The Market Ticker ®
Commentary on The Capital Markets
Login or register to improve your experience
Main Navigation
Sarah's Resources You Should See
Full-Text Search & Archives
Leverage, the book
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions. For investment, legal or other professional advice specific to your situation contact a licensed professional in your jurisdiction.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility; author(s) may have positions in securities or firms mentioned and have no duty to disclose same.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be sent unmodified to lawmakers via print or electronic means or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media, to republish full articles, or for any commercial use (which includes any site where advertising is displayed.)

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must be complete (NOT a "pitch"; those get you blocked as a spammer), include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.

Considering sending spam? Read this first.

2024-03-28 09:15 by Karl Denninger
in Editorial , 286 references
[Comments enabled]  
Category thumbnail

This deserves a bit more because frankly, I'm getting tired of the nuts.

Indeed this might get added to my FAQ here (go see the section on "Troofers" for what happens if you run that garbage on my forum, whether in the comment section or otherwise) because it is getting about that stupid.

Let's talk a bit about boat handling, especially single-screw vessels.  Most props (unless you have twins) are what are called "right hand" screws.  When going ahead the torque effect and the rotation of the water column coming off the screw tend to move the stern of the ship to starboard, and since the vessel only has applied moment (force) at the stern this means if the stern goes starboard the bow goes to port.  Each vessel has an "effective" pivot center; exactly where it is varies, but it is not in the center of the vessel length-wise.  With an outboard it is often at or right near the transom, which can make close-quarter handling quite a mess in snotty conditions at low speed.  Gigabite, which was a Hatteras 45' Sportfish, pivoted at around her engine locations, which was roughly 10-15' or so from the transom (she had twin Detroit diesels.)

A twin engine vessel has one RH and one LH screw, and with both engaged she will track more or less straight because the two torque and rotation of the water columns cancel each other out.  But a single-screw vessel does not.  The other factor is that as way increases the water flow over the keel tends to keep her going in a straight line.

Further, the rudder gets most of its authority -- that is, the ability to steer -- from the blast of the prop which is directly in front of it, and at lower speeds through the water it has almost zero authority without the screw turning.  Note that the speed over ground does not account for current and the current is almost-never exactly aligned with your direction of travel, so it always, when it is present, attempts to destabilize the path of your vessel.  In harbors and similar tidal flow is the primary cause of said currents and of course they shift depending on whether you have a rising or falling tide and exactly where you are.  In some cases this can be quite-treacherous, especially if you get other than straight on with or against it; someone who was a dockmate of mine with a sailboat attempted to abort running Destin Pass with friends on board (that was stupid, by the way), got sideways and the boat was knocked down and dismasted.  That was a 40 footer too -- not a little rowboat.  Fortunately nobody was killed and the boat did not sink but two were ejected and had to swim to the jetties.

It is clear that the power went off on the vessel.  Why it went off remains to be determined but that it did, and that the emergency generator started when it did, is known because you can see the power go off and then come back on.  It then trips a second time, presumably due to an extreme demand (e.g. the skipper attempting a last-ditch use of the bow thruster at full power to keep off the piling.)

Until the power went down the ship was in the channel and on a stable heading.  It would have had some starboard rudder dialed in -- in other words, it was not set dead straight forward -- because the normal "walk" of the screw ahead would be to induce a port turn if it was dead straight.  When the power goes down that torque and rotational effect disappears and the rudder is now going to try to turn the ship slightly to starboard, and it is locked there with power off.  Add to this any current impact if the flow is in any way other than head-on (and as noted it almost never is straight on) and the impact of wind and that the ship began to yaw is not surprising, nor is it surprising it went to starboard.

Without power you now are riding on 100,000 tons of metal (and cargo) traveling at whatever velocity you were at underway which is subject to external forces you cannot counteract.  By the time the power comes back up it is likely there was nothing that could be done to prevent the collision but you can bet they tried -- the second power failure made those attempts irrelevant.  As you can see from the video when the power comes back again they're within seconds of impact.

Older machinery was not reliant on electrical power to work.  My boat had two mechanical diesels operated with cables from the bridge to the engines and transmissions; the transmissions (large ships are typically straight-shaft with no gearbox) were hydraulically operated by a pump driven from the engine.  Once started so long as they had fuel, air and lubricating oil they run.  The steering gear on my boat was hydraulic but with no booster so again, as long as the hoses and lines were intact and it had fluid in it you could steer but without the screws turning you had very little rudder authority.  I also had twin screws so at low speed I could steer without the rudder at all, and frequently did, since I could put one screw in forward and one in reverse, along with varying their speed.  I did have, during my time owning Gigabite, an electrical failure.  It was not a big deal as it occurred during daytime (at night you obviously have no running lights which is serious); we made port without incident and I fixed it.

Modern emissions requirements make no-electric-required operation impossible.  On a modern vessel without electrical power its engine shuts down because it is electronically controlled and the fuel pumps, conditioning equipment for the fuel, any after-treatment of the exhaust and various other required elements all require it, along with mechanical control being insufficiently precise to meet modern emissions standards.  While I could operate with no electrical power at all provided the engines were running before the failure occurred this is not true for modern vessels and engines.

Finally, contemplate that it would be close to impossible to actually know that causing a power loss of this sort, assuming you could, would result in this sort of calamitous outcome.  Exactly where that ship goes when the power goes off is determined by facts you cannot know with sufficient precision in advance; if the tide or wind had been different it might have gone right under the span and, if it had, there would have been no calamity at all (however, it might have gone aground on the other side somewhere once it got out of the channel.)

This does not mean that there should not be liability.  Admiralty Law is very different than what you think of as "legal liability code" in this regard and it is both older than the US and time-tested.  A ship can literally be arrested under Admiralty Law, for openers and in addition the owners of the cargo on board can be assessed as well in a major casualty incident such as this.  Obviously the physical damage is in the billions, never mind the (small, but real) loss of life, all of which is chargeable on a liability basis.  That will take time to sort out but it absolutely does exist and can be sorted out -- for an example see Ever Given in the Suez which was impounded by Egypt when the owners and insurers refused the original demand to pay a billion in economic damages.  The harm here is obviously much-greater although it certainly includes the disruption of port business which was the primary harm (disruption of transit) from the Suez incident.

Finally, as with the Suez incident there were local harbor pilots on board and in command, as is the case for vessels of this sort and size (yes, including cruise ships) coming into and leaving ports -- although in virtually all cases the vessel's master is still ultimately responsible (and will get tagged if something goes wrong.)  That's done because those local individuals have very extensive experience with that specific passage where a ship's captain does not -- he or she may have only been through there once or twice where these officers run this particular passage, in many cases, every day or every few days.

Large commercial ships also have data recorders similar to an airliner's "black boxes" and I'm sure by now the USCG and other US authorities have them in-hand and will be going through them.  They include both very detailed machinery logging as well as voice records.  From that the precise sequence of events, including the orders given (and by whom) will be able to be determined.

But from what is known now -- and in fact what was known at the time the event occurred I see nothing to suggest that this is anything other than an extremely serious industrial accident.  Are there lessons to be learned and mitigations that can be taken on a forward basis?  Of course -- but whether they'd have been successful if put in place in advance (e.g. "dolphins" around the pylon) in preventing the collapse are, at this point, speculative.  Frankly, with 100,000 tons of ship moving at 8kts even if said bollards had been present it is not at all clear thy would have actually prevented the contact and destruction of the bridge.

View this entry with comments (opens new window)
 

2024-03-26 09:50 by Karl Denninger
in Flash , 7615 references
[Comments enabled]  

The Key Bridge in Maryland was struck overnight by a container ship and has collapsed.

There are plenty of people raising various arguments like "deliberate" or similar.  Observing the video in that link its pretty clear that's BS.

The ship visibly loses electrical power (all the lights go out) just after the video starts, regains it briefly, you can see them attempt to go "full power" and then they lose electrical power again -- although by that point they're doomed.

Rudder authority on ships is to a huge degree generated by the prop wash -- which is in front of the rudder.  The wind was coming across the bay last night and you can see the boat yaw as soon as power is lost.  With a huge amount of windage due to the containers up above the deck the rudder authority under power is what's keeping you pointing the right way and when you lose the screw nearly all of that rudder authority disappears.

You're not stopping a ship like that in a short distance no matter what you do.  I don't know what the harbor pilot(s) (who I presume were on board as that is required in such locations) commanded when the power came back up on the main (which you can clearly see as the stack blasts black smoke; they went to full power) but I doubt there was anything that could be done to prevent the impact given the close quarter situation when they lost electrical and, in all probability, both propulsion and rudder.

View this entry with comments (opens new window)
 

2024-03-21 07:00 by Karl Denninger
in Federal Reserve , 639 references
[Comments enabled]  

The market's reaction to the Fed Rate decision is utterly insane.

Obviously the market thinks rate cuts are imminent.  There's no evidence for this in the Fed Statement or data.

Specifically, the Fed strengthened its language on the job market in this statement, which would tend to remove said expectation, not add to it.

The Committee is strongly committed to returning inflation to its 2 percent objective.

Well, you're not headed there with allowing the market to keep believing that which you don't state, but which you also don't strongly stomp on.  That's a serious problem for the economy generally because inflation is most-certainly not headed back to 2% when, for example, both car and homeowner's insurance is rising at about a 20% annualized rate.  May I note that automobile insurance is 2.8% of the basket all on its own so 0.5% inflation is represented by that even if everything else was literally zero!

Never mind shelter costs are rising at close to triple the 2% target and that is 36% of the basket, so just taking that alone if everything else was zero they'd be at the target -- and, obviously, everything else is not zero.

Further, everyone knows that the CPI is a joke at this point -- especially when it comes to mandatory spending on things like shelter, fuel and insurance of all sorts.

I can't fathom how this is a bullish statement, particularly given the credit issues at the consumer level and maturing corporate debt that will have to be rolled over the next year or two -- and then at an increasing rate in the years beyond.  Most of this was refinanced in the last five to seven years and that was at rates that were much lower than those of today.

I saw nothing in this statement that implied you should be buying anything -- except the short end of the Treasury curve.

View this entry with comments (opens new window)
 

2024-03-19 08:04 by Karl Denninger
in POTD , 80 references
 

 

View this entry with comments (opens new window)
 



2024-03-17 07:00 by Karl Denninger
in Technology , 316 references
[Comments enabled]  

This article deserves more notice than it got....

The consumer advocacy group found issues with a dozen seemingly identical video doorbells sold under brand names including Eken and Tuck. All are made by the Eken Group, based in Shenzhen, China, and controlled through a mobile app called Aiwit, which Eken operates, CR said. 

Eken and Tuck are not well-known brands in the video doorbell market, yet they are relatively strong sellers online. The doorbells appeared in multiple listings on Amazon, with more than 4,200 sold in January alone. Both brands are often touted as "Amazon's Choice: Overall Pick," CR stated.

What is the definition of an "Amazon's Choice"?

That's a good question, but arguably one of the better answers is probably "doesn't get returned often."

This much I can assure you -- Amazon doesn't verify the security chops of such an app or device and apparently neither does Google's Play Store other than by automated scan because despite this article and CR's warning the app is still on the Play Store and claims all data is encrypted in transit and none is collected.

This may be true, by the way.

But as I've noted repeatedly over the years when it comes to home security surveillance cameras are a special problem.  The common protocol used to stream data, RTSP, dates to 1998 and while there is a replacement as a "proposed standard" in RFC 2876 it is not backward-compatible and RTSP offers only authentication via a digest method for access and no security whatsoever on the payload which is live video and audio!

There is a serious tension between the cost of IP cameras and encryption, in that encryption is not "free" on a CPU cycle basis and making cameras that have two-digit costs before the decimal is fairly incompatible with real-time video encryption -- never mind the other issues that arise such as a lack of a published, reasonable standard for it that is interoperable across vendors and the certificate and keying management problems that have to have some sort of secure means of being resolved when you have these devices all over the place.  The latter is serious as PKI (public key) has a cost too; that little "https" thing we all use isn't free to the site owner because the folks issuing it actually have to do work and their security has to be up to snuff or every certificate they issue can be compromised.  In other words this is a material problem and not a trivial one to fix on a mass-marketed device, particularly when cost pressures are involved.

HomeDaemon, the software package I wrote quite some time ago but refuse to put into commercial channels for multiple reasons I've pointed out in the past, works with pretty-much any camera that can do RTSP and resolves the problem by insuring that the data never leaves your premises without being encrypted with strong, PFS-enabled security -- and it never goes to any sort of "cloud" system at all, only being decrypted on your phone.  This narrows the PKI space to one device in your house which is the HomeDaemon gateway (but still has the PKI issue and, if done through public certification authorities such as is in use for this blog) still would have a recurring expense.

New rules are needed to hold online retailers accountable for vetting sellers and the product sold by their platforms, according to CR. It called on the Federal Trade Commission to stop the online sales of the doorbell cameras and on retailers to do more to ensure the quality of the products they sell. 

Well, "stop the sale"?  Entirely disagree.  It should be up to an individual consumer whether they find the trade-off to be fair or not.

But force both the sellers and app publishers to be honest about the issues, yeah, how about that?  And how about considering misrepresentation to be fraud (and throwing people in prison) when it occurs?  And by the way, does this apply to the various "proprietary" cameras and such?  I don't know, because I haven't bought one and looked into it but I'll guarantee given what we do know that the data is not secure on an end-to-end basis.  I'd like to assume that the "Ring" (and related) versions don't share this issue in transport but those have potentially even more-serious trouble because they're all "cloud" enabled and while their data may be encrypted in transport it is not individually encrypted in storage with keying only the customer has and controls.  This clearly is not the case otherwise we wouldn't have (as we do) various places that ask (and allow you to) "help" agencies of various sorts (e.g. police departments) access to said information.

Never mind that Amazon in particular at least back to last summer is known not to encrypt data "at rest" in their cloud storage because they paid a nearly $6 million fine to the FTC for allowing their workers to access RING camera video.  You can't access what's encrypted with only the customer having the keying and thus the question as to whether such is stored "in the clear" is quite-conclusively known.

Why is the above a big deal?  Because such "cloud" storage concentrates a whole bunch of said unencrypted data from different people and places into one place and thus makes that place a very juicy target.  To compromise one camera and its data is bad if its your house that's targeted but to compromise one million cameras at once is obviously much worse and thus it becomes effectively the same as a bank with a big sign on the front of the building stating "$100 million in gold bars is in our vault!"

If you do that you better be sure the vault is adequate to prevent anyone from breaking into it successfully to steal same and if they try they'll get caught before they get in.

My assumption is that any such device sold in the consumer marketplace is insecure in transport and any "cloud" storage unless you, personally, wrap all said transportation of data before it leaves your premises and you never use any of the offered "cloud" options at all.  In the current product environment I have no way to make a recommendation that doesn't result in a severe privacy problem because there's no way to reasonably believe said data is secure in any of the commercial offerings.

In an environment where what is observed is public land (thus there's no expectation of privacy at all) it obviously does not really matter but as soon as that camera is pointing at private property, presumably yours, it matters a great deal and unfortunately in the current marketplace, as has been the case for several years now, there's no answer that I'm comfortable with recommending for purchase.

Maybe I'll decide to release HomeDaemon generally (without charging for it) at some point to resolve at least the "personal access only" problem side of the issue for those willing to put in some personal effort.

View this entry with comments (opens new window)