Monday, March 19, 2018

Our last trade war

Trade war!
I have been thinking over the commentaries I'm seeing about Trump's coming trade war and I am not impressed.

Trade wars are a bad thing, usually, but some of the predictions I have been reading do not match very well with our trade war with Japan.

Trump, for example, thinks that once we get the barriers up and the factories restarted foreigners will rush to buy American products. And some of the anti-Trumps think that a weaker dollar will increase our exports by making them cheaper to foreigners.

That isn't what happened between America and Japan. The yen went in a fairly short period from 360 to 120 to the dollar, and over a somewhat longer period to about 90. That is, the dollar weakened by a factor of 3 to 1 and eventually 4 to 1.
Did the Japanese start buying Fords? No. Why would a savvy Japanese consumer buy a crappy Ford when he could buy a reliable Toyota?

The trade war with Japan was fought with blunt instruments. Oranges, for example. The Japanese raised a tariff wall against American oranges in order to protect their growers of mandarins. This despite the fact that a navel orange and a mandarin orange are not really equivalent products.

The American orange growers thought that their troubles would be solved if they could just unload their oranges on the Japanese. Meanwhile they forgot to look after business and American groves are now in a bad way from citrus greening, disinvestment, anti-immigrant policies and the usual bad management that we associate with virtually all American businesses.

The United States can no longer supply our own demand, much less export, and we are now dependent on Brazil for our juice.

Back in the previous trade war,  the one with Germany, West Germany at that time, we thought  we could solve our chicken problem by selling cheap chickens to the Germans. The Germans did not particularly want cheap chickens, and we retaliated with a big tariff against German vans. American consumers did not then buy American vans. What savvy American consumer would by a crappy Chevy van when he could buy a good Volkswagen van?

I speak from experience. i bought my first Volkswagen van in 1970 at the height of the trade war and later on three more Volkswagen vans. It never crossed my mind to buy an American one. You would've had to pay me to take Detroit iron.

As I write this as I write this the rumor mill says Trump is going to impose $60 billion in tariffs on Chinese goods. That is a trivial amount compared to overall US-China exchanges. I do not know what is going to happen but I expect it will be bad for everyone, or just about everyone.

As Texas Guinan used to say to the big  butter and egg men, "Hiya, suckers!"

The summit that ain't

I have bet one amero with a friend the Trump and Kim never meet.

There is no document from the North Korean government requesting a meeting. Nothing oral either. Just a comment from a South Korean.

Trump got rolled. Again. That's what happens when you don't do staff work.

Wednesday, March 14, 2018

Allianz catches up

What took it so long?

“In our view, its intrinsic value must be zero,” Stefan Hofrichter, the company’s head of global economics and strategy, wrote in a recent web post. “A bitcoin is a claim on nobody – in contrast to, for instance, sovereign bonds, equities or paper money – and it does not generate any income stream.”

Sunday, March 11, 2018

Keeping up

So, in the course of one 8-hour day, Trump got rolled by North Korea, Canada & Mexico. I bet the Iranians are so envious they could just spit.

So, Bannon goes to France and smooches the neo-nazis. How long before the people who castigated RtO for calling Bannon a racist admit I was right. (The best thing about restating obviousnesses is the very high hit rate.)

Wednesday, March 7, 2018

Pinhead's pinpricks

Before we get all bent out of shape about tariffs on foreign steel and aluminum, let us note that imports of steel and aluminum amount to about 1/500th of the U.S. economy.

Yes, the tariffs are a bad idea; and yes, Trump is an economic nitwit living in a mercantilist mindset that was abandoned by everybody else over 200 years ago. And yes, we are not going to win any trade wars with anybody.

Still, everybody get a grip.

I recall in the early 1970s when I was first starting out to report on American business and reading the Wall Street Journal wall-to-wall, there was a plaintive advertisement that ran every day for months: a Pennsylvania foundry was soliciting to make gray iron castings at a capacity of 250,000 tons per year.

The reason that it didn't have any work was China – still a pariah in international trade in those days – was dumping gray iron castings at ridiculously low prices and driving foundries around the world out of business. But it turned out the Chinese castings were worthless crap just like everything else China makes. The Chinese foundries didn't even wash the greensand before reusing it. The forgings were pitted and full of voids and quickly rusted away.

China still dominates by tonnage in gray iron castings, but nobody who needs really high-quality ones goes there. Mexico also exports a lot of gray iron into the United States. But there are several foundries still operating here.

One of them, I noticed, in Alabama even announces on its Internet page that it was founded in 1970 – in the middle of the Chinese invasion -- with the intention of proudly serving American companies with good old-fashioned American cast iron.

So China is left with the international market for things like cast iron park benches, but when  it counts it counts, companies that need high-quality forgings take their trade elsewhere. A quick search found a 2010 survey which commented that Chinese quality control was "weak but improving." That's very slow progress.

China at that time held 36% of the world market (for iron forgings generally, not just gray iron) and workers in Chinese foundries were making 50 cents to a dollar an hour.

American, Japanese and European founders primarily serving the automotive industry pay more, and get more.

Trump's ridiculous policy will not save any American jobs, net, but his claque won't ever know that, just as they don't know that his promises about Carrier jobs were a heaping pile of crap.

Thursday, March 1, 2018

Shut up, Monica

Monica Lewinsky shows up in Vanity Fair looking for attention, again, this time claiming that her fling with Bill Clinton represented a gross abuse of power by him.

No it didn't. Many gross abuses of power have been revealed to the public lately, but we recall that before setting out for Washington Lewinsky told her friends that she was out of earn her presidential kneepads.

Lewinsky miscalculates, again.

Thursday, February 22, 2018

Dirty water

The Department of Health has identified a moderate nitrate contamination problem in the groundwater Upcountry.

Most of us Upcountry get our water from the county, and most of the county's water comes from surface streams or from wells outside the zone of suspected nitrates contamination, so the issue is not about drinking water but about real estate.

I attended the Kula Community Association chalk talk last night, and the presentation was clear, precise and useful. I was on the Mainland during the original presentation which was criticized for not being any of those things.

The questions were also useful for the first five or six questioners until the obnoxious hotheads took over and I left. (When I was paid to go to this sort of meeting I had to stay for all the jerks; it is kind of pleasant to be able to walk off when they spout off.)

So here's the deal and what it means to you:

If you look at a map, the habitations Upcountry run from Kula San almost directly north and all downhill. There are about 10,000 sources of sewage and about 7,400 are cesspools, with the rest septic tanks or better.

Nitrates do not degrade in groundwater in the presence of oxygen. (In anoxic conditions, they do, which is why the pineapple cannery had to install pipes to vent the methane that was the end product of the slightly sugary wash water that it used to inject into the ground.) Health concerns for nitrates in drinking water start at 12 mL per liter, and no well tested Upcountry comes close to that.

However the health department takes notice when tests top 5 mL, which indicates some sources above natural conditions. Two wells, one at Pukalani Golf Course and one at the long-gestating Baldwin Estates project just below Haliimaile, have been tested fairly thoroughly.

They show nitrates at nearly 9 mL. Modeling  and spotty data from around the area suggest that there's a nitrate buildup in groundwater gradually as more and more units are feeding into it as you drop in elevation.

Although the department says it is not prescribing anything and is open to other approaches, it is clear that it has concluded that it would be simple and effective to skim off about a quarter of the excess nitrates by way of universal septic systems Upcountry.

Cesspools discharge their liquids about 15 feet down, too low for vegetation to take them up. Septic tanks discharge their liquids around 3 feet below the surface where a fairly large portion of the nitrates become fertilizer. That's the source of Erma Bombeck's book title,"The Grass is Always Greener over the Septic Tank."

Converting 7,400 cesspools to septic systems at around $20,000 dollars and up per system is going to cost a great deal of money, although not as a percentage of the value of most of that real estate.

The problem is space. Although the department says it is not mandating changes, not yet anyway, about 25 years ago it mandated a huge change Upcountry when it designated most of the island is a Critical Wastewater Disposal Area. That meant new construction could not use cesspools. It did not require retrofitting. It effectively established the minimum lot size Upcountry at one-quarter acre, regardless of the county zoning which is not nearly as restrictive.

This hasn't created much indignation because virtually all the housing built over the past 25 years was luxury housing and none of that was on quarter-acre acre lots. It did affect a few older lots for people wanted to subdivide for their families but were prevented from doing so.

Septic tanks are easy if you have a quarter acre or better, but if you don't there is another alternative and that is waterless treatment of household sewage. There are numerous manufacturers.

It would take some getting used to for Americans to go back to waterless waste treatment but after all we didn't start having indoor plumbing until our great-grandparents' time for the most part. It could be done.

I have a long proposed that the county spend a couple hundred thousand dollars, buy four or five of these units from different manufacturers and install them in households in West Maui, Upcountry, Hana, Molokai and Lanai and see what happens.

The crucial area is not Upcountry but Wahikuli which is the real source of the degradation of water due to biosolids in West Maui and not the fabled injection wells which are not a problem. That's a myth flogged by the know-nothing environmentalists, and we are spending tens of millions of dollars to fix this nonexistent problem and $0 to fix the existing problem.

I've blamed Sen. Dan who spent a million federal dollars trying to get Wendy Wiltsie Ph.D. to convict injection wells back in the '90s. She couldn't do it because it wasn't happening and she was an honest enough scientist to put that in her report, although her public statements tried to obscure the facts.

The Upcountry nitrate situation seems genuine enough, and I was impressed by the solidity of the scientific study that was presented last night.

I happen to think that waterless systems will be easy, cheaper and hard to sell. I spoke briefly to Council Member Kelly King and it appears that there is a small, very small effort originating at the state level to perhaps do a demonstration.

She is attempting to get at the state money. I say pish. The county's operating budget is $900 million. We lose $200,000 in change in the sofa cushions in the County Council breakroom. Forget the state  demonstration.  We should just go.