Saturday, June 18, 2016

How can Car Emissions change our world?

The story of VolksWagon (VW), and other companies caught lying about emissions and gas consumption efficiency brings to mind the fact that the world is changing significantly. The biggest changes are coming in the near future.

Apparently VW, Audi and Porsche are all the same company. The problems started for them when emissions engineers discovered they had set up their diesel engines to detect when they were being tested, and run lean at that time. Things weren't so lean later when they weren't being tested as an enterprising emissions engineer discovered. Today, there is a massive lawsuit moving through the courts to compensate the 420,000 owners of these cars in the US. Even more car companies were caught overstating the truth, or outright lying about efficiency or pollution. Most car manufacturing companies who sell cars in the US have been implicated.

The problems continue, though. Ford had a write-up  on how they moved heaven and earth to attempt to get their preeminent F-150 to conform to current emissions standards. They spent a $1B on shifting their line to make F-150 trucks in aluminum. This is good because aluminum makes for a lighter, although more expensive truck. However, Ford's F-150 as a fleet does not meet current emissions standards.

Making a bad situation even worse from car manufacturers' view, President Obama increased automotive average fleet standards to 54.5 miles per gallon by 2025, although he did so with the best intentions for the sake of a clean environment. This new standard could cost car manufacturers quite a bit. By current standards, to get an average economy of 54.5 miles to gallon of gas would require a motor scooter, or a moped. Perhaps a 500cc motorcycle engine would be the maximum size under this type of legislative environment. This brings to mind the question of if car manufacturers or consumers will be willing to pay the difference needed to make vehicles with this type of efficiency. In the Ford F-150 Has Big Problem After Overhaul article, Bloomberg quotes the following:

“The question is, do consumers pay for this technology or just get it for free?’’ said Warren Gibbon, a portfolio manager for Standard Life Investments in Boston, who helps manage $373 billion and sold his holdings in big Detroit car companies in 2012. “If it’s the latter, it will be tough for automakers to make a good return on their investment.’’

Also at stake is the fact that pick up trucks are designed to work and haul materials. To perform this work, they have to have decent sized engines.  An under-powered truck wouldn't make it far in the business world. Perhaps with time, hybrids and electrics can be made to fulfill this purpose, but the cost will be high.

Car manufacturers are under pressure today to meet ever-increasing emissions standards. If the standards were possible, then companies wouldn't lie about their emissions or gas efficiency. VW is in a huge mess due to lying about their TDI Diesel engines, but if the engineering were possible, I would think they would have engineered to meet the standards. Other companies are in trouble for fudging various figures for their cars.

If all goes well, we will have efficient cars and trucks that will make the high standards set by the government. They might not be affordable, though. Expect to see a shake out in the car manufacturers. However, if car technology is a limiting factor, then the cars in 20 years won't be burning gasoline.

My mind ran to Cuba where all the cars date from the 50s or earlier. If we are in a situation where old cars' emissions are grandfathered, then I can easily see fleets of pre-2010 cars that will still be on the road in 20 years. Perhaps we will enter the age of heirloom cars where families pass them down because new ones cost a lot. One thing is for sure, if technology can't find a better answer than we see today, then the age of the gasoline car will be over. Horses might be fashionable again, and the same for ride sharing.

Changes on this potential scale mean our world will change substantially. The age and era of quick personal travel will be over. This change, if technology can't keep up with standards, will happen in the near future.

Epilogue: One of my friends just got back from Peru. No emissions rules there, and come to think of it, there weren't any rules in China when I went there in 2009. Perhaps other countries won't change as much as us.

Sunday, April 24, 2016

LInux Mint Rosa 17.3

 Linux Mint Rosa 17.3 is a Long Term Release. A Long Term Release means an extended period of support, in the case of this version until April, 2019. The next version, 18 (also known as Sarah) is due out in May or June, 2016. Support for that version will go to 2021. I find since I use my computer for production (producing content), that I need a Long Term Support Version. Changing the OS always takes up more time than I realize, and then I have to spend time adjusting all the behaviors that change with the new version, like the network card and vino server.
Quite a while ago, I downloaded a copy of Linux Mint Rosa with the Cinnamon desktop. I also downloaded Fedora 23, not realizing the network card would stop working. The Fedora 23 wound up on a laptop, and I am very happy with it. However, I ran into problems with my way-too-large old Dell. The network card wouldn't work, and it did work up through Fedora 22. Hmm, this seemed odd, or perhaps my old Broadcom eXtreme chip set wouldn't work on a new driver. Sometimes Fedora is picky with hardware, so I switched the system to Linux Mint Rosa 17.3. This didn't help anything. I reasoned that the driver was wonky since being updated, and I found a few clues on Google that indicated I was right.

I went to Ebay, ordered up a gigabit pci card (see how old that computer is?). With one thing and another, I didn't install the card until a month or so after I received it. I put it in, and networking was back to normal. I also experienced a problem with Vino, aka Gnome Desktop Sharing. I like to use UltraVNC to connect to my Linux box from Windows (dual booting is no good). The solution to that was turning off encryption at the user level:

$ gsettings set org.gnome.Vino require-encryption false
Arch Wiki Credit 

Now UltraVNC works perfectly.

The Linux Mint distro turned out to be eminently predictable. Installing was easy,
with no surprises, and the ease of use was very good. Now I will get to see if the distro can stand the test of time.

With Microsoft 365, I am able to easily edit my docs via a web browser in Linux, and then use open source software for all my needs. This step forward makes a terrific difference in ease of use. Additionally, Libre Office Writer will save in Microsoft formats. I've found problems with tables when going from Linux to Microsoft machines. I think the underlying code for tables is difficult and the group coding Libre Office hasn't yet found a work around.

All in all, this is a good, solid distro. The machine works well with this, and I recommend switching to Linux in the form of Mint 17.3.

Wednesday, April 20, 2016

The Human Cost of Market Change: PCs

I was startled to hear from Linda Bridges, the owner of Pacific Solutions.  She called to tell me the computer market had changed too much for her store's value proposition to be effective so they were closing soon. The company I work for has done business with Pacific Solutions for many years. I appreciated Linda's efforts to support Linux, even in the late 90s. She and her team kept our network going, and they fixed many problems we had. We'll miss them.  It's always hard to see the human cost when markets change substantially. My friend, Bob, who volunteers at Free Geek, says the lap top computer market is collapsing too, with many units coming in for salvage and refurbished models selling at low prices if at all.

In previous posts, I wrote about the decline of the desk top computer and by extension, the laptop computer. I have a collection of several desk top 70+ lb behemoths. Today, though, mini pcs which are something we would have called a nano computer a few years ago, does as much as the huge elephants. The new computers are tiny and can be mounted on the back of a monitor. I think this is the next wave of computers, combined with usb stick computers (think Google TV), and tablets. The most interesting part is the fact that the typical tablet computer can't do as much as a desk top computer manufactured after 2005 or 2006 when that type of computer peaked out.

Major computer tech companies are starting to lay off large numbers of people right now. IBM is laying off work force members all over the world. IBM is the home of heavy metal main frame computers. Another company laying off is Intel, who will lay off approximately 10% of their workforce. If IBM's talent is main frames, Intel's talent is their duopoly with Microsoft and manufacturing mother board chips for desktop PCs. Interestingly enough, while their balance sheet is not as fat as it was in the early 2000s, Microsoft seems to be pulling off big changes successfully.

 When you think about it, Microsoft Office 365, is Google Documents on steroids.Google Docs are wonderful, but they have an open source feel to them. I'm stuck on Microsoft Office, and my professional writing has to be in Microsoft Office formats. The wonderful part of Office 365 is using the online version of Word to edit my docs on a Linux box. Microsoft, in a total surprise move is starting to embrace Linux (similarly to Google's embrace of Linux in the form of Android?). Windows 10 is now free for most people. They have converted to software as a subscription, which means they shifted successfully form the desk top frame of mind. More evidence of Microsoft's shift away from the PC is the fact Office 365 runs just as well on all my devices which include laptops. desktops, tablets, and phones. 

I'm amazed and overjoyed. Microsoft has become a company that is much better to work with. Unexpectedly, Intel and IBM are having problems because they did not embrace change quickly enough or radically enough. My business education tells me Pacific Solutions, Intel and IBM's struggles are very typical in a radically changing marketplace, and that Microsoft, while they still have challenges, is likely to survive the shake out.

Saturday, January 16, 2016

The Liquidity Trap

I've had concerns about the stock market for a few years now. Sometimes, I wonder if I am a bear like David Stockman. Still, though, the fundamental values in a healthy stock market seem to have been violated for quite a while. In April of 2015, I wrote about slowing GDP in key bell-weather nations like China that would bring about a slide into Spring.   In July of 2015, I wrote about how previous indicators like the implosion of the Greece economy and significant drop in China's stock market seemed to indicate a spreading economic problem. Right now, stock prices are way down, oil prices are very low, and the threat of a deflationary spiral seems real. Interestingly, after teasing us with the threat of increased interest rates, the markets did not seem to react to their increase, but rather posted more reaction in response to significant problems in China.

Liquidity is a key to the health of the stock market. A symptom of poor liquidity and a lack of safe haven for short term cash has sovereign debt granting negative rates. In essence, investors are communicating they are willing to take a small hair cut (loss) just to keep their cash in a safe place. Interestingly enough, recent academic studies reveal that a lack of liquidity in the stock market foreshadows recession. (Chen, Chou, & Yen, 2016). Even back in September, the bond market was wallowing in illiquidity, and conditions are worse now.

As always in these situations, ill health in the bond market leads to problems in the stock market. (The opposite is true too). The part the commentators missed is the connection to low commodity prices. The price of oil is a significant part of this puzzle. Last March, several commentators thought Saudi Arabia was selling large quantities of oil to purchase military supplies. Other commentators thought the fire sale in oil was due to an expanding US oil industry. Anyway you argue this case, the result is a tailspin in oil prices. Oil is not the only commodity going down in price.

Another commodity that has diminishing value similar to oil is gold. Gold is coming down, which is odd when you consider that the stock market is going down as well.  Copper and most commodities, except for food, are retreating. Since so many commodities are going down in price, odds are good that demand for the raw materials is at a record low. Low demand is connected to economic problems due to demand's connection to Gross Domestic Product.

The above factors all tie into the Kondratiev (1998) theory of long wave economic cycles based on commodity prices (Gore, 2010). In between the technological waves, Kondratiev (1998) theorized a period of stagnation or depression.  

If we take these factors and postulate that the trends will continue, the future looks ugly with a recession on the horizon. A Krondratiev (1998) interregnum would be a bad place to go. However, the stock market is adjusted so rapid declines in value can not happen. We've seen the market blowing off excess valuation lately; hopefully this is a small correction. Additionally, the Fed can adjust our trajectory by using Quantitative Easing (QE). Never underestimate human ingenuity, we are truly masters of our destiny. Let's stay tuned for the next installment starting Monday.


Chen, S., Chou, Y., & Yen, C. (2016). Predicting US recessions with stock market illiquidity.                      B.E.Journal of Macroeconomics, 16(1), 93-123. doi:10.1515/bejm-2015-000

Gore, C. (2010). The global recession of 2009 in a long-term development perspective. Journal of International Development, 22, 714-738. doi:10.1002/jid.1725 

Kondratiev, N. D. (1998). In Makasheva N., Samuels W. and Barnett V. (Eds.), The works of Nikolai D. Kondratiev (S. Wilson Trans.). London, U.K.: Pickering & Chatto Limited.