All Things in Moderation

Found this Rage Comic over at Ace of Spades HQ, and had to share:

— KW

It looks like Christmas spirit has prevailed and the tax will be sidelined. No lump of coal for Obama.
-Ashot-

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Thought I’d post this story from NPR on a start-up company trying to compete with the big boys (governments) in developing an economically viable fusion reactor.

The world would be a very different place if we could bottle up a bit of the sun here on Earth and tap that abundant and clean energy supply. Governments have spent many billions of dollars to develop that energy source, fusion energy, but it’s still a distant dream. Now a few upstart companies are trying to do it on the cheap. And the ideas are credible enough to attract serious private investment.

One such company is hidden away in a small business park in the suburbs of Vancouver, British Columbia. Nothing seems unusual here — there’s a food distributor, an engineering firm and small warehouses. But on one door there’s a sign suggesting that all is not normal.

NPR on General Fusion

This would be really cool if it pans out. FairlingtonBlade can explain the science behind magnetized target fusion better than I, but the basic idea that it’s kind of a hybrid between magnetic confinement (tokamak, ITER) and inertial confinement (laser, NIF) fusion. Heavy hydrogen is heated up to a plasma, injected into a spinning lead sphere (which creates a magnetic field to contain the plasma), then the sphere is compressed with a series of pneumatic pistons. This results, theoretically, in fusion and the production of large amounts of energy, heating up the lead, which is then piped out and used to produce steam. Electricity is then generated by a typical turbine system.

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Vital Statistics:

Added a new vital statistic – the Italian 10 year government bond yield.

S&P futures are getting crushed as investors focus on Italy and the rise in Italian government bond yields. Overnight, LCH Clearinghouse increased the margin requirements on Italian government debt by 75%, triggering a sell-off in Italian bonds. Spanish and Irish yields are wider as well. Both EURIBOR / OIS and LIBOR / OIS are signaling stress in the financial system. One problem for the banking system is that government bonds form the basis of Tier 1 (risk-free) capital. So if the “safe stuff” is suspect, all of the banks are suspect.

Luckily the US credit markets (with the exception of the mortgage space) have been largely insulated from the problems emanating out of Europe. US banks raised a lot of capital during the crisis and have been de-levering for years. Two big corporate issues priced yesterday and hedge funds are raising money for distressed debt vehicles. The US government bond is back under a 2% yield.

The European experience is instructive for the US. Slow-moving train wrecks can lull investors into a false sense of security. Simply because investors are not focusing on a well-advertised problem at the moment doesn’t mean things are fine. These sorts of things typically coalesce in a short period of time. In other words, it doesn’t matter until it matters, and then it is the only thing that matters.

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