Monday, January 30, 2012

I would be surprised...  

If officials find much of the MF Global missing $$. So would others.
Federal officials looking for an estimated $1.2 billion missing from customers of MF Global Holdings Ltd. feel more and more that a lot of it may never be located, according to a report citing sources familiar with the probe.
What's been learned so far suggests that a good deal of the money may have “vaporized” because of scrambling in trading in the week before MF Global filed for bankruptcy protection Oct. 31, the Wall Street Journal reported, citing “a person close to the investigation.”
Many now think specific MF Global employees used money from a customer account meant to be walled off and used it to cover collateral requirements or to unfreeze assets of banks and others as they became more worried about how exposed they were to MF Global, the Journal reported. [More]

The TP seminar is underway, and this will be one of my questions to the analysts at the taping.
See their answers this weekend.

Sunday, January 29, 2012

A pain in the back...  

I have friends and family who suffer from back pain, and Jonah Lehrer clarifies what we know in a brilliant article about the boundaries of our understanding of cause-and-effect.
Today, back pain is an epidemic. There's an 80 per cent chance that, at some point in your life, you'll suffer from it. There are so many moving parts in the back that doctors have always had difficulty figuring out what, exactly, was causing a person's pain. As a result, patients were typically sent home with a prescription for bed rest. This treatment was very effective. Even when nothing was done to the lower back, about 90 per cent of people with back pain got better within six weeks. The body healed itself, the inflammation subsided, the nerve relaxed.
For years, this hands-off approach remained the standard medical treatment. That all changed, however, with the introduction of magnetic-resonance imaging in the late 70s. These diagnostic machines use powerful magnets to generate stunningly detailed images of the body's interior. Within a few years, the MRI machine became a crucial diagnostic tool. The view afforded by MRI led to a new causal story: back pain was the result of abnormalities in the spinal discs, those supple buffers between the vertebrae. The MRIs certainly supplied bleak evidence: back pain was strongly correlated with seriously degenerated discs, which were in turn thought to cause inflammation of the local nerves. Consequently, doctors began administering epidurals to lessen the pain, and if it persisted they would surgically remove the damaged disc tissue.
But the vivid images were misleading. It turns out that disc abnormalities are typically not the cause of chronic back pain. The presence of such abnormalities is just as likely to be correlated with the absence of back problems, as a 1994 study published in The New England Journal of Medicine showed. The researchers imaged the spinal regions of 98 people with no back pain. Two-thirds of normal patients exhibited "serious problems" such as bulging or protruding tissue. In 38 per cent of these patients, the MRI revealed multiple damaged discs. But none of these people was in pain. The study concluded that, in most cases, "the discovery of a bulge or protrusion on an MRI scan in a patient with low back pain may frequently be coincidental".
This is not the way things are supposed to work. We assume that more information will make it easier to find the cause, that seeing the soft tissue of the back will reveal the source of the pain, or at least some useful correlations. Unfortunately, that often doesn't happen. Our habits of visual conclusion-jumping take over. All those extra details end up confusing us; the more we know, the less we seem to understand. The only solution for this mental flaw is to ignore a wealth of facts, even when the facts seem relevant. This is what's happening with the treatment of back pain: doctors are now encouraged not to order MRIs when making diagnoses.
The failure of torectrapib has not ended the development of new cholesterol medications -- the potential market is simply too huge. Although the compound is a sobering reminder that our causal beliefs are defined by their oversimplifications, that even the best-understood systems are still full of surprises, scientists continue to search for the magic pill that will make cardiovascular disease disappear. Ironically, the latest hyped treatment, a drug developed by Merck called anacetrapib, inhibits the exact same protein as did torcetrapib.
The initial results of the clinical trial, made public in November 2010, look promising. Unlike its chemical cousin, this compound doesn't appear to raise systolic blood pressure or cause heart attacks. (A larger clinical trial is under way to see whether the drug saves lives.) Nobody can conclusively explain why these two closely related compounds trigger such different outcomes or why, according to a 2010 analysis, high HDL levels might actually be dangerous for some people. We know so much about the cholesterol pathway, but we never seem to know what matters.
Chronic back pain also remains a mystery. Doctors have long assumed that there's a valid correlation between pain and physical artefacts -- a herniated disc, a sheared muscle, a pinched nerve -- yet there's a growing body of evidence suggesting the role of seemingly unrelated factors. A recent study published in the journal Spine concluded that minor physical trauma had virtually no relationship with disabling pain. Instead, the researchers found that a small subset of "nonspinal factors", such as depression and smoking, were most closely associated with episodes of pain. We keep trying to fix the back, but perhaps the back isn't what needs fixing. Perhaps we're searching for causes in the wrong place.
The same confusion afflicts so many of our most advanced causal stories. Hormone-replacement therapy was supposed to reduce the risk of heart attack in postmenopausal women -- oestrogen prevents inflammation in blood vessels -- but a series of recent clinical trials found that it did the opposite, at least among older women. (Oestrogen therapy was also supposed to ward off Alzheimer's, but that doesn't seem to work, either.) We were told that vitamin D supplements prevented bone loss in people with multiple sclerosis and that vitamin E supplements reduced cardiovascular disease. Neither turns out to be true.
Given the increasing difficulty of identifying and treating the causes of illness, it's not surprising that some companies have responded by abandoning research. Most recently, two giant firms, AstraZeneca and GlaxoSmithKline, announced that they were scaling back research into the brain. The organ is too complicated, too full of networks we don't comprehend. We live in a world in which everything is knotted together, an impregnable tangle of causes and effects. Even when a system is dissected into its basic parts, those parts are still influenced by a whirligig of forces we can't understand or haven't considered or don't think matter.
This doesn't mean that nothing can be known or that every causal story is problematic. Some explanations work better than others, which is why, thanks largely to improvements in public health, the average lifespan in the developed world continues to increase. Although our reliance on statistical correlations has strict constraints -- which limit modern research -- those correlations have managed to identify many essential risk factors, such as smoking and poor diet.
And yet, we must never forget that our causal beliefs are defined by their limitations. For too long, we've pretended that the old problem of causality can be cured by our shiny new knowledge. If only we devote more resources to research or dissect the system at a more fundamental level or search for ever more subtle correlations, we can discover how it all works. But a cause is not a fact, and it never will be; the things we can see will always be bracketed by what we cannot. And this is why, even when we know everything about everything, we'll still be telling stories about why it happened. It's mystery all the way down. [More][Apologies for a very liberal excerpt, but the whole piece is worth the time, albeint mildly discouraging]
I have been puzzling for some time about the anti-scientific mood in much of America, or at least a "cafeteria" approach to science and technology. We choose when adherence to the scientific method is applicable. For farmers, it displays as staunch defense GMO's with arguments they deny for climate change. This list includes vaccinations, environmental cancer causes, flood control, meat consumption, and other hot-button issues.

I've written about our profession's approach to science before. In agriculture, we justify it by carefully annotating some science as "sound". Curously, sound science is always research that validates our position.

Sound science doesn’t just line up on one side of an argument either. Anyone who has been to a congressional hearing or in major litigation can witness a parade of sound scientists contradict one another – for a hefty fee, of course.
When EU customers won’t buy GMO corn for obviously trumped up health issues, I really doubt that a mountain of sound science will suddenly change their minds. It certainly hasn’t for US producers. Sound science has quietly pointed out that market advisors are virtually ineffective – although better than farmers themselves – compared to random choice, but producers still fork out hefty fees and mumble mantras of technical mumbo-jumbo. Sound science points out that wind energy is a non-starter because of the backup generators required, but it looks like such a great idea and if we can get a subsidy the science won’t really matter.
Sound science would also demand that no tractor be operated without a closed cab (interestingly, something our “non-science” EU cousins believe and we don’t) or by operators over 65. 
What might be happening is the clash between how much cultural change we can absorb and the pace of scientific progress. But watching the anger of the Tea Party and the mystical surreality of modern spirituality on the other side, it appears neither wing has much respect for plodding efforts by scientists to push back the boundaries of ignorance.

Meanwhile, we want our phones to work and our cars to drive themselves and life to become easier, faster and cheaper every day. My observation is electronic advancement is far more likely to be embraced than medical or geophysical. One is too close to home, the other has too many long time horizons. In those areas we reserve the right to manufacture our own belief systems, even though I think it is those seemingly disassociated technologies that are wrenching our intuitive understanding of the world the most.

My concern is that making the scientific method a handmaiden to our particular agenda renders it worthless. Our minds will have to work overtime to rationalize mysticism here and physics next door. Most of all, it appears the failings of our education system in STEM courses makes the option of "going with the gut" or "feelings" a  choice that cannot be criticized even with it's dismal results.

Religion is caught in the divergence from seeing the world dispassionately and empirically. Hence the rise of atheism or at least a "none-of-the-above" spirituality that is becoming the refuge for those seeking meaning and forced to choose between reason and faith.

We've struggled with this rift before, of course, but we now have so much power (ironically thanks to science) to change our world and lives, that the philosophical nature of the debate is dwarfed by the scale of possible consequences. 

Thursday, January 26, 2012

The Phipps Grain Bin Rally...  

Oh yeah, I'm officially taking credit for this corn rally. The Argentines arranged their drought just to have one last cheap shot at me.

As I have mentioned before (at least in speeches) I have built two of the world's most expensive free grain bins under the Cargill Grain Bin Program. This year I thought I was home free.  My target price was $6.34 on the first trading close in February. If Mar corn closes below that, my 41,000 bushels no longer have to be delivered.

Once - just one - I thought I was going to win one. (This is third and final year of the contract) If we coulda just stayed below the trigger AND THEN HAD A BIG RALLY, I could have matched a friend of mine whose bin experience was just that: his trigger was a half-cent higher than the close, and he went on to sell the contents for zillions. He mentions it often...

So as we motor to $7 please wave to me in the rearview mirror.

[Just in case you are new or confused, this is all very tongue-in-cheek. I would never have built the bins without the program, they have already paid for themselves, and railing at higher markets because you voluntarily sold earlier is nonsense.]

It just doesn't feel like a win.

If only NASS could issue a report between now and then...

Wednesday, January 25, 2012

Junkbox, Episode XMEN...  

I hate moving to a new computer, so I was blown away by the "Migration Assistant" on my Apple iMacs. The computer asked me which computer I was moving from when it found my network, told me it would take about 5.5 hours, and started the move.

About 6 hours later, I essentially had two identical computers. The new 27" screen adds mostly width, but is still a welcome addition for worsening eyes. The speed is noticeably zippier, and I've eliminated some annoying freezes.

Best of all, I get to play Santa Claus to one of nieces/nephews/friends and hand off my old Mac.

Some stuff I've found:

Tuesday, January 24, 2012

This is the competition...  

In an amazing and slightly horrifying article, the NYT details why the iPhone is made in China. And it's not just low wages - it's simply incredible organization and speed. The most jaw-dropping revelations:
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals. 
The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.
Foxconn employees, in interviews, have challenged those assertions.
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days. [More of what should be mandatory reading to understand globalization]
Just like the old basketball saw, "You can't teach height", we still struggle in the US to grasp what millions of motivated low-wage workers can allow in terms of flexibility and market response. As manufacturing increasingly depends on shorter time horizons and being first to market, the ability to move literally hordes of people around to fit the task is a dominating advantage.

But just as we have centers for specific business activities (Silicon Valley, Motor City, Wall Street) it might be that we are moving to global focal points for manufacturing, finance, technology, etc. For us in agriculture we need ot work to make sure we are the leading location for agriculture.

I'm not sure that is our goal right now, and the sacrifices (less subsides for production, more for research, education, for example) needed to make it happen aren't being asked or made.

Update: For a refreshingly upbeat case that clearly articulates the other side of the story for the US, read this gem by Dan Dresner.

Sunday, January 22, 2012

Probably not to get...  

US government grants, anyway. If there is a non-scientific reason why the Chinese climatological community is sounding the alarm about global warming, I haven't seen it. The usual accusations applied to our own scientists don't seem to work, however.

Anyway, the latest Chinese assessment of the impact of climate change sounds familiar, if not more urgent.
Both drought and flooding are already major issues in China. The report predicts an increasing concentration of rain during the summer and autumn months, overwhelming rivers in the south; and long dry winters, which will be especially crippling for those living in China’s parched northwestern provinces.
Rising sea levels will also make coastal areas more vulnerable to flooding from typhoons and flood tides, defenses for which are currently “inadequate,” says the report. This is of particular concern, as such coastal areas are home to the major cities and Special Economic Zones at the center of China’s rapid industrialization. Shanghai is expected to see an increase of 10 to 15 centimeters in its coastal waters over the next three decades; it has already risen by 11.5 centimeters in the previous three.
With global warming will come changes to the pattern of the seasons and thus the realignment of China’s agricultural map. A warmer, wetter northeast will sustain more rice and other crops, while the cotton-growing region of Xinjiang in the northwest could suffer a decline in agricultural output. [More]
Another article on this report helpfully mentions a little more detail about ag:
Under one scenario of how global warming will affect water availability, by 2050 eight of mainland China's 31 provinces and provincial-status cities could face severe water shortages -- meaning less than 500 cubic metres per resident -- and another 10 could face less dire chronic shortages.
In low-lying coastal regions, rising seas will press up against big cities and export zones that have stood at the forefront of China's industrialisation.
China's efforts to protect vulnerable coastal areas with embankments are inadequate, says the report, noting their vulnerability to typhoons and flood tides that global warming could intensify.
There are sure to be shifts in Chinese crop patterns as well, says the report. More rice and other crops will probably grow in the northeast, thanks to warmer weather and possibly more rain. In the northwest cotton-growing region of Xinjiang, shrinking water availability could lead to a "marked decline in agricultural crop productivity". [More]
I think the steadily growing body of evidence will slowly (as in decades) overcome ideological opposition to the overwhelming scientific consensus here in the US and as we see  above, around the globe. It will simply never be acknowledged.

That is an OK outcome, IMHO. It matters less, for example whether farmers stop railing against government or scientific leaders than if they install tile, revise planting dates and change maturities, or even crops. They can even claim alternative reasons such as merely cyclical patterns. But I am doubtful this will be the rule for those who succeed us. This is how public opinion changes now. 

It is rebuilt mind by mind.

Saturday, January 21, 2012

A reason to visit Germany...  

Way cool.

Almost makes me want to go to Hamburg.


[via sullivan]

Friday, January 13, 2012

As you can see...  

From the updated speaking schedule at right, I'm on the road for a while. I'll post when I can and when I learn something interesting. 

Speaking of which, what up with the root worm insecticide shortage? Could it be people are doubling down on 17-stacked trait-hybrids or (like us) are planting more "refuge" corn?

As for the reports this week, I'll let time render a verdict.

BTW, Mike Hoffman (the USFR Meteorologist) is beginning to eye the NWS long range forecast of a wet, cold, late spring. Doesn't mean squat now, but I'm not bailing on my sales yet.

Thursday, January 12, 2012

Maybe we don't need to raise taxes...  

We could just collect what is owed right now.  Bruce Bartlett has the sad story.

  [Be sure to click and view full size and read the lower right caption]
Clearly, therefore, one solution to the tax gap is to increase reporting and withholding requirements. However, previous efforts by Congress to do so have been met with huge political resistance. People don’t like the intrusion into their privacy — and the diminution of their opportunities for tax evasion — and businesses don’t like the cost or the alienation of their customers.
In 1982, Congress briefly enacted a withholding requirement for interest income and the outcry was so loud that it was repealed almost immediately.
Conservatives tend to talk about noncompliance as if it were solely a function of tax rates. The higher tax rates are, the greater the incentive for tax evasion; lower tax rates and evasion will decline. Thus tax evasion is yet another excuse to cut taxes.
However, as the I.R.S. data show, noncompliance increased between 2001 and 2006, a period in which a substantial number of tax cuts were enacted. The top rate fell to 35 percent from 39.6 percent, the bottom rate fell to 10 percent from 15 percent and the rate on dividends fell to just 15 percent from a top rate of 39.6 percent. If the conservative model is correct, tax compliance should have increased, since the return to evasion fell substantially.
Of course, another factor in tax compliance is enforcement. Someone who thinks the odds of being caught are close to zero is going to be strongly tempted to cheat no matter how low tax rates are.
Unfortunately, Republicans have been treating the I.R.S. like a political punching bag for years, cutting its personnel and restricting its ability to do its job. The number of I.R.S. employees fell to 84,711 in 2010 from 116,673 in 1992 despite an increase in the population of the United States of 53 million over that period.
Federal revenues are at a historically low level and are a key cause of the federal budget deficit. Sooner or later, taxes will have to be increased. It would be better to minimize that increase by ensuring that taxpayers pay what they owe. It’s unfair to honest taxpayers and undermines tax morale when large numbers of people and businesses don’t pay their taxes. [More]
With a smaller workforce, I suspect the IRS will be targeting the richest hunting ground. And that looks like my ground. Could it be that grain 1099's will finally happen?

The fate of the last 1099 change does not make it seem likely.

Monday, January 09, 2012

I had hoped...  

To have grandchildren earlierThis wasn't the reason, but...

New moms and dads with visions of Ivy League degrees dancing in their heads should be prepared to face a bill of $422,320 in today’s dollars if Junior heads off to one the country’s priciest colleges as a member of the class of 2034.

If college costs keep rising as they have for the last three decades, the inflation-adjusted price of four years of tuition alone will more than double at private colleges and nearly triple at public universities by the time a baby born this year is ready to enroll, an analysis by The Daily shows.

Even after adjusting for inflation, college tuition has increased by an average of 3.5 percent a year at private schools and 4.5 percent a year at public schools, the analysis showed. When room and board are factored in, the total cost of college has gone up by an average of 3.08 percent a year at private schools and 2.96 percent at public schools. [More depressing projections]
I wonder how this would compare to my own education cost and calculated in acres of farmland. If I remember correctly, it was about $6000 total at RHIT (1966-1970).  I think land was selling for about $600, so it cost ten acres to educate me.

Pricing land at $12,000/A, today's 4-year private education cost looks like about $160,000 or 13 acres. 

These are quick and dirty numbers - just thinking out loud.

Sunday, January 08, 2012

What Bt boost?...  

Contra conventional wisdom, new hybrids don't seem to be moving the corn trend line.  In fact, there isn't one right now.

This is less unusual than it might seem.
Statistical analysis finds no statistically significant time trend in average U.S. corn yields since 2003. Thus, the increase in consumption of U.S. corn from 10.2 billion bushels to 12.6 billion bushels between the 2003/04 and 2011/12 crop years, has largely been met through an increase in planted acres of 13.3 million (from 78.6 million acres to 91.9 million acres).
It is important to note that it is not uncommon to find no statistically significant trend in U.S. average yield over a 9 year period. Of all 64 9-year periods starting with the 9 years that begin in 1940, less than half had a statistically significant upward trend in corn yields. This may seem surprising since the average annual increase in U.S. average corn yields since 1940 is 2.2% per year. [More]
It is much harder to come up with some sort of composite (rain, heat, delays, etc.) weather graph that shows a trend is weather influence. But my bet it it would not be flat like the above.

There are many of us with a downward 9-year trend since 2003. Those who have had some spectacular crops in the last few years may be misled into thinking the curve always goes up.

At the very least, the assumption of unlimited productivity advances looks a little shaky to me.

Saturday, January 07, 2012

I did not know that...  

That famous line from Johnny Carson leapt to mind as I saw this photo showing the shadow of the rings of Saturn. It never dawned on me they would be dense enough to cast shadows. I'm trying to get my head around what it would look like on the surface.

This is a stunning portrait of Saturn taken by the Cassini spacecraft in December. Its beauty and fantastic — in the literal sense of being like a fantasy — cloudscape are so overwhelming you might not even notice the moon Tethys hanging just under the knife-edged rings. To give you an idea of how immense Saturn is, "tiny" Tethys is over a thousand kilometers across. [More]

Friday, January 06, 2012

I notice they didn't test calls to Dad...  
Calling to talk to Mom is good for you.
Wired flags a new study that proves many mothers across the country right: For your own sake, you should call home more often. The research comes from Evolution and Human Behavior. It finds that a phone call to mom provides significant stress relief while instant message conversations won’t quell the nerves.
The conversations happened after research subjects took a stressful test. As subjects spoke (or typed) with their mothers, the researchers measured changes in levels of cortisol (generally linked to stress) and oxytocin (a hormone linked to pleasure). When subjects talked on the phone, cortisol levels dropped and oxytocin went up. But IMing with Mom looked the same as having no contact at all. [More]
I also note the test was for girls calling home.

So we decided to mow the lawn today

I'll start on the pool tomorrow...

Keep an eye on Mike Hoffman* next week on USFR. He's out on a limb about an abrupt dive into deep winter next week, but I'm not so sure (at least for us).

If he's wrong, I'll try not to mention it...

*Seriously, this guy has made me a lot of money when deciding whether to plant or let stuff field dry, etc.

Wednesday, January 04, 2012

Junkbox, Episode MMCXII.14159*...  

Bonus points for knowing what the decimal digits refer to.
What's wrong with this sentence?...  

I read this and blinked:
The U.S. Food and Drug Administration prohibited some unapproved uses of antibiotics in livestock on Wednesday.

Farmers will no longer be able to administer a class of antibiotics called cephalosporins to cattle, pigs, chicken and turkeys in unapproved doses or frequencies, or as a means of preventing disease, the agency said. [More]
I assumed I understood what "unapproved" meant, but maybe not.
That has long been a concern of many public health experts, including the Pew Health Group. Pew said in a press release today that while "the FDA has approved cephalosporins to treat some infections in food animals, the drugs often are administered in ways not specifically approved by the agency."
This "extralabel" use of antibiotics by livestock producers is linked to the emergence of resistant bacteria, or superbugs, that have infected tens of thousands of people, according to David Wallinga, a physician at the Institute for Agriculture and Trade Policy and a member of the Keep Antibiotics Working coalition.
Today, the FDA said the drugs remain critically important for humans, so their use should be restricted only to humans.
The decision to restrict the cephalosporins comes just two weeks after the FDA announced it was trashing a 1977 proposal to remove approvals for two antibiotics, penicillins and tetracyclines, used in livestock and poultry feed.
An association of veterinarians says the new rule on cephalosporins won't have a big impact. They can still use these other antibiotics to keep animals healthy. [More]
How can off-label use not be prohibited? 

So, is this just the FDA, saying "We really mean it this time!"?
In which I learn about capital gains...  

Well, color me embarrassed!  I got into an argument with TurboTax about some machinery I sold to Aaron as part of the transition on our farm. The stooopid program taxed the sale as ordinary income, instead of the relatively delightful 15% I had planned.

Only capital gains on depreciable property aren't like capital gains on say, shares of stock or farmland.
The income tax consequences of an outright sale can be substantial, as shown in Example 2. For the seller, a large amount of recaptured depreciation and capital gain may arise from the sale, especially if some assets have an adjusted tax basis of zero; that is, they are "depreciated out." Reporting all the income and gain in one tax year may cause some of it to be taxed at a higher marginal rate than the seller usually pays. In addition, most sellers prefer to spread out or postpone tax payments whenever possible. [More]
Which is exactly what TT calculated. All my stuff is depreciated out, thanks to Sec. 179, and all the various bonus depreciation boondoggles of the past few years. And I didn't sell any of it below above original cost.

I guess I can keep working for another few years...(sigh)

Feel free to hoot with derision at my ignorance. 

My so-called friends did...

Tuesday, January 03, 2012

The trouble with North Dakota...  

Is, as we all have realized, it's too close to where North Dakota is. Simply put: Location, location, location.

This recent gem of verification of this hard fact.

Our top export last year was (drum roll, please) FUEL.  That's right, citizens, we're importing oil and exporting gasoline/diesel. While much of that is due to consumption decline, the other biggy is the ND problem.
Nevertheless, something real is happening here. What accounts for the new-found U.S. competitiveness? I think a key factor is that abundant new supplies of crude oil from Canada and North Dakota are now coming into the central United States. Between 1987 and 2008, West Texas Intermediate, the benchmark light, sweet crude oil for sale in Cushing, Oklahoma, sold for $1.50/barrel more than Brent, its North Sea counterpart. That differential vanished in 2009-2010, and so far in 2011, WTI has sold at an average price that astonishingly is almost $17/barrel cheaper than Brent. [More]
Since there aren't good ways to get this shale oil to the ports, but there are pipelines from Midwest refineries for fuel, the obvious is happening.

Meanwhile (sigh) I may have been a little too optimistic about shale gas which is currently propelling the energy boom elsewhere.
By the same logic, you can claim to be a multibillionaire, including all your "probable, possible, and speculative resources."
Assuming that the United States continues to use about 24 tcf per annum, then, only an 11-year supply of natural gas is certain. The other 89 years' worth has not yet been shown to exist or to be recoverable.
Even that comparably modest estimate of 11 years’ supply may be optimistic. Those 273 tcf are located in reserves that are undrilled, but are adjacent to drilled tracts where gas has been produced. Due to large lateral differences in the geology of shale plays, production can vary considerably from adjacent wells.
The EIA uses a different methodology to arrive at its resource calculations, offering a range of estimates. In the most optimistic, "high shale resource case," it estimates there are 1,230 tcf in the “estimated unproved technically recoverable resource base.” It also offers several production forecasts through 2035, ranging from 827 tcf in their Reference case, to 423 tcf in their Low case—one-fourth the headline number. In the Low case, which certainly could be correct, the EIA says the United States could once again become a net natural-gas importer by 2035. [More]
I'll keep checking on the estimates, and maybe much of the predicted reserves will be shifted into the solid column, but I should have looked a little harder at where the numbers were coming from.  Maybe it was the "infographic misinformation syndrome" that helped me leap to a possible overly rosy outlook.
Now that Obama's dog has won the War on Christmas, or something, it's time to get down to a war that really matters: the war on terrible, lying infographics, which have become endemic in the blogosphere, and constantly threaten to break out into epidemic or even pandemic status.
The reservoir of this disease of erroneous infographics is internet marketers who don't care whether the information in their graphics is right ... just so long as you link it.  As a Christmas present to, well, everyone, I'm issuing a plea to bloggers to help stop this plague in its track.
Below the break, a tour of some of the more egregious examples, and some thoughts on why they've become so prevalent.
For those of you who can't sit through all that boring writing, however, I will first deliver my message in--ahem!--a more visual format:
 McArdle's identification rules:
If you look at these lovely, lying infographics, you will notice that they tend to have a few things in common:
  1. They are made by random sites without particularly obvious connection to the subject matter. Why is making an infographic about the hourly workweek?
  2. Those sites, when examined, either have virtually no content at all, or are for things like debt consolidation--industries with low reputation where brand recognition, if it exists at all, is probably mostly negative.
  3. The sources for the data, if they are provided at all, tend to be in very small type at the bottom of the graphic, and instead of easy-to-type names of reports, they provide hard-to-type URLs which basically defeat all but the most determined checkers.
  4. The infographics tend to suggest that SOMETHING TERRIBLE IS HAPPENING IN THE US RIGHT NOW!!! the better to trigger your panic button and get you to spread the bad news BEFORE IT'S TOO LATE! [Same for all above]
It should be obvious the energy business is in the same turmoil as the rest of the global economy, as new demand and precarious economic situations make all sorts of information hard to get and even harder to verify. But either some better minds than mine are investing way too much on a overblown idea of NG reserves or stubborn pessimism will be slowly proven wrong. That said, I no longer assume that richer people are probably smarter people. (And it's not because I think I've gotten smarter)

Monday, January 02, 2012

So, about the Mayans and 2012...  

Great stuff.


On the other hand, if this is THE END, I'm glad I borrowed all that money.
15 Minutes of Fame Winter...  

My snow shovel is rusting out this "winter". This is surprising because it's plastic. But it doesn't look like I'll need it soon.

[Click to embiggen]

Accuweather is the longest range forecast I check routinely along with Intellicast, and NWS. The last is fun because we are only 2 miles from IN, and the forecast for Dana, IN next door can often be remarkably different.

Meanwhile we ponder how much we want to tear up our lane hauling corn on unfrozen gravel.

On a side note, I asked some friends if a really warm March, which produced warm, dry soils by say, the 20th would induce them to put seeds in the ground. This would be about 10 days earlier than most of us have traditionally felt comfortable with. All said yes, since their earliest corn had been by far the best the last 4-5 years.

At least one part of our brains are coping with climate change, it seems. Maybe that's the way it will work out - we'll make adaptations all the time we proclaim AGW to be nonsense.
Still coming inside...  

I had wondered if financial turmoil has slowed the flow of fund money into farmland, like it has with commodities, but maybe not. At least one large hedge fund manager is doubling down.
Diggle plans to transfer ownership of his farmland into a holding company, in which outside investors can hold shares, he said. Vulpes, which currently manages about $200 million, will own and operate the company. After buying farms in Uruguay and Illinois, as well as a kiwi-and-avocado orchard in New Zealand, he plans to pour money into Africa and eastern Europe as global food prices soar.
The value of farmland in the U.S. has probably gained 20 percent to 30 percent in the last two years, while Diggle’s investments in Uruguay may have risen 50 percent as sheep and cattle prices almost doubled in Latin America this year, he said.
Agriculture would be the “single most interest opportunity over the next 10 to 20 years,” Diggle said.
Vulpes favors investments in metals, energy and food, and “dislikes” government bonds, he said.
“Being long stuff in the ground is going to be a better place to be than holding pieces of paper,” Diggle said.
The firm’s Testudo Fund, which is heavily invested in precious metals and the mining industry, has gained 2.5 percent this year. The Russian Opportunities Fund has declined about 10 percent in the same period. [More]
Of course, this may not signify much, because hedge funds are little more than a way to extract bloated fees from extremely rich people.
Much has been made about hedge funds’ failure to keep up with the major stock market benchmarks this year. But 2011 is merely the latest disappointment in a string of misses that stretches back nine years, according to one analysis of the hedge fund industry.
Money invested in hedge funds since 2003 would have generated a return of 18% through November, according to data compiled by Hedge Fund Research. That puts it far behind the Standard & Poor’s 500-stock index, which has generated returns of 29% over that same period, once dividends are factored in, according to Simon Lack of SL Advisors. The hedge fund underperformance is even starker when placed next to a small basket of investment grade corporate bonds, as measured by the Dow Jones Corporate Bond Index. That benchmark has gained 77% since 2003.
Factor in hedge fund mangers’ customary 2% management fee and a 20% cut in profits, and the gap widens even more.
While disappointing, Mr. Lack says investors have no one but themselves to blame.
“The investors are all sophisticated wealthy institutions, not retail investors. So frankly, it’s a lot of sloppy analysis,” he said. [More]
Maybe the continuation of hedge fund money into farmland is a bad sign, no? If nothing else, those farms will likely push the boundaries of cash rents if for no other reason than to pay their exorbitant fees. Try as I might, I can't work up much sympathy for the investors, however, which maybe underscores the growing social rift between that sliver of the very wealthy and even those of us doing pretty darn well. Be honest - aren't you rooting a teensy bit for the conniving hedge fund managers? Didn't you experience some titillating schadenfreude  during the Madoff revelations?

Yeah - me too.

Regardless, I think it is fair to say it is really hard to find places to put money that will 1) still be there in 6 months, and 2) earn a positive return. 

Sunday, January 01, 2012

Save the mice!...  

An interesting response to the anti-meat position - at least for Australia.
Published figures suggest that, in Australia, producing wheat and other grains results in:
  • at least 25 times more sentient animals being killed per kilogram of useable protein
  • more environmental damage, and
  • a great deal more animal cruelty than does farming red meat.
How is this possible?
Agriculture to produce wheat, rice and pulses requires clear-felling native vegetation. That act alone results in the deaths of thousands of Australian animals and plants per hectare. Since Europeans arrived on this continent we have lost more than half of Australia’s unique native vegetation, mostly to increase production of monocultures of introduced species for human consumption.
Most of Australia’s arable land is already in use. If more Australians want their nutritional needs to be met by plants, our arable land will need to be even more intensely farmed. This will require a net increase in the use of fertilisers, herbicides, pesticides and other threats to biodiversity and environmental health. Or, if existing laws are changed, more native vegetation could be cleared for agriculture (an area the size of Victoria plus Tasmania would be needed to produce the additional amount of plant-based food required).
Most cattle slaughtered in Australia feed solely on pasture. This is usually rangelands, which constitute about 70% of the continent.
Grazing occurs on primarily native ecosystems. These have and maintain far higher levels of native biodiversity than croplands. The rangelands can’t be used to produce crops, so production of meat here doesn’t limit production of plant foods. Grazing is the only way humans can get substantial nutrients from 70% of the continent.
In some cases rangelands have been substantially altered to increase the percentage of stock-friendly plants. Grazing can also cause significant damage such as soil loss and erosion. But it doesn’t result in the native ecosystem “blitzkrieg” required to grow crops.
This environmental damage is causing some well-known environmentalists to question their own preconceptions. British environmental advocate George Monbiot, for example, publically converted from vegan to omnivore after reading Simon Fairlie’s expose about meat’s sustainability. And environmental activist Lierre Keith documented the awesome damage to global environments involved in producing plant foods for human consumption.
In Australia we can also meet part of our protein needs using sustainably wild-harvested kangaroo meat. Unlike introduced meat animals, they don’t damage native biodiversity. They are soft-footed, low methane-producing and have relatively low water requirements. They also produce an exceptionally healthy low-fat meat.
In Australia 70% of the beef produced for human consumption comes from animals raised on grazing lands with very little or no grain supplements. At any time, only 2% of Australia’s national herd of cattle are eating grains in feed lots; the other 98% are raised on and feeding on grass. Two-thirds of cattle slaughtered in Australia feed solely on pasture.
To produce protein from grazing beef, cattle are killed. One death delivers (on average, across Australia’s grazing lands) a carcass of about 288 kilograms. This is approximately 68% boneless meat which, at 23% protein equals 45kg of protein per animal killed. This means 2.2 animals killed for each 100kg of useable animal protein produced.
Producing protein from wheat means ploughing pasture land and planting it with seed. Anyone who has sat on a ploughing tractor knows the predatory birds that follow you all day are not there because they have nothing better to do. Ploughing and harvesting kill small mammals, snakes, lizards and other animals in vast numbers. In addition, millions of mice are poisoned in grain storage facilities every year.
Each area of grain production in Australia has a mouse plague on average every four years, with 500-1000 mice per hectare. Poisoning kills at least 80% of the mice.
At least 100 mice are killed per hectare per year (500/4 × 0.8) to grow grain. Average yields are about 1.4 tonnes of wheat/hectare; 13% of the wheat is useable protein. Therefore, at least 55 sentient animals die to produce 100kg of useable plant protein: 25 times more than for the same amount of rangelands beef. [More]
I was vaguely aware of the problems in Australia due to a lack of predators to control introduced species like the famous bunny problem. But I did not know they were still battling occasional mice population explosions.

These calculations may be of little value to our grain-fed beef industry, but the new research in methane accounting and measurement could be altering even those numbers.
New CSIRO research indicates that the amount of methane emitted from cattle fed on tropical grasses in northern Australia is up to 30 per cent less than previously believed.
Current greenhouse gas accounts indicate that methane from the northern cattle industry contributes about 4.5 per cent of Australia's greenhouse gas emissions
CSIRO research leader Dr Ed Charmley says he hopes the new data might allow current estimates of the industry's contribution to Australia's greenhouse gas emissions to be updated.
"Measurements from cattle in CSIRO's custom-built respiration chambers show that Brahman cattle fed a wide range of tropical grasses emit up to 30 per cent less methane than previously determined," he said.
"While you always have to be cautious in extending lab data to the field and across an industry, we have been able to cross-check our findings with methane detecting laser systems used in the field. [Only a little more]
Again, I can't find anything to match this assertion for corn-fed meat, but as better methods for measurement are developed, perhaps those numbers, too will move us on from the caw-fart presumption of GHG contributions of meat.