Outrun Change

We need to learn quickly to keep up with the massive change around us so we don't get run over. We need to outrun change.

Archive for the category “Economics”

Retail brick-and-mortar stores continue their slide

The near future for a lot of Sears stores. Image courtesy of Adobe Stock.

I read but did not keep track of a WSJ article describing e-commerce companies moving into otherwise dead shopping malls and converting them into fulfillment centers. Sounds like a good way to recycle vacated malls.

Some other articles on the deteriorating retail market. Also, an explanation why sales of vinyl records have slowed.

7/7/17 – USA Today – Sears to close 43 more stores as retail crisis continues – This is in addition to the 66 closings I mentioned on June 16, which is in addition to 180 announced since January 1st.  Article says this brings the year-to-date total to over 300. I obviously missed 20 recently that were mentioned in the article.

Article says J.C. Penny is closing 138 stores, Macy’s is closing 68, and Radio Shack has shuttered over 1,000 stores since Memorial Day.

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Venezuela continues moving toward dictatorship

Shipwreck standing on the beach with the sea in the background. Margarita Island. Venezuela. Photo courtesy of DollarPhotoClub.com

What little that remained of democracy in Venezuela continues to crumble.

8/4/17 –France 24 – Venezuela’s currency crumbles at dizzying speed – The value of the bolivar is shrinking fast.

On Thursday the bolivar dropped to 17,000 to 1 U.S. dollar.

The official exchange rate is 2,870:1.

The reporter interviewed an executive in a reinsurance business. That would be a professional level position. His salary is 800,000 bolivars a month. A year ago that was worth $200 and now it is worth $47.

Two pounds of rice costs 17,000 bolivars.

8/5/17 – Wall Street Journal – Venezuela’s New Assembly Fires Attorney General – Well, the slow-motion coup continues to roll forward.

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Drop in transportation costs from Erie canal

Erie Canal, Newark. Date: circa 1910. Image courtesy of Adobe Stock.

Infrastructure such as canals, interstate freeways, and the internet provide a foundation that enables the economy to boom.

This is one of many ideas I’m enjoying as I look at John Steel Gordon’s explanation of An Empire of Wealth: The Epic History of American Economic Power.

In the 1790s, the road system in the US was so poor that farmers in western Pennsylvania could not afford to ship their grain to the east coast. To make a living they had to distill their grain into whiskey so they could afford the shipping costs. A new thing I learned is how to describe that situation: value-to-weight ratio.

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Elections in Venezuela

Image courtesy of Adobe Stock.

An unofficial plebiscite was held to oppose the end of democracy. The vote for a constitutional convention to re-write overthrow the current constitution has been held, with uncertainty as to the actual turnout.

 

7/15/17 – Reuters – Venezuela opposition hold unofficial plebiscite to defy Maduro – The opposition holds an unofficial vote on 7/16 as a protest against the upcoming official vote which many consider to be the last votes ever in Venezuela as a new constitution will essentially put the legislature under the thumb of the president.

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Continuing devastation in Venezuela – #29

What economic system produces this result? Image courtesy of Adobe Stock.

The political and economic conditions in Venezuela continue to deteriorate.

7/3/17 – Bloomberg – Venezuela’s Poor Rebel, Roiling Maduro’s Socialist Strongholds The power base for the leaders of the socialist country is poor people.

From previous reading I’ve done, massive subsidies to the poor successfully bought their allegiance. The collapse of services including water outages, random outages of electricity, and empty store shelves are rapidly undermining support from the poor. Protests has spread to many of the poor communities in Caracas. There have been nightly protests in a number of communities for several weeks.

7/5/17 – Wall Street Journal – Maduro Supporters Storm Venezuela’s CongressRead more…

While on a long road trip, what economic system provided the goods and services I needed, when and where I wanted them?

How is it that services are available on the interstate highway system when and where I need them? Image courtesy of Adobe Stock.

I took a road trip from the Los Angeles area to Williston last week. My wife and I drove there with our son and his family.

A few questions came to mind on the trip

Questions

1. What economic system provides a gas station within a few miles of the point that we decided we wanted to fill up the tank?

With four drivers in the car,  we were planning to drive on through the night. We were too tired to do that so we decided to stop for the night.

2. What economic system provides multiple hotels and motels half an hour down the road from where we changed our mind?

3. Furthermore, when we wanted to stop, what economic system provided motels at multiple price points so we could pick the one that fit our price range and taste?

4. Why is it that the motel we choose included a full breakfast for all of us in the price?

5. Why did the motel even have two upgraded lamps on the night stands each with 2 USB charging points and two electrical outlets on the base of each lamp?

Answers

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More on the downside of unreliable wind power: paying for decommissioning costs

I count 64 turbine towers in that view. Photo by James Ulvog, somewhere southwest of Williston, en route to Denver.

There will be major costs involved in decommissioning wind turbines. Who will pay?

3/8/17 – Stop These Things – Farmers “Hosting” Wind Turbines Faces Massive Clean Up Bills & Other Legal Liability – Legislation is under consideration which would force wind power companies to set aside money to decommission the turbines. At the moment the corporate shells holding the producing assets have nothing set aside. Without some requirement for accumulating reserves, neither the holding company nor the entity’s parents will have any responsibility to clean up the site. There will be no recourse by landowners or regulators to force the then-empty shells to clean up the sites.  That will leave the landowner or the local government or the national government holding the bill for decommissioning.

Disposing of a wind turbine means finding some way to get rid of the toxic blades, the generator containing large amounts of rare earth metals, and 1000 metric tons of buried concrete.

Situation is similarly bad in Australia. Read more…

More on the downside of unreliable solar power: Paying to get rid of excess electricity.

Photo by James Ulvog.

There is so much excess electricity from solar power that sometimes California has to pay utilities in other states to take it. Also, what will we do with all those panels when they wear out?

6/22/17 – Los Angeles Times – California invested heavily in solar power. Now there is so much that other states are sometimes paid to take it – There are two non-negotiable physical laws that undercut the value of solar power.

First, electricity must be used the instant it is generated. Second, solar power is generated when the sun is bright not necessarily when the electricity is needed.

Some days, there is so much solar power in California that “we” have to pay utilities in Arizona to take the electricity in order to keep from overloading the grid in California.

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Bleak outlook for Venezuela

Image courtesy of Adobe Stock.

With the supreme court compromised, the president outmaneuvering the congress, all members of the military under the watchful eye of Cuban zampolits (political officers), and the most loyal members of the military allowed to enjoy the spoils, there doesn’t appear to be much hope for either a peaceful solution or near-term end to the massive, intentionally caused humanitarian suffering in Venezuela.

Here are two short comments on the escalating violence and a long discussion of a feature article on the collapse of democracy and the economy.

6/16/17 – AFP at Yahoo News – Venezuela mobs kick, burn thieves in lynching epidemic – What happens when governments take actions that prevent the economy from working and as a result people are starving? Thieves start robbing people of food at gunpoint (money isn’t worth stealing).

What happens when robberies get out control because there is so much disruption and the government can’t do anything to maintain peace and there is widespread suffering? Mobs start lynching robbers.

There were 20 reported mob driven lynchings in 2015, 126 in 2016, and 60 in the first five months of this year.

In one attack on an armed robber, the police were able to pull the near-unconscious man into a police car as the mob cheered having beaten him. Another reporter filmed a robber being set on fire.

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Venezuelan government supported with cash from investment bank while support from military is weakening

Image courtesy of Adobe Stock.

A New York investment bank bought bonds from the Venezuelan central bank at a steep discount and got a lot of heat for doing so. The military is applying more violence to protesters as support from the rank and file appears to be shrinking.

5/30 – Wall Street Journal – Goldman Sachs Under Fire for Venezuela Bond Deal – Goldman bought $2.8B of bonds issued by the government-owned oil company for $865M. That is 31% of face. If, and this is a big if, the bonds were to be paid in full, on-time, at face value that would produce a 40% return.

Goldman is in a PR mess because the bonds were held by the Venezuelan central bank, meaning Goldman essentially put almost a billion dollars into the government’s hand.

Article says Goldman has been increasing their holdings of Venezuelan debt over the last few months. Their play is that if government gets its finances in order, the bonds will soar in value and Goldman will make a huge profit.

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Why, oh why, did production of oil and food collapse in Venezuela? What could have caused this amount of human suffering?

Shipwreck standing on the beach with the sea in the background. Margarita Island. Venezuela. Photo courtesy of DollarPhotoClub.com

Devastation in the oil industry and food supply chain in Venezuela is due to intentional government policies.

One article sees how the government caused the damage to the oil industry while another article sees the devastation in the food supply but cannot see any direct cause.

5/7/17 – Forbes – How Venezuela Ruined Its Oil Industry – Here is a primer on how to destroy your oil industry when you have the world’s largest proven reserves of oil and are in the top 10 of world oil producers.

If you want to destroy your country, the article provides a how-to-guide, using Venezuela as the road map.

The high point of oil production in Venezuela was 3.5M bopd back in 1998, which not by coincidence was the year Hugo Chavez became president. Production then began to slip. How could that be?

After civil unrest in 2002 and 2003, Chavez fired much of the staff of the national oil company, letting go 19,000 experienced staff.

Let me translate that: 19,000 staff who knew how to produce extra-heavy oil were fired and replaced by people whose primary job skill was loyalty to the president.

Extra heavy oil takes specialized knowledge and is very expensive to produce on top of oil production already being capital-intensive.

To generate more revenue, Venezuela invited five of the oil majors to develop more oil production. The form of investment was a partnership. The five majors invested many billions of dollars in oil production.

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More explanation of the serious downside of wind power

Part of the cost of wind power is externalized with great force on the wings and torsos of critters like this. Image of Golden Eagle in flight courtesy of Dollar Photo Club before their merger into Adobe Stock.

Two recent articles point out the serious limits and negative consequences of wind power.

5/13/17 – Matt Ridley at The Spectator – Wind turbines are neither clean nor green and they provide zero global energy – There are many economic, ecological, and environmental problems with wind power. Author focuses on three issues:

  • Tiny portion of total energy consumption provided by wind
  • The massive number of new turbines needed just to keep up with growth in energy use, let alone reduce the amount of fossil fuels consumed
  • The massive amount of natural resources needed to manufacture that many new turbines

I will summarize the article with my expansion on select points.

Amount of wind production worldwide

Close up of following view. Compare the size of the turbines to the roads. Photo by James Ulvog.

How much of the total consumption of energy across entire planet do you think came from wind during 2014?

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When do we get to call the ‘Maduro diet’ in Venezuela a crime against humanity?

Consequence of intentional government policies in Venezuela. Image courtesy of Adobe Stock.

A one-year old child who weighs 11 pounds.

Eleven.

In what used to be the regions’s richest country, the average weight loss in the last year is 19 pounds.

That’s an average weight loss according to a survey by social scientists measuring the impact Venezuelan government policies are having on the citizens of the country.

It is called the ‘Maduro diet’ in dishonor of the president who is gladly continuing the polices that have broken the once rich nation.

It is a common site to see people picking through trash hoping to find something that is edible.

When will those of us who don’t have to decide which of our children get to eat today start calling the expected results of intentional policies a crime against humanity?

Let’s take a quick look at health care in Venezuela before returning to the starvation issue.

Collapse of the health care system

The medical crisis is so bad that even CNN has noticed. On 5/11/17 they reported Amid chaos in Venezuela, infant deaths, malaria cases skyrocket.

 

The government released statistics for 2016. They reported:

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Ongoing violence in Venezuela against those who merely want to their children to eat

In Venezuela, above activity is sufficient to draw weapon fire or armored tanks. Image courtesy of Adobe Stock.

The violence in Venezuela directed against those people who merely wish to keep their children from starving continues.

My previous comment: 4/19/17 – Washington Free Beacon – Socialist Venezuela Leader Steps up Arming of Supporters After Outlawing, Confiscating Civilian Guns – The government has spent the last five years confiscating guns from private citizens. That’s what authoritarian, totalitarians, and other bad governments do.

Why? So they can’t defend themselves.

From what might individuals need to defend themselves from?

How about 400,000 loyalists who are going to be armed by the government. Read more…

“Magic without wizards”, or, why is your favorite bread on the shelf when you want it?

Consider merely the way that your favorite bread is always available, usually from many bakeries. And at the time you want. The bakery doesn’t know whether you will stop in on your way to work, during lunch, or after having dinner.

How can it be that several bakeries know to have your choice of bread available, whether sourdough loafs, whole wheat biscuits, rye rolls, croissants, or cranberry bagels? How did they know to order enough yeast, oil, and flour? How did they know what mix to bake before the sun came up?

How did the wholesalers know enough to deliver the right amount of flour to all the pizzerias, bakeries, and pastry shops?

How did the farmers know enough to plant the right amount of wheat, oats, barley, and rye last spring to harvest enough this fall to satisfy all those bakers?

Hmm. What could be getting all those people working together to make sure my favorite and your favorite bread is available when you or I want it?

Ponder these and many more questions just in terms of having bread on the shelf in this video, called “It’s a wonderful loaf:”

 

 

The answer of how all that happens is readily available for all who want to find it.

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