Miscellaneous Business/Economics/Energy Items

Apple is going to make Watches and MacBooks in Vietnam.  (More precisely, Apple suppliers will make the products there.  “Make” in this context meaning mostly “assemble”, I think.)  Apple is also planning to produce the iPhone 14 in India, with only about a 2-month lag from its initial production in China.

Intel will be partnering with Brookfield Infrastructure Partners to help pay for factory expansion projects, with Brookfield contributing up to $30 billion.  Most immediately, the money will pay for the expansion of Intel’s Ocotillo manufacturing campus in Chandler, Arizona, with Intel funding 51% and Brookfield funding 49% of the total project cost.  (This is pretty different from BIP’s typical investments, which tend to involve such things as railroads, toll roads, pipelines, and electricity transmission)

A useful overview of planned and in-development fabs, worldwide.

Electricity prices, marginal costs, and the last kilowatt.

Texas has banned BlackRock and several other firms from doing business with the state.

Finland may be facing power outages this winter.  On the other hand, if their Olkiluoto 3 nuclear power plant goes into production at the end of the year, as planned, this should help a lot.  Another plant is planned, taking total nuclear contribution in Finland to 60%.

Also,perhaps a way could be found to harness the power from their PM’s very high-energy dancing.  (If other Western leaders could dance like that, would it somehow influence their minds to adopt more rational energy policies?)

Elsewhere in Europe, skyrocketing energy prices are causing a lot of hardship–and will surely create serious economic pressures as much manufacturing in the affected countries becomes cost-prohibitive)

The Euro is not doing very well versus the dollar.  More here.

Paul Graham:

f you think people have scar tissue, you should see organizations. Each time there’s a disaster, they create a process to prevent future disasters of that type. Eventually they accrete a thick layer of these processes that prevents them from moving. Then they die.

How to turn a recession into a Depression.

The Fed has confirmed that we are officially in a recession. The actual decline in GDP is higher, though. It is at least -1.6%

What caused the Great Depression? Amity Schlaes’ book “The Forgotten Man” suggests that Roosevelt’s “Regulatory Uncertainty” was a big part of the cause. How were businessmen supposed to plan when policies changed from month to month ? The Roosevelt “Brain Trust” could not decide what might work. Some were good ideas, like the CCC which took young men off the street, helped them get into condition and did many worthwhile projects. Some, like the National Recovery Association, were Fascism which was popular in the 1930s.

Now, we face a disastrous shift in the national focus to imaginary threats like Global Warming. This has become all powerful among politicians because none of them know any science and the science people have become dependent on government funding. Fear is a great driver of government money. Climate science has become a rich field through flogging the unskeptics with fear of global warming. It doesn’t matter that there is no evidence of global warming or any of the other alleged threats. The super rich, like Barack Obama, are still buying waterfront estates no matter what they tell their followers.

Here is a proposal that might help.

Central planning always fails, but the utopian visionaries implementing the plans cannot admit that they are at fault. A scapegoat must be found. As a leading example, when Soviet dictator Josef Stalin’s collectivization of agriculture led to mass starvation, the official blame was placed on “saboteurs” and “wreckers.”

Our current-day analog is the centrally-planned replacement of our very large, inexpensive and highly functional energy system, mostly based on fossil fuels, with the alternatives of intermittent wind and sun-based generation, as favored by incompetent government regulators who don’t understand how these things work or how much they will cost. Prices of energy to the consumer — from electricity to gasoline — are soaring; and reliability of supply is widely threatened.

All of which brings our President forth to blame the current price and supply issues in the energy markets on anything but his own administration’s intentional efforts to suppress the functional fossil fuel energy. One day the scapegoat is Vladimir Putin; another it is “companies running gas stations,” who stand accused of price gouging.

One possible solution is to use the states as experimental laboratories.

With federalism in energy policy, we can have New York forging ahead with its “Climate Leadership and Community Protection Act,” and California doing the same with its SB 100 — both of them seeking to eliminate fossil fuels from the generation of electricity, and then to force all energy consumers to use only electricity for their supply. Will that work? If New York and California are successful, they will be a model for the rest of the country to follow. Congratulations will be in order. If they fail relative to other states — that is, if they see energy prices soar, or frequent blackouts or shortages of needed energy — then it will be obvious to all that it was the green energy that failed, and not that there were “saboteurs” or “wreckers” or “price gougers,” who after all could have attacked the other states as well.

Well the Feds allow this? Probably not with the current regime in power.

Fortunately, the red states are not just going along with this kind of thing any more. This will be a critical battleground over the next five to ten years.

We will see after the election. Many Republicans are in thrall to the climate hoax.

Brian Deese — The Musical Tribute Continues

I first heard of Brian Deese during the Obama administration, when he was appointed as one of the ‘Czars’ for the auto industry…and I was inspired to write this little song.  (with apologies to Gilbert & Sullivan)

I see that Mr Deese–now the Director of the National Economic Council–is much in the news lately, most recently for this interchange:

CNN: “What do you say to those families that say, ‘listen, we can’t afford to pay $4.85 a gallon for months, if not years?’”
BIDEN ADVISOR BRIAN DEESE: “This is about the future of the Liberal World Order and we have to stand firm.”

So, I saw no alternative other than to resort again to a musical form of expression.  Here, to be sung to the tune of “I’ve been working on the railroad”, is the next song in my continuing tribute to Mr. Deese:

I’ve been workin’ up at Blackrock
All the livelong day
Hung out there during the Trump years
Yeah, I really liked the pay!

Had to package those investments
Rise up so early in the morn
Hear the other partners shouting
‘Brian, blow our ESG horn’

Now I’m back here in the government
Washington, DC
Surely speaks well for Joe Biden
That he’s impressed with me

I explain that economic problems
Are surely not our fault at all
Whatever it may be the numbers say
Or those charts up on the wall

Someone’s in the kitchen with the data
Someone’s in the kitchen I know-o-0-0
Someone’s in the kitchen with data
Watching the inflation quickly grow

And singing
Fee-Fi-Fiddly-I-O
CPI and PPI up wo-wo-wo-wo
Fee-Fi-Fidly-I-O
Watching the inflation quickly grow

What you going to do about it, Brian?
What are you and Biden going to about it woo-woo-woo-woo
What you going to do about infla-tion
Seems like the folks are getting a clue

They’re singing
Fee-Fi-Fiddly-I-O
Can’t afford to drive or eat wo-wo-wo-wo
Can’t afford to pay our rent or mort-gage
Watching the inflation quickly grow

Need to polish up that narrative
Why there’s nothing we could do
Have to let the prices rocket up
Or the Liberal World Order is so screwed

We’re singing
Fee-Fi-Fiddly-I-O
Nothing we could do about it wo-wo-wo-wo
Fee-Fi-Fiddly-I-O
It’s best to let those energy prices grow

How I Know Things Aren’t Too Bad In Odessa (yet)

I don’t watch a lot of TikTok, but somehow the algorithm one day put me onto a sandwich shop in Odessa. They do a live every morning (afternoon/early evening over there) which shows them making sandwiches, and transacting per normal. I hope that live is on every day.

This indicates that supply chain is still working as all of the ingredients seem to be in ample supply, the grid is up for electricity/internet, and the monetary system isn’t broken down as people seem to be transacting per normal.

Coming from a supply chain perspective, this seems to be good news for now.

Life in a Realm of Scarce and Expensive Energy

In one of the Hornblower novels, set in the early 1800s, the protagonist is staying in a hotel. Thinking about the bill he is going to have to pay on checking out, he realizes that there is going to be a significant item for ‘light’…ie, candles.  I believe this is historically accurate–candles were expensive enough that they could not just be given away free with the room.

Whereas for most of the last 100 years in America, you could just turn on the lights in your hotel room without worrying about what the added charge on your bill was going to be.  And–much more significantly in terms of energy use–you could adjust the heater or air conditioner to suite your temperature preference, again without worrying about added charges.

With the unrealistic energy plans of the Biden administration and of most European governments, such luxuries may soon be a thing of the past.  I doubt that you will actually have to pay extra for keeping the lights on, but it’s entirely possible that you may have to pay extra if you want it cooler than, say, 78 degrees in summer or warmer than 64 degrees in winter–perhaps with those thresholds adjusted according to the balance of total grid power demand and availability, so that an extreme air-conditioning surcharge kicks in at 88 degrees on an especially hot and windless day.

And not just in hotels. It’s likely that stores, restaurants, etc will get significantly cooler in winter and warmer in summer.  And unless you can afford to not worry about your electricity bill very much, you will likely have to adjust your home temperatures to fit the current supply/demand profile on the grid–indeed, in some jurisdictions, it may be prohibited to violate the required limits no matter how much you are willing to pay.  (With likely exceptions for certain ‘public servants’.)

Above and beyond the impact on individual citizens and families, you can expect that many kinds of energy-dependent businesses, especially manufacturing businesses, will become increasingly uncompetitive in the US.  Again, there will likely be an exception for certain politically-well-connected businesses. But overall, expensive US energy will likely drive a new wave of offshoring.

And I haven’t even talked about transportation.

The above is not carved in stone, of course, there is still a good chance to escape it, as people begin to perceive (from experience) the realities behind all the idealistic talk, theories, and harangues.  But it will be a close-run thing.