Why the stock market keeps going up

Americans are out of work.  Factory orders are sluggish.  The economic news is grim yet the U.S. stock market keeps going up.  Can this be consistent?  Sure!  It is possible to believe simultaneously that the American people are getting poorer and that the largest American corporations are going to get ever richer.  How could this happen?  Group A and Group B can get richer if they work together to grow the pie.  Alternatively, Group B can get richer by transferring wealth from Group A.


We’ve discussed this already in this blog in the context of airline CEOs who managed to take $billions in taxpayer money and transfer quite a bit of it into their personal checking accounts as salaries, bonuses, guaranteed pensions, etc.  But there are more subtle ways in which corporations can acquire property formerly held by the public.


For example, movie studios (notably Disney) and other corporate copyright holders recently purchased a federal law that extended copyright out to 100 years (the Founders had it at 14; it was 75 years until recently).  There was no way for them to argue that this law would provide an incentive to authors because it applied to works that were created in the 1920s, i.e., whose authors had been dead for half a century or more.  The effect of this law was to transfer public average-Joe property (public-domain works) into the hands of large corporations, i.e., the companies whose shares are going up.


Disney figures in another corporate property transfer.  Ever since the dawn of aviation it has been held that airspace belongs to the public and is to be regulated for the benefit of all by the FAA.  This is what, for example, prevents the owner of a farm in Missouri from demanding that Delta Airlines pay him a tax every time they fly over his farm.  In May of this year that changed for the first time.  Disney essentially now owns the airspace over Disneyworld and Disneyland and they can exclude anyone from overflying.  They’d been trying for years to exclude planes towing advertising banners but Sept. 11th gave them a security rationale (though neither the TSA or the FAA felt there was a security risk or wanted to transfer the airspace into private hands).  Background story: http://www.aero-news.net/news/sport.cfm?ContentBlockID=9601


Let’s hope the comments section will fill up with other examples of this trend.  But the bottom line is that the time seems ripe to invest in the S&P 500.  Look around you at stuff that you believe to be public property.  Very likely it will soon be given away to America’s largest corporations and consequently their stock will go up even if they don’t innovate.

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Car/Kennel

Conventional wisdom says “never leave a dog in a car” because he’ll die from the heat. A modern car, however, has nearly all of the makings of a perfect kennel: (1) two energy sources: battery and gas tank/engine, (2) fans that can bring in fresh air, (3) interior temperature sensors (cars where you set “72 degrees” on the dashboard), (4) power windows, (5) clear windows that are coated with high-tech materials that reject IR and UV light. Plus the car is a familiar place for the dog and most dogs seem to prefer being in their normal car to being tied up somewhere unfamiliar. With 100 lines of computer programming a car could do the following:

  1. blow air in or, ideally, out of the car when the temperature rose above 70 degrees
  2. roll down the windows a bit
  3. turn the engine on and start the air conditioner, notifying the owner that it was getting a bit roasty out there for Fido [doing this mass-market would require a working wireless Internet infrastructure in the United States, something that has been discussed here earlier but is apparently not a high priority for our politicians]
  4. if the gas tank were getting low, roll down all the windows and shut off the engine, notifying the owner that the dog was at risk of escape or theft

The system could be made a bit better if the car had, in addition to the windows, a slideable stainless steel or Kevlar mesh that could roll up and down. Then the dog and the car could be secure with all the windows up.

Because car makers don’t open their computer systems to programming (I never thought I’d say this but I wish that cars ran Windows XP so that I could add the above features myself in Visual Basic), it isn’t possible to build this right now very easily. However, I think I have a solution.

Suppose that you don’t really use the back seat of your car. You can install a stainless steel wire mesh on the inside of the back windows, essentially stapled to the door frame. Attached to the inside of the mesh on one side put a 12V exhaust blower fan. You can now roll down the rear windows, put a sunshade across the windshield, and the temperature inside the car should not exceed the temperature outside. Maybe add a provision for a temporary fine-mesh screen for summer evenings so that mosquitos don’t get into the car.

One issue with the car/kennel idea is that the motor might run the battery down. However the only time you’d want to use the fan is in the summer when the battery power is at its peak and the power required to start the engine is at its lowest. You wouldn’t be leaving the dog for more than an hour or two so even the most powerful fans wouldn’t exhaust the battery.

I’m planning to do this with my next car. I like minivans because it is easy to keep a bicycle in the car (I have trouble walking so like to have a bike available at all times). There are some new minivans available that have middle windows that roll down, e.g., Toyota Sienna 2004. Before I trade in my 5-year-old minivan I am hoping that someone will introduce a gas/electric hybrid minivan but if it doesn’t happen by February 2004 I’ll buy a new Sienna and start stapling.

Better ideas anyone?

[Update 2019: “Tesla introduces ‘Dog Mode’ to keep your pets from getting too hot”]

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Summer weddings should be in waterslide parks

Thus far this summer I’ve endured two weddings.  One was at a golf course by the sea and the other in a fancy hotel in Harvard Square.  Both seem like cruel wastes of a day.  It is so painful to sit indoors and look out the window and think “we could be out there moving around, having fun, enjoying the warm weather.”  The feeling is especially acute if one has driven a long distance to attend the wedding.


Imagine instead a wedding held at a waterslide park.  The ceremony would be at the top of one of the big waterslides and people would leave the aisles by jumping into the tubes.  Instead of warmed-over surf and turf guests could wander around getting freshly grilled hot dogs from the usual theme park vendors.  Rather than having to buy expensive and ugly bridesmaid dresses the guests need only show up in a swimsuit.  Most important everyone would remember that they left the house and had a lot of fun.


Most weddings seem to cost at least $200 per guest and therefore the cost of renting out a smaller and/or older theme park should not be prohibitive.

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Fun for Friday: Vacuum out your PC

My desktop machine came with Intel Active Monitor software (free but it only works with Intel-brand motherboards), which issues alerts when the system or CPU get too hot.  The machine is about 16 months old and the monitor software has been complaining vociferously lately about excessive heat.  My friend Doug and I opened up the case, vacuumed out the innards, using a little canned air as an extra incentive for the dust to depart the fan blades, and the machine is now running 30-40 degrees F cooler.


Who knew that desktop PCs required maintenance?

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Rich island retreat = good; Obscenely rich = ?

Just back from Martha’s Vineyard.  If you’ve flown and driven the entire East Coast you realize how unspoiled the Cape and Nantucket/MV are.  No concrete high-rises, lots of woods, cheesy tourist strip malls mostly confined to the main roads and the occasional town.  Maybe it is the coldness of the water that has kept development from ruining this area.  That doesn’t mean that Martha’s Vineyard isn’t changing, however, and those who knew it when aren’t entirely happy.


1970s:  the Vineyard was a year-round working-class town of fishermen and boatyard workers supplemented by a summer season where rich New England WASPs spent weeks or months in small simple cottages near the shore.  The place was isolated, the only access being by ferry boat from Woods Hole on the Cape Cod mainland or in little propeller airplanes from various points.  It wasn’t practical to remain in the fast lane in New York or Washington, DC and also spend weekends on the Vineyard.  Crime was non-existent.


2000s:  The corporate jet has changed everything.  KMVY has a 5500′ runway and an instrument landing system.  That plus a Gulfstream puts most of the population of the East Coast within about a one-hour flight from Martha’s Vineyard.  And all on the shareholders’ dime!


Ease of access has made the Vineyard both more and less democratic.  It is less democratic in that you better show up with $2-5 million if you want to buy a house.  It is more democratic in that anyone can buy a house now if they have enough money; you don’t have to be a WASP.  For example, Harvey Weinstein, a Jewish movie producer, was able to purchase a house in a formerly exclusive area (people did not want to sell to a Jew but eventually the siren song of a suitcase full of 100-dollar bills was irresistable).


It is also become more democratic in that poor people have arrived in large numbers.  Why?  Rich people attract poor people.  A middle class person with a vacation house will tend to keep it up by himself.  He comes out for a couple of weekends in May to turn on the water, patch up any broken screens, and cut the lawn.  Then he tinkers a bit for the rest of the summer.  This isn’t practical if your vacation house is a 10,000 square foot mansion set in 4 acres of formal gardens.  You could hire the local working class folks to maintain your garden and clean and repair your house but that would get expensive, even for a rich person.  The solution is to import serfs from the Third World.  Martha’s Vineyard is filling up with foreign workers, mostly Brazilian, sleeping 5 to a room at night and preparing the estates of the rich for July and August.


The old-timers are worried.  Violent crime is on the rise.  The children of the serfs seem to be forming gangs.  It looks as though Martha’s Vineyard is on its way to becoming more like Rio de Janeiro:  fantastically rich in spots but also not very safe when you step out of your enclave.


More:  http://www.photo.net/us/ne/cape-cod (M.V. section is about halfway down)

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My first helicopter lesson

Due to a large number of fatal crashes during training, students are not allowed into a Robinson R22 2-seat helicopter, even with an instructor, until they’ve had some ground training.  If you believe that you have some special mission on this planet the grounnd training might cause you to terminate your.


Here’s what I learned about the hazards inherent in flying helicopters…


As with airplanes, the key to being safe in a helicopter is energy management.  In an airplane you have potential energy (altitude) and kinetic energy (forward speed) that can be traded off against each other to bring the airplane down gently in the event of an engine failure or ordinary landing.  The helicopter has three kinds of energy:  potential (altitude), kinetic (forward speed), and angular momentum (blade speed).


In an airplane you can make decisions about trading forms of energy very late in the day.  For example, if you pull the stick all the way back at 6000′ above the ground you will gradually slow down and eventually stall and perhaps enter a spin.  With many airplanes you could spin nearly all the way to the ground before applying forward stick and opposite rudder to get back to a normal flight condition.  All without an engine.


In a helicopter, by contrast, if the blades spin down more than 10-15% from their normal velocity, there is no way to convert potential or kinetic energy into spinning such that the helicopter will start to fly again.  If you don’t have an engine, therefore, your helicopter can very quickly become a rock.


In a turbine-powered helicopter like the Jet Rangers that are typically used for sightseeing the blades are heavy and the blades won’t slow down for several seconds after an engine failure.  The Robinson, however, is designed for super high efficiency and therefore everything is as light as possible.  After an engine failure you have no more than 1.2 seconds to take exactly the right actions or the helicopter cannot be recovered.


What if you do take all the right actions?  Suppose that you’re up at 4000′ and the engine quits.  You lower the collective pitch (lever on your left) immediately to flatten the blades and allow them to be driven by the wind through which the helicopter is now falling at 2000 feet-per-minute.  You adjust the cyclic (stick in front of you) for about 65 knots of forward speed.  You aim for a landing zone.  The good news is that you don’t need a very large one but the bad news is that the glide ratio is 2:1 instead of an airplane’s 10:1 and therefore you don’t have as large an area from which to choose.  As you get within about 50′ from the ground you pull back the cyclic to flare the helicopter and shed most of the forward speed.  Just as in an airplane this flare also arrests most of the vertical speed.  At the second to last moment you stop flaring and return the helicopter to being parallel to the ground.  Ideally at this point you are hovering 5′ or so above a soccer field and the blades are still spinning.  Finally you raise the collective as the helicopter falls, using the stored energy in the blades against the force of gravity.  You land gently on the skids.  (In practice the cyclic flare is more important than the “hovering autorotation” at the end; a lot of people walk away from helicopter engine failures if they get the cyclic flare right but can’t manage to pull the collective smoothly at the last moment.)


This all sounded good until we looked at the “deadman’s curve”.  The marketing literature for helicopters says “if the engine fails, you can autorotate down to a smooth landing.”  The owner’s manual, however, contains a little chart of flight conditions from which it is impossible to landing without at least bending the helicopter.  Unfortunately these conditions are the very ones in which nearly all helicopters seem to operate.  If you’re above 500′, for example, you’re pretty safe.  But TV station helicopters are often lower than that when filming.  Flying along at 65 knots is also good but if the camera needs the pilot to hover the helicopter slows to a crawl.


After a couple of hours of theory we went to the hangar and preflighted the helicopter.  The engine is flapping in the breeze on an R22 and therefore you can inspect a lot of linkages and lines that are hidden on most airplanes.  Most of the other critical mechanical components are open to the air or accessible via covers that you open during the inspection.


Four hours after the lesson started we were ready to fly…  but the ceiling was 900 overcast with visibility 4 miles in mist.  So we gave up and went home.

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Only 3 computer companies in this decade (Oracle/PeopleSoft)

If you’ve been reading the business news you might have noticed that Oracle has been trying to buy PeopleSoft, one of its competitors in the enterprise software toolkits market, in which the German company SAP is the leader.  With either SAP, Oracle Applications (not to be confused with the Oracle Database Server), or PeopleSoft you can build a corporate accounting system without having to start from scratch.


My theory of the market for IT products…


1960s: lots of innovation, many vendors


1970: customers realize that most of their innovative smaller vendors have gone bankrupt, vow to buy only from IBM


1988ish: customers realize that the computer they bought this year from IBM was almost exactly the same as the one they bought from IBM in 1969; they begin to demand innovation


1988-2000:  lots of innovation; small companies such as Microsoft and Oracle are able to grow into big companies


2001: customers realize that most of their innovative smaller vendors have gone bankrupt and vow to buy IT from only three vendors:  Microsoft for software, Oracle for big database management software, IBM for mainframes.


2010?:  customers realize that Windows/Office 2010 is more or less the same as Windows/Office 2000 and begin to look at new products from new companies again


Currently therefore it makes a lot of sense for all the medium-sized software companies either to fold or be purchased by Microsoft, Oracle, or IBM.  When customers will only buy from one of the Big Three the business is worth a lot more to the Big Three than to anyone else.


[Of course PeopleSoft may not be sold at all.  Oracle has offered $5.1 billion, which the shareholders would be incredibly lucky to get considering that the long-run viability of the business is questionable.  Craig Conway, the CEO of PeopleSoft, however, states that “I could imagine no price nor combination of price and other conditions to recommend accepting the offer to our shareholders”.  I.e., if Oracle offered to give his shareholders a Dr. Evil-esque $100 billion he would turn it down because the acquisition would mean the end of his CEO job.  Mr. Conway earned $17.6 million last year, during which revenue and profit declined and his shareholders got creamed.]


 

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Our Earth: Spinning faster, covered in filth

Back home in Boston now after enjoying the magic of big airplanes:departed Tel Aviv on Lufthansa at 0530, slammed down at Frankfurt four hours later (European airports charge a landing fee for every practice touch and go and therefore most European pilots have much less experience with landings than their American counterparts), got into a 747 at Frankfurt and climbed over scary-looking cumulus clouds that topped out at 20,000′.  Seven hours later we broke through a 5000′ cloud layer to touch down (smoothly) on 22L, exiting the runway with 2000′ to spare out of 10,000.  Would have been several months of planning and fitting extra fuel tanks and one week of flying/waiting for weather in a light airplane.  One of my hosts in Israel was a retired air traffic controller from Ben Gurion airport.  He said that it never ceased to amaze him that a 747 could get off the ground and deliver hundreds of people to the other side of the planet in a fraction of a day.


Up above the clouds it is easy to start reflecting on the state of the planet…


Flying out of Boston to Nantucket you can take a short detour over the
famous dunes of Provincetown and eastern Cape Cod.  These natural
treasures are protected by Federal law as a National Seashore.  Just
how ancient are these dunes?  They go back to just after 1600 when the
Pilgrims arrived and cut down all the trees, thus allowing the soil to
turn into pure sand and blow around.


Wales and Scotland are the “wild” portions of the United Kingdom.  The
collision of Scotland with England way back generated a collection of
mountains that have eroded into rolling hills, typically rising to
2000′ or 3000′.  From any town, trail, or road you have unobstructed
views because the island was deforested by humans many years ago,
perhaps during Roman times.  You’d expect it to look a bit like
Vermont, with pastures in the valleys and large areas of tree cover,
especially near the ridges.  Without trees, however, it looks like,
well, England.  The remotest parts of the UK are incredibly crowded by
rural and small-town American standards.  No matter how minor the road
that you’re on, there is always one car behind you and another visible
coming in the opposite direction.


The crowding seems to be irritating the people who live in the UK.
Buildings and parks are festooned with signs asking people not to do
this or that.  You are threatened with heavy fines should you park for
more than 2 hours at a motorway rest stop or park sloppily and take up
two spaces in a 500-person village’s central car park.  If you own a farm, it is very difficult to get permission from
neighbors to land your airplane in your backyard.  People even attack public airports in the UK, something that is almost impossible in the U.S. due to the fact that nearly all regulation of airports is federal.  For example, Madonna, the pop singer, bought a big estate in southern England.  She travels there by private jet to a big airport and then a turbine-powered helicopter (Mother of All Noise) to her backyard.  A few miles away is a public airport, Compton Abbas, with a short grass runway and a bunch of Brits goofing off in ultralights and Cessna-style airplanes.  Madonna has been trying to get them shut down because, after her private helicopter roars away, she wants a little more peace and quiet.


Perhaps some of the violence in Africa can be explained by overcrowding.  The Congo, for example, has about 25 people per square kilometer, roughly the same density as the U.S.  But their percentage of arable land is 3 percent versus 19 percent for the U.S.  Thus they have something like 6 times as many people per acre of farmland and, due to a lack of education and infrastructure, many fewer opportunities to survive via non-agricultural pursuits.


Let’s move on to Man’s effect on the environment…


Looking up into the UK sky one occasionally sees a blue patch.  The
air seems clean through the vertical slice that you’re seeing.  Get up
into an airplane, however, and you look through horizontal layers of
air.  It is the same brown color that strikes one when returning in an
airplane from Alaska or the Caribbean into the Continental U.S.


Israel from a small airplane looks rather like Los Angeles without the
big mountains.  One side bordered is by the sea.  Development sprawls
in all directions from Tel Aviv, mostly high-rise apartment buildings
rather than the single-family houses you see in less densely populated
L.A.  Old citrus groves surround new exurbs.  Occasional undeveloped
scraps of dry scubby land poke through the buildings.  The air, seen
sideways from a plane, is tinged brown with pollution.


Traveling out of North America, with its vast wilderness areas, one is struck by how atypical North America is.  The UK and Israel are representative of the human experience on this planet:  most people will never see even one tiny corner of the Earth in anything like its natural state.


If one is not a professional ecologist and one has grown up in North America it is tough to appreciate at a gut level that humans are able to have any significant effect on the Earth.  Our planet seems like an infinitely huge and forbidding wilderness punctuated by the occasional human settlement.  According to Understanding Earth (a very interesting book but a new edition is coming out within a year or so), our planet’s mass is 5.976×10^27 grams, i.e., much heavier even than the biggest S.U.V.  Yet we humans have managed to speed up the Earth’s rotation enough to shorten each day by 10 microseconds by impounding water behind dams in rich countries, which tend be at high latitudes.  The dams pull water away from the the equator, where it was spinning with a high linear velocity.  By conservation of angular momentum the Earth is forced to spin a little bit faster when the mass of water is pulled inwards, just as ice skaters spin faster when they pull their arms in.

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The dangers of traveling in Israel

Friends who read the newspaper and watch CNN didn’t want me to come to Israel, which as far as they can tell is the world’s most dangerous country.  If this is true, someone forgot to tell the Israelis.  They gather in huge crowds at beachside restaurants.  They stroll around Tel Aviv at all hours of the day and night.  They pack the highways and shopping malls.  They meet at huge dinner parties with friends and extended family.  In short, they are sitting ducks.


When I go back to the U.S. tomorrow morning I’ll be risking getting eaten by a Mountain Lion in a Colorado suburb (it happens), being killed by a Grizzly Bear almost anywhere in the West, getting swept away by violent rivers and waves, being mugged in Cambridge by local kids who aren’t grateful for a lifetime of taxpayer support, being blown up on Amtrak or in NYC by Islamic terrorists while attempting to go to a Broadway play, being killed in a post office by an angry worker with a high-powered rifle, etc.  And then there is my first helicopter lesson on Monday morning….


Anyway the bottom line is that Israel seems to be at least as safe as most densely populated parts of the U.S. and Europe.  The obsession with violence in Israel is a foreign obsession.  The world would be a much safer place if people focussed more on reducing violence in their own backyards.

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