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2024-04-16 08:02 by Karl Denninger
in POTD , 63 references


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2024-04-15 07:00 by Karl Denninger
in Energy , 243 references
[Comments enabled]  

What's old is new again.....

Since their birth in 1960, fast reactors have been attracting increasing attention around the world because they can provide efficient, safe, and sustainable energy. The closed fuel cycle of fast reactors can support the long-term development of the nuclear power as part of the world's future energy structure and reduce the burden of nuclear waste. Thus, the fast reactor has become one of the development directions of global fourth-generation nuclear power.

I remind readers that Fermi I in Monroe MI was one of these.  We had a couple more as well.  Japan had one operating, as have a few others.  None of those still are operating and yet this technology, which we know works, is a required component of a closed fuel cycle and sane disposal and handling of nuclear fuel.


Because using either uranium or plutonium (or for that matter Thorium if you breed it; it is fertile, not fissile) produces Actinide byproducts and those are very, very long-lived radioactive nasty things.  There is only one sane option for them since trying to bury or otherwise keep them safe (e.g. out of the environment) requires tens of thousands of years of confinement in many cases.

The only sane option is to separate them out of the spent fuel, which fortunately can be done chemically as they're all distinct elements (you don't need centrifuges and turning them into a gas first, as you do with Uranium) and if you put them back into a fuel pin and stick that back in a reactor along with more active fuel they will be burned up by neutron bombardment and turned into less-dangerous radioactive elements over time.

They also release a little more energy but you don't do it for that reason, you do it because the only sane place for something so dangerous is where what's in there is so dangerous anyway that it doesn't make it worse.  A fuel pin, in an operating reactor, is already full of ridiculously dangerous stuff and in addition its behind a lot of shielding and physical protection from various physical insults (e.g. terrorist attack, etc.)

Each cycle of said fuel, as you reprocess it, results in more and more of that material being turned into lighter, shorter-lived radioactive elements.  The shorter the better; when you get to things that have half-lives measured in single and double-digit years now we're talking about reasonable confinement requirements that we know how to handle.

The other part of it is that in a commercial, large-scale power reactor (either PWR or BWR) only 5% of the fuel pin contents are fissile.  This is both a safety thing and a requirement thing -- fissile material is expensive and putting more of it into there than you actually can burn up between refueling cycles is stupid.  The rest of the space has to be consumed with something and your choices are U-238 (the most-abundant natural isotope of uranium) or spent fuel material that has been separated out from usable plutonium and is extremely dangerous.  The latter is the obvious wise choice if you have a surplus of it (and you always do when using nuclear fission for power) because you have to do something with it.  In addition in that spent fuel there is both U-238 that did not transmute and Plutonium in a few isotopes that did.  Its very hard (and very dangerous) to separate out the Plutonium isotopes if you want to make bombs because only one of them is usable for that -- the others actually poison the bomb in that they make it "fizz" rather than "boom."  But for power purposes you don't care because you don't want it to go boom anyway so for power purposes chemical separation, which again is much easier and cheaper, is just fine.

If you recycle the fuel like this you can reach nearly 100% utilization although that's probably stupidly-expensive.  Reasonably-economic projections are around 60%.  Contrast this with 5% or less with a "once through and done" system which is what we're doing now and I think you can figure out which is the wiser choice.

We stopped this progress in the United States because Jimmy Carter issued an E/O banning reprocessing.  Those firms who had invested in it lost their money, and that Reagan reversed the order was irrelevant to them: The government had demonstrated that it would screw them out of their money and they had no interest in that happening again, quite-obviously, so they didn't do it again.

Can we fix this?  Of course.  Should/must we fix this?  Absolutely.

Would I prefer that we head toward Thorium-based fuel?  Yep.  Why?  Because it is in coal and a high-temperature reactor (e.g. LFTR), using thorium as a fuel, brings both the capacity to generate electricity and turn the coal into synfuel which solves two problems at once because the cause of lung cancer from coal use comes from the thorium that naturally occurs within the coal and it is trivially able to be separated out as it is both metallic and much heavier than the carbon.

Nonetheless that China has decided to pursue closing the fuel-cycle for nuclear fission and we are not will turn into a significant disparity in energy policy and outcomes -- and its a disparity we cannot afford to let them have, particularly when we have more than 50 years of time under our belt in knowing how to do so ourselves.

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2024-04-10 08:41 by Karl Denninger
in Macro Factors , 531 references
[Comments enabled]  

... cause we sure got it on the inflation figure.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in March on a seasonally adjusted basis, the same increase as in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.5 percent before seasonal adjustment.

The index for shelter rose in March, as did the index for gasoline. Combined, these two indexes contributed over half of the monthly increase in the index for all items. The energy index rose 1.1 percent over the month. The food index rose 0.1 percent in March. The food at home index was unchanged, while the food away from home index rose 0.3 percent over the month.

Core, all items less food and energy, was also up 0.4, which annualizes to 4.91%.

Forget about rate cuts folks; I told you there was another impulse in the PPI and other data and here it is.

Gasoline, which I pointed out recently, was up unadjusted 6.4% last month and that was clearly going to happen as the sample week crossed a major price spike.  Incidentally just in the last few days there was a large spike and then decrease -- gee, there's no manipulation going on in front of the eclipse, right?  I found that particularly offensive and nobody would try something like that 40 or 50 years ago because people would go to prison for it, being that its actually illegal under 15 USC Chapter 1 to fix prices.  Not arresting anyone for decades in any industry, especially health care, tends to encourage this sort of thing -- and here it is.

Car insurance was up 2.6% on the month which annualizes to 36%.  Surprised?  I'm not, because I just got my renewal and despite having no claims, no accidents and no tickets for decades the double-digit increase -- and shopping it got me nowhere -- should have and did translate into the report.

What's equally-bad if not worse is that car repair and maintenance is up 8.2% over the last year as well -- and of course nobody needs that, right?

We were never trending toward 2% and there is no evidence in this report that inflation is "relaxing"; as I've pointed out all of this is being driven by Congress which refuses to stop spending 30% more money than it takes in via taxes.

Rates are going to continue to go higher in the economy until that stops, and this in turn is going to turn around and hammer corporate profitability while destroying anyone who is dependent on being able to borrow on an incremental, repeated basis in order to afford groceries.  NEITHER political party has been willing to do a thing about this, and until it stops neither will the inflation or higher rates.

Let me be clear as I have been now for more than a decade: The MTS (Treasury Statement) makes clear that the only possible way to resolve the problem is to actually enforce 15 USC Chapter 1 against every single medical provider and drug company, without exception.  This will collapse medical pricing by 80%.  It is not a question of whether you want to do this (yes, that will produce a huge number of layoffs and a nasty recession centered in and on those firms and employees) it is that this is the only place where enough funds are spent to resolve the issue, and further it is the place in the budget where the problem has always been which was clear all the way back to the 1990s and for that reason I've been raising a stink about it since.  This is not a matter of political preference it is one of mathematical fact.

In the meantime if you are dependent on debt, whether as a business or a consumer, or if you as an individual require said medical system as it exists today, you're in serious trouble.

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2024-04-05 09:24 by Karl Denninger
in Employment , 367 references
[Comments enabled]  

Here comes the fun....

Total nonfarm payroll employment rose by 303,000 in March, and the unemployment rate changed little at 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, government, and construction.

Of course two of the three are basically (from an economic reality perspective) a tax; one absolute and forced, the other coerced.

72,000 jobs added this month in health care?  How many of those were doctors or nurses?  I'll bet less than 10%.  The rest are responsible for making sure the amount of money spent goes up.  You're not really going to try to tell me that in one month we had to add someone in medical care for each 4,600 people in America, are you?  I mean, we're not all standing in line to get into a clinic or hospital, are we?

Employment showed little or no change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; transportation and warehousing; information; financial activities; and professional and business services.

The economy portion that actually improves people's lives -- you know, by making things we then want and delivering them to people -- that went nowhere last month.

On the unadjusted household numbers the raw figure was +1.041 million, which is roughly in-line for a March with no real surprise.  The number of couch surfers ("not in labor force") was down by 502,000, accounting for about half of the job "adds."  Note that the household survey doesn't count the number of jobs (that is, they ask "do you have a job?") so someone who has two counts as one there, where in the establishment survey they count employment by the firm, so if you have two jobs it will show as 2 in that survey.  This isn't intentional misdirection -- its just a different means of measurement.

Of particular note and which should be good for immediate alarm in the asset markets which are all expecting lower interest rates was an 0.7% monthly change in employment compensation.  That annualizes to 8.7% so if you think rates are coming down with employment wage costs going up by nearly 9% on an annualized basis I will strongly suggest you go see someone about your particular delusionary tendencies.

As Kashkari said yesterday "if inflation continues to stall" there will be no cuts at all and this is yet another indication, along with both the PPI and ISM prices paid, that it not only is "stalling" it is reaccelerating.

That is exactly what I have expected from the data going back the last several months and why, in my forward projection Ticker for 2024, I did not expect to see materially lower -- if lower at all -- Fed Funds rates.  Add to this that Congress continues to deficit spend on an insane basis and there is no way you are going to see inflation pressures wane -- and thus the current inversion of the curve, with the TNX trading roughly a full percent under the IRX is flat-out nuts.

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2024-04-02 07:00 by Karl Denninger
in Consumer , 304 references
[Comments enabled]  

Deflation is bad, mkay, even if you can't afford anything right now you just have to suck it up.

Who wrote this piece?  Good question -- all we have is who contributed to it from AP's Auto Desk (in Detroit, of course) home of the place where they have tarted up pickup trucks to the point that they likely have $40,000 gross margins on that $90,000 truck.

Of course there is no option to buy the $30,000 version anymore without all the gizmos because "nobody wants it" they say.  The truth is that plenty of people would want it if you didn't have inexpensive financing.  Oh wait, that seems to be gone now due to the lack of uneconomic interest rates that were all the rage for 10 years in the post-crash era after 2008.

Hmmm..... what was the problem again?

Actually, it wasn't The Fed.  It was Congress and the "mavens" in the markets who all thought they should (and did) roll over debt that was at higher rates for much lower ones but, of course, never paid any of it off.  And note this nonsense:

The bank’s researchers said the biggest economic risk came not from falling prices for goods and services but rather from a freefall in the price of assets — stocks, bonds and real estate. Those collapsing assets, in turn, can topple banks that hold crumbling investments or that made loans to struggling real estate developers and homebuyers.

The damaged banks may then cut off credit — the lifeblood of the broader economy.


Don't think so.

In fact, I'd argue all that is the "lifeblood" of is bubbles which are inherently destructive.  Oh sure, they feel great when you start, but facts are facts and no, they're not good.  A bubble house is of no good to you if you own one before it starts.  If you think otherwise explain to me what happens when you want to move from said house to a newer or larger one.  The newer and/or larger one also got bubbled so you make nothing; you get more for the existing one but you pay more for the other one and your net value improvement is zero.

The person who wants one and doesn't have one now gets hosed because affordability gets damaged.

The banks, title companies and real estate brokers all win because most of these firms make a percentage either on the price or they get paid for volume (e.g. title companies) so the more transactions the more they make.

The other argument often raised is that if there is deflation you'll put off purchases in the hope they're cheaper tomorrow.  That's certainly true if the only motivation to buy in the first place was a fear of the price going up!  Its definitely not true if your refrigerator or car is broken and you need a new one because you would like a place to store your refrigerated foods, a vehicle to get around in or an HVAC system for your house.  None of those are things you will avoid buying "because they might be cheaper tomorrow" if you actually have a reasonable need for them, which by the way can include something being materially better.

On that point: Are the newer vehicles materially better?  How about the refer or HVAC system?

In some cases, absolutely.  I replaced my working HVAC system last year because the older one was old enough that a failure was increasingly probable and the newer one is more efficient.  Had the newer one not been more-efficient I would have waited until the old one broke down at an unreasonable price to fix.  How about my refer?  The one I own now I will certainly not change out for a "newer model" because they have reached pretty-much the endpoint of efficiency improvements (and its not small either; it draws a fraction of the power of the one I had in Florida, all because its new and inverter-driven.)

On cars why would I buy a newer car when my other ones work perfectly well and the price ramps include forced purchases of things I don't want?  I just ordered up a few hundred dollars of suspension parts for my 2015 Mazda (250,000 miles on it by the way) and will install them myself.  Do I need to do that maintenance?  No, but it will improve the ride somewhat since deterioration over time is reality and the price is reasonable.  How would you get me to buy more of that sort of thing more-often?  If it was cheaper (deflation) I would!

huge percentage of Americans live on ever-expanding credit today.  The premise of "economists" that this can continue literally forever is false; nothing exponential expands forever -- it can't.  This is a finite rock hurtling through space with finite size and mass. You can certainly pull forward demand for things that would be bought tomorrow into today with credit and some of that is mostly ok, such as single-family homeownership in that stability in the home is good for both kids and communities.  But don't kid yourself about such situations in the general sense; they are not good when it extends to people putting their groceries on credit they cannot pay off at the end of the month.

Expanding credit always forces prices higher.  If you think not look at "insurance" in the health industry and the most-egregious example, college.  Before "student loans" were handed out to anyone who fog a mirror and bankruptcy discharge was prohibited college cost went up at a reasonable price along with everything else because if you borrowed it was at a ridiculous interest rate since everyone understood that there was no way to "repossess" what you were taught, unlike a car or house.  Thus lenders were quite-careful and demanded to be well-paid for their risk.

Today?  All of that has been progressively destroyed.  Now college is essentially impossible to fund spinning pizzas and through summer jobs (it wasn't hard to do it in the 1980s at all when Pell Grants and Stafford Loans, both heavily capped and tested were basically it) but they'll hand you any amount of money for a degree that has close to zero marketable value in the workplace.  Why?  Because if you don't pay it back or get the President to try to force the taxpayers to eat it they will hound you literally to death, garnishing your Social Security in old age, if you don't pay.  As a result colleges have felt perfectly free to add all manner of non-instruction fluff and bill you for it.

AP says that cutting off credit would be bad.

What would happen to the price of college if there were no loans?  It would fall by about 80% and all the fluff would disappear.

Explain to me why the fluff adds to he value of learning Calculus, Physics or Medicine and we can certainly debate whether we should cut it all off other than on strict merit and at a very high interest rate, or whether we should allow what is now a cancer on our educational system to continue to metastasize until it eats the economy exactly as has health care.

The author of this piece is the owner of this site and is a former CEO who never borrowed a nickel from a bank or other financial institution to operate his business (MCSNet), and did just fine without any of that nonsense.  Of course the banks didn't make much of anything off me, other than the discount rate on credit cards, which I'm sure annoyed them greatly as I refused their "financing" offers.  Go figure.

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