Been reading Prince of Traitors at Tapas. It’s good. Well written with coherent story and a decent world. Only downside is it’s written in the present tense. Recommended.
Status
I’m looking at writing competitions.
I had a plot for Herostratus, but it was just nihilism. There’s enough of that. We don’t need more.
Discord isn’t bad, but I’m not sure what the point of it is.
Oh, according to Jetpack LC has 56 lifetime views. It has 283 subscribers. Something’s a little fishy.
The Prisoner’s Dilemma
There’s this thought experiment in game theory called the Prisoner’s Dilemma. Wikipedia has a good write-up here. There’s a lot of argument about what a wise person would do, not knowing what the other person will do, and I often consider it while playing Diplomacy.
Game Theory doesn’t seem to address the fact that you can only betray your partner once. Then they will always betray you, and that’s the worst outcome. Often it is worth it to take a risk now so you don’t guarantee failure later.
That’s why I like playing series Diplomacy and not just one-offs. There’s a world of difference between a single game and a seven game series with the same people. They’ll remember a betrayal or a compromise. A lot of people in politics are blind to the notion that they’ll have to deal with these people in a few years and a few dacades.
More Flat Earth
In reality Flat Earthers usually aren’t grounded in whether or not the Earth is flat. They’re grounded in one of two points: the government is lying to them or the government/science people think they’re stupid.
If the government is lying to them, they just disbelieve everything the government says. Republicans did this under Obama, and Democrats are doing it under Trump. It’s the same kind of passion, only even more extreme. The Flat Earthers are just against whatever the government says, and NASA does say the Earth is round. Therefore, the Earth is Flat, QED. It’s not a cosmological theory; it’s a social theory. “Those people are lying!”
The other one is that science people called them stupid, so they just don’t believe anything. People do this all the time. If you tell someone smoking is stupid, the smokers will keep smoking just to show you. This is why people roll coal. A lot of people think sciency types told them they’re stupid, so they just refuse to agree on principle. This also happens a lot with vaccinations and GMOs. Like FE, they sorta feel right if you don’t explore the notion much. Again, social theory not physical.
You can argue physics and explore physics. You can’t argue that someone shouldn’t distrust the government or be insulted by physicists who call them stupid.
Anyway, imagine you have a boat and you go to the Pacific Northwest. You can sail fifty miles out to sea and see the mountains near Puget Sound. But you can’t go thousands of miles out to sea and see them. You should be able to if the Earth was flat. What’s more, again, when sailing east towards Puget Sound, the mountains will appear to rise. IF the Earth was flat, they’d just sort of appear out of darkness. This is not the case. They rise.
The Shutdown
After a few betrayals in a game of Risk or Diplomacy, a lot of players stop talking to each other. They decide that’s it. In both games, that usually leads to stalemates. In Risk there’s the chance someone will win via cards, but the game drops into this hours-long slog where nothing really happens as players horde cards. More often everyone goes to bed with the game unfinished than someone wins. In Diplomacy it turns into nothing but fighting, but since Diplomacy lends itself to stalemates, no one can win. Again, a stalemate happens.
Both parties in Washington have dug in. I don’t think there’s any communication going on. Trump won’t sign a budget until he gets his wall, and Pelosi won’t fund the wall. There’s no room for compromise there. Neither side is going to persuade the other to cross the trenches. Neither side is going to persuade the other voters. And with the furlough/back-pay bill passed, I think both sides are set up for a long war of attrition.
I don’t see an end to this any time soon. I hope I’m wrong. But in my experience with human interaction when the various factions resort to reiterating the rightness of their causes, there’s no more meaningful discussion. And nothing’s moving through Washington now.
The Flat Earth
I legitimately can’t figure out if @FlatEarthOrg is trolling or not.
Driving westbound from Kansas into Denver there’s a stretch of I-70 that is almost perfectly East-West. It’s also almost dead-aimed at Pike’s Peak. The road itself is a little north, so Pike’s Peak would be straight ahead and to the left, but there’s about 100 miles of straight where you can see the mountain.
Now eastern Colorado is just western Kansas in terrain. Almost perfectly flat with little hills with shallow sides. About a hundred miles away, around Burlington, CO, you come over this low hill and see Pike’s Peak. The crest of it stands above the brown horizon. The peak itself is dark blue against a dark blue sky. The peak is perfectly triangular. My phone is garbage, but I’ll get a shot when I get a new phone.
As you continue to drive west, the peak grows. It gets taller. What’s more, features appear. The shoulders of lower peaks, subordinate summits, and nearby mountains in the front range rise into the sky. They don’t come forward; they come up. By the time you get to Limon, I-70 shanks north to head towards Denver, and by then Pike’s Peak is alone and tall. You can see its white head and beard. Lesser summits are not only visible but distinguishable from the central prominance. It’s magnificent.
People, I moved to Colorado for the scenery. This stuff does it for me.
But Pike’s Peak clearly rises. As one drives in the opposite direction, the mountain sinks in the rear view mirror. It gets lower. It crouches, and the subordinate summits are lost first.
I’ve seen pictures of ships go over the horizon, and they do sink from the bottom up, but I find those pictures blurry and hard to see. There’s none of that in Pike’s Peak. Giant hill rises from behind the horizon, and it can’t do that if the Earth is flat.
US Treasuries
The US Treasury yield curve has been inverted somewhere since 11/29, or 26 business days ago. If you’re reading and have any interest in finance, you’ve probably heard about this in hushed voices. This is why.
Interest rates follow something called a yield curve. The curve relates the interest rate to the duration among loans to a given credit quality. Bonds are loans. They have a few defining characteristics: maturity date, interest rate, value, and issuer are the biggies.
Working backwards, issuer is the entity that borrows the money. US treasuries are issued by the US government to finance the debt. The US federal government is the issuer or borrower.
The value, or face value, is specifically how much this bond is worth when it matures. The standard value is $1,000, but treasuries may be purchased in any denomination up from $25. Corporate bonds usually issue in higher denominations because this makes things cheaper for the issuer. As such, bond prices are talked about in relation to something called par or in terms of cents on the dollar. Par is the maturity value of a bond, but its discussed in terms of percent. So for a $1,000 or a $25 or a $1,000,000, par is 100 (from 100%). Cents on the dollar goes the same way. It’s useful to talk about how prices move, because in percent, they move the same way for little and big bonds.
The interest rate is the interest the borrower pays the buyer to borrow the money. It is paid twice a year, and the final payment is paid concurrently with the bond maturing. In the real world this takes a day or two past the maturity date to settle. Sometimes this is called the coupon, but this terminology is obsolete. Old bonds had physical tear strips that were removed and turned into the bank for payment. Now it’s all electronic.
The bond comes due on the maturity date. The face value of the bond and the final interest payment, if any, are paid then. The time between now and the maturity date is the duration of the bond. So if I bought a Jan 1, 2020 bond in 2010, it was a 10 year bond then and is a 1 year bond now.
Take a simple example. The US government auctioned 9 year, 10 month bonds today, 1/9/2019. The CUSIP (which is the ID number for all of the bonds of one issue) was 9128285M8. These bonds mature Nov 15, 2028. This is pretty close to 10 years, so we call them 10 year bonds or notes.
The interest rate of the bond was 3-1/8% or 3.125%. So a $1000 bond would pay $31.25 a year in 2 $15.625 payments. The last payment would be paid with the face value of the bond, for a final payment of $1015.625. The 15th is a Wednesday, so it will probably hit your brokerage account by November 17th or earlier.
Here’s the trick. Bonds rarely sell for their face value. In 9128258MB, 103.398824 was the best (lowest) price. That’s in percentage, so $1033.98824 for a $1,000 bond. What this means is that actual yield, how much money the buyer or lender gets for the money isn’t exactly 3.125%. It’s actually 2.728%.
Now the price should be close to the value, but it varies a lot. When people particularly want bonds, the price goes up. The interest remains the same, so the yield goes down. When people don’t want bonds, the price goes down, but again the interest remains the same. The yield goes up.
In general people want bonds that mature sooner more, because we all want money now. The demand for long duration bonds is lower. So the yield of short duration bonds should be higher than long.
That’s not what’s happening now for all maturities. Treasuries that mature in about a year are yielding about 2.59%. 2yrs are at 2.56% and 3yrs are at 2.54%. Durations of less than 1yr are orderly, and yields go down as they get closer to zero. (1 month is as low as the official numbers go) Above 3 years yields go up as the duration gets longer. There’s just this little bit between 1 and 3yrs where instead of yield increasing with duration, it goes down.
People care for a few reasons.
1) Not all inversions precede recessions, but since the fifties, all recessions have been preceded by inversions. This could be a big warning sign.
2) It means people think investment prospects will be better in a few years than in 1 yr. This short term pessimism can lead to problems.
3) It may mean the Federal Reserve is raising interest rates too fast. The logic for this argument is beyond the scope of a blog post, and it’s something we like to yell and fight about in financial discussions. It’s like talking to a counter-shipper about your favorite ship, only less sex, less romance, and more money. Unless you ship Batman.
4) Actually, the Fed has more money than Batman. So think Darth Vader.
Does this matter?
I don’t know. I cannot see the future. But it is an interesting detail, and not all that’s worth knowing is worth doing something about. Put it in your brain hole.
Why are some people saying the yield curve isn’t inverted?
Because classically, we compare the 2yr and 10yr bonds. 10yrs are yielding 2.74%, which is comfortably more than 2.56%.
Why did you say 10yrs are yielding 2.74% but the example was 2.728%?
A bunch of math, and it demonstrates the point that these measurements aren’t exact. There’s some wiggle room here.
Feathering the prop
Feathering a prop means turning the blades sideways, parallel to the direction of travel. This minimizes air resistance. It is typically done on modern gliders, but in theory may be done on any human-controled variable pitch propellor. I bet there are exceptions. Some company has to make electric or mechanical nannies that interfere.
Note that gliders may be planes that are intended to glide and may be propellor driven. They become motorized gliders or self-launching gliders, not planes. The licensing is different.
Advertising
There’s a billboard on Colfax, just past the Rodolfo Gonzalez library going west, that says something to the effect of ‘Ditch your side hustle. There’s easier ways to make money.’ It has a picture of a tired lady with a half dozen dogs on leashes.
The problem is that side hustle looks amazing. They’re so fluffy! I want half a dozen dogs, and if that was what I did for cash, I’d be all for it. There are dog walking services with WAITLINES. She’s in! She got it. The dogs are even still for the the photograph, so she’s got a half dozen big, fluffy, well-behaved dogs. The billboard does not make me want to ditch my side hustle.
Jetpack
Test of statistics plugin