Collateral Transformation, or Doing the Laundry

By J.D. Neeson, President, Marine Parts Express

In will-they-never learn and where-the-heck-are-the-regulators department, J.P. Morgan, Bank of America, Barclays, Deutsche Bank, and State Bank are all setting up collateral-transformation trading desks. Due to the new financial rules that will begin in 2013, banks, hedge funds, and other traders have to increase the percentage of collateral they post when trading in the $648 trillion (yes, trillion, or 10 times the world GDP!) derivatives market.

Congress changed the law requiring most privately negotiated derivatives trades (called over-the-counter trades) to go through established trading houses and ruled that the collateral collected must not only be a bigger percentage of the trade, but of better quality and relatively easily convertible into cash. The theory being that if a derivatives trade went south, the clearing house would be able to cash in the collateral to cover the default and not require government help.

Herein lies the challenge for the poor derivatives trader. It is difficult to find enough high-quality rated debt to meet the new rules. The United States has about $11 trillion of high-quality treasuries out in the market, and if you add in the Japanese and European high-quality debt there is another $25 trillion available. There is a tremendous demand for these types of instruments from central banks, governments, and big institutional investors.

So the banks came up with collateral-transformation that allows the derivatives trader to “borrow” high-quality securities (mostly treasuries) from the banks by putting up as collateral for the loan of these high-quality securities, inferior or non-complying securities. At some point, the trader is supposed to return these good treasuries.

The derivatives traders take these loaned (or maybe rented is a better word) high-quality securities (mostly treasuries) to the clearing houses and use them as collateral for their derivatives trades. The clearing houses are happy because they have the good securities as collateral and meet the new regulations. The banks are happy as they charge the derivatives trader for doing the swap and charge interest for the loans of the securities.

And the derivatives traders are happy as they have completed the derivatives trades, and to pay for them the traders have effectively “laundered” their sub-par securities.

Who is not going to be happy is the government and, by extension, all of us. If the derivatives trader’s bet fails, the clearing house will liquidate the collateral to cover some percentage of the default and go after the bank for the rest (the trader’s sub-par securities are with the bank). The bank will have to try to liquidate the sub-par securities and to maintain the bank’s reserve ratio at the same time, but they don’t have their nice, secure, high-quality bonds anymore.

Does this scenario sound familiar? It should. The only aspect missing is some smart insurance company offering insurance for the bank collateral-transformation desk and we can have a default swap AIG-type debacle all over again.

It is a blatant attempt to get around the regulations, and I am sure the bankers (in the back of their minds) are thinking that if it all goes wrong, the government will bail them out again.

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com.

 Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation

For all your marine engine parts needs, call us toll free at 877.621.2628, or outside the U.S., 207.882.6165.

Octopus to the Face

By Stan S., First Prize winner of our “Best Fishing or Boating Story Contest”

Blue water, calm seas and a cool breeze—it’s hard to beat a nice day offshore with friends and family doing whatever it is that lures you out there. In my case, its half-crazed fellow Helldiver buddies with an unquenchable desire for extreme spearfishing. Our dive club was founded in 1962 and named after the aquatic, highly efficient duck-like fishing bird which is formally known as the Pied Billed Grebe. It is also closely related to the loon. . . . I think you get the picture.

Our main playground is along the coast from Florida into Texas in the Gulf of Mexico. We focus on the Louisiana Delta in anywhere from six to 600 feet of water because of the abundance of fish and hundreds of oil platforms which create a fantastic habitat for trophy fish—they are literally vertical living reefs.

When we’re not being raked along the barnacle encrusted pipes with our hands clenched deep in a big amberjack’s gills or blindly being pulled into a murky entanglement by some other monster fish, we are curiously exploring the nooks and crannies of the huge underwater Jungle Gyms that the oil platforms provide.

If you really stop and look at some of the structures you will be amazed at the life “hiding” in plain view among these manmade reefs. There are lobsters, urchins, corals, sponges, crabs, shrimp and too many tropical fish to list, etc. Did I forget to mention the cute, cuddly and quite tasty octopus? I can honestly say that, ounce for ounce, the octopus is one of the strongest critters I have ever grabbed and being from South Louisiana I have grabbed my share of critters.

Being a novice diver twenty-five years ago I was the planned victim of “hey, sounds like FUN” when the idea was presented to me by a mentor. Quickly I learned that once grabbed an octopus tends to use all eight arms and in somewhat of a harp playing motion it works its way toward your upper torso and there is really nothing you can do about it! To say the least, your eyes get as big as golf balls as the suctioned sea creature nears your pie hole and envelopes your head.

I’ve since had the pleasure of initiating a few bright eyed spearos over the years and must say it’s much more entertaining watching than participating. Even though the most danger that they’re ever in is when they’re trying to explain the suction marks on their necks to whomever is requiring explanation we still keep an eye on them until they’re back to the boat. For the rest of the day, or in some cases days, it would require plastic surgery to remove their smiles. Wisdom comes from age and experience and one important thing that I have learned is to never put a live octopus in an unlatched ice chest with beer in it. Need I say more?

By Stan S., Marine Parts Express customer

 

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com.

Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation

For all your marine engine parts needs, call us toll free at 877.621.2628, or outside the U.S., 207.882.6165.

Digital Book Publishing

By J.D. Neeson, President, Marine Parts Express

Earlier this summer a friend sent me an article written by Alexandra Alter called “Your E-Book Is Reading You” and subtitled, “Digital-book publishers and retailers now know more about their readers than ever before. How that’s changing the experience of reading.” The article is nicely written and discusses how the various e-book content suppliers (Barnes & Noble, Google, Apple, Amazon, etc.) are not only tracking what readers are reading, but how they are actually reading. Then, using statistical analysis with other regression techniques, they are determining what people like and don’t like and are supplying this information to the authors.

This is way beyond scary, and when coupled with a few cases where Amazon removed books from customer’s units after they had already been sold (Amazon was feuding with the author or the author’s estate) means that us readers are completely at the mercy of these companies.

I wonder how long it will be until the powers that be will begin changing content on the fly. Maybe the Kindle version of the “Pentagon Papers” will end a bit differently with the United States reaching the hearts and minds of the Vietnamese.

Or maybe companies will be allowed to slip in product placements. I am thinking something like a coal company underwriting a version of “How Green Was My Valley” or Google supporting “Atlas Shrugged”—with only a few small textual changes, you understand.

Or even worse than having people subtly change a book I am reading, is having the government know what I am reading and keeping track of it. It means we all have to trust them a great deal and when the public has, in years gone by, believed the government knows best is when McCarthy had his power or Bush his weapons of mass destruction.

Although, I have to admit, there are some books that I would like to change the ending a bit or know more about a character or tighten up a plot line. I bet it won’t be long before a book comes out in multiple forms. There will be one version with the ability to click on a character to get his back story or maybe read about his ancestors, or there will be another version of the book that will have more descriptive prose or maybe more adult content (I read about a guy who successfully defended his PhD thesis that pornography drove all technological improvements, and I understand that romances and other more explicit books make up one of the fastest and most profitable sectors of the book world.).

And perhaps like Wikipedia, there will be group writing of books with people participating through the Internet or maybe an author would be hired to take over the editing of the inputs—sort of a ghost writer for the hoi polloi.

But nowhere in this brave new world of data mining does it address the quality of the work—rather it quantitatively measures the popularity of a work in a moment of time. Does this mean that books will be constantly re-written to reflect the changes in the population? Often I have re-read a book and found it seemed completely different from what I remembered from my first reading of it. And does this mean books like Sinclair’s “The Jungle” or Rachel Carson’s “Silent Spring” that materially changed the world, but can’t really be described as a crowd pleaser, will never be written again?

However, I am a great believer that if you have given a book a chance and it doesn’t reach or entertain you, you should stop reading it. So is it any surprise that publishers are trying to pick books that will appeal to the greatest number of people. I suspect that the publishers of the past would love to have had the ability to quantitatively measure which books were going to be successful.

In the past, the publishers and editors had to trust their own judgment, but now with the proliferation of self-published books and the alternative forms of presentation, the publishers are feeling increasingly nervous that their business model doesn’t work anymore and what they do is becoming increasingly separated from what the public wants.

Just for an example, in the year 2006 there were approximately 274,416 books published in the traditional manner versus about 22,000 published in a non-traditional way (self-published, e-books, etc.). By 2010 the traditional was around 328,259 (20% increase) and the nontraditional was around 3,806,000 (a 17,351% increase)!

During the year 2011 publishers fought back by working with online and e-book suppliers to sell their original traditionally published books in new ways. While this did reduce the amount of non-traditionally published books (including a drop from Print On Demand books that were printing public domain tittles through the Web) by quite a bit, the difference from 2006 was still a 5,400% increase in non-traditional publishing.

This battle did help reduce the non-traditional publishing by having the publishers co-opt some of the methods that were used by the others, but it only increased the publishers’ share by 6% and it was very expensive for them to do so. E-books were approximately 41% of total books sold, but only 11% of sales, as the average e-book sold for $3.18 compared to $12.68 for a paperback.

No wonder the publishers are very nervous.

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com.

Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation

For all your marine engine parts needs, call us toll free at 877.621.2628, or outside the U.S., 207.882.6165.

TRUE Fishing Story

By Paul U., Captain of 22’ walk around cc—Marine Parts Express customer and Second Prize winner of our “Best Fishing or Boating Story Contest”

It’s a hot summer day on Lake Erie some three miles off of Cleveland, Ohio. The temperature is 92 degrees, no breeze, and not a cloud in the sky. We are perch fishing in 52 feet of water and swimming to keep cool. I just got back on the boat when my son’s rod was pulled overboard by a fish. Without hesitation I dove overboard in the location of the rod and kicked once at about 8 feet and saw the rod going deep six. I kicked twice more and now, my ears feeling the pressure, I reached the handle and started topside. Once above water the party on board was amazed and laughing and asked for the rod. I kept the rod and treaded water while fighting the fish. This must have been a sight for those on board. After reeling in a 3-pound fresh water sheepshead I handed the pole to my friend Mike, who unhooked and released the fish. This moment is burned into the memories of all who were on board. We still talk of this event some ten years later. Hope you enjoy this.

By Paul U. —Marine Parts Express customer

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com.

For all your marine engine parts needs, call us toll free at 877.621.2628, or outside the U.S., 207.882.6165.

Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation

Now for Something Completely Different (Part III)

Now for Something Completely Different (Part III)

By J.D. Neeson, President, Marine Parts Express

There was a report out of Marl, Germany, on March 31 about a plant that suffered a tremendous explosion that closed the plant and killed two workers. This plant, owned by Evonik Industries, is apparently the major producer of a chemical called CDT, which is used in the production of a plastic resin called Nylon 12 (PA-12). What is interesting about this is that Nylon 12 is used to manufacture fuel and brake lines, and because U.S. manufacturers have embraced the just-in-time and “single quality supplier” concept, it is likely that auto manufacturers will have to cut production.

When I was a buyer for a large Midwestern company back in the 1980s, we all jumped on the same bandwagon and established very close relationships with mostly single suppliers. It made it very easy and cost effective. It also allowed us to actually control our vendors (some of them used to mutter about being captive suppliers), but I remember one of the old buyers being horrified about being so dependent. He would roam around the office quoting, “For want of a nail the shoe was lost.” I don’t know what happened to him, but I bet he is chuckling about this!

 

I came across a blog the other day (www.govtrack.us/blog) by Josh Tauberer that had a nifty chart showing how many bills were introduced to congress and how many became law. From 1999 through 2008, the average number of bills introduced was around 8,500, with about 5 percent of the bills becoming laws. (I have read elsewhere that about 25 percent of all enacted bills involve naming buildings and the like). Since the start of the new congressional session beginning in 2009, the average has dropped to 3 percent and the 112th Congress, so far this year, has passed only .5 percent. So it can be pretty fairly stated that it is a do-nothing congress, which is not necessarily a bad thing.

Talking about bills being made into law, a new law that is likely to pass this year will eliminate the annual 7 percent per country green card limit. Approximately 140,000 work-based green cards are issued each year allowing foreign workers to come to the United States to work. In the past there was a limit of about 10,000 cards issued per country. The new law eliminates this requirement so conceptually all 140,000 employees could come from one country.

This is not likely to happen, but it is likely that the number of highly technical people from India and China will rise substantially at the expense of lesser trained people from other countries. The industries that rely on these unskilled workers will be under strain and are likely to begin to compete with the temporary work permit industries that are already under pressure from changes in other laws dealing with temporary workers. And I wonder if this increase in the number of available skilled employees brought in doesn’t discourage U.S. companies from supporting education and training. A goal both political parties claim to support, but then buckle when pressured by the technology companies.

 

A company called Lytro makes a really cool type of camera. The camera (which I bet isn’t cheap) captures all the light rays in a scene and then allows the picture to be focused later and in different ways depending upon wavelength. It eliminates the need to focus at the time of the picture being taken and reduces the amount of ambient light required. The thought is that there will be all sorts of applications for this process, ranging from medical internal imaging to allowing pictures being taken from moving vehicles (or pilot-less drones).

 

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com.

Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation

For all your marine engine parts needs, call us toll free at 877.621.2628, or outside theU.S., 207.882.6165.

Snowbirds

By Noreen O’Brien, special correspondent to Marine Parts Express

Most of us readily recognize the ubiquitous snowbird, or Dark-eyed Junco (as birders know them). Juncos, mostly short-distance migrants, arrive in Maine from parts north as early as mid-August (some do nest here), but virtually all are in place in time for the first snowfall, hence the pet name for the birds.

A well-studied species, juncos live across all of North America and down to northern Mexico, with a number of different races within the two species—Dark-eyed and Yellow-eyed—that are scattered throughout their range. The most likely race of the Dark-eyed Junco we see here in Maine is the Slate-colored.

This small, but plump bird, with its pink bill, overall slate gray color (females are browner), white belly and white outer tail feathers that flash when the bird takes flight, is actually a sparrow. As such, they are ground feeders particularly fond of the small seeds of weedy shrubs, bits found in the leaf litter or on lawns, and commercial seed, such as millet, rather than sunflower seeds that spill out of birdfeeders.

Juncos tend to scratch the ground’s surface in search of food, hopping forward and kicking in a backward motion. Watch these birds closely. Typically, the more birds in the flock, the less frequently the individuals look up from their feeding. There is safety in numbers (one of the values to birds flocking), because it reduces stress to individual birds as they “relax” a bit while they eat without having to be constantly looking over a shoulder for what might make a meal of them.

Juncos appear to be a favorite food of Sharp-shinned Hawks. An impressive predator that will actually take a Mourning Dove, a bird approximately the same size as the hawk. Juncos also can fall prey to owls and shrikes. However, the main predator of the junco, particularly those around bird feeding stations, appears to be cats, both feral and domestic. According to one individual from California, a flock of 35 juncos at a feeder “lost one bird daily until two cats and one shrike were shot, whereupon mortality ceased.” Not surprisingly, it is unclear who shot the cats and the shrike.

For fluid intake, juncos drink from small streams, sip from moisture on vegetation or eat snow. Like their cousins the American Tree Sparrow, juncos will bathe in light, fluffy, “dry” snow, similar to the way some birds take a dust bath. The birds dip head first toward the ground flapping their wings and collecting snow to toss over their bodies, and then they preen individual feathers to keep them clean. To clean their bill, they will swipe first one side of the bill then the other from the base to the tip on a branch. They perform this bill-swiping frequently, so do keep on the lookout for this action.

For nighttime roosting, juncos prefer conifer, cedar trees or bushes to remain out of the cold winds. Often, they will snuggle into the bushes around the front of our homes for warmth during cold and snowy nights. When no such shrub is available, these birds hunker down on the ground under dried leaves, at the base of tall grasses or in brush piles—another good reason to maintain at least one year-round brush pile in a corner of your yard.

Meanwhile, it is likely that these birds are helped through the winter by seed that falls to the ground out of bird feeders. Studies show that northern wintering populations of juncos probably suffer from starvation during harsh winters with lots of snow cover. With this in mind, when shoveling the walkway, remember to shovel an area at the base of the feeders and spread fresh mixed seed for these birds, as well as for the cardinals, other sparrows, Mourning Doves and other ground feeders.

Perhaps the junco is not as brilliant as the cardinal is against the backdrop of snow, but juncos do add a measure of cheer and a flurry of activity out there on a cold winter’s day. And those white outer tail feathers flash like a piece of ribbon as the birds flutter hither and thither around the yard, adding yet another spot of cheer out our windows. I encourage you to offer their favorite food of mixed seeds, which is rather inexpensive, to attract them to your yard. And, both sexes sing—even in winter. Listen for a musical trill on one pitch, and enjoy the snowbirds.

All of us here at Marine Parts Express “overwinter” here  in Maine, but many of our customers are true snowbirds and skip down to more southern climes. We ship their parts directly to them and we are happy to ship worldwide. For all your marine engine parts needs, call us toll free at 877.621.2628, or outside the U.S., 207.882.6165.

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com.

Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation

ChinaTrade: Myths vs. Reality

By Walter E. Williams

Townhall.com

Republicans and Democrats, liberals as well as conservatives, have bought into anti-Chinese trade demagoguery. Former House Speaker Nancy Pelosi suggested that tariffs against China are a “key part of our ‘Make It in America’ agenda.” During his 2010 campaign, Senate Majority Leader Harry Reid, D-Nev., called his tea party-backed Republican challenger, Sharron Angle, “a foreign worker’s best friend.” In a recent news conference, President Barack Obama gave his support to the anti-China campaign, declaring that China “has been very aggressive in gaming the trading system to its advantage,” adding that “we can and should take action against countries that are keeping their currencies undervalued … (and) that, above all, means China.”

Republican 2012 presidential candidates have jumped on the anti-China bandwagon. Mitt Romney wrote: “If I am fortunate enough to be elected president, I will work to fundamentally alter our economic relationship with China. … I will begin on Day One by designating China as the currency manipulator it is.” Former Sen. Rick Santorum, R-Pa., was even more challenging, saying, “I want to go to war with China.”

Let’s look at the magnitude of our trade with China. An excellent place to start is a recent publication (8/8/2011) by Galina Hale and Bart Hobijn, two economists at the Federal Reserve Bank of San Francisco, titled “The U.S. Content of ‘Made in China.’” One of the several questions they ask is: What is the fraction of U.S. consumer spending for goods made in China? Their data sources are the U.S. Census Bureau, the Bureau of Labor Statistics and the Commerce Department’s Bureau of Economic Analysis.

Hale and Hobijn find that the vast majority of goods and services sold in the United States are produced here. In 2010, total imports were about 16 percent of U.S. gross domestic product, and of that, 2.5 percent came from China. A total of 88.5 percent of U.S. consumer spending is on items made in the United States, the bulk of which are domestically produced services—such as medical care, housing, transportation, etc.—which make up about two-thirds of spending. Chinese goods account for 2.7 percent of U.S. personal consumption expenditures, about one-quarter of the 11.5 percent foreign share. Chinese imported goods consist mainly of furniture and household equipment; other durables; and clothing and shoes. In the clothing and shoes category, 35.6 percent of U.S.consumer purchases in 2010 were items with the “Made in China” label.

Much of what China sells us has considerable “local content.” Hale and Hobijn give the example of sneakers that might sell for $70. They point out that most of that price goes for transportation in the U.S., rent for the store where they are sold, profits for shareholders of the U.S. retailer, and marketing costs, which include the salaries, wages and benefits paid to the U.S. workers and managers responsible for getting sneakers to consumers. On average, 55 cents of every dollar spent on goods made in China goes for marketing services produced in the U.S.

Going hand in hand with today’s trade demagoguery is talk about decline in U.S. manufacturing. For the year 2008, the Federal Reserve estimated that the value of U.S. manufacturing output was about $3.7 trillion. If the U.S. manufacturing sector were a separate economy—with its own GDP—it would be tied with Germany as the world’s fourth-richest economy. Today’s manufacturing worker is so productive that the value of his average output is $234,220, three times higher than it was in 1980 and twice as high as it was in 1990. That means more can be produced with fewer workers, resulting in a precipitous fall in manufacturing jobs, from 19.5 million jobs in 1979 to a little more than 10 million today.

The bottom line is that we Americans are allowing ourselves to be suckered into believing that China is the source of our unemployment problems when the true culprit is Congress and the White House.

Reprinted with permission.

Dr. Williams, who very kindly and generously gave us permission to reprint this article on our blog, serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of “Race and Economics: How Much Can Be Blamed on Discrimination?” and “Up from the Projects: An Autobiography.”

Williams, Walter E. (2011, December 21). China trade: myths vs. reality. Townhall.com. Retrieved December 21, 2011, from http://townhall.com/columnists/walterewilliams/2011/12/21/china_trade_myths_vs_reality.

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For all your marine engine parts needs, call us toll free at 877.621.2628, or outside the U.S., 207.882.6165.

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com.

Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation

Birds in Winter

By Noreen O’Brien, special correspondent to Marine Parts Express

Birds are of a marvelous design, just like everything else in the natural world, and have ways of keeping balance in their lives, even during the coldest temperatures of the shortest days of the year. To survive, most birds must maintain a body temperature of about 104 degrees Fahrenheit. To maintain that temperature in the cold of winter, they employ a variety of strategies.

Food being the primary source of energy, and the available winter hours for them to feed being fewer than the hours of sleep, birds must eat almost constantly just to survive. This is a good reason to include a high energy food like raw beef suet at your backyard feeding station throughout the winter months. They need enough daily food intake to draw from stores that will fuel heat created by their own bodies during the nighttime.

Bird feathers have tiny muscles at their base, making it possible to fluff them, thereby trapping an insulating layer of air between their feathers and skin. Do you use a down parka? If you bend over, you’ll note the woosh of warm air trapped under the zipped parka when it escapes under your chin. Same premise holds in the case of birds, but it’s built-in for them. Like us, birds also shiver when they’re cold, as a kind of exercise, which turns the body’s stored fat into heat.

As can sometimes be seen on a cold, sunny day, a bird may sit with its back to the sun, head turned toward its back, face tucked into the plumage of its shoulder. Water birds such as ducks floating on the water’s surface will do this, as well. Such a position decreases the total heat-dissipating area of its body, but it also covers bare surfaces that lose heat, such as facial skin, naked combs or wattles.

Shorebirds, gulls, and waders may be seen standing on one leg on rocks or on the beach, head tucked into a shoulder, body facing into the wind—the other leg is tucked up close to its belly. Birds can control the temperature of their legs and feet separately from their bodies by constricting blood flow to these extremities, thereby reducing heat loss. In addition, their legs and feet are covered with specialized scales that minimize heat loss, also allowing them to conserve heat for the rest of their body.

Birds of open areas have their strategies, too. Wind velocity is greatly diminished at ground level. Birds such as sparrows or larks will scrunch up together, close to the ground, sometimes making a bit of an igloo out of snow or a grass tussock, or by scratching a shallow hollow in the ground’s surface.

To fully protect itself from the cold temperatures, wind, and precipitation through the night, a bird would do well to have a solid wall of cover surrounding it. The more enclosed the bird is, the less heat escapes into the air around it. Most frequently, songbirds roost alone, however, on extremely cold and bad weather nights birds will congregate in huddles, sometimes with groups of different species, but mostly of the same. A British ditty describes this, “When tom-tits cluster, soon it will bluster.”

A collection of Brown Creepers might cling to the bark of a tree trunk in a huddled mass, bodies overlapping, heads inward and tails sticking out. Black-Capped Chickadees and Tufted Titmice generally sleep alone, perhaps snuggled into a bough of a conifer, but on a cold night, these birds may gather in a huddle inside an old woodpecker hole, an old nest of another species, or even a nest box.

The Yellow-Rumped warbler, a hardy warbler that may be found here along the northeastern coast even in winter, is not a colonial or a cavity nester. However, these warblers have been known to seek out others of their species and hunker down in an old nest for added warmth and protection from the harsh elements.

Maine writer Bernd Heinrich released a report not too long ago of a study he made on the wee four-inch kinglets. He spent many cold Maine nights following the birds until he found what he was looking for: kinglets roosting together huddled for warmth and survival.

There is a downside to some of these strategies birds use. Sometimes, when cleaning nest boxes in early spring, carcasses of birds are found inside them. The birds died over the winter from the cold, suffocation from the weight of layered birds with the top ones dying from exposure and the bottom birds too weak to work up through the pile, or starvation.

Still, huddling must work for the birds more often than not or they would not be using such a strategy to survive a cold winter’s night. On cold late afternoons, watch nest boxes for birds like chickadees and nuthatches, and even the occasional woodpecker, entering for the night. Also, look for juncos, sparrows and other small birds roosting in the shrubbery around the house. Better still, hang boxes and plant shrubs next spring with the birds in mind. They need all the help they can get surviving these long Maine winters.

Till next …

Noreen

While we up here in chilly New England have battened down the hatches getting ready for the cold, it doesn’t stop us from being able to send engines and parts to all our warmer climate customers. For all your marine engine parts needs, call us toll free at 877.621.2628, or outside the U.S., 207.882.6165.

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com. 

Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation

Country Debt

By J.D. Neeson, President, Marine Parts Express

It struck me the other day that everyone talks about government debt and how much personal debt people have, but I had never seen what the total debt is. So here is a nifty table showing some of these. All the numbers are a percentage of a country’s GDP and are estimates.

Country	% GDP	% Government Debt	% Business/Bank Debt	% Household Debt
UK	497	77	340	80
Japan	492	213	226	53
Spain	366	66	210	90
France	341	88	223	30
Italy	313	110	165	38
South Korea	306	30	186	90
US	289	80	124	85
Germany	284	86	149	49
Canada	274	68	118	88

So, in the United States, the total debt is 289% of GDP and out of this number 80% of GDP is Government Debt, 124% of GDP is Business/Bank Debt and 85% of GDP is Household Debt. Or, to phrase it another way, as a percentage of total debt, which is a bit more revealing of the government and societal pressures that countries have to deal with and the decisions that are made either consciously or unconsciously.

Country	% Government Debt	% Business/Bank Debt	% Household Debt
UK	15	68	16
Japan	43	46	11
Spain	18	57	25
France	26	65	9
Italy	35	53	12
South Korea	10	61	29
US	28	43	29
Germany	30	52	17
Canada	25	43	32
Average Rate	26	54	20
Median Rate	26	53	17

There are all sorts of observations and deductions that can be made from these numbers. For example, I think what it shows is that while Japan and France have relatively low Household Debt they have higher than average Government and Business/Bank Debt. But the reasons for this are different. Japan has a history of high personal savings, but the country has been forced to keep society afloat through government support of its industries.

The French, on the other hand, have forced their industries to keep artificially high wages and benefits by government edict. That has kept Government Debt down, but has forced businesses to take up the slack. Much of the needs of the French people are supplied by either the government or by their employers, so personal debt is lower.

Another example is South Korea and the United Kingdom, both of which have relatively low Government Debt. Again, it is for different reasons. The Koreans are much more hands off when it comes to economic issues type forcing industry or households to take on the debt risk, while the U.K. form of socialism controls the economy more closely and forces industry to take on the debt.

You notice none of these broad generalizations include efficiency or value considerations and there are all sorts of other factors that create the choices that countries make. The only aspect that seems clear is that less debt is better than more debt and more capitalistic economies seem to spread debt risk over the entire economy more than the socialistic countries that either dictates the entity that will be the debtor or take the debt onto themselves.

I have no idea which is better, but this decision may affect which class of borrower has the most say in the governing of the country. In all cases, the beliefs and societal mores can tie the hands of decision makers more effectively than laws passed.

I would love to find the same sort of numbers for China, Dubai, or some other very strictly controlled economy more totalitarian form of government and compare it with the numbers for Sweden or Denmark. And wouldn’t poor Greece’s or Portugal’s numbers be fun to look at?

~J.D. Neeson

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Wheel Turns

By J.D. Neeson, President, Marine Parts Express

When I was working for a large manufacturing company in the 1980s, the dreaded juggernaut on the horizon was the Japanese. Everyone thought it would be only a matter of time before all manufacturing would end up on the Japanese shores, due to the Japanese’s relatively low labor rates and their adoption of new manufacturing techniques. What eventually happened, of course, was that all those Japanese workers began to enjoy having a little more money and began to want a little more.

Then, within five to seven years, there was a great move afoot to move manufacturing to South Korea, where the Koreans’ relatively low labor rates and their adoption of new manufacturing techniques made them the darlings of manufacturers.

So, I greeted the recent news regarding China’s concern over the number of companies that were moving to Vietnam, Myanmar, and Cambodia, with their relatively low labor rates and their adoption of new manufacturing techniques, with gentle pleasure and not-so-gentle satisfaction.

Apparently, wages in China have risen 158 percent over the last 10 years or so, and 11 percent in the last year alone. The Chinese have begun to try a number of what they call “adjustment strategies.” One strategy is to transition towards high-value, low-labor manufacturing (i.e. fewer workers and more robots), but what happens to all those workers that are displaced?

Currently, approximately 300 million of China’s 1.3 billion people are involved with manufacturing, or 23 percent of the population (the United States’ percentage is 3.5 percent), and they are unlikely to be happy campers. Just think how much excitement is generated in the U.S. on this issue and then multiply that by seven. (Incidentally, the total manufacturing output of the two countries is almost identical.)

Once workers have had a taste of the apple it is just about impossible to take it away from them. I bet the Chinese leadership lie awake nights thinking about what might happen if growth slows and unemployment increases and a whole bunch of people look toward Peking for answers.

On a side note, during the ’80s when all of us in the U.S. manufacturing world were frantically trying to imitate the Japanese, I always had the vision of a bunch of guys in Tokyo sitting around a big table discussing what they could make the foolish U.S. guys do. One might say something like, “Let’s convince them we all do jumping jacks every morning.” Another guy would say, “Oh, that’s good. I know, I know—let’s tell them we use little red cards for tracking.” And one of the other guys would say, “I have a cat called Kanban, so why don’t we call it that.”  Then they all giggle and drink their sake.

~J.D. Neeson

For all your marine engine parts needs, call us toll free at 877.621.2628, or outside the U.S., 207.882.6165.

Comments? Questions? Suggestions for topics for our blog or newsletter? Send them to info@marinepartsexpress.com.

Marine Parts Express is a division of Water Resources, Inc., a privately held Maine Corporation