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(and no, this is not hentai)
During the last few posts about green energy and then mechanized weaving it was necessary do some research into how things used to be. Thanks to the good folks at Google Library (or whatever it’s called) I found a number of studies from around the turn of the last century, studies that compared working wages here with those in other countries of our class (at the time) and with the relative pricing of goods and services.
While this could be seen as dry stuff, it’s nonetheless quite fascinating if you try pricing the goods of the past in terms of what you can afford now. Would you have had to save up for 3 weeks or more to buy a good dictionary? What percentage of your weekly pay had to go toward each month’s rent? What might you have done for work back then? How did the wage scales relate to the things it was necessary to buy? How many hours of work did it take to buy a pair of shoes or a sandwich or a ticket on the train into Boston?
One of the techniques you can do is convert all the numbers into gold value (if you have the table of gold prices per month/year going back that far) so that you get the added dimension of being able to see how prosperous things were then compared to things now, without calculating it through the usual set of currency inflation numbers.
Anyway it was during this process that I realized that our romantic take (have you got one? I’ve got it bad and always have) on the economy of the turn of the previous century (call it 1880~1910) is in fact vastly tainted by the forces of arbitrage.
For those of you not familiar with the term, arbitrage means making use of arrangements or resources that are/were valued at different times (usually with older valuations carrying forward into a present arrangement) so as to be able to make a profit by gaming the system ever so slightly.
One contemporary example of this would be Southwest Airlines and how it bought (and made use of) fuel futures priced far below the high fuel prices seen this past summer. SWA had a huge advantage over other carriers because it was getting today’s fuel at yesterday’s prices, while its competitors were paying then-current high prices.
Another example, slightly less well-known, is the way the Abathasca Tar Sands project is scaling down. While we all know that they’re not making dinosaurs anymore and that we need to keep finding new sources of oil (if we wish to consider using liquid fuel so extravagantly, that is) what we’re seeing now is all of those “oil alternates” (like shale oil, biomass, tar sands, etc) and new deepwater projects being canceled. Why? Because the economics of these things required that oil prices be constantly increasing over the time span between when the project’s outlays were purchased and when the product got to market. In other words, it was arbitrage at work again.
In the case of the Abathasca tar sands project, they were able to make it generate profit only as long as they were still getting natural gas energy rather cheaply relative to the high price of oil they were able to get for their main product .. and as we know, Abathasca goes through vast quantities of natural gas and water. It is in fact a pollution disaster of epic proportions.
Another contemporary example is ethanol made from vegetable crops grown on cropland normally devoted to food. As long as the project’s input costs are scaled lower than the profit of its outputs, it’s cash-positive, but without constantly raising the scale of the numbers, it falls apart.
In this case, for example, corn-based ethanol was “profitable” only as long as agricultural fuel was cheap (due to subsidies), as long as federal subsidies were poured into ethanol projects (above $1.50/gallon in subsidies), and as long as retail fuel prices continued to skyrocket. Had prices been stable and not subsidized, it would have been more obvious to the people involved (whose heads were deep up their asses at the time) that they were essentially spending 100 gallons of diesel, plus a bunch of money, just to make 60 gallons of ethanol. (remember just 7 or 8 months back, when congress was summoning fuel refiners to Washington to ask them why fuel was so expensive? it was a strange time indeed)
Sadly, this arbitrage thing is not new and neither are the effects of it. To return to the example I mentioned in a sarcastic comment over on ZK, Jim Kunstler has often said that in the low-energy economy of the future, he’d probably be running a local newspaper or some other local venture involving the printed word. Umm, no. In the same way that I looked into the energy/materials/profit arrangement of a spinning-weaving-sewing line, I also looked into paper-making. It takes tremendous amounts of heat, mechanical energy, water, and sawn/shredded lumber just to make paper. In fact, it is so expensive in energy & materials that if you had to make the stuff without the artificial energy support of fossil fuels (even coal) your tremendous expenditure in time & calories would mean that you’d have to charge very steep rates for your paper. The only way to make it “cheaply” (and this involves tremendous environmental costs) is if you’ve got lots of dense artificial energy (coal), lots of fresh water you can freely pollute, and lots of mechanical power.
In other words, no more newspapers if you’re living in a low-energy economy. The only way to do that would be if you could get the paper cheaply from someone else manufacturing it elsewhere .. someone who’s still using fossil fuel and mechanical power. Probably no more toilet paper or paper towels either. Hello arbitrage.
Other forms of arbitrage take place when resources are undervalued compared to what they will later be. For example, much of the metal made during the early part of our country’s economic expansion was smelted using charcoal that was obtained by burning the vast hardwood forests that once covered the land east of the Mississippi. At the time, the wood was so undervalued that the forests were wantonly felled just to make charcoal. How much would all that virgin timber be worth now?
The economy of 1880~1910 was expanding madly. European immigrants were still arriving at a rapid rate, and for sure our nation benefited tremendously from not having borne the costs of birth and basic education of most of those imported people .. in essence, we got ready-to-use adults instead of infants requiring years of care and education before entering the workplace. More arbitrage at work.
Not sure if it is possible to find what parts of the 1880~1910 economy were stable and not part of the mad expansion, but it should be interesting to try to find them.
I’ve been using the Google Chrome browser for about a week now. The look and feel of Chrome is quite similar to their search engine website (www.google.com), which has been minimized on most people’s internet browsers by now at this point in time as a toolbar. Thusly, with the rolling out of Chrome, Google has put in your face (yet again) a full-sized graphical user interface, this time providing the additional functionality of a clean and generally well organized open source browser.
I like Chrome and would recommend it to most people; the remaining people, let’s be honest, I just don’t like. When you first install the Chrome program (a free download), it gives you the option to import bookmarks and cookies from your default browser and asks whether you wish to designate Chrome as your new default browser. One of the cooler features is a “Bookmarks bar” (for your favorites, presumably), which can be separately managed from the bookmarks saved in the folder denoted “Other bookmarks”.
If you want to have multiple “instances” of a particular webpage open at the same time, simply right-click on the tab and Chrome presents a menu option that allows you to Duplicate the webpage.
You can also open up “incognito windows”. According to Goggle:
Webpages that you open and files downloaded while you are incognito won’t be logged in your browsing and download histories; all new cookies are deleted after you close the incognito window. You can browse normally and in incognito mode at the same time by using separate windows. Browsing in incognito mode only keeps Google Chrome from storing information about the websites you’ve visited. The websites you visit may still have records of your visit. Any files saved to your computer will still remain on your computer.
Probably the most important feature of Chrome is that each tab represents a separate process. A benefit of Chrome’s approach to running multiple processes is that if one tab — I should say process — hangs up (I’ve never seen this happen yet) the browser doesn’t need to be restarted. You simply close the tab that crashed and continue working and/or goofing off.
Ha, no, not that. The other day, I woke up obsessed with doom. We all know the sun is going to go red giant sooner or later, enveloping the earth in its outer corona and frying all life on the surface of the planet. Long before that, of course, other problem will make themselves felt. And there’s some sort of economic crash thingie underway right now.
On a number of blogs (even the HBB) I’ve seen a fairly similar set of discussions about how manufacturing prosperity (goods manufactured, profits & income earned, etc) is the main ingredient in any meaningful economic recovery .. and how we won’t have any recovery until we’re again making and selling things of value, to use JHK’s phrase.
Just to keep those doom-y thoughts at bay, I seized upon the loose threads of another obsession (sewing) and got to thinking about what’s up in the world of fabric retail sales. Things there are horrible now. My favorite nearby store (a place so special that it catered to folks who make clothing – stores like that are rare because the sewing market is dominated by the uber-rich SAHM yuppie types with the $5K Berninas who dabble in quilting, then by the bridal set, then by the window treatment set) has gone out of business and I haven’t been able to find a replacement. There are places in Lowell MA and Manchester NH I’ll have to check out, but for the moment it seems the leftover options are Chinatown (in Boston) and then the NYC garment district.
For the stores I really really like, it’s clear that they get their best fabrics as remnants and stubs of bolts from the clothiers of NYC. They had someone driving a truck down there every so often to pick out the likely-selling stuff. The fashion places in NYC typically buy the fabric from the Middle East or Africa. A lot of it is made in places like Pakistan or India on old power looms that are probably 50+ years old. They are close to the yarn/thread suppliers there, of course, and the market economics are better than for here. What weaving operations we’ve still got in Massachusetts tend to be only the high-tech things like specialty kevlar fabrics or other Apollo-era crap. Malden Mills was one of the last operations of that type, and they’re down to specializing in Polartec fleece.
The non-funny thing, of course, is that global commerce is crashing right as we’re watching it, so of course I wonder what’s going to happen when those Pakistani spinning & weaving operations are not running all the time, making low profits selling fabric to the west where it gets resold at much higher prices. What happens when those NYC clothiers stop ordering thousands of yards of specialty fabric?
Knowing a little about how most people tend to do business here in the UPL, I had to wonder if all those closed former weaving mills had unions in them (likely) and if the companies did business the Apollo-era way. Did they put up lots of bright lights and safety rails around the machines? Did they have a thick manual, put out by management, detailing the exact steps needed to clean the place? Did they buy the expensive equipment new, on credit, then spend a portion of their profits paying off the rental fees (aka interest) for the money later? Did they have spiffy new furniture in their conference room? Did they have high-flying CEOs earning hundreds or thousands the levels of the grunt workers?
Anyway I was very touched to see one commenter on the HBB who mentioned that there are people out there who might, if they were so inclined, put their resources to sensible use by starting up their own small-scale businesses. That’s more like it!
So I started wondering exactly what it takes to get some sort of minimum weaving operation going. I haven’t yet learned the full supply stream for the thread/yarn side of the business, but I spent enough time researching the weaving end to learn the basics of power looms and how they work. I’m kicking around the idea of making a little 1/1-weave hand-cranked loom just for turning knitting yarn into scarves. The trick is the self-cocking flying shuttle and getting the draw beam to advance at a regular rate so as to be consistent in the piling-up of warp threads. I measured all my sewing patterns and found it’s not necessary to have more than 28” fabric width for the biggest of them.
Amusingly, there are ultra-expensive hand looms available out there (see Leclerc and its competitors) but they seem designed for the SAHM craft/quilt crowd who’ve got mega free time on their hands. Those things are so slow that the fabric on them would have to be priced ridiculously high just to cover the labor costs, even if the weaver is getting only minimum wage, and it won’t have much in the way of tension/thread count stability on either the warp or the weft.
I also learned that denim is a relatively simple 3/1 weave of the twill family, which includes canvas and duck.
An interesting sentiment to see (in the world of powered weaving) was the preference to make all new looms as jacquard looms, so that the machine is not later limited in the types of weaves that can be made on it. A jacquard machine is rather special because it has fine control over which of the weft threads are raised (to form the “shed”) as the shuttle is passed across the warp. By changing the pattern of the weft threads, you can make anything from denim to towels to brocade to satin on the same machine.
So, there ya go, I kept doom-y thoughts at bay for part of the weekend by getting obsessed about what it would require to set up a minimum weaving line done as a cottage industry. If the economy does in fact crash hard, one thing I am certain about is that the cheap-assed manufactured clothing being worn by everyone these days is not going to last very long into the long emergency. It’s basically crap that falls apart all too quickly or after too many cycles through the washer. I give the stuff 2 year tops before everyone’s got holes in their clothing, and not the trendy kind of holes either.
Is anyone else out there thinking “Got business plan?” :)
(SAHM = stay at home mommy, usually with large SUV and willing to run over anyone in order to get precious little Bratleigh to riding lessons after school
According to my research, not a single US soldier has died in hostile circumstances in Iraq since January 18th, two weeks ago, and two days before Barack Obama’s inauguration. January looks like it will have 9 American deaths, not all combat, but the lowest since the war started. What could be the likely causes for this situation?
Who gave this guy a newspaper? I think that’s a shower curtain behind him, so I guess that solves where he is sitting. Special Thanks to MOU for this one. I think if this guy can lay off the pipe for more than 6 minutes at a time he might have a future at CBS News. Somebody should post this at CFN right now. It would make a great first post of the day. This guy totally scooped Jimbo with the area rug thing. You’ll be the hit of the party.
~zk~
Demonstrating a variation of the patented Rumsfeld Claw
Between 1986 and 1989, U.S. Treasury Secretary Designate Timothy Geithner was employed at Henry Kissinger, Brent Scowcroft and Lawrence Eagleburger’s Kissinger Associates influence-peddling firm, which also employed George W. Bush’s former special envoy to Iraq, L. Paul Bremer, during the early 1990s. A leading candidate for Commerce Secretary, Bill Richardson, also is a former employee of Kissinger Associates.
Time running out on Circuit City gift cards
Liquidation Nation
Circuit City, Linens ‘n Things, and Sharper Image are gone. What company is next to go under?
Polaroid Fans Try Making New Film for Old Cameras
Big changes for Boeing’s Dreamliner - Jan. 20th
U.S. Stocks Slide to Worst Inauguration Day Drop in Dow Industrial History ; U.S. Stocks Fall in Worst Start to a Year
Dow’s Worst Drop Since Election Day Meant 75% Rally in 1933 – Jan 20th
Fiat Acquires 35% Stake in Chrysler - Jan. 20th
NIMBYalready on the Deal: Rail Not Happening
Even if you accept that commuter rail would give you the best bang for your long-term buck, in the short term, coastal rail is guaranteed to smack dab into the worst NIMBY opposition imaginable. In the short term, the only jobs it would produce are for lawyers — not the hard-hat wearing shovel wielders of Obama’s dreams.
Obama's new rail project
Bono to write Op-Ed column for New York Times (Oh, Joy)
Jan. 9, 2009
I don’t know if anybody else has seen, but Eliot Spitzer is writing a weekly column for Slate. Seriously.
General Motors cleans out the garage
Troubled automaker is selling vehicles from its ‘Heritage Collection’
~zk~
Okay. I’m imagining that Obama just picked Leon Panetta for Head of the CIA, right? I’m dreaming.
I was reading this recent article by Matt Taibbi, The Whore Factor, I fell asleep, and I’m just dreaming this.
~zk~
Now there’s NOT a surprise.
Blank rules the day.
blank said: “How about one more rule? That would be that a proposed treasury secretary…” I agree with you blank… the guy wasn’t my first choice either… but he’s not “proposed” anymore… and I’m just lookin’ at what he actually did on his first day…
-asoka
Both asoka and Bob Snowjob “agree” with blank in the course of a few hours. Too fucking funny.
Blank calls them douchewads on a very regular basis. These guys have no self respect. And no ability to see that they have been completely wrong their entire lives. I’m sorry. I think sepuku is the solution here. Nicholas Paredes where are you?
Well now! Let’s just see if there is anything missing! Hooooly Jesus!
Crude Oil, week of Jan. 25th
In a partially transparent and mostly lame attempt to keep my loyal readers informed on my sockpuppets and adventures in the blogosphere, I offer this link. I post today, late in the thread as King Abdullah.
Already we find ourselves living in interesting times of the type from the famous Chinese curse, with the strong possibility that things could get even more interesting. The analogies we use to name things are .. somewhat instructive.
We are all familiar with things that roll. Some of the most basic childrens’ toys feature balls or wheels or cylinders or other smoothed round things capable of rolling. Some of you, from the era back when we got snows worthy of the name, may even be familiar with the “snowballing” type of roll that is often used to describe certain kinds of disasters: you need good heavy pack snow from around the middle of the range of its heaviness; you need a fairly steep hill; and you need a “seed” snowball maybe 9”~14” in diameter to start with at the top. The common theory for these is that they roll downhill, getting larger and larger, until they dissipate the energy on flat level ground or a rising slope, or they smack into some obstacle. Another common one is the runaway Mack truck, or the runaway freight train rolling downhill toward a trestle that’s been washed out.
It was known a few years ago by some, and with some certainty, that our expanding credit bubble was inflating far too rapidly to have any kind of stability, and that a crash phase would follow. For these things the descriptive memes are like the madly-breeding bacteria in a petri dish who, after being given a while new resource base (sugar) breed madly until their growth has exhausted the resource, then their populations crash most spectacularly. Where we conjured credit out of thin air, and where the bacteria were given sugar by the researchers, Spain once plundered whole shiploads of gold from the New World, and it too suffered the same fate. You would think all that gold would make Spain rich, but no, like a person given $50million in lottery winnings, the money actually brought more of a curse than a blessing specifically because it enabled spending patterns dependent on unsustainable earnings. Not only do un-worked-for riches carry a substantial karmic curse, but they enable the same sort of wild & unsustainable growth seen here in recent years, when every fool in the phone book could pick up a McMansion, a pair of matching his & her Hummers, 60” flatscreens for every room, etc, all on zero-down EZ-credit terms. And then when those unsustainable earnings run out (or suffer a little bump in the road) those unsustainable expenditures crash most spectacularly.
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