Blessed by the Potato

The CBC recently ran an editorial titled “Cool science, but is it news?”

I was prepared to rant and rave and dump all over it for pages and pages, but I suspect that it’s meant to manufacture controversy.

So instead I’ll just make a few rebuttal points. The big question underlying the question in the headline is what is news? I think scientific progress definitely fits most any definition of news: it can have big (or small) impacts on society, health, and business, in addition to the esoteric impact on our understanding of the universe around us. Sports on the other hand, doesn’t: locked in a continual, meaningless struggle that will be repeated anew next monday/year/whatever. I am continually baffled by professional sports in general, but at least have some inkling of the entertainment value of watching it. Reading about it the next day seems like abnormal behaviour that should maybe get looked at by a specialist — if it weren’t for the fact that so many people do it.

On the CBC’s news website, they have one screen with a varying selection of top stories, then towards the bottom 10 boxes with different categories (business, world, Canada, politics, etc). Two of those categories are different boxes for sports. Two are ostensibly science-related: technology & health, but both tend to have much less scientific stories than what is being discussed in the editorial (the latest happenings on twitter, scandals of minors doing things that may hurt them, or the tech specs of the flashiest gadget are hardly cool science). On the mobile site, fully one third of the screen space is dedicated to sports, and even then sports stories crawl into the other two panels in the default view. Science is nowhere to be found.

Science certainly isn’t being treated as news, though in my opinion it most certainly is.

Moving past that quibble, the article goes on to lament the way science stories are reported. And I have plenty of things to gripe about there. On the first day of J-school it must be drilled into journalists’ heads that they must — must! — attempt to relate science stories to some every-day impact. “This will (eventually) lead to a cure for cancer…” “Can warp drive be far behind?” “Climate doom awaits us all!” “Bacteria found in space rocks: Can invasion be far behind?” On top of that, stories have to be written for a very lay audience: often below the high-school level. So the stories don’t get to convey much, and waste a lot of column-inches on trying to catch the reader up on basic background information. Some of that should be changed, if for no other reason than Wikipedia exists. Hyperlink the big words, and accept that a certain portion of the readership will either tune out (they probably are anyway), or, after reading enough, will have managed to refresh their memories of grade 11 and caught up to a slightly higher scientific reading level.

After all, that’s the way the other sections work. The business stories just plow on through terminology like basis points, index, or leverage, and don’t even attempt to define acronyms like CEO or EBITDA. Everyone would think the sports section dull and boring if in the midst of describing something they had to break and ensure the entire audience understood, and had to lead off with a slow insertion from some random generality:

Every year thousands of Canadian youth enrol in hockey programs to get fit, make friends, and lose teeth. These programs are supported by billions of taxpayer dollars in the form of subsidies for arenas, tax credits for kids’ programs, and direct funding of government salaried referees. It may not look like an activity that would lead to preparing our kids to become productive members of society, but these kids are in it for a different reason: to gain one of the coveted spots as a ‘professional’ hockey player.

One such professional team, the Toronto Maple Leafs, played a second team composed of paid players from Ottawa, known colloquially as the “Senators” (though there is no relation to the Senate). Vladimir passed the puck — a hard black rubber disc that is the focus of the players in hockey — to Jacques, another member of the Toronto Maple Leafs team (though peculiarly enough, neither one is actually from Toronto). Jacques then skated, which is like running but on the icy surface of the hockey rink, towards the net that was defended by the goalie from the Senators. However, before he could attempt to score a goal, an unforseen result was found in the data: the referee determined that he was offside with a confidence of 95%, 19 times out of 20.

“Offside” is a state of being that makes no sense in our conventional world, but hockey experts assure us that the implications could be far-reaching, including the beginning of a whole new hockey “trial” from the face-off area. Despite this two-steps-forward, one-step-back outcome, head coach of the Toronto Maple Leafs is excited about the work done so far. “I’m really pleased with the progress we’ve made on moving the black, rubber object across the slippery surface; or as we call it, ice. This really speaks to the dedication of the team, and the value our work has for society as a whole. It’s really just one piece of the puzzle, but it’s like that corner piece that really helps orient your worldview and re-define the problem. Now instead of trying to put the puck in the net, we’ll be working to make sure the Senators don’t get the puck out of the little circle.”

Opinions are conflicted as to the real-world benefits of last night’s hockey game, but there’s a sliver of hope that if this pattern continues in further games, there could be an increase in the supply of donor teeth to the local gummy homeless population.

And I’ll conclude by linking to a very good article that I didn’t find until after I had already finished my little rant. It tears apart the science journalism tropes even better: The Unwritten Rules of Journalism

The Ottawa Citizen had a great couple of articles on a joint NASA/NRC/CSA project to study snow storms and weather radar. While the first article about the project is not bad, what made it notable was the follow-up freedom of information release showing the ridiculous layers of bureaucracy and message massaging that had to happen before a non-answer was released. An op-ed the next day lamented the extreme information secrecy of the government.

I think scientific communication is important — indeed, it’s something I’m hoping to make a career out of here. So it’s kind of sad to see such an epic failure of communication in this case. What makes it especially sad is the number of people involved: I counted at least 4 different people in the FoI series of emails who were dedicating time and effort to not communicate, and there were more who appeared in just one or two short snippets. I bet you could not communicate with just one person in the department, or even an unhelpful sign on the door and a voicemail message. These guys, in theory, are supposed to help translate the science for the lay people and do the communications so the scientists can do science, though with the present government the entire goal may simply to act as a firewall between the scientists and everyone else. But wouldn’t everyone have been better off if one of the scientists just did the talking for himself?

So I see this kind of thing and can’t help but think “what are they getting paid for?” Couldn’t that money be better used for the main mission: science?

Hybrids (like my Prius) contain many awesome innovations that give it that great efficiency, leading to lower fuel use (and lower expenses!). With plug-in hybrids starting to hit the market, the ways that technology provides efficiencies increase. Yet even though hybrids have been around for well over a decade, they are still very poorly understood (particularly by auto journalists).

Quick, which one innovation contributes the largest portion of the fuel savings in a hybrid like the Prius, is it:

a) regenerative braking
b) exhaust gas recirculation
c) atkinson-like cycle engine
d) electric motors and a battery to power acceleration
e) aerodynamics, including a tear-drop shape and a plastic cover for the underside to smooth airflow
f) lightweight aluminum construction
g) low rolling resistance tires
h) continuously variable transmission
i) an engine that turns off when not in use (coasting, at stops)

All of those innovations (and I’m sure a few I’ve forgotten) add to the efficiencies. Odds are good that you answered a, or d, or i, since those are the items that are the most distinctive about a hybrid, and which get the most press. And of course, none of those three are of much good when smoothly cruising on the highway, which is why auto writers keep saying stupid, easily disprovable things like “all that hybrid gear is useless on the highway.”

Yet a quick check of fuel consumption ratings shows that indeed, hybrids get fantastic highway mileage. The gap between them and a regular car isn’t as wide in the highway cycle as in city driving, but it’s still a really good improvement. So why is that?

It’s because the actual answer is (c): the atkinson-like cycle engine. Estimates vary, but something like half of the total improvement in overall mileage (and nearly all of the highway-rating boost) is because the engine is simply more efficient at turning hydrocarbons into motion (the “thermal efficiency”). All that business with the electric motors helps, and there certainly is some benefit from pairing the properties of an electric motor (which generates maximum torque at low RPM, and is great for helping to meet peak demand) with a gas engine (which needs to rev up to produce acceleration, and which has a high-density fuel source for steady-state power demands), but it’s there largely because with an Atkinson engine, you’re not going to get anything approaching an acceptable 0-60 time. That efficient engine needs help getting going.

If you wanted (e.g.: if you’re an automotive engineering student looking for a summer project), you could strip out all the electronic stuff from a hybrid and just drive around with the Atkinson engine, and you’d get a big part of the benefit. Of course, you couldn’t actually use that in traffic since it would take you forever to accelerate, but on a closed course to prove a point…

Anyway, once you’ve got the electric motor in there for the acceleration boost, you can do all the extra tricks with it to squeeze out even more efficiency, like shutting off the engine when coasting, regenerative braking, etc.

So now that you know about the importance of the Atkinson-cycle engine, you see why hybrids still rock on the highway. In fact, improved thermal efficiency is also the reason why diesels get decent fuel consumption numbers on the highway: the higher compression of a turbo diesel is also more efficient at turning hydrocarbons into motion. In terms of litres burned per hundred kilometers, diesel (like a Jetta or Golf TDI) is on par with a hybrid like the Prius; though once you factor in the higher energy density of diesel, well, you can see who the winner is (and I won’t get into the issue of city driving, too).

And of course, knowing that this is the single biggest source of efficiency is why I was so upset that GM didn’t include an Atkinson-like engine in the Volt, instead just slapping in an off-the-shelf engine, which is why its efficiency isn’t so great once the charge from the plug-in is used up.

There has been a real barrage of articles about the housing bubble in the MSM lately. Perhaps because January is both a slow news period and a slow real estate period, so it’s a good time to get it all out, or perhaps because the topping process has begun, and the awareness of the problem has started to spread from gloomy spreadsheet addicts like myself to society at large. Based on some very non-scientific mining of Google’s news search, mentions of a housing bubble started to increase about a year before the top in the US, and really were flying wild when the prices finally turned the corner. Here, stories about a Canadian housing bubble roughly doubled last year, to about 500 hits in 2011. There have been over 200 hits already in 2012 — just one month!

Alongside the stories that warn of the danger are ones that try to explain it all away, including two recent ones by Larry MacDonald (who I respect) and Mark Weisleder (who, well, let’s just say he makes these kinds of mistakes a lot). Together, they make a few basic points:

• House prices have been stable.
• Immigration.
• Interest rates are low, and even if/when they do rise, they will be accompanied by job growth.
• Recourse mortgages.
• Low foreclosures.
• High valuation metrics… but, like, so what?
• Bears only call for a bust due to recency bias, because we just saw a housing bust in the US.

So, to the point-by-point rebuttal machine!

Though some are shared, Mark’s arguments are obviously much weaker than Larry’s. Only he would make the point that housing has been stable and the GTA is nice, so it’s an attractive buy. Of course the converse implies that if housing does start to turn, it will turn badly because that point in favour of buying goes away, and instead becomes a point in favour of selling.

Similarly for his immigration argument: we do get a steady influx of immigrants to Canada (and the GTA in particular). Beyond just immigrants, babies will still be born, teenagers will still turn into twenty-somethings, and people will still move out of their parents’ basements. That was as true in 1992 as it is today. For that matter, it was as true in 1989 as it was in 1992. These things are all true, have been true for a long time, and mean absolutely nothing when it comes time to deciding whether now is a good time to buy a house in Toronto. It means your house won’t be completely worthless, but doesn’t mean a painful 10-35% correction isn’t in the works — as witnessed first-hand by buyers in Toronto, 1989.

The point about low interest rates is also not particularly strong. Even with the recent deals on fixed 5 and 10-year rates, you will be exposed to future rates for a long time when buying a house. After all, the typical mortgage is 25 or 30 years long. It is much better to buy at higher rates and a lower price than to scramble to buy at high prices and low rates. Think of the possible outcomes: if rates move lower, you get a gift and can pay off your mortgage faster. If rates move higher, you face a hardship. If rates are as low as they’ve ever been, the odds are this is as good as it will get, with likely hardship to follow.

Now Larry makes a point about higher rates being accompanied by higher employment, which should offset the price declines that higher financing costs would bring. But to that I simply say: invert it. Prices were up 10% in Toronto last year, and apparently the economy is still just limping along, warranting low rates. So how big of a driver is employment vs interest rates for house prices? To me, that indicates that while there may be a bit of tempering if employment and wages gain along with increases in rates, those are not going to have a large enough effect to counter the decrease in prices that will come from the higher rates. Rates trump jobs when it comes to our housing market.

Recourse mortgages is a common reason thrown around to explain why Canada may be different than the US. It’s an interesting one, too. Sure, if the bank can come after you for your other assets you’re going to be less likely to strategically default and walk away from the house. That’s going to slow the positive feedback cycle, but there’s very good evidence that it’s not realistically that big of a factor. To point out the real-world evidence, again, just look at Toronto, 1989: mortgages were recourse then, too. Didn’t stop the bust. Many US states also had recourse mortgages (including Nevada, one of the few states to escape the housing meltdown — oh, no, my mistake, it’s one of the hardest-hit).

Let’s consider that point in a little more detail. Why doesn’t the recourse action save the housing market? At the core level, the simple answer is because it doesn’t fix anything in the fundamentals: the only way for price-to-rent and price-to-income to come back into line is for price to fall or rents and incomes to rise. So having recourse mortgages may stem the tide and positive feedback cycle of strategic defaults and foreclosures, but doesn’t bring any new buyers to the market. But even then, how much of the tide does it stem?

To answer that question, we have to get an idea of how many strategic defaults there might be vs. bankruptcies. If you can’t pay the mortgage, if you’re severely underwater, and if you have very few other assets, there is really no difference between a strategic default and a bankruptcy — and we still have bankruptcy here. You give the house back to the bank and you start over with nothing. Many people — far too many — have bought in recent years with nothing down and are house poor: aside from their house (with just a thin slice of equity in that), they have very few savings and investments. So to them, there’s no difference between a strategic default and full bankruptcy. If someone has a lot of other assets, then they may have considered a strategic default, but how many of those people are there who also have so little home equity that they’d be willing to trash their credit and walk away, if only it weren’t for that damned recourse mortgage? I’d bet not terribly many. Not enough to matter anyway.

So recourse mortgages aren’t going to stop a housing bust, and are certainly no reason to go out and buy now (if anything, it should give you pause as a buyer).

Hmm, low foreclosure rate. Let’s see, prices in Toronto were up about 10% year-over-year last year. Why are there any foreclosures? Even a 5%-down buyer could sell the place, repay their mortgage, and cover all the sundry transaction fees, taxes, and penalties if they ran into financial trouble in this market. They just had to stay solvent for a year. No, foreclosures are a lagging indicator: only when the housing market is already flat or going down and people are getting into financial trouble does the rate go up, because all other options have been taken away.

Both Mark and Larry touch on valuation metrics. Part of Larry’s point is valid: they don’t tell us about when the correction will come. I’ve been bearish for years precisely because the metrics have been out of line for years. But that said, severe over-valuations like this rarely correct neatly, with a long period of modest negative real returns — “crashes” or “corrections” are the norm. Mark’s point… does Mark have a point? If you don’t like averages, fine, use medians. But don’t compare the nominal number with one method to the nominal number from another: what was the median Toronto income to the median Toronto house price historically, and what is it now? You can’t try to hand-wave the fundamental imbalance away like that Mark, I’m too perspicacious for that.

Finally, to Larry’s point about recency bias: I disagree. I think the recency bias is not clouding the vision of the bears, but rather the bulls like Mark. The last crash in Toronto real estate was 1989, when many current first-time buyers were kids, or gametes. All they’ve known for recent history has been rapidly increasing prices with no risk.

Asides: Mark has a few other points that aren’t even remotely relevant, but I figured I’d rake him over the coals a little more.

His final bullet point about debt ratios shows how clueless he is about what these population measures are showing: for a given person, a debt-to-income ratio of 150% is nothing. Hey, a 25-year-old making $50,000/year who just bought a $400,000 house with nothing down except the closing costs would have an 800% ratio, and people still wouldn’t look at him funny. That person should be able to handle the payments and has lots of time. But what about a retired 70-year-old who has a pension of $40,000 and is $60,000 in debt? That’s only 150%, yet is clearly a much worse situation than the young guy at 800%. So the important thing with these population measures to see how they change over time. The Bank of Canada isn’t worried about one particular Joe having 150% debt-to-income, it’s worried that for a long time that ratio stood at 100% and over the last few years has climbed to 150%. I wonder how Mark would interpret a stat like the average family has 2.3 kids? He must be one of the ones envisioning whole neighbourhoods hiding kids with only a third of a body in the basement.

The closing message about the US not allowing the economy to fall apart in an election year is face-palm worthy. 2008 was an election year, Mark. The reality is that the US government, for all its nuclear missiles and predator drones, is helpless to stop a housing collapse. Ours will be even more impotent since we’ve already burned up the government mortgage guarantee, low rates, RRSP raiding, and extended amortization options.

I don’t know what to say about the disaster striking Japan. The size of the earthquake (now being reported as a 9.0) was tremendous, one of the largest earthquakes ever, and the following tsunami overwhelmed even one the countries best prepared for tsunamis.

The focus now is on the nuclear plants that are in partial meltdown. There is a lot of fear out there, and some of the coverage has been hyperbolic. The situation is still unstable, and it could of course get a lot worse from here.

As someone who supports nuclear power, who is a scientist, and who has been trained in radiological disaster management, I have to ask myself if these events would change my views, and I would have to say so far, no. I do think there could have been more done at the plants for saftey backups (e.g., the ability to run a backup turbine off the decay heat to power the cooling pumps), and that a safer (in my non-specialist and Canadian opinion) CANDU design probably should have been used in a seismically active country like Japan. But, nuclear power is one of the few options to meet the power requirements of the world, and especially countries like Japan, with high population densities and few hydroelectric options.

Plus, I think it’s important to keep in mind the scope of the problem so far. First off, this is not a separate nuclear power problem, this is a result and an extension of the one of the worst earthquakes and tsunamis ever. This is the worst-case scenario for these reactors, and these are old reactors. The death toll from the earthquake and tsunami are still being tallied, but are in the several thousand range. There are workers in the plants that will likely have health effects from radiation exposure (unclear how many at this point), but most of the general public near the plant was evacuated days ago. Radiation has been released into the environment, with the highest numbers I’ve seen peaking at 12 mSv/hr close to the plant, but generally much lower than that. A typical background dose is in the range of a few mSv per year, and a CT scan might be several mSv. The Canadian occupational limits are 20 mSv/year. So even close to the plant, a person could take their sweet time evacuating and still have no health effects.

What the ultimate outcome will be is still an open question, and it will take several days until the decay heat from the cores is gone and any further fire/explosion/breach risk dissipates. However, the actual impact of the nuclear disaster looks like it will pale in comparison to the impact of the tsunami and earthquake natural part of the disaster. Yet, already the fear is enough to compromise the development of nuclear plants around the world.

I know there must be burning questions out there, ask away and I’ll try to answer them!