Double Blind

The big news with the RAV line was that North Vancouver and Richmond’s city councils were going to complain with the winning bid and proposal (3.2MB PDF). Fortunately they shut up at the last minute and let the existing proposal go through and it is sure to get approval at Translink’s next meeting.

North Vancouver’s council doesn’t have much of a moral basis to complain about the project (i.e. it’s way out of their municipal boundaries), but Richmond was going to complain about two things. One was that the proposed system uses an elevated track and second, they were considering proposing a change in routing to Minoru Blvd instead of No. 3 road. Both of these proposals were thankfully not submitted by Richmond council in yesterday’s meeting so the project will proceed to the next step. I’ll go over these arguments.

Argument one was that the rail system was using an elevated track, which is an eyesore compared to an at-grade (on street level) system. I agree that the elevated track is more utilitarian than aesthetic. However, an at-grade system would have to give traffic priority to the rail system. Although the trains would come and go an average of three minutes apart (as there is six minute service time for each direction), this would probably have enough of an impact on traffic as to cause problems in downtown Richmond. In addition, my confidence level of traffic planners in the city is less than perfect – I remember when they said that one of the advantages of the 98-B-Line (Express) bus from Richmond to Vancouver would be that the busses would have traffic priority – the lights would magically turn green when they approached them. Despite the fact that they spent 10 million gouging up No. 3 Road in Richmond for dedicated bus lanes, the bus trip to Vancouver isn’t faster at all than what they previously had! It’s still about 45 minutes. So while I will agree that elevated tracks are an eyesore, it’s a tried-and-true method that we’ve done for the Millennium Line in Burnaby, and it will probably serve us here in Richmond well.

The second issue is somewhat less obvious – it never occurred to me to change the routing of the line from No. 3 Road (Blue in the picture) to Minoru Blvd (Red). The gist of this argument was that Richmond councilors didn’t want to wreck the beauty of the downtown core with this big concrete structure in the middle of it, so the solution would be the route the light rail through a lesser traveled street. Intuitively, I didn’t think this made any sense at all, but when giving it further thought, there is some element of logic to it. When the line splits from Lansdowne Mall (station 3 in the diagram), it goes along a sparsely populated area consisting of small shops, auto dealers, auto repair places, etc. Then when it hits Westminster (parallel to station 4 in the diagram), there’s the hotel area and some more cosmopolitan features of the city. Finally between Westminster and Granville there’s some high density housing (next to Richmond Centre) that could feed the line. It’s an interesting diversion, but ultimately one that I don’t think would work for logistical reasons (e.g. they haven’t spent 10 million to gouge up the road to put space in for a new Skytrain rail line).

Ultimately what has to happen to make the RAV line a success is that the area around the line needs to have higher population densities. There is some high density housing just east of Richmond Centre (and those people that have to commute to downtown Vancouver will most likely walk the three minutes to get to the station), but other than that, there needs to be some more residential housing. The only room on the map for this is between Stations 2 and 3. Otherwise, the existing bus network in Richmond should be diverted to just feed the rest of the city into Station 5.

I am fairly confident that the expenditure of (now) $1.7 billion will be worthwhile – it will take half as long to get to Vancouver as it would by bus. The value of the light rail network dramatically increases for each connected destination that is added. Realize, however, that traffic on the three bridges that connect Vancouver and Richmond (Arthur Liang, Oak Street and Knight Street Bridges) will not suddenly disappear after RAV – there will still be gridlock. With RAV, there will be a viable alternative that can get you there faster than just by queueing up to get onto the bridge, which is why people will use it. I still see some political risk to the project (such as whether the Federal government will cough up their cash pledge they made to the project, and if the NDP get elected to government in BC, whether they’d scrap the project), but despite my previous predictions of never seeing rapid transit come to Richmond for the next 30 years, I’ll be delighted to see it finally happen.

The people that have whined about this project being a “boondoggle” should realize that the other solution is to start tearing up Oak Street and installing a massive freeway that connects Richmond and Vancouver – it is the largest symmetric commuter corridor in the region. Would they like to see their money spent instead on an elevated 8-lane freeway? Instead of complaining, they should propose solutions to provide viable alternatives to traffic problems. More buses do not solve anything, they just add to the gridlock in the city without expanding the capacity of the road network.

This of course leaves the final question, where does rapid transit go from here? After the north-east corridor (Coquitlam, Port Moody) is built, the next logical connection for Skytrain is to mirror the route along the Fraser Highway in Surrey all the way to Langley city centre. Then you connect an express rail line from Richmond to New Westminster (through the Queensbourough Bridge) and then you have a pretty kick-ass transportation system that can get you nearly anywhere in the Lower Mainland.

(The article that got me thinking about this issue)

The Canadian parliament passed legislation to accelerate the investigation by a task force to create regulation or pass legislation that would limit the trans-fat content of processed foods to as low a level as possible. Some groups are claiming that the Canadian government is banning trans-fats, but depending on what the task force comes up with, it may be up to a year for them to decide on anything.

Being rather ignorant of this issue, but hearing about it in the media over the past year, I did some research on the matter. It appears that there is some extra risk of getting heart disease if you eat too much trans-fats, which is the primary danger. The risk in absolute terms is minor: the people that are attributed to dying due to trans-fats are already suspectable to heart disease and other coronary conditions even if they didn’t have trans-fats in their diets. I think the take-home message is that if you have a sensible diet and a moderate amount of exercise (i.e. get out and walk half an hour each day or equivalent), then eating 5 grams of the stuff a day isn’t going to kill you.

There are also some sites out there that are religiously against trans-fats. They would probably have a better time convincing me if they listed the arguments why you would not want to ban trans-fats. The aforementioned site mentions the argument for banning trans-fats: “If people know it’s bad for you, then how come it shouldn’t be banned?” – this is a stupid argument. Chocolate bars are bad for me. They contain lots of sugar, they are loaded with empty calories, they are high in sodium and provide little nutritional content. If I eat enough of them over a long period of time, I would probably suffer some consequences. Children in schools are getting fat with the help of chocolate bars. Clearly, although they are tasty, chocolate bars are not healthy to eat and thus they should be banned.

Where do you draw the line? Is banning a class of food ingredient on the basis of whether it is “good” for you a correct decision?

Finding information as to why trans-fats should not be banned was a little more difficult.

Trans-fats are manufactured from vegetable oils because the resultant trans-fats are more chemically stable at higher temperatures. This makes it easier to manufacture processed foods. One logical consequence of banning trans-fats is that it would make foods that use such oils slightly more expensive. Would you be willing to pay an extra penny or two for a bag of Oreo cookies? Effectively you are subsidizing people that are susceptible to heart disease.

The largest immediate impact to the consumer would be the availability of hard margarine – it would be the first to go in the event of a trans-fatty acid ban. Margarine is made with vegetable oil. However, to get the ‘butter-like’ consistency, you need to process it. In this process, you convert some of it into trans-fatty acids. They do sell margarine without trans-fats, but it is relatively soft under room temperatures and would be less ideal to spread on breads. This would kill some of the market for the product and would make butter producers happy. This is a minor consequence of an anti trans-fat law passing, but such ‘laws of intended consequences’ are difficult to predict in their entirety.

You’d get the impression by all the media attention that this is a one-sided issue. Unfortunately, this is not the case. When you play with the marketplace with regulations on how food manufacturers have to make their food, that cost goes directly to the consumer. Two questions to ask yourself if you support this issue is:

Is banning a food because “it is bad for you” sufficient reason to invoke such a ban?

Should everybody that buys foods with trans-fats inside be forced to subsidize those that are susceptible to heart disease?

My personal take on the matter is that it’s a close call. I do like the current regulation that is going on in food labeling – food products with trans-fats have to have it labeled. Consumers that need to be conscious as to their trans-fat intake have the necessary information at the point of purchase. In theory, those that want to pay the extra penny or two for the Oreo cookies without trans-fats can do so, while those that think they are not susceptible to heart disease can pick up the product with the trans-fats inside.

Huge amounts of snow fell in southern California today. This is such a rare occurance that it’s worth writing about. Here’s an article about what will be the snowfall of the year that shut down Interstate-15. Apparently it did snow in Las Vegas in the early morning, except you had to be on top of one of those hotels on the Strip.

On my car ride back, I left around 6:00pm. I decided to take US-95 south to Needles, California and then the Interstate-40 west to Barstow. The reason why I took this extra diversion was because I knew that Interstate-15 was snowed out, but I didn’t know where. I figured it would be safer to take the southern route back to Orange County, which cost me an extra 45 minutes of driving. Between Las Vegas and Needles, there were places where you could see snow on the side of the road, but nothing to impact the speed of traffic.

However, when approaching within 20 miles of the city of Barstow, California, it began snowing. Then the snow density just kept on getting worse and worse. After crossing Barstow, it was at its worst – traffic slowed to a crawl, and the freeway was quite icy and snow was all over the place. It was especially bad whenever the big trucks would start passing you on the freeway – they’d spray snow all over you, and the force of the wind would be significant enough to force you to keep your hands very firmly on the steering wheel since you can feel your rear wheels slipping. I probably wasn’t the best equipped guy on the road with my Buick Century, but at least I wasn’t crashed out on the side of the freeway like half the other passenger cars and SUVs that decided that they could take the road at 60 miles per hour without slipping.

Suffice to say, it was a fun drive back – I never expected to see snow here.

I would like to know if anybody can endorse a calling card that has the following properties:

Can call from the (continental) USA to Canada – Canada to Canada is a benefit but not necessary;

Zero maintenance fees;

Zero connection fees;

Expiration of 3 months of more;

One minute billing or less;

Clear voice connections.

I would like the above characteristics, and optimized for price.

I have so far tried three calling cards out there. One is the Telus calling card which is provided by my company. It works very nicely, but the drawback is that it costs 27 cents per minute to process calls and thus the company doesn’t permit its free use.

The second calling card I bought was the “My 2 cents” (code: MTC10-DL) from 877phonecards.com. This calling card was horrible. The calling card is supposed to be 2 cents per minute from USA to Canada, so a $10 card would last 500 minutes. The calling card did not last as long as I expected (it lasted approximately 300 minutes), but the audio quality is such low quality that you can hardly have phone conversations with people. The quality resembles something like what you would hear on a broken RealAudio connection back in the 14.4k days. Not only that but there is a 1 second lag between when you say something and when the other party hears it. This makes interactive conversation difficult. I cannot recommend these cards at all. I don’t know if this is due to the card or the provider, but I can’t justify buying cards from this site again. The AT&T 3 cent cards look compelling, but I don’t know if they will have junky quality as well. It’s one matter getting crappy audio quality, but it’s another matter completely with logging the time that you use the cards for and getting scammed on time. I would blame this on the site and won’t shop there again.

Another calling card that I have bought that offers the benefit of calling from Canada as well as the United States is buytheminute.com, which offers 5 cents per minute calling to Canada or the USA. The cards have per-second billing, no connection fees, no maintenance charges (other than expiration after 6 months) and excellent quality. I was rather surprised at this considering the site looks like it was made in 1998 and hasn’t been updated since.

So out of these three product offerings, I would choose the last one at buytheminute.com. Does anybody know of any reliable calling cards with good voice quality that are cheaper? Otherwise I’ll just be resigned to the fact that it will cost 5 cents per minute to call places.

Yesterday I filled my car up in Vancouver (just north of Boundary and Grandview) for 68.4 cents per litre (Canadian). The previous day, I filled up my car in Anaheim (about 40 miles southeast of Los Angeles) for US$2.23 per gallon.

There’s 3.78 litres per US gallon. This means I filled my car up in Anaheim for US$0.59/litre. Since the US dollar is worth $1.20 Canadian, this means I paid 70.7 cents per litre in California. This is the first time I can ever recall paying less for fuel in Canada than in the United States.

Canadian fuel taxes are 10 cents a litre federally and 20.5 cents a litre provincially in the Greater Vancouver Regional District (this is based off of an old 2001 report for the Federal government and a BC fuel tax bulletin for the provincial taxes). I will ignore the 7% GST. The fuel tax in California is 36.4 cents (US) per gallon. This translates into about 11.6 Canadian cents per litre. I will ignore the approximate 7.5% state tax (it varies depending on what municipality you buy fuel from).

So despite the fact that Canadians are paying more than double the fuel taxes than Californians are, we are getting our fuel cheaper. I know that California has rather strict standards on the grades of gasoline they have to refine, but something is economically wrong here: our gasoline operators are getting raped to death. Doing some very simple calculations:

a. A barrel of oil costs US$48 today. A barrel is 42 US gallons or 158.8 litres. I am assuming that the whole barrel can be used for automobile consumption, which is a very incorrect assumption.
b. This translates into a raw cost of 30.2 US cents per litre or 36.3 Canadian cents per litre.
c. 36.3 Canadian cents per litre plus Canadian and BC taxes of 30.5 cents gives you 66.8 cents per litre.
d. Add 7% GST and you get 71.5 cents per litre.

I can only conclude that gasoline operators in British Columbia right now are losing money. I have no idea how they can sell fuel at the rate of 68 cents per litre, which is why I suspect they are going to be raising prices imminently to recover the losses they are making now. Otherwise the natural consequence of the current pricing is that we are going to start seeing fuel shortages in Vancouver. Better keep your car filled.

A quick link off the Drudge Report talks about Bush’s stance on the Kyoto Protocol. This entry has nothing to do with the article except for this sentence written by John Heilprin of the Associated Press:

Gore signed the treaty in 1997, but it never was ratified by the Republican-controlled Senate.

Does it not matter that the “Republican-controlled Senate” voted it down 95-0? The sentence implies that the Republicans used their control in the senate to prevent the USA from ratifying Kyoto. As there were 55 Republicans and 45 Democrats elected in the senate at that time, at least 40 Democrats voted against ratifying Kyoto. This is yet another example of at least sloppy reporting and probably somebody still angry that George Bush won a second term in office.

Here is a chart of how the Bush contract has traded during election day. Very instructive – I’m happy that my prediction that purchasing Bush before the day of the election was stupid when you could just buy it for much cheaper intra-day. This is something you can’t do in Las Vegas.

Today has been an absolutely furious day of trading, mainly taking advantage of pricing inefficiencies on state and total electoral vote contracts.

Assuming that Bush keeps Ohio, I will have netted roughly US$600 after trading fees. About $250 of that was “planned” (see my previous post), but $350 of that was due to active trading on the political futures market.

Regarding the December 13th certification date, I have taken a small proxy bet of 75 (short) contracts at 94.9%, which is approximately 20:1 odds that the presidential election will not be certified by December 13, 2004. This is kind of a hedge against my Bush position since I doubt they will be able to overturn the results before December 13 if Ohio does go for Kerry. In the event that the certification goes past that date, I’ll have run into approximately $710. I doubt this will happen, but I don’t know what Kerry and Edwards are up to concerning litigation.

I don’t think Kerry has a chance in any judicial appeal regarding Ohio, but that’s his only chance to have any chance of winning this election. There’s too much differential between Bush and Kerry in the state for the absentee and provisional ballots to actually count for anything. It’s almost as if all of those votes would have to count for Kerry in order for Kerry to win the state. This is not going to happen.

Right now Bush is trading at 95%, which I think is under-valued. I would say that Bush has a 1% chance of not being re-elected as US president.

Some thoughts on today’s trading – Bush traded as low as 24% approximately an hour before the polls closed. This was a prime opportunity for me to grab some Bush contracts at 26.1%. I’m kind of saddened that I didn’t grab more than 20 contracts at that price, but that netted $200 right there. The US Senate was an easy call, so there’s not much to discuss there. My state predictions turned out as expected, except I liquidated Michigan at 22 since there was some legitimate fear on my part that Bush would have an exceptionally strong turnout in that state. As it turns out, he lost in the state as I predicted, but not the margin I was projecting.

I had picked up quite a few contracts of the Bush 300+ electoral votes at a level of 8.5% and I was thinking that Bush could pick up Iowa, Nevada, New Mexico and Wisconsin (which would have given Bush 300 electoral votes exactly). This contract actually got as high as 40 before trading down again. Had I liquidiated at that time, I would have run into an extra $200 of profit. Alas, the contract turned and I cashed out for a few bucks of profit. I really should have put in an equivalent of a ’stop’ on the contract and just sold half the contracts at around 20-25 to secure a higher profit.

Finally, I thought that Iowa was going to go towards Kerry and took a position against the 280 electoral vote contract, as Bush would have won with 279 electoral votes if he took all his ‘regular’ states except Iowa. This bet eventually turned against me and I took a 40 dollar loss to liquidate the contract when it was clear to me that Bush was going to take the state.

All in all, it was one hell of a trading session. In a single day, I’ve increased my online gambling equity by a significant margin. I wonder if I should buy myself an early Christmas present…

Here are my following notes on the upcoming presidential election on Tuesday. Some of these include actual bets I have made on the outcome. I don’t know whether these predictions will be correct, but it should be a fun Tuesday even if I blow a bit of cash on my rather fuzzy crystal ball.

Congress – Control of the House:
Republicans to keep the House; the market at 93% is slightly under-valued, fairly suited for some relatively risk-free money.

Congress – Control of the Senate:
Republicans to keep control over the Senate; I will be risking $237.65 to gain $112.35 (67%) in the event that least 51 Republican senators are elected or 50 Republican senators are elected and George W. Bush being re-elected. Market now is 84% and is fairly valued.

Kerry to take the following states:
Washington; I will be risking $90.50 for a $9.50 reward.
Oregon; Totally missed the boat to go for Kerry here.
California;
Hawaii; This state is trading at around 24% on Tradesports and I think is a good sell. The state has about as much of a chance of voting for Bush as Osama bin Laden converting to Judaism. I forgot to dangle an order over the past few days and will be trying to get short some contracts at 28%.
Michigan;
Illinois;
DC;
Maryland;
Delaware;
Pennsylvania;
New York;
New Jersey and all states north-east of New Jersey. I am risking $79 for a reward of $21 that NJ goes against Bush. I am also risking $80.50 for a reward of $19.50 that Maine goes to Kerry.
This includes New Hampshire, which is currently trading at 32%. I seriously doubt that they will be voting for Bush, so I have bet $56.50 for a $43.50 reward – better than the market currently. Basically if you look at previous election results, the state didn’t like Al Gore all that much, but I believe it will rally behind Kerry simply because of his connections to the New England states. I don’t see them voting for Bush again.

Bush to take the following states:
Alaska;
The box of states between Idaho and Texas (this includes Nevada and New Mexico). I have risked $140 for a potential reward of $60 that Bush will take Colorado;
Iowa;
Wisconsin;
Indiana;
Ohio;
West Virginia;
Missouri, Kentucky, Virginia and all states south.

Hotly contested states and how they will fall relative to their market position:
Nevada for Bush – Market is roughly 76% for Bush which is slightly undervalued.
New Mexico for Bush – Market is roughly 65% for Bush which is fairly valued.
Minnesota for Kerry – Market is 33% for Kerry which is fairly valued.
Iowa for Bush – Market is 53% for Bush which is slightly undervalued, although not to the degree where I will take a bet.
Wisconsin for Bush – Market is 42% for Bush which is undervalued, although not to the degree where I will take a bet (I would look for 35% which is nearly 2:1 on the money).
Ohio for Bush – Market is 55% for Bush which is slightly undervalued, but not enough where I would want to take a bet on this particular state.
Florida for Bush – Market is 59% for Bush which is slightly undervalued, but not enough.
New Hampshire for Kerry – Market is 32% for Bush which is still over-valued.

Generally speaking, there aren’t any “slam dunk” potential bets here that are presenting themselves in the marketplace. If there was something I would put money on that was an underdog, I would choose Bush to take Michigan (at 24%), but I don’t think this scenario will happen.

Popular vote:
Haven’t done the proper number-crunching necessary to come to a conclusion here.

“Brain-dead” money on election:
Want to earn an instant 9% in a day? Purchase Bush to get 200 electoral votes or more for 91.1%. Conversely, sell Bush to get 350 electoral votes or more for 9.5% (there is no chance at all of this happening, Bush would have to take New Jersey and Michigan). The next brain-dead bet would probably be the Republicans keeping the House at 91%, but this is a thinly traded contract.

Will all 50 states certify their results by December 13, 2004?
Yes. Does big media think that judges will be sitting on their asses waiting for the junk lawsuits about voter disenfranchisement come in? Apparently so. The contract trades at 80% right now which is too high to take a bet on, but if the results are close after the election, then I’d start picking up contracts if it starts trading significantly lower (a good risk to return would be a 4:1 or 20% bet).

The next US President:
Bush, 300 electoral votes to 238. The election will effectively be over around 8:30pm EST. Right now, I have no money on the direct outcome of the election as I think there will be a better point to enter while the results are being counted in earlier states. The contract will be volatile in the first hour of ballot counting – it will probably get as low as 40%. The key swing states will be Florida and Ohio, both of which will be voting for Bush.

Best underdog bet on US election:
The contract where Bush will get 300 or more electoral votes. Right now you can pick it up for 25%, which is 3:1 on your money. When the ballots start counting in Florida and Ohio, this will probably dip to 10-15% where a well-timed order could yield a 6:1 to 9:1 gain depending on what happens.

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Update #1: I have now risked $71.50 for a potential reward of $28.50 that Kerry will take the state of Hawaii. I no longer have any unfilled bets on the market other than low-ball bids on the Presidential winner contract and the Electoral Vote contract.