Category Archives: Front Page

The Games People Play

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Dryfly is a regular commentator on calculated risk and one of the better (best?) ones. He really should start his own blog. Here is what he had to to say about high levels of investment in China…..

I work for companies who have put plants in China – they have been racing to get the plants in & operational & then transfer over & convert money about as fast as they can. As much as the Chinese will allow. They did it to get in under the revaluation should it happen. Lotsa companies are doing that.

Currency controls in PRC make it difficult to move big sums fast so the way to get around it is buy or build a plant IN China. Then liquidate it when the revaluation occurs – you should come away with more dollars for doing little or nothing IF all goes as planned…

In response to further questions he elaborated a bit more by saying…..

He doesn’t know where the ‘hot money’ is – no one does or isn’t saying – my guess is companies like the one’s I sell for are moving way more in than they need to operate. WAY MORE. They want it in RMB IN CHINA BANKS before the revaluation. So some of this transfer is in bricks & mortar and illiquid and some is liquid ‘operating capital’.

To them it seems like a win-win… if RMB stays weak they export to the US at a profit… if RMB appreciates they sell appreciated assets & reconvert operating capital back to USD. Seems brilliant until you learn the other part of the story – they are owned by a heavily leveraged PE firm (mid-level not B or K). They might be able to wait until the RMB revalues or maybe not. They might get their own ‘margin call’ soon. Maybe tomorrow.

A lot of smart folks are going to end up too smart by half before this is all over.

The “he” in the above comment is talking about Brad Setser who has been wondering about China’s accounts lately.

Dryfly mostly worries about these “smart” people getting margin calls. But I wonder if anyone will want to buy the factories from them when they want to cash in. To me, that is the biggest risk.

Essay of the Week: 4/13/08-4/19/08

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This week’s essay of the week was selected under some protest from some of our staff. It was felt that 60 page essay “The Prehistoric Origins of European Economic Integration” was just too much to ask anyone to read.

But such complaints where brushed aside. The essay is 60 pages double spaced which means it is more like 30 pages single spaced. And besides, people should stretch themselves every now and again.

The essay is full of fascinating tidbits that will interest anyone who has much knowledge of the bible (thought the bible is scarcely mentioned in the essay and illuminating it was furthest thing from the authors mind). But if there is anyone overarching lesson to be taken from the essay, it is how slender our knowledge of antiquity is and how the self confidence assertions of scholars should be taken with a large grain of salt.

This is not the point the author was trying to make. Rather, the overarching theme of the essay is that the peoples of antiquity were far more numerous, wealthy, and literate then scholars have previously supposed. But when one reads about how few finds it took to upend previously held beliefs, ones glimpse the precarious foundation of modern knowledge of antiquity

And you thought Sony was bad

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From Marginal Revolution….

A satellite missed its orbit. The problem can be fixed but, believe it or not, Boeing has a patent on using the moon, i.e. gravity, to change a satellite’s orbit! The patent probably wouldn’t hold up in court but because of a different lawsuit Boeing is threatening to sue anyway if the firm uses the procedure. Since the costs of a lawsuit are high and the satellite is insured, down it may come.

There is gas in them hills

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I don’t know about the rest of the readers of the Ethereal Voice, but I have been hearing of gas companies paying top dollar to various individuals plus the promise of royalties. The talk from people that know is that the price being paid out is 2500 dollars an acre for the right to drill for gas in the hill country around here plus the promise of big royalties should stuff be taken out of the ground. As this article notes….

Geologists and energy companies have known for decades about the gas in the Marcellus Shale, but only recently have figured out a possible — though expensive — way to extract it from the thick black rock about 6,000 feet underground.

Like prospectors mining for gold, energy executives must decide whether the prize is worth the huge investment.

“This is a very real prospect, very real,” said Stephen Rhoads, president of the Pennsylvania Oil and Gas Association. “This could be a very significant year for this.”

The shale holding the best prospects covers an area of 54,000 square miles, from upstate New York, across Pennsylvania into eastern Ohio and across most of West Virginia — a total area bigger than the state of Pennsylvania.

It could contain as much as 50 trillion cubic feet of recoverable natural gas, according to a recent study by researchers at Penn State University and the State University of New York at Fredonia.

From what I hear, this is rapidly turning into a gold rush and I hope it does not all end in tears. That 50 trillion cubic feet sounds real cool. But it relies on expensive technology describe in this Oil Drum article that has never be tried out on a large scale before.

Stuff we already know

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Its an article of faith amongst most people that grid can be hacked by any half way competent hacker, so I am not sure this is really news. Still, it is nice to know that some things that everyone knows are really true. This from Network World…..

Cracking a power company network and gaining access that could shut down the grid is simple, a security expert told an RSA audience, and he has done so in less than a day.

Ira Winkler, a penetration-testing consultant, says he and a team of other experts took a day to set up attack tools they needed then launched their attack, which paired social engineering with corrupting browsers on a power company’s desktops. By the end of a full day of the attack, they had taken over several machines, giving the team the ability to hack into the control network overseeing power production and distribution.

A cool map of foreclosures

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This map of foreclosures is the best thing since sliced bread once you figure out how to navigate it. It starts off showing you a color coded map of the US showing which parts of the country are having the most problems with real estate foreclosures. But you can pick what ever part of country you want and zoom in on it. You can zoom all the way down to the township level and the map will still be color coded. I had expected it to stop at the county level.

Plus, you can see all the individual house that are in foreclosure if you zoom in fare enough.

Polar Bears are cruel to fish

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From Spiegel….

Berlin Zoo had put the carp into his moat to help keep the water clean by eating algae. But the 140-kilo (309-pound) bear shocked onlookers by catching the chubby fish and playing with his live prey until they stopped flapping. Then he gobbled them up.

“He ate them all in just a day and a half,” the zoo’s bear expert Heiner Klös told SPIEGEL ONLINE. “Whatever people may say, he’s a good hunter, and it’s all part of being a polar bear. This shows he’s totally fit. We won’t be placing any more fish in his moat, though.”

Germany’s top-selling daily Bild reported that onlookers were disgusted by the spectacle. The newspaper ran the headline “Knut Embroiled in Carp Scandal” and quoted animal welfare campaigners as criticizing the zoo for letting Knut eat live vertebrates in breach of German animal protection regulations.