of banks, withdraw savings and put savings besides your "working cash" into silver and gold coins etc. If you are going to follow Ben Franklin's dictum to "never a borrower nor a lender be", it means by definition you can't deal with banks.

Okay - so I read a couple of articles yesterday and I got to thinking last night - and was wondering what other people think.

First - it was about the people that are buying another house (because it is cheaper and better than theirs) and then letting their old house go into foreclosure. These people are gaiming the system and letting the banks take the hit in loss of value - but am I correct in thinking this only works for people that have a non-recourse loan and no second piggyback loan?

Do you think that more and more people will do this, but realize that it is only on their first loan and not any good if they have serial refied?

Second - when all these properties are being foreclosed upon - and in some areas that hasn't happened because the judges have said "produce the documentation to prove you are the holder of the loan" (to the banks) and the banks have not been able to provide the mortgage documents - when people subsequently buy foreclosure properties - are there going to be some, where the banks are going to come along and say - hold on a minute that property belongs to us (the wrong bank/bond holder got the pay off on the old loan - or some portion of the old chopped up loans got sold to some hedge fund/credit collector as bad debt)?

FormerAptBroker Says:
I don’t understand why anyone would “invest” in something that did not give them a regular return on the investment.

"saved", not "invested". Return ON investment is an abstract concept when you are not even sure of return OF investment. Anyway, my point was gold vs. fiat. Not gold vs. a closely managed investment.

Yes Claire, only on a non recourse loan can someone just walk away from a house. Not having it recognized as debt forgiveness is a further incentive, though it might still be taxable at the state level. I should check that, it keeps coming up here. It should only work for someone with an original first trust deed otherwise the debt would just follow them to the new house so what would be the point?

No I don't think banks are going to claim title on resold homes in the future. Even if they did the title insurance would make the parties whole. That is the purpose of title insurance, to protect an owner or buyer from such claims. As you pointed out, some banks are having a hard time with the paperwork just for that reason, a claim for foreclosure has to be very clear and precise. Like an eviction, any failure to follow the process will get the person filing the action to have to start over.

As one of the people who mentioned gold:

No, I don't expect the country to collapse. If I really did, I'd be investing in residency visas, not gold. Don't be silly.

The same people who were saying that you can't eat gold were telling me the same thing when gold was at $500. How'd *your* speculative assets work out for you in the interim?

Gold is, at this time, a risky speculation. It's speculation that fiat currencies will continue to lose value vs. real assets. Unlike property, it's globally traded, so it's not limited to the local market.

Right now, important things (like oil, and soft currencies) are switching from the US Dollar to a "basket of currencies". Gold is a bet that a basket isn't any better in the long run than one.

*Something* is going to replace the dollar in international commerce. It's probably not the Euro. I think it will be gold bullion. (It won't be the Euro because the housing bubble has infected Spain, the Netherlands, and most of the Eastern block.)

BTW - in California, you don't pay sales tax on purchases greater than $1k, and amounts less than $10k are not reported. You're on your honor to report the capital gains yourself.

"Investments" have returns. "Speculations" rely on appreciation. Gold is a speculation, as is property that's twice the cost of rent. A failure to understand the difference between the two is what's got us in this mess, so I'm acutely aware of it.

I'm also speculating in short ETFs. For investment, I'm in Money Markets, whose returns stink, but who (probably) won't lose all my money.

Claire - I'm sure there are a few people buying that 2nd house then walking out on the first. But there are only a few people with balls that big. Most homedebtors are just hanging on, worried about doing the right thing, really good little slaves. And they'll work themselves nearly, or sometimes literally, to death to make the payments and follow their programming.

Which is going to make for a lot of pissed-off ex-slaves when the whole damn thing collapses anyway and life jams the red pill down their throat.

"as is property that's twice the cost of rent"

Well said. By the time the RE Boom had reached illegals arm'd w/ liar loans, debt ='d wealth and speculating ='d "investing". If you weren't ready and willing to pay 2-3 X rent, well then you just weren't getting it.

@DinOR,

If that $729K GSE conforming loan limit passes both houses and gets signed into law (and I fully expect it will --just gotta love "bipartisanship"), we might as well all be prepared for Phase II of the Real Bailoutâ„¢: dropping the FF rate to 0%, and allowing the GSEs & FHA to buy neg-am, interest-only and NINJA loans.

At that point, I suspect even stalwart bubble-warriors, Mr. & Mrs. HARM, will capitulate and buy the biggest McCrapshack we can find with the nastiest low-payment FB loan we can get. I'm thinking a cash-back "instant equity" 100-year neg-am NINJA with a maxmum LTV ceiling of about 25,000%.

What good is it being responsible when there's an endless river of government rewards for speculators and idiots?