environmentalism, Berkeley style

I bet most of the country thinks of Berkeley as a leader in environmentalism. A bastion of the greens; and no doubt this is one honor UC is shooting for. Especially now that "green technology" is such a must-have. It is so cutting edge, and with the new administration in Washington, something that is officially endorsed.

Speaking of the new administration, we won't mention how Barack Obama flew to New York for dinner and a Broadway show. How's that for saving the environment? There are no restaurants in DC worthy of the President? How about that vegetable garden that Michelle started?

UC is following in the President's footsteps here. In an expensive looking brochure -no doubt printed on recycled paper with soy ink, I didn't check;) - UC is trying to highlight how it is focusing on the environment. The cutting edge research may raise a few eyebrows. At least, it should raise a few eyebrows. Hopefully it does more than that!

UC is working on gas saving phones. The project has a killer name: Mobile Millenium. It is a collaboration with the US Departments of Transportation and corporate partners. This obvious consumer angle should not be overlooked. What the MM project is aiming to do is to use volunteer's cell phones to help monitor congestion on side roads as well as on major highways. And here comes the pitch (in bold no less): "If 3,000 users shave 30 hours a year from their commute times, the project will save more than 70,000 gallons of fuel, says the research team."

Applause please !

Or how about this cutting edge idea that is run in collaboration with Google? I quote: "Imagine that your thermostat and appliances are so "smart" they can adjust to peak energy costs throughout the day and night to save you money--and help save the planet." Say that again? Who or what are we trying to save here? How about you become so smart that you turn off your appliances and use less energy? How's that for a killer cutting edge research idea?

UC doesn't stop there. They have a section on "Hatching Green Ideas." Printed in green ink no less! Here we learn that scientists "are experimenting with cutting edge photovoltaic materials to make solar prices "dirt cheap." Cutting edge as in silicon, aka dirt? The dirt cheap is a nice touch.

UC hopes that this will "lead to more impactful products reaching the marketplace," and thereby stimulate more unbridled consumption (that last part is mine)?

The common theme is clear: whatever it is you are doing is good, needed and essential. You HAVE to drive, you HAVE to run your appliances, you HAVE to use energy all the time. You need to buy and consume. That is a given. What our green technology is trying to do is make it so you don't have to feel guilty about it!

We will remove the inefficiencies. Because, you see, the problem is with inefficiencies. If there were no traffic jams, we would have no global warming. If everyone had a "smart" thermostat there would be no environmental impact. And if everyone chartered Airforce One and a fleet of limos to go halfway across the country to eat at a restaurant, then we would all be green heroes.

Cheers America! Let the green begin!

sunny outlook

Consumer confidence is up. That had the markets all jazzed up and we saw another rally yesterday. Unfortunately, it won't last. Consumers may feel more confident now that the sun is out and the weather is getting warmer, but it won't lead to economic recovery. We are a long way away from that. Much more hardship is to come before we can start dreaming about recovery. 

The sunny mood was everywhere. Several newscasts did specials on Memorial Day sales and retailers tried to sound hopeful and upbeat. Even the real estate guys saw signs of a "turnaround" or a "reduction in inventory." Call it a calm before the storm. Rest assured that another round of foreclosures is coming our way. The first reason is quite simple: the moratorium imposed by the new administration is about to run out. The second reason is far less obvious but much more damaging.

The most onerous mortgages, the ones with negative amortization and pay-as-you-go schedules have yet to reset. Their 5 year grace periods will be ending soon. Starting this summer the first ones will hit their resets. When they do, a major wave of foreclosures is inevitable, even if the economy stays where it is (or improves). California will be especially hard hit as most of these "creative mortgages" were written in the golden state.

Foreclosure is inevitable is because people who bought houses with such mortgages were unable to pay their true mortgage rate 5 years ago when they acquired the house. They are even less likely to be able to pay it now. 

What will happen soon is that people who could not afford a 30 year mortgage of say $400K will now suddenly have to a pay a 25 year mortgage of $425K. With no equity in their homes and the residual values hovering around 50-60% (i.e. $250-300K in our example), these people will walk. They would be fools not to.

There is a third reason: the deteriorating job market. Everyone who have lost their jobs since the crisis started is also in trouble. That has added an additional pool of foreclosures in the prime mortgage category. People who have equity in their homes but who can no longer afford to pay the remainder of their loans.

All three factors are likely to exacerbate our problems starting this summer. Expect another big drop in housing prices. To be followed soon thereafter by another big wave of job losses and layoffs.

fear mongering

Even though the Bush administration is now history, its fear-mongering tactics are alive and well. Pushed by none other than Mr. Cheney himself, who takes every opportunity to remind Americans how well the Republicans really did before the Obama landslide rolled over them. Not surprisingly, Mr. Cheney's fear-mongering works as well as it did before. It seems people never learn.

Mr. Cheney is not alone. The health care industry is also reviving their old fear-mongering tactics. Harry and Louise are back to let us know how the government is going to prevent us from accessing our preferred doctor, how we are going to be added to endless waiting lists, and how the bureaucrats are going to make health care decisions for us. Wait a minute? Isn't that already happening? Isn't that what every respectable HMO excels at?

Of course, no amount of reality can remove irrational fears. We all think there were no major terrorist attacks after 9/11. So we are eager to believe that whatever the Bush administration did must be responsible for that. It never occurred to us that terrorists do not have the resources to mount repeated frontal attacks of this magnitude on the same target. Especially not when the element of surprise is lacking. Terrorists did attack the West after 9/11, both in London and Madrid, but in our book, that does not really count.

One cannot help but noticing that fear works very well in America. During the cold war, Americans were more on edge about the Russians invading Western Europe than Western Europeans were. And there are plenty of other examples too.

One reason fear works so well in America is because people are very isolated. They are often displaced, i.e. far removed from the friends and family they grew up with. They are living among strangers, people they hardly know, and people they cannot really count on. Furthermore, they are exposed to a constant barrage of commercials and "breaking news" stories that remove all context, all critical thinking and all common-sense averaging.

Americans are also kept on edge by uncertainty. Most of us have no job security, no health security, none of the basic securities that people in other advanced societies enjoy and that make them less vulnerable to turmoil and less likely to be swayed by ads.

All that is not good, but I suspect some people think it is just the way they like it. It is good for business. People who are on edge spend more and they spend more often. They use more resources, they pursue more paths. They make better consumers.

spare the air and running off cliffs

The past weekend set new records in several Bay Area locations. Saturday was also a "Spare the Air Day." Do you think people bothered? I doubt it. I went running on Saturday and people were driving busily up and down the freeways, causing traffic jams everywhere. You might think that because it was weekend day, people would try to drive less.

On weekdays, spare the air rarely amounts to anything. People "have to" go to work. They need to participate in the rat race so they can afford to keep up with the neighbors. Or make the payments on that overpriced McMansion they bought years ago. Or pay for a new "hybrid" car. In short, they need to do their patriotic duty and keep up the consumption and consumerism that is the engine of our wealth.

Weekends are no different. After working hard all week, who can blame us for wanted to go on a little trip? Or drive junior to the little league, and then to soccer, and then to chess, and then.. Well, you get the picture. We have obligations to fulfill. We have things to do, important things, things that cannot be derailed by a spare the air announcement.

Ever seen a herd of cattle run off a cliff? I doubt that you have seen this happen in real life, but surely you have seen this in one of the many nature shows on TV? Or you may have read that the plains Indians used this technique to hunt down bison?

Surely you must have wondered, what could possibly possess these dumb animals to be so stupid as to run off a cliff? You must have wondered, what were they thinking? Well, search no further because the answer is at hand. We, humans are running off a cliff too. And what are we thinking? Probably the same thing those cattle thought.

We have always done things this way. It has always worked in the past. We must follow the herd. We must go with them or be left behind. Surely they know what they are doing. Things are fine, so why worry. Aaaahhh, a cliff... Never saw that coming!?!?

stress tests

Let's all rejoice now that our financial system has passed the stress test. Sure the bigger banks need some more money, but fundamentally -whatever that means in this context- they are fine. Unlike the auto-industry, my friends, our banks are essentially well-run businesses led by the best and the brightest our country (aka the world) has to offer. That is why we keep on paying them these huge bonuses. Because, god forbid, what would happen if they ran away? Where would that leave us?

Let me make two observations: the banks and financial institutions caused this crisis. It wasn't the government that said the banks were wrong, it was the market. The "free" market, in case you wonder. Fraud, misbehavior and in general irresponsible management practices got us in this mess. All the while, those same bankers paid themselves huge salaries and bonuses and they threw lavish parties. They still do.

Yet for all their bad behavior the banks were hardly chastised. Even when they continued to pay themselves exorbitant bonuses, the government did not intervene. The Obama camp continued to give them funds and they are planning to give them more. The Obama camp even sat down with them to prepare a stress test. Just like your teacher sat down with you in high school and told you the answers to your exams? Oops got that wrong!

Now take the car makers. The car makers were badly run for sure. They were in trouble. Yet look at how the government responded to them. Obama fired the CEO of GM. He is prepared to let the auto makers go bankrupt. He is withholding funds and beating up auto makers and their unions to renegotiate contracts. The UAW, unlike the Wall Street Bankers has to make concessions. And in this case we are not talking about paying back some undeserved bonuses. We are talking about people forgoing cost of living increases, health care and their retirement benefits. Of course these people are not the geniuses that we need to keep around to run our economy!

You think this is fair? You think this shows leadership in Washington?

Take a look at the donor lists for the presidential campaign. Look at the donor list for Congressional campaigns. Who paid for the lavish parties and the "historic" inauguration of our new president? Are you surprised at what is happening?

Unfortunately it doesn't stop there. By failing to intervene and fix the banking system, our government has all but assured that the crisis will continue. Maybe not immediately so, as the financial wizards can surely cook up another bubble of prosperity. But it won't last. At some point we will have to pay the piper. And the longer we wait the more we will have to pay.

Right now we are seeing the money bubble. Instead of building, we are printing.

The government is printing money at an ever increasing rate. Money that is essentially promissory notes. Ever wonder what will happen when people no longer want all that paper? When people suddenly lose trust? You think it can't happen? Remember how housing prices could never go down either? Think again (and buy some gold. You may need it to buy food one day).

waves

Flu pandemics, like wildfires, come in waves. And like wildfires they leave out obvious targets that subsequently become the area of intense study and even more intense superstition. After major fires one can drive through neighborhoods and see perfectly intact houses in the middle of total destruction. Often one will see scribbles or large graffiti on those houses, where the occupants thank god for saving them.

One will also see scientists studying this interesting phenomenon, or even trying to model it. Another big waste of tax payer dollars.

Why bring this up? Well first, because the flu pandemic isn't over yet. Pandemics like wildfires have waves and they too leave out obvious targets. There are two lessons to be learned. One is that overly optimistic and naive interpretations of 1918-9 are likely to be wrong. Back then, some cities survived in the middle of mayhem, not because of actions taken by local governments, or any other foresights, but simply because these things are part of how large systems (pandemics, hurricanes, wildfires, etc.) behave. They skip obvious targets.

The second lesson is that a mild spring wave should not lull anyone into thinking the danger has passed. All major pandemics that we know of -that is mostly those in the 20th century- behaved this way. First there was a mini version of the pandemic, not too infectious and certainly not too virulent, that went around seeding pockets here and there. That was followed by two to four waves of much more intense disease, the first one of which was usually the worst. That is the 1918 scenario. After a mild disease in the spring, the truly deadly wave came later in the fall of that year.

Experts are eager to point out that in 1918 we did not have anti-virals or vaccines. We did not even know what caused the flu. Surely we must be better off now? Dream on.

Vaccines take months to develop and they can only prevent the flu. Once infected it is too late. It is possible that we will develop a vaccine against the H1N1 by fall. And that may help. Although the fall virus will be different (viruses "evolve" on a fast time-scale), it may remain close enough so that the vaccine confers some immunity.

As for anti-viral drugs, they must be given within the first couple of days to be effective. Now it is interesting to point out that many in 1918 were dead within 9-12 hours. And that most of those were killed not by the virus per se, but by the immune reaction it evoked. That is one of the reasons given for the high mortality among 18-34 year olds during that pandemic. Unlike seasonal flu, pandemic flu tends to favor young and healthy adults. 

If a 1918 scenario develops, it seems highly unlikely that antivirals will do much good. What may help -and what we have enough of now, but did not have back then- are steroids. Steroids and respiratory support. Only it is hard to implement such measures when emergency rooms are overwhelmed with cases.

One more thing: what played a key role in 1918 was the widespread crowding of young people in army camps. That situation created a true pool of naive (as far as infection goes) candidates. Clearly, that situation does not exist today. But what does exist is many more people, living much closer together, and traveling a whole lot more.

What WHO should do now (which they can't really do) is implement very severe travel restrictions. That seems like the logical thing to do. Only it is so incompatible with the free market and consumer society that nobody will even contemplate it.

As for you, what can you do? Get infected! Seriously, getting infected now, when the disease is mild, will give you free immunity. The best immunity you can buy. But there is one catch. If we all do it, we will instantly have the pandemic that we are so desperately trying to avoid. 

You see, there is no free lunch.