remembering America

Have you ever wondered how people will remember America? As the empire that rose from a distant European colony and prospered after it removed the natives? As a nation that lived above its means and spent money it did not have? A realm that bloomed because of cheap oil and became so utterly addicted and dependent on that oil that its entire foreign policy was dictated by oil wars? As a people that elevated senseless consumerism to a new religion? A fat overindulgent mass behaving like a bunch of undisciplined teens wreaking havoc on the environment and wasting resources as if there were no tomorrow? Zombies brainwashed by never-ending commercials, urging them to spend and spend more, to consume and consume more, to trash and trash more?

earth hour

Apparently Vegas dimmed its lights Saturday for Earth hour. Dimmed is what the paper said. One cannot expect Las Vegas to go dark. Although some notorious items apparently did go without illumination. For one hour the sign, "Welcome to fabulous Las Vegas" was dark. And so were the Luxor's space beams. How is that for progress?

The soon to be renamed Sears Tower, the Golden Gate bridge, the Sydney opera house, the Eiffel Tower, all these landmarks went dark and stayed dark for one full hour.

I hope you didn't feel the urge to pull out the good-old SUV from your garage to go and watch it happen. Or that you were one of the guests at the Bank of America tower drinking cocktails with battery-operated "ice" cubes, served by waiters who carried flash lights and wore battery operated head lights? Because if you did that, it pretty much defeated the purpose.

Then again, millions of people no doubt turned on their TV sets to watch these famous landmarks go dark. Courtesy of hundreds of TV camera crews, who pulled out all the stops to capture the scenes. Never mind the miles driven, the generators that ran, and the elaborate energy wasting toys that were needed to ensure we could all witness this historic event in real time.

I have an idea. Why don't we turn off all those lights every single night? And then once a year, we can celebrate earth hour and turn everything on for 60 minutes. How is that for a nice twist? WWF where are you?

another baby boom and a perfect storm

We are in the midst of a new baby boom. Last year more children were born than at the height of the post-war baby boom (1957). If you think that is good news, think again. We are rapidly running out of room on this planet.

If you live in California, you may think -based on your travels through our renowned deserts- that we have room a'plenty. Unfortunately, we humans need more than just land. We need water and California is already having trouble providing water to its existing residents, let alone to newcomers. Sure, most of California's water goes to (big) agriculture -another one of those welfare programs for the richest of the rich- but that agriculture provides much of the US, Europe and Japan with fruits and vegetables. Like all irrigated ecosystems, California is losing farm land every year. California's irrigation has already depleted valuable fisheries and it is bound to cause more trouble for the oceans in the future.

Climate change will only accelerate these trends. Our consumption of fossil fuels continues to grow unabated and the effects of greenhouse gas accumulations continue to surpass our wildest predictions. That means sea levels will rise more than our worst case scenarios, and desertification will be more extensive. These trends will further reduce agricultural areas.

According to the latest research we are headed for a perfect storm when it comes to growing world populations and dwindling resources. That storm is predicted to hit around 2030, give or take a decade. What that means is that it is close enough for many of us to start witnessing its effects during our life-times. Unfortunately for some of us, it may become the reason our life-span will turn out shorter than expected.

It seems most likely that such a storm will hit more or less out of the blue, much like the credit crisis we just experienced. All these types of events, be they financial, biological, ecological, or what have you display similar patterns of behavior. Mathematically speaking, these events are very similar.

So while many will see it coming, and there will be clear telltale signs and warnings, most people will ignore these, and a significant number will think the scenario impossible or absurd. It seems highly likely that the run-up to the storm will be characterized by behavior that is truly excessive, and -in retrospect- incomprehensible.

The same happened during the housing crisis. Prices kept rising and everyone thought it would never end. People took on more and more risk, and were feeling more and more optimistic about the future (one reason we are having a baby boom now). And then very suddenly the bubble collapses.

The only difference being, that a resource crisis will be many times bigger and many times more painful than a financial crisis. Tens of millions will die, and many more will be faced with starvation, malnutrition, infectious diseases,  and other mortal dangers.

what the consumer wants

Yesterday I heard that California wants to outlaw some energy-wasting big screen TVs. It seems like a no brainer to me. It appears that the race is on to impress one's neighbors with ever expanding screen sizes that do nothing more than waste huge amounts of energy to beam advertising into your life. TV's have become second only to heating and cooling in their energy consumption and the state wants to do something about it.

That does not sit well with the plasma TV association, or some such trade group whose goal it is to sell as many plasma TVs as possible regardless of the environmental impact. The organization readily decried California's stance as one that denies to give the consumer what the consumer wants. Honest TV installers were worried that they would be labeled criminals for attending to "people's needs." Oh how I do feel sorry for them!

Surely it is hard to think of something more un-American than to deny the consumer his or her every whim? Therein lies a battle cry more shrill than any other. The State of California is going to limit the choices we as consumers have! Surely they must be communists!

We are a long way from the famous Rolling Stones song, "you can't always get what you want." In this case it behooves us as society to pause for a moment and reflect upon this dismal state of affairs. Have we really regressed to the point of becoming temper-tantrum throwing toddlers? Do we always have to get what we want -to say nothing of how these "wants" and "needs" are artificially created through clever advertising?

Is it really so bad if the state provides some adult supervision? Is not adult supervision what we really need? Wouldn't a bit of adult supervision have gone a long way to prevent our current housing crisis? What if someone had told these "poor innocent victims of foreclosure" that it was a stupid idea to buy a house they could not afford? Would that have been so evil?

It is precisely the Reagan idea of laissez faire that has gotten us into our present trouble. You can always get what you want. "This is America," says none other than 24's Jack Bauer in the new Bank of America ad. An America that is as bankrupt as Bank of America.

You can get whatever you like, even if it damages the environment. The world after all, is here to please your every foible and fancy. Don't worry about anyone else. When you buy a stereo the goal is to drive your neighbors crazy. That is the message of conveyed by many car stereo ads. And not surprisingly, many teens and would-be-teens are eager to follow such smart advice.

You can have whatever you want, even if you can' t afford it. That is the Reagan message of hope. Don't worry America, there is always credit. No wonder half of the American households have negative net worth. Isn't it time for some adult supervision?

afraid to face the music

I heard another economist talk on KQED last night. This one was from Harvard -I forget his name, not that it really matters in the scheme of things. 

Once again the story was the same: the administration is not doing enough to mitigate the crisis. It is afraid to "grab the bull by the horns." The monster bailout is too little, too late. And then there was more talk about "toxic assets" and possible bank failures. It appears nobody wants to admit these toxic assets are not toxic as in, "of questionable value," they are simply worthless. Totally and completely worthless. There are no "toxic" assets because there are no assets to begin with.

Anyone who talks about selling toxic assets or setting up a clearinghouse to sell toxic assets is yet another scam artist trying to fool the public into buying worthless paper. No wonder savvy investors are not interested in the Geitner plan. They've learned their lessons.

Unless and until we face these facts, the crisis will not get resolved. Not only that, the longer we wait, the more serious the problem will become and the more damage will ensue. It is one pill the Obama administration does not want to swallow. It is one danger they are not prepared to tackle. 

The reality is that all of the nation's major banks are de facto bankrupt and will have to go through bankruptcy procedures of some sort to be salvaged. Since everyone seems to agree that we need those banks, we cannot simply let them go out of business. That would be an even greater disaster and might cause a profound lack of trust in our currency. If that happens all bets are off. That is why I think you should own real gold. Real, as in tangible metal.

Even though Obama does not want to admit to it, the solution is simple: the US has to nationalize its major banks. At the very least it has to nationalize these banks for some short period of time. In essence much of it has already happened. We the tax payers are keeping these businesses alive. We are the de facto owners.

What is truly shameful however, is that the government did not want to get legal ownership in return for its cash. It did not want to become a shareholder with shareholder rights in return for the money it donated. Therefore its bailout money is nothing more than a donation to the rich. No wonder people are getting upset!

And why did that happen, you may ask? Because the folks in Washington are simply too chicken or too stubborn to admit that the great capitalist Reaganomics system has failed. That there is no other way out than to nationalize the financial system in order to avoid total disaster.

If stubbornness is the cause then we are seeing something that is eerily reminiscent of the previous administration's stubbornness to admitting failure in Iraq. If that is true, then change was just another empty campaign promise. If stubbornness is not to blame then there is only one alternative: weakness. I am not sure which is preferable.

climate

The results from Copenhagen are in. Once again, we beat all predictions. Climate change is happening faster and is more extensive than our worst case scenarios. Do you see a pattern here? Rather than worry about media hype and overly pessimistic scientists, the world should worry about naysayers and too-rosy forecasts. If the present trends hold up, warming will be worse and its effects more devastating than a bad Hollywood disaster movie.

negative presents

One important thing you can do "to save the planet" is to stop throwing away stuff that can be reused. If you try this at home you will soon be overwhelmed with items and no place to store them. The reason for it is quite simple: you buy too much stuff. Too much stuff that you really don't need and have no use for. The remedy is very simple: buy less stuff.

It has been said that Americans throw away 90% of what they buy within six months after purchase. If true, this is clearly an unsustainable situation. No economy can survive for an extended period of time like that. 

One thing is for sure, nearly half of what we buy is packaging and wrapping material. Not only do most items come wrapped or packaged, everyone seems to feel a need to add more material or bags. I frankly do not understand why people buy bread that is shrink-wrapped, stuffed in a plastic bag, and then feel the need to request another bag to carry it to their cars. Wait a minute! They don't carry it to their car. They simply roll the cart with all the triple and quadruple-wrapped items to their car.

One important area of unwanted goods are all the do-dads designed to "solve" infrequent and unimportant problems. Many of these can be found in the kitchen. Garlic presses, stirring tools, hard boiled egg slicers, yolk separators, juicing machines, blenders, stirrers, and what have you. The type of things that look good at first but soon become a hassle to use and wash and keep track of. 

These are also the type of items that become impulse buys. They look useful, are easy to pick up and don't cost all that much money. They are stored near the cash register or in other places where you linger and may as well pick something up that you don't need. They are also sold in fancy-looking stores filled with ingenious and unneeded gadgets or via TV shows and infomercials. The best way to avoid "collecting" such items is to not go shopping idly or to turn off your TV unless you are really watching it.

Other things we OD on are toys for our kids. Most children have so many toys they don't know what to do with them. Their rooms are filled to the brim with toys that are never looked at. These toys are there to signal how much we love our kids. But what they signal most clearly is how disposable our "love" really is. Because what we need to do, instead of working so hard to "get ahead" is spend more time with our kids.

The reality is that we are too busy to do that. So we feel guilty and buy toys instead. So here is an idea for your child's next birthday party: "give negative presents," i.e. take away presents instead of adding more. Yes you heard that right. Take away some junk and give it to charity instead of adding yet another boring item to the every growing pile of trash that is your kid's playroom. Another fancy item that your kids will spend three days looking at before adding it to the rest of the pile. Been there, done that.

let's get real, wall street journal style

The WSJ has another opinion piece regarding renewable energy. Another half a page of arguments we have heard many times before. How solar and wind make up only a very small amount of our energy production. How increasing that percentage to a significant level will be extremely difficult and take a long time. How we still won't have a solution for the transport sector, a key energy hog. How it won't matter at all whether we develop solar or wind, so why bother, etc. etc. Same old, same old.

There is however, one good point all these WSJ people make. It is a point that is often overlooked by those who want to convert to renewable energy. That point is simply this: we use an outrageous amount of energy and there is currently no good way to supply such an enormous amount from alternative sources. Nor should we try to. What we need to do is go on an energy diet.

The energy hogs have a nice way of covering up the problem. They either talk about the energy America "needs" or the energy America "wants." Both of these imply that the problem is fixed and that Americans cannot survive without that vital energy. They imply this is how much we need to produce to stay alive. That is also the basic flaw in all the energy hog arguments. 

We know it is flawed because there have been times -now is one of them- when people use less energy and they are just fine. We also know it is false because it is blatantly obvious that over half of our energy is wasted. Wasted as in used to no benefit to anyone, other than perhaps the person selling it.

According to today's piece we "want" 47.4 million barrels of oil equivalent per day. The equivalent part is because this calculation converts all energy sources to their caloric equivalent in oil. 47.4 million barrels is roughly 1/6 of a barrel for every man, woman or child in this country, every single day.

However, what America "needs" or "wants" is very much driven by the price of energy. If prices are high, we suddenly can do with a lot less, as has been shown over and over again. We don't need to heat and cool entire mega-mansions, we don't need to drive six and eight cylinder cars, we don't need a power tool for every simple manipulation we perform, we don't need five TV's, three stereos, etc.

It is no exaggeration to say that we waste at least half of the oil we burn. Waste as in burning it to no benefit in traffic jams, waiting in parking lots, "warming the engine," etc. Waste as in keeping the entire house warm or cool for hours on end, when nobody is there. Waste as in leaving the lights on, or having three TVs going that nobody watches. To say nothing of all the "mobile" devices that are plugged in, or all the "important" items that are on constant standby, ready to turn on in an emergency. Can't miss that show!

Given that we apparently "need" 19 million barrels of oil a day, we could easily do with about 9.5. Natural gas is our second source and here we use an equivalent of 12 million barrels. That can easily be halved too. Coal is another 11.5 that can be cut in half. Scrap 20-22 million barrels in pure waste.

We are now down to about 25 million barrels and we haven't even considered driving a sensible small car, using public transportation, walking instead of driving. Doing away with monster fridges to cool gallons of sodas. Heating the entire house when we only use one room.

The point being, we are focused on the wrong thing. We need not replace 5 or 10% of our energy "needs" with renewables by some target date. We need to use less. It is something we can start right now. No investment is needed, no grand plan. The benefits are tangible and the gains are immediate. We will spend less money, get more exercise, be healthier, and feel better. We will reduce obesity, heart disease, and cancer rates in one fell swoop.

Here is our real energy plan for America: use less, consume less. That is change you can believe in.

detroit blues

The car industry is finally finding out that people don't need two cars. They don't need big inconvenient pieces of metal that guzzle gas, are awkward to drive, pollute the environment, and serve no purpose other than to impress potential mates. I wrote about this in November 2007. I called it mating dance.

Humans, and male humans especially, like to show off for the opposite sex. Like peacocks, human males are willing to put up with showy but otherwise inconvenient and bothersome display artifacts. The mating dance car is curiously maladroit. It is a race car that is unfit to race, a four wheel drive that is unfit for off-road duty, or a "sport-utility" vehicle that is neither a truck nor a passenger car. Or perhaps a "luxury" vehicle that the owner has to drive. Go figure!

The situation has gotten out of hand. Even when it comes to showing off, Detroit and its foreign cronies have run out of ideas. I admit that I do like cars. And so I know what I am talking about when I say there has been no worthwhile improvement on the market for at least 10 years. Nothing worth buying really. Nothing that didn't exist 10 years ago in a better format. Because car companies have long since run out of "innovations." 

To make up for this lack of ideas, they have jumped onto the trend of building moving living rooms. They have added and continue to add every single home improvement item they can think of. Massage chairs, stereos, DVD players, phones, fridges, you name it. All of it clutters up the car, adds weight, destroys performance, and otherwise makes driving less enjoyable. But then again, who can drive these days? People spend their time sitting in traffic instead. So maybe they need their gadgets to avoid boredom?

Cars are a very American way to show off. Europeans also use cars for this purpose, but to a lesser extent. They tend to concentrate on fine clothing and smaller luxury items like watches, fountain pens, etc. Conceptually, it isn't any different, except that fountain pens don't consume gallons of gas and spew out tons of carbon dioxide. Fountain pens can be fine display items that do very little to destroy our habitat.

Something to think about in these hard times.

dow 6000

My prediction of six months ago just came through. But if you insist and stick to closing numbers only, I should say it is about to come through, a few hours from now. The Dow Jones is below 7,000 for the first time since late 1997. I believe it has a ways to go. I have said it many times, I am a dyed-in-the-wool optimist and 6,000 was too optimistic. 5,000 anyone?

Did you also notice that AIG has just reported the biggest quarterly corporate loss in American history? And that GM is among the walking dead? Or that California unemployment is in the double-digit range now? It is scary to see how quickly all these predictions are coming through. Given how early -yes, you read that right, early- we are in this crisis, that should just scare the hell out of us.

It seems unlikely that we will come out of this crisis in less than 10 years. That is my optimistic scenario. The damage will be widespread and it will be very serious. Better hold on to your seats.

Best is to buy gold. Never mind that the price will fluctuate. A few years from now it won't seem all that important anymore.