Monday, December 8, 2008

Big Green Trucks

Be sure to enjoy the new article about flywheel hybrids here!

Hybrids got a lot of press when gas was $4 a gallon, but now that it is below $2, does anybody care? Well, Eaton does.

Eaton has been in the power, hydraulics, and automotive business for quite some time, quietly developing new technologies used in most cars, trucks, and heavy trucks today. Cheap? No. 100% Free. Trade stocks for free on The Free Trading Community.

As I have written previously in "Hybrid Hummer Hums," Eaton was a main supplier in the hydraulic units for that vehicle. In this article, I will discuss two Eaton implementation of hybrid technologies.

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Parallel Hybrid System
The picture above graphically displays Eaton's Hydraulic Launch Assist system, a heavy vehicle (garbage truck) with a standard engine, and hydraulic system is supplemental power. It is designed to capture energy through regenerative braking, store it in hydraulic fluid, and then use it to "launch" the vehicle from a stop.

From Eaton's web site, "During acceleration, fluid in the high-pressure accumulator is metered out to drive the pump/motor as a motor. The system propels the vehicle by transmitting torque to the driveshaft." This system is able to work in either Economy or Performance mode. The difference being that engine doesn't perform acceleration until after the hydraulic system is spent in Economy mode, while in Performance mode, both the engine and hydraulic system work together. In either case, Eaton predicts a 20-30% fuel efficiency increase.

Series Hybrid System
A series hybrid varies from a parallel system in that, "... conventional transmission and driveline are replaced by the hybrid hydraulic powertrain and energy is transferred from the engine to the drive wheels through fluid power."

The series hybrid allows the engine, mated to a continuously variable transmission (CVT) to operate at optimum efficiency, while "energy is transferred from the engine to the drive wheels through fluid power." This system also uses regenerative braking and managed engine cut-off to show fuel efficiency improvements of 50-70%. Would you feel better if you had more energy? Try FRS® Healthy Energy™ Free*!

Although these systems are not in full production, they are the leading edge in hybrid technology for heavy vehicles. Think about these hybrid systems when you see a city bus or garbage truck accelerate from a stop. Imagine seeing that same bus accelerate, but without that black cloud. That is progress.

Thursday, December 4, 2008

Stop the Meddling With the Market!!

On the front page of the 04 December print edition of "The Wall Street Journal," the headline is "U.S. Eyes Plan to Lift Home Sales." Are you kidding me?? The article states unbelievably, "The plan, which is in the development stage, would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5%, more than a full point lower than prevailing rates for standard 30-year fixed-rate mortgages."

You just read what I read, Freddie and Fannie back loans whose rate is below market. Good grief!! The goal is to extend more loans and "address falling home prices." Doesn't anybody remember the housing bubble? Why does the government think it makes sense to prop up home prices instead of allowing the market to price them? Also, why allow failed institutions to back below-market mortgages? I feel like I am living in the Twilight Zone.

Let's take this a step further. This scheme is only for buying a home and not refinancing. However, later in the article, Secretary of the Treasury Paulson says " to reduce the cost of mortgage finance so more families can afford to buy a home and so homeowners can refinance into more affordable mortgages." Huh? Now he wants to subsidize mortgages? Maybe the plan can include only those refinancing with bad credit, as the rest of us suckers are stuck with what we've got.

When I bought my house, I had to scrimp and save to get a suitable down payment, as well as prove employment and the ability to pay. Guess what, I have been able to pay my mortgage, on time, and without any "adjustments." So why should things change now? What should happen is that those institutions that made bad loans face the consequences.

As a taxpayer, and somebody who pays on time, I resent that some new home buyer is going to get a subsidized mortgage. I also resent the fact the lenders are going to rewarded for not applying standard risk models and setting rates. Stop this madness!! If the US government wants to restore both faith in the financial markets, as well as stability, mortgage and home prices should be set by the market, not by government interference (and my money!).

Thursday, November 20, 2008

Another Look at Hybrids

With gas below $4, and in some states below $2, I thought I would take another look at hybrids and their economic efficiency.

While I am not against hybrids per se, I still am not completely convinced that the value proposition is there.

In my previous column about hybrids titled "Hybrids, the Real Deal or Flavor of the Month" and "Hybrid Hummer Hums," I made a general statement about how to determine if the fuel savings of the hybrid is greater than the additional acquisition cost. Also, I recommended using the MPG calculator at

I decided to compare the Toyota Camry and Toyota Camry Hybrid. Here is a table I created using data from an auto buying service. The data surprised me.

2009 Toyota Camry 4dr Sdn V6 Auto XLE (Natl) vs. 2009 Toyota Camry Hybrid 4dr Sdn (Natl)

As configured, the MSRP is $2545.00 greater ($28695.00 vs $26150.00).
Engine Type 6 cylinders standard, versus 4 cylinders standard.
Fuel Economy City 14 mpg lower fuel economy in the city (19 versus 33).
Fuel Economy Highway 6 mpg lower fuel economy on the highway (28 versus 34).
Cruising Range City 216.1 less miles cruising range in the city (351.5 vs 567.6).
Cruising Range Highway 67 less miles cruising on the highway (518 vs 584.8).
Base Curb Weight 164 pound(s) less base curb weight (3516 vs 3680).

What does all of this mean? I couldn't believe that the non-hybrid was $2545 more than the hybrid. But the story doesn't end there.

In a recent article in The Wall Street Journal about small cars, the Journal reports that hybrids are more expensive to own. To me, that didn't seem possible until I read the article.

Insurance for hybrids is more expensive, as are repair parts and labor. "The 2009 Camry hybrid, for instance, costs an average $1,957 to insure for that 40-year-old male driver, while a similar conventional 2009 Camry costs just $1,302, according to"

Also from the Journal, "Hybrid cars cost more to insure because they can't [always] use after-market parts, the labor charges per hour are higher, and the they take longer to repair," says Amy Danise, a spokeswoman for

Just when I thought I might buy a hybrid during the gas run up, I am glad I didn't. I had no idea about the insurance issue, but that is why I wrote this article.

I wanted to highlight the need for a smart consumer to perform comparisons based on all of the facts. Many people have bought hybrids to be "eco-chic" or some other non-measurable quality. Others only view the gas savings, but don't know about the insurance hit.

Ultimately, since its your money, you will decide the relative value of each option, but please, do so in an informed manner.

Friday, November 7, 2008

Keeping India Poor, One Company at a Time

**UPDATE: Tata Releases Nano to India!**

With the world's second largest population, India also has one of world's largest populations in poverty, no thanks to Mamata Banerjee and her anti-business politics.

As a an Indian MP, and member of Trinamool Congress Party, Banerjee was a leader in the violent protests against Tata Motors and the building of their Nano plant in Singur. See "Tata Motors Says "Tata" to Singur" for more information.

If that wasn't bad enough for the economically depressed city of Singur, now Banerjee announced that she would lead anti-industrial protests across Communist-led West Bengal. Further, some of her ilk would like to see her take this campaign industrial suicide nation-wide.

According to The Wall Street Journal, on 05 Nov 2008,:

"...she (Banerjee) voiced her opposition to land acquisition for a power plant, a shipbuilding yard and a technology park in the state... She said she intends to keep up pressure on Tata and wants it to return any loans it got on favorable terms from the state."

Is this what India needs? Fewer manufacturing jobs, less technology, and more subsistence farmers? These companies and opportunities will help West Bengal improve the standard of living for all who live there. Infrastructure will have to be improved, which is one of Banerjee's complaints. New jobs and job training benefits the entire population. However, Banerjee, who is wed to foolish notion that subsistence farming is somehow more virtuous than working in industry, and is willing to exploit for political gain, is deserving of great contempt.

Every country in the world that has transitioned away from primarily agrarian economy to an industrial economy has felt this type of pain. It is not easy, but is best for the well-being of the country as a whole. It is a matter of efficiency. Farming on a large scale is more efficient and requires fewer workers. Those workers could be trained to take higher paying industrial or technology jobs. Higher wealth creates a higher standard of living and demands for better services from the government, such as clean water, power, and environment. Has Trinamool Congress Party of the Communist done that for Kolkata or Singur?? I think not.

India, don't let Banerjee and her brand of populism stop your country from being its best. Men like Ratan Tata have the right idea to improve the country. Industrial growth, while not perfect, offers a better life for the poor and their families. Don't be slaves to populist politics or subsitence farming, but be free to explore the possibilities of an improved economy.

Wednesday, November 5, 2008

Hold on to Your Wallets, Here Comes Obama

So you went and did America. You voted for Barack Obama. All of that "Change" and "Hope" talk snowed you, didn't it?

Well guess what? Starting with the new Democrat congress and Obama in the White House, taxes are going to skyrocket! One of the first things on the agenda will be allowing what was known as the Bush tax cuts to expire. That is an instant tax increase on all tax payers.

We also know that Congress and President-elect Obama are going to raise income taxes on anybody making $250,000, no wait, $200,000, nope, its $150,000, ok, just everybody. The tax increase that is really going to hurt the US economy is the capital gains tax.

Captial gains tax is a tax on the increase in investments. For simplicity sake, if your investment earns $100, current tax law takes $25. In percentage terms, if your investment earns 8%, your actual return is 6%, after taxes. President-elect Obama plans to raise that rate to 35%, thus making that $100 gain worth $65, or that 8% gain is really 5.2%. Will triple tax-free bonds become more popular?

What that really means is that folks will reconsider investing that next dollar, as the tax hit may not be worth it. Additionally, if companies have investment gains outside of the US, they won't repatriate that money because it will wipe out their investment returns. Without money to improve the business, or pay dividends, the economy begins to sputter. Considering the current state of the global economy, ANY tax plan that increases the burden on individuals or corporations is both dangerous and foolish. But don't blame me, I voted for McCain. Rant over.

Monday, November 3, 2008

"Beware of Geeks...Bearing Formulas"

Warren Buffett says it all, as reported in the 03 November 2008 print edition of the Wall Street Journal, titled "Behind AIG's Fall, Risk Models Failed to Pass Real-World Test." The article explains why the risk modeling used by AIG was one of the most significant causes of the storied insurers dramatic fall and current weakness.

As I have written in the past (Financial Crisis Primer), much of today's financial crisis is based on poor risk management. Additionally, the U.S. government had a strong role in the distortion of the mortgage and mortgage-backed securities market, creating a ripple effect felt through the credit-default swaps.

What is a credit-default swap? From the article:

"In essence, AIG sold insurance on billions of dollars of debt securities backed by everything from corporate loans to subprime mortgages to auto loans to credit-card receivables. It promised buyers of the swaps that if the debt securities defaulted, AIG would make good on them."

So, AIG had a Dr. Gary Gorton, formerly a Wharton professor and now a professor at Yale School of Management, build highly detailed models to determine "worst case scenarios" for the securities AIG was using for the credit-default swaps. While Dr. Gorton provided data based solely on the default potential of the backing securities, the AIG management was the final say on what was purchased.

So far, this sounds like a good practice. A very smart PhD economist builds a huge computer simulation to model risk. What the model didn't take into account is where this all falls apart and AIG is getting almost $100 billion in U.S. government loans.

The risk model of Dr. Gorton didn't account for the loss in value of the backing securities, nor did it account for the loss in value of AIG itself. Why? Mainly because the financial instruments used to create the credit-default swaps were so complex, and the other outside factors were near impossible to predict. In short, there were too many variables making proper risk management impossible also.

One can argue, as does a current criminal case, that AIG should have exercised better judgment in how it set up and sold credit-default swaps. One can argue that conservative risk management would have minimized these issues and allowed AIG to not require government financing. Perhaps there is another lesson in all of this. When something is too good to be true, like loose credit and cheap money, it pays not to be greedy. Just ask Lehman Brothers, or should I say, Barclays?

Thursday, October 30, 2008

Price Discrimination in Health Insurance

According to the "New York Times," women pay higher health insurance premiums than men. The article, titled "Women Buying Health Policies Pay a Penalty," explains the reasons, but convolutes the issue for political reasons, shocking, I know.

In general, women pay more for health insurance because they tend to consume more health services. Seems pretty simple, right? Just like a life insurance is cheaper for somebody who doesn't skydive. Would you feel better if you had more energy? Try FRS® Healthy Energy™ Free*!

However, and this is where you should get nervous, "Women’s advocacy groups have raised concerns about the differences, and members of Congress have begun to question the justification for them."

I will save these groups and members of Congress the trouble by explaining this issue with data from the article itself.

"In general, insurers say, they charge women more than men of the same age because claims experience shows that women use more health care services. They are more likely to visit doctors, to get regular checkups, to take prescription medications and to have certain chronic illnesses." Pretty simple, right?

How about this:

Thomas T. Noland Jr., a senior vice president of Humana, said: “Premiums for our individual health insurance plans reflect claims experience — the use of medical services — which varies by gender and age. Females use more medical services than males, and this difference is most pronounced in young adults.” Again, women are consuming more health services. Cheap? No. 100% Free. Trade stocks for free on The Free Trading Community.

Again, for the advocacy groups who claim insurance should cost the same, in the name of equality, "Mr. Bykerk, a former executive vice president of Mutual of Omaha, said, “If maternity care is included as a benefit, it drives up rates for everybody, making the whole policy less affordable.”

So there you have it. Disparities in the cost of health insurance for women are based on usage. It seems like this is just another contrived issue for big government types to get there hooks into the best health care system in the world. These are same government types that brought you the TSA. Think about that!

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Friday, October 24, 2008

A Global Nuclear Renaissance

An article in the 24 October 2008 print edition of the Wall Street Journal (B2) reports that France's Areva SA and Northrop Grumman are forming a joint venture to build heavy equipment for the nuclear power industry, as well as an engineering center in Newport News, VA.

According to a joint press release on 23 October:

The 300,000 square-foot facility represents a significant investment of more than $360 million in the U.S. commercial nuclear and manufacturing industries and will bring more than 500 skilled hourly and salaried jobs to the Commonwealth of Virginia. AREVA Newport News will be the first full-scale manufacturing facility dedicated to supply heavy components, such as reactor vessels, steam generators and pressurizers to the U.S. nuclear energy industry.

What the casual reader should know is the that the Newport News facility is one of the world's largest shipyards, and only one capable of building a Nimitz-class nuclear aircraft carrier. In short, it is a gigantic heavy industry site with highly-skilled labor.

This story is relevant to this blog not only because it follows the path of several previous articles:
"A Nuclear Renaissance in Germany?", "Nuclear, French Style", "Nuclear, India Style", "Nuclear, America Style", and "Build Wind, Drop Nuclear - Germany Loses its Mind" but also because nuclear power is one of the "greenest" and most reliable source of energy on the planet. This joint venture is also a shot in the arm of US heavy manufacturing, as the predicted market for its products is $100 billion.

Nuclear power is good for the US and those nations who are responsible. Let's hear it for Areva and Northrop Grumman for expanding the opportunity for clean and reliable power to the rest of the world.

Wednesday, October 22, 2008

A Nuclear Renaissance, in Germany?

In two previous posts, "Build Wind, Drop Nuclear? Germany Loses its Mind!" and the follow up post "Germany Loses its Mind- Follow Up" I wrote about how the German government was looking to decommission nuclear plants in favor of building 17 wind farms. As you can tell from the above titles and posts, I think it was a pretty bad decision.

However, there has been a ray of hope! I found this article on Platts titled "Germany's RWE to build new nuclear plants at home, abroad." The CEO, Juergen Grossman stated the following to the German newspaper, Sueddeutsche Zeitung, (as reported by Platts):

"RWE will engage in projects in Germany as well as abroad. An exact number will depend on the financing options available and possible partners, but we reckon about three to five new builds."

Well, it seems like Herr Grossman has the inside track. Maybe Germany has figured out that there is a real need for clean, reliable, nuclear power and that it doesn't have to be a zero-sum game with wind power.

Interestingly, he also makes this statement, that on first blush, is counter intuitive, considering the enormous capital costs surrounding the construction of nuclear facilities:

"Grossman believes the credit crunch provides an opportunity for RWE to grow as people look to greater security in their energy supplies. The crisis may require affected governments to reduce the amount of imported natural gas and re-focus on national resources, such as nuclear or clean coal technology, he said."

Let's hope that Germany can get back on the nuclear track while it lives out its wind fantasy.

Monday, October 13, 2008

Financial Crisis Primer, Part II

In my previous article, "Financial Crisis Primer," I gave a very brief explanation of why there is a financial crisis in the first place.

What I failed to mention, was a solution. While I would love to take credit, I didn't come up with this, and sadly I don't remember the name of the guest on CNBC who mentioned it.

What the Treasury should do, and it appears as though they will, is ask the banks what they need in terms of recapitalization. For example, Neel Kashkari (Cash-Carry, right? Love it) pictured above, calls Citi and asks how much they need to cover existing losses on mortgages, as well as capital necessary for lending. Citi responds with a number like $15 billion (twice what they got from Abu Dhabi Investment Authority). The government in turn, gets $15 billion in prefered stock, warrants, and other financial instruments of value.

I think this is a good model. It is very similar to what Warren Buffett did with Goldman Sachs. Goldman needed some quick cash and Warren put down a cool $5 billion. In exchange, (from MSNBC):

"(Buffett got)...$5 billion worth of perpetual preferred stock getting a 10% dividend and warrants to buy $5 billion of common stock with a strike price of $115 a share. He'll be able to exercise the warrants at any time over five years."

Imagine if the Treasury could spend $120 billion, $15 billion over 8 banks, and voila, much of the financial crisis is solved. The banks get fresh capital and the US taxpayer gets a profitable investment. Unfortunately for the existing shareholder, the infusion will dillute existing shares. Oh well, caveat emptor.

In the end, I think Bernake and Paulson are trying to shorten the duration of this mess by offering US taxpayer money to purchase the worst of the worst assets as well as providing plenty of cash at the Federal Reserve Discount Window.

Many argue that the government shouldn't be spreading around taxpayer dollars. While I agree in principle, the overall market for money indicates that banks are hoarding cash and investors are fleeing for quality. For the global financial system to function smoothly, capital has to get moving again, and I think that is the plan.

Tata Motors Says "Tata" to Singur

Tata Motors, who is building the world's least expensive car, the Nano, has finally fled business unfriendly Singur, in West Bengal, for Sandand in Gujarat. I have written two other articles about this topic, "Indians are Bad for Indian Business" and "India, When it Can't Get Any Worse."

In a press release dated October 7, 2008, Tata states:

"The integrated project, ... will come up on an area of about 1100 acres. The plant, ... will produce 250,000 cars per annum. The capacity is expandable up to 500,000 cars per annum. The project, including Tata Motors’ plant, vendor facilities and service providers, will together generate over 10,000 direct and indirect jobs."

I guess poverty is what local politicians had in mind for the populace, and poverty they will continue to enjoy. When will Indians learn that the way to move a country forward is through a positive business climate, and not one ruled by tin-pot, local politicians?? Gujarat seems to have learned that simple lesson, while West Bengal hasn't. It is a shame for the poor who are left to suffer.

Monday, October 6, 2008

Forget HHO, Go HCCI

In previous posts, ("HHO or HHype" and "HHO Sounds More Like HHype") I have provided a 10,000 foot overview of the HHO topic for increased fuel efficiency. In general, I have found it impractical at best and highly dangerous at worst.

However, there is a newer topic being researched at Berkeley, GM, and Sandia National Laboratory called Homogeneous Charge Compression Ignition. Here is a video about GM's research. Shop DriveTime First! Bad credit, no credit, no problem. Apply on-line.

The long and short of it is trying to get a gasoline engine to perform more like a diesel in efficiency. Berkeley explains it best: "Unlike a traditional S.I. or Diesel engine, HCCI combustion takes place spontaneously and homogeneously without flame propagation. This eliminates heterogeneous air/fuel mixture regions. In addition, HCCI is a lean combustion process. These conditions translate to a lower local flame temperature which lower the amount of Nitric Oxide (NOx) produced in the process. NOx is a gas that is believed to be responsible for the creation of ozone (O3)." 3-Bureau Credit Monitoring alerts you to changes on all 3 of your credit reports! Get a free 7-day trial plus credit report & score!

Increased fuel efficiency, lower emissions, using standard platforms, now that is what I call economically efficient. Let's hope that the technology around the lifters is improved to make this viable soon.

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Thursday, September 25, 2008

India, When it Can't Get Any Worse

In a previous article titled, "Indians are Bad for Indian Business," I wrote about how local farmers are protesting to keep Tata Motors from building the world's least expensive car (the Nano), and giving the locals good paying jobs. Makes sense, right? Keep yourself chained to dirt farming and forget about improving your life and the life of your family.

Well, it gets worse. In the 23 September issue of The Times Online, there was an article titled, "CEO Murdered by Mob of Sacked Indian Workers." The company, Graziano Transmissioni, is an Italian firm making parts for the Tata Motors Nano, that was to be built in Singur (see previous article, link above). From the article:

Lalit Kishore Choudhary, 47, the head of the Indian operations of Graziano Transmissioni, a manufacturer of car parts that has its headquarters in Italy, died of severe head wounds on Monday after being attacked by scores of laid-off employees, police said.

Further, from the article:

It is understood that Mr Choudhary, who was married with one son, had called a meeting with more than a hundred former employees who had been dismissed after an earlier outbreak of violence at the plant. He wanted to discuss a possible reinstatement deal.

So, if you get fired, and the boss is looking to re-hire you, your best move is to beat him to death, leaving a widow and young son. Brilliant! Murder is a great way to garner sympathy.

Who would advice this course of behavior or promote this attitude? Well look no further than Oscar Fernandes, Minister of Labour and Employment. From a linked story in the Times, "...declined to criticise the attack, saying it “should serve as a warning for management”. "

If Indian wishes to remain a second-class citizen in the world of commerce, it will continue to elect and promote politicians like Fernandes who promote violence and Marxist labor principles. Violence has no place in an orderly society. While workers deserve fair treatment and the dignity due all people, management deserves not to have their lives threatened over working conditions. Who do these guys think they are, Teamsters?

Friday, September 19, 2008

Financial Crisis Primer

**Make sure to read Part II, here.**

While I have written posts about the Freddie/Fannie mess as well as the collapse of Lehman and Bear, I found an excellent synopsis of the situation in the Sept. 19, 2008 print edition of "The Wall Street Journal." Cheap? No. 100% Free. Trade stocks for free on The Free Trading Community.

On page A21, Todd G. Bucholz writes in the Bookshelf section an article titled, "The Woe on Wall Street." The article is a review of David Smick's book, The World is Curved. Here is where I found this gem of knowledge:

"The real problem running throughout the system was not a lack of new regulations. It was a lack of skin - that is, skin in the game. Mortgage brokers turned into fly-by-nighters, immune from the effects of reckless decisions. Local bankers, securitized loans and packed them off to some naive investor or to a rating agency manned by analysts who weren't sharp enough to get a job at Bear Stearns or Lehman. Homebuyers who put nothing down or lied about their income could pack up and run off, leaving no skin behind. The entire housing sector began to look like a motel renting rooms by the hour, as johns and hookers snuck out during the wee hours."

Phew, in a paragraph, that's it. Each player had a part to play. In each case, there was a lack of fundamental risk management. Mortgage brokers were setting up loans to folks who shouldn't have had them. The banks lent the money anyway, and sold off the loans to those who didn't have the skill or desire to evaluate them properly. Investment houses saw low interest rates as the sole risk premium, ignoring all that they had learned at Wharton or Harvard. Protect your Medical Identity with TrustedID. $1,000,000 Warranty & Great Customer Service

While I don't wish to understate dishonesty or chicanery, I can't speak strongly enough of proper risk management. I invite all those who study or have studied such things to go back to your Finance books. Look at the sections about risk management. Its worth the read. And to think, I only got my MBA from a state school.

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Thursday, September 18, 2008

Solar Doesn't Make Sense in Dubai

Of all the places in the world for solar to work well, the U.A.E would come to mind. Gulf states have very little rain fall, uninhabited tracks of land, modern infrastructure and plenty of cash.

Dubai, the most well-known of the Emirates, has a "green" building code and is pushing ahead with environmentally friendly buildings.

However..., in a recent article in, Nakheel, the Dubai real estate development company found, "The use of solar power in construction is not economically justifiable right now..."

It turns out that the costs to store solar energy are just too expensive. Additionally, the technology is still too novel to make it profitable. From the article, ""We had a case recently where I wanted solar panels to be used in one of our projects, but after looking into it we discovered that this would have added US $3 million (AED11 million) to our project costs," he said. From a business perspective, we can't justify using solar power right now."

While I think or would have thought that solar would be a no-brainer for Dubai, it just isn't. Additionally, the technology won't make it economically efficient for some time. What bothers me more, however, is the following quote: "People are realising that economics isn't going to be the only driving force for green technology," he said. "The focus on sustainability will actually drive this market."

So, we are to substitute a nebulous concept known as "sustainability" for a known metric, economic efficiency. If anything makes people not buy in to the environmental agenda is that it just doesn't make sense. You may feel good about it, but it hurts you in the pocket. Yikes.

Tuesday, September 16, 2008

Winners and Losers

It is very easy to consider the free market as nothing but a vehicle to decide winners and losers. However, it is more than that. It is a vehicle to restore order and balance, insuring that the fundamental principles of economics are obeyed.

In the events of the past weeks, we have seen stalwarts such as Merrill Lynch and Co., Lehman Brothers, Bear Sterns, Freddie Mac and Fannie Mae all begin to fade into obscurity.

As this is the political silly season in the U.S., politicians are quick to point blame at each other, some of which is well deserved. However, the current troubles are the result of violating basic economic principles. Yes, I repeated the phrase, because it bears repeating.

Companies in the U.S. can safely take on debt (leverage), if their cash flow permits it. Additionally, debt can be used to lessen taxes. However, with debt comes risk. Failure to properly evaluate risk can result in being over leveraged and unable to pay back the debt. That is exactly what we have seen in this current economic situation.

Individuals took out mortgages well in excess of their ability to pay. These mortgages were bundled, chopped into pieces (tranches), and sold. Lehman, Merrill, etc., bought these seemingly low-risk securities and then used them as collateral for new debt. In both the individual and corporate cases, they were over-leveraged. People have been missing mortgage payments. The tranches with bad mortgages have lost value. That value which was used as collateral is now insufficient to pay back corporate loans. Badda bing, badda boom, companies go out of business.

Let this be a lesson, conservative risk management rewards in the long run. Bank of America, JPMorgan and Goldman Sachs, while taking it on the chin in the short run, are well positioned to weather this storm. The market is correcting the excesses and that's exactly what it is supposed to do.

Wednesday, September 10, 2008

Ken Lewis Cleans Up

Its good to be the king, or CEO of a major bank. Ken Lewis, the CEO of Bank of America, is looking quite smart.

Forbes did an article about the whole Freddie/Fannie mess call "BofA's Bailout Benefit" on September 8th.

The article calls out how Mr. Lewis was panned for his purchase of Country Wide, the large and failing mortgage company. Many thought BofA was chasing good money after bad. However, with the bailout of Freddie Mac and Fannie Mae, he is looking crazy like a fox.

From the article: "The Ladenburg Thalman analyst (Dick Bove) argues that Bank of America, and Countrywide, have the existing infrastructure to start buying and securitizing loans on a large scale. He even said in a phone interview that Bank of America's capital levels would allow it to guarantee mortgage payments. This promise to pay has been Freddie and Fannie's traditional role in the U.S. housing market."

Naturally, one questions if a company like BofA can handle the securitization and guarantee of mortgage payments, do we really need Freddie and Fannie anyway?? Arguably, the answer is "No." In my previous post "Taxpayers Cover Freddie's Fannie," I state the bailout is a done deal, but what to do with the Freddie and Fannie is an open question.

It would seem that a market solution may be the best solution after all. Yes, you can hear me grinning, as that is a common theme of mine. Although widespread home ownership is valid policy objective, let's keep the government out of it to the greatest extent.

Again, from the article: "“I would be shocked if Bank of America isn’t happy about how this worked out. For years, banks have been asking for Fannie and Freddie to be cut back in size because they have they an unfair advantage," said Bove.“The government says Fannie and Freddie handled 80.0% of the market this year and someone has to handle that market share.”

There you have it, companies such as BofA are well positioned to handle a piece of the hopefully dismantled Freddie and Fannie. The next question is whether other banks of similar size have enough capital to do the same. If Citi, JPMorgan Chase, and Wachovia can get their capital coffers refilled, then maybe this will be a reality. However, if they can't get their collective acts together, expect to see more Barney Frank (D-MA) and government intervention.

A Word about Copyrights

It has come to my attention that a person has stolen my material and claimed it as their own. All works found on this blog are copyrighted, which, from is: Unabridged (v 1.1) - Cite This Source - Share This
1.the exclusive right to make copies, license, and otherwise exploit a literary, musical, or artistic work, whether printed, audio, video, etc.: works granted such right by law on or after January 1, 1978, are protected for the lifetime of the author or creator and for a period of 50 years after his or her death.
2.of or pertaining to copyrights.
3.Also, cop·y·right·ed. protected by copyright.
–verb (used with object) secure a copyright on.

[Origin: 1725–35; copy + right]

cop·y·right·a·ble, adjective
cop·y·right·er, noun Unabridged (v 1.1)
Based on the Random House Unabridged Dictionary, © Random House, Inc. 2006.

All of the work on this blog is original, and written by me. As this is my work, I guard it jealously, and will take all necessary actions to protect it. I attribute all source material. All pictures are the work of the artists.

If you wish to cite this blog, include the URL of the post, as well as the article name. Thank you for your consideration.

Monday, September 8, 2008

US Taxpayers Cover Freddie's Fannie

The US taxpayer is going to insure the financial solvency of two public companies. Sounds a bit odd. So odd, that Jim Rogers of Rogers Holding proclaims, " (the U.S. is )more communist than China right now."

According to the Wall Street Journal Print edition ("US Seizes Mortgage Giants", Sept. 8, 2008, A1)

"In its most dramatic market intervention in years, the U.S. government seized two of the nation's largest financial companies, taking direct responsibility for firms that provided funding for around three-quarters of new home mortgages."

What is person to think? Should the government be meddling in a publicly-traded company's solvency? Is it right to have the government backing the fortunes of shareholders? Is there some greater good at stake to make this more palatable?

Freddie Mac and Fannie Mae are federally-chartered, publicly traded companies. Both companies' missions are to make home ownership more affordable, as well as making financing more reliable. Sounds good, right? Ah, but the catch is that when government is in the business of making things "more affordable," it presumes that the market can't do that effectively, thus creating constraints and other conditions not present in the market, which may or may not increase risk.

While millions of Americans have benefited from home ownership, and world financial markets have benefited from the buying of mortgage-backed securities (until recently), it would appear that these businesses have been a success. However, with flood of loose mortgages and the collapse of the credit market, maybe these "affordable" mortgages weren't such a good idea.

But they were! When the government chartered the businesses, it assumed the risks via the conditions placed on Freddie and Fannie. While there has been considerable legislative debate over their existence, they have provided the financing for millions of mortgages. However, it is time to pay the piper, and that is just what the government did, step in and put US taxpayer money on the line to pay for a system set up over four decades ago.

Right, wrong, or indifferent, when the government proposes interference in the free market, it is up to the citizens to either approve or disapprove of the action. US taxpayers should view this situation with great concern and think long and hard about the value of these two institutions.

I don't presume to have an answer, but I am willing to hear the arguments for both sides and would like to see more detailed analysis to make an informed decision.

Wednesday, September 3, 2008

Indians Are Bad for Indian Business

*Make sure to read the update, "India, When it Can't Get any Worse" found here.*

Huh? In today's The Wall Street Journal print edition, there is an article titled, "Protests in India Push Tata to Stop Building Car Plant." (03 Sept. 2008, A8).

Tata Motors has a design and wants to build the world's cheapest car, the Nano. Priced around $2500, "...the minicar has been touted around the world as revolutionary." It is revolutionary mainly because of its price point, but also because of its Indian construction for global consumption.

However, some farmers near the proposed "...plant in Singur, in the eastern state of West Bengal, about 25 miles from Kolkata..." are upset that they have "lost" their land. Lost is a relative term. Tata purchased 1000 acres from farmers, though some decided not to accept the money. Instead, they are organizing with other farmers and politicians to demonstrate against the plant.

This is only the beginning of the incongruity. From the article, "...Tata is known as one of India's most powerful, yet socially responsible employers." Additionally, the building of the plant brought over 4,000 jobs to the depressed area. The total investment was about $345 million, and 60 suppliers were setting up to support the plant and production. All of this was promoted by the local ruling party, the Communist Party of India (Marxist).

Confused yet? A benevolent corporation, setting up shop in a poor area, with good jobs (close to 20,000 new jobs), supported by the Communists (of all people), is seriously considering closing their plant because very poor people (subsistence farmers) want to stay poor. Of course, local politicians are in on the action, "... to portray the Communists as insensitive to the interests of small farmers and local constituents."

It gets better. If Tata pulls out, it is almost guaranteed that no new investment will come into the state, leaving Mitsubishi Chemical Corp the loan survivor. Breathtaking, isn't it? By far, this has got to be one of strangest stories I have read in a long time. Communists are trying to improve the economy with private investment. The poor want to stay poor. A car made for poor people won't be made because the poor are protesting a factory and 20,000 new jobs.

Good job, protesters in Singur! Enjoy poverty!

Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.- Albert Einstein (Hat tip to

Thursday, August 28, 2008

Get Rich Blogging!

Gotcha, didn't I? Seriously, this is the perfect place to illustrate the whether an activity makes economic sense.

I actively write three blogs on three very different topics: green roofs, economic efficiency, and management. One of my friends convinced me that I should write a blog because I could make a bunch of money. He was making $300 a day. While that seems like a fantastic claim, I saw the balances.

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So, how does one make money blogging? The simple answer is ad revenue. Whether you use a service like Blogger or Typepad or Wordpress, advertisements on the sites, when clicked, provide a meager amount of money to the site "owner." Ehow allows you to write "how to" articles, while they provide the hosting and the ads. When people read your ads, they are also present ads from Google Adsense. While they don't disclose their payment formula, my guess is that readers need to click the ads.

Ads are often provided by Google Adsense, or folks act as affiliates for a company selling something. Both blog sites and Adsense have particular rules about their use. Adsense only allows three ad units per page. Blogger doesn't allow you to write things like "Support our Sponsors" or "Click Here!" Its reasonable, as using Blogger is free for the person writing the blog. Besides, Blogger is not for "commercial" purposes. Cheap? No. 100% Free. Trade stocks for free on The Free Trading Community.

When I review the amount of time I have taken to write approximately 100 posts, as well as the supporting research and interviews I have conducted, the operation is completely in the red. In other words, I can't even think about quitting my day job, or buying that tempting cookie for desert at lunch.

So why do it if it isn't economically efficient? Simple, its fun. I enjoy writing, particularly about the topics I write about. I also enjoy learning about Web 2.0, content creation, and the metrics surrounding it. In short, its a hobby, not a job. If blogging ever becomes like work to, I am out. Trading time for fun is worthwhile, that's why casinos are still around.

Monday, August 18, 2008

Nuclear, French Style

Ah, the French. While I love to poke fun at them and their, um, French ways, I have to give them credit for their successful nuclear power program. There, I said it. The French do something right that isn't silly.

The New York Times ran a piece titled, "France Reaffirms Its Faith in Future of Nuclear Power" on August 17, 2008. In it, the explain how France got its act together, starting in the late 1950s, to be as close to energy independent as possible. The article states, "Nuclear power provides 77 percent of France’s electricity, according to the government, and relatively few public doubts are expressed in a country with little coal, oil or natural gas." Certainly, this has helped smooth out many economic bumps experienced by those countries without such an aggressive nuclear policy. Additionally, think of how clean the air is without all of those coal plants?

Did I mention that nuclear power is clean, reliable, and cost effective? Here is where France really makes nuclear the best option: "He (senior aide to Jean-Louis Borloo, the minister of ecology, sustainable development and planning) said that France’s choice for a “closed fuel cycle” — reprocessing used nuclear fuel to recover plutonium made in the reactors so it can be reused — was safer." Too bad Jimmy Carter banned fuel reprocessing in the US. Spent fuel from first use has about 95% of its active ingredient left. Hey, recycling, what an idea!

Finally, the French discovered that having a successful power program is great for their economy. In some towns, the 60-year life cycle of a nuclear power plant, "...we have economic activity for two generations.”

Tuesday, August 12, 2008

HHO Sounds More Like HHype

In my previous post about HHO, titled "HHO or Hype," I was pretty balanced about my opinion.

Well, I am beginning to believe that HHO is more snake oil than I did before. I was willing to consider the possibility that the injection of hydrogen into the air mixture could improve combustion. Click Here to Shop

While I was also willing to accept that the turning engine would provide the energy necessary to perform the hydrolysis, nobody has been willing to submit to a true, third-party laboratory test.

Here is the full text email I got when I made that suggestion:

So, know anyone who owns a lab? I don't have the time to get labs to test
anything, or the money. By the time they get it done anyways, I will be
driving a hover car or using the transporter. We have logged hundreds of
hours ourselves, and we know what has worked for us. Good enough for me.
Everyone else will just have to take it or leave it.

Sounds a little defensive and cry-babyish for me. If you are water4gas, or Punchhho, or the makers of Hydro 4000, why would you not want a laboratory test?? Maybe it won't work as advertised? Mountain House Freeze-Dried Food

While I am willing to concede that lab testing is time consuming and potentially costly, can you imagine the boost in sales they would get? Also, these companies could make great acquisition targets. I would consider lab testing the cost of doing business. But hey, I am just a blogger, with an MBA, working for a Fortune 20 company.

Internet Fax

Friday, August 8, 2008

Scooter Polluter

She loves her smog machine! Huh? Yes, an article in "The Idaho Statesman," spells it out in black and white:

"It's true. The cleanest scooter is still dirtier than a car," said John Swanton, air pollution specialist with the California Air Resources Board."

While scooters and motorcycles use less gasoline, they create more smog due to their lack of emissions controls. The article further states:

"Some motorcycles emit as much hydrocarbon in 10 miles as a car driven 850 miles, according to Environmental Protection Agency studies."

It all goes back to choices. If your concern is saving money on gas, a scooter or motorcycle is the way to go. If you are eco-conscious, the answer may be any of a number of choices, like the Hummer they mentioned, or even better, the hydraulic hybrid Hummer, when it becomes available! DriveTime - The used car dealership for those with bad credit. Apply online.

If you are going to buy a scooter or motorcycle, make sure you have the proper training, helmet and leather gear. I recommend Timot Leather, as I have seen how their products perform in actual accidents, which was spectacular! Additionally, make sure the scooter or motorcycle suits your needs and is certified by either the EPA or state environmental boards (like California). Taste the Purest Tea on the Planet – Organic and Fair Trade Certified Shop Numi Organic Tea

From the article: "... a rise in substandard Asian imports, Swanton said. These cheap and dirty scooters and motorcycles do not comply with EPA standards. In 2005, the EPA issued an enforcement alert warning importers and the public about non-EPA compliant motorcycles and scooters entering the U.S. market."

Finally, ride responsibly!

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Monday, August 4, 2008

Electric Car Finds its Niche

In a brutally honest (and refreshing) piece in Reuters, titled "Electric cars -- It's the economy, stupid!" the author gives a real-world assessment of her Reva G-Wiz, pictured on the left. Guess what, it isn't all pretty, but that's not why I like the article.

The author purchased the car to be able to drive in London and avoid the congestion tax, as well as the $9 a gallon gasoline, and also take advantage of free parking. To that I say, "Good for you!" She wisely identified that her objective was to have self-determination in transportation and a cost that suited her budget.

From the article, "...I set up a spread sheet when I bought the car and I fill in the savings I make on the congestion charge, estimated on petrol and on parking... I sold my old car and I have now "made back" the expenditure on the G-Wiz through these savings... I "paid off" the car in March this year and am on the way to "paying off" the total amount."

So what' the catch? The car go only go about 40 miles per charge. Additionally, that 40 miles is really only in mild weather on flat roads. It has poor acceleration and is very small. The author also stated that going up hills was like riding a bicycle.

What this article really is about is choice, and that's what I like about the article. The consumer had a choice of the beefier car, but was faced with congestion tax, parking fees, and very expensive gas. She chose an alternative which saved her money and suited her needs. Long live the free market!!

Enjoy this Jeremy Clarkson ( of the BBC's Top Gear) video of his take on the G-Wiz. It is in about 2 minutes or so. He takes those two minutes to mock the French.

Thursday, July 31, 2008

HHO or HHype?


With gas at $4.00 a gallon, who isn't thinking about ways to make the daily commute a little cheaper. I have a friend who runs a blog called "HHO Gas" and has been talking about this stuff like crazy. Shop DriveTime First! Bad credit, no credit, no problem. Apply on-line.

The pitch goes, "Run Your Car on Water," or improve your gas mileage by adding hydrogen gas to your air intake. Lots of claims have been made that it will increase fuel economy by 60% etc.

Being the natural skeptic, I decided to look into this. I have read several articles both pro and con on the topic. HHO gas, more correctly called Brown's gas, or Oxyhydrogen, was the precursor to acetylene. It is flammable and was also used before incandescent light bulbs.

But will it improve your gas mileage? While you can check out the biggest hawker, water4gas, I also saw a good news report here. The news team in Florida used a product called the Hydro 4000. They tested a vehicle and found that it improved mileage by about 10%. It also required that the driver put a cup of distilled water in the system about every 60-80 miles. Guard against ID Theft with 15 Points of Protection from TrustedID, including our $1,000,000 Warranty. Click Here!

I further checked with the Better Business Bureau about the maker of the Hydro 4000, 1 Freedom Inc. Here is a link to the report. While there are no customer complaints, the company has been warned to stop using the Better Business Bureau logo.

While there definitely is a lot of hype around the issue and no 3rd party laboratory has provided an analysis, there is some indication by some parties that it may work. Yes, that is less than a definitive answer, however, I need more proof.

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Your Garbage, My Money

While many of my regular readers may think that I am opposed to all things green, allow me to disabuse you of that notion. I believe in doing things that are cost efficient and effective, like green roofs. You can read my blog, Clean Air through Green Roofs .

I am a big fan of recycling, particularly those things that make sense to recycle, like steel and aluminum. However, when it takes more resources to recycle than it takes to make the product from scratch, I am skeptical.

In the July 24th edition of Business Week, there is an article titled, "Cash for Trash." It discusses how not only are traditional waste management companies making money from recyclying, but venture capital money is going to firms, "...which includes everything from materials recovery to sewage biotechnology..."

There is a simple "why" to the question of increased recycling.

"The calculus is simple: As the prices of oil and other raw materials rise, recycled products become more attractive. Consider that 8% of global oil production is siphoned off to make plastic each year. Recycled plastic, however, requires 80% less energy to produce. Recycled aluminum burns up 95% less energy. Recycled iron and steel use 74% less, while paper requires 64% less."

So there you have it. Recycling now is worth it! Is anybody surprised? They shouldn't be. In a world of ever shifting commodity prices and consumer tastes, new markets show up to take advantage of any disequilibrium. When the cost of oil and metals goes down, don't be surprised to see recycling businesses fade away, just like in 2002, when "Mayor Michael Bloomberg, ...suspended the city's glass- and plastic-recycling services in 2002..." Things change, markets change, tastes change and generally that's good, because that's how markets are made.

Wednesday, July 30, 2008

Nuclear, India Style

India is not only one of the world's largest countries by population, it is also on of the largest consumers of electricity. However, India suffers insufficient power generation and distribution networks, making stable and continuous power a very hard target.

In the July 24 issue of Business Week, titled "All Eyes on India's Nuclear Prize," the article, while focused on who is getting business to build 30+ reactors, also spells out India' commitment to clean, nuclear energy.

When it comes to spending about $100 billion of government money, one can bet on controversy. Additionally, when that money is to spent on building safe, reliable, clean, nuclear plants, one can count on the leftists to scream the loudest.

So, should one be suprised when the article states, "Communist members of Singh's coalition opposed it and walked away from the government, forcing a confidence vote on July 22." If one followed the news, they would see that Singh survived the confidence vote.

Lest anyone question the need India has for power, consider this quotation:

"And as the economy expands, New Delhi hopes to quintuple nuclear energy production. "Demand for electricity is so large," says R.B. Grover, India's chief negotiator for the nuclear deal, "that we can accommodate all countries" willing to help build capacity.

All the best to India and its nuclear power expansion. If they are successful, perhaps the can reduce the number of coal and oil plants and really reap the fruits of clean, safe, and reliable, nuclear power.

Monday, July 28, 2008

Germany Loses its Mind-Follow Up

First, thank you to all my readers. I hope you are finding the posts worthwhile and occasionally humorous. I pride myself on the research that I do for each post, as well as my professional experience and Masters-level education. And yes, nuclear energy is safe, very safe.

I would like to post a comment to one of my posts on Germany's decision to decommission nuclear plants in favor of wind farms. Again, thank you for your comments.
Anonymous said...

I hope nobody reads your ramblings, mate. You clearly ignore the horrors and suffering that Chernobyl caused and still continues to cause to Eastern Europe. Nuclear energy is not safe, period. Anyone who says so is ignoring the number of accidents around the world that get reported 2-years after they happened -- or never if they can conceal it (Russia?).

We -- Germans -- simply do not trust the people working in nuclear power plants. The technology may be alright, but the human beings inside are no computers, we all make mistakes. Chernobyl was no technical issue, but a series of very unlikely human errors. As long as we are in control, nuclear power is not safe. OTOH I wouldn't even think about giving a computer total control over such a thing.

And please, stop bragging about your superior common sense, when it sounds more like some down-home-hokum. You clearly have little facts at your hands as you continue to accuse every other person on this planet to have none.

Look at some pictures of the people dying in Chernobyl and read about their stories and then remember that it was a human error that can and will happen again. Maybe this could teach you some compassion.

And while we're at it, just buy a bike and use it instead of a car and choose home appliances by their energy usage -- the German build ones are pretty good at this, maybe then you can understand that our environment is pretty dear to us.

So, if you research nuclear power generation globally, you will find that the Russians failed to build a secondary containment unit of reinforced concrete, which is standard for ALL Western nuclear plants. If they had done that, the deaths and devastation wouldn't have occurred.
The French and the US have managed to run nuclear plants without fatalities for over 30 years. Guess what, that's a lot safer than flying in a plane or riding a bicycle!! Human error is real. However, with proper planning and risk management, nuclear power generation remains the cleanest and safest, without exception.

We pray for the souls of the dead and injured from Chernobyl, but also place the responsibility where it belongs, squarely on the shoulders of the haphazard Russian builders.

Sunday, July 27, 2008

Only Because Its Funny...

Is that Al Gore with the chainsaw?

Thursday, July 24, 2008

Common Sense vs. Ethanol

As I wrote in a previous post, "Adding up the Cost of Ethanol," the production of ethanol takes more fuel than it creates, it uses 10,000 liters of water for the 5 liters it returns, and it is made by using food crops. As you can imagine, this is about one of the worst strategies for decreasing dependence on foreign oil.

Finally, responsible adults have started to speak up. Governor Rick Perry of Texas has asked the US EPA " temporarily waive regulations requiring the oil industry to blend ever-increasing amounts of ethanol into gasoline." according to the New York Times. His contention is that ethanol is causing food prices to sky rocket, including animal feed. Of course, farmers and ethanol producers don't want any waiver.

Some big names have lined up on both sides of this issue. "Senator Kay Bailey Hutchison, Republican of Texas, has introduced legislation calling for a freeze of the mandate at the current level, saying it “is clearly causing unintended consequences on food prices.” The measure is co-sponsored by 11 other Republican senators, including John McCain, the presumptive presidential nominee." Some could argue that these Senators are in the pocket of ranchers and the preeminent boogie man, "Big Oil."

That same argument can be applied by those who are against the waiver, namely Senator Chuck Grassley of Iowa. He has been a major recipient of ADM largess. Grassley has stated that support of this waiver is "treasonous." Sure, treason. Good grief!

There is another way to look at this, though. Corn farmers are claiming that fuel costs, as well as those for fertilizer have gone up, thus his prices have to go up to cover his costs. That is reasonable. They also claim that they geared up to meet the regulations and demand for ethanol. If that demand changes because of a change in regulation, then they are stuck with way too much corn. While I sympathize with argument, hey, that's business. How did every liquor manufacturer feel when Prohibition went into effect? The same is true for Freon and other things that regulation has changed the market for.

So what does all of this mean? Probably not much. Oil is still expensive. Anything that uses petroleum and its associated products are going up in price. With or without ethanol, the cost of a bushel of corn will probably stay fairly high, because of the cost of fuel and fertilizer. However, it is good that folks are finally catching on that ethanol is a loser.

Tuesday, July 22, 2008

Oil Speculation is Good!

Does $4 gas get you down? How about those high airline fares? I have heard the cry, "Quick Congress, do something!!!" Airlines have sent emails and taken out ads decrying speculation, yet if I recall, all airlines buy oil futures. Yes, buying futures is the same as speculating, and it is good!

In the 22 July edition of the Wall Street Journal, there is an editorial titled, "An Energy Sarbox." The editorial clearly details the 40 hearings Congress has had and all of the associated hand wringing. Before we go any further, the future purchasing of commodities is good for all consumers. It allows for businesses to plan how much of any commodity they will consume in the future, and for what price. It allows these same businesses to set stable prices. Additionally, it allows for contracts to be made on future outputs at fixed prices.

Back to the knuckleheads in Congress, the article spells out how the left goes back to the old power play book. Declare a crisis, then move in to increase power.

"Instead of merely increasing funding and manpower at the US Commodity Futures Trading Commission, it vastly broadens the CFTC's regulatory purview. It also orders the CFTC to distinguish between "legitimate" and "non-legitimate" traders."

So what happens when US lawmakers make doing business in America too expensive and difficult? They leave. So, if Congress wants to "wring the speculation out of the market," they are going to run all commodity exchanges out of the country. Yes, that would be the NYMEX (New York Mercantile Exchange) and the Chicago Mercantile Exchange. Guess what happens when things go overseas? You got it, they can't be regulated. So much for regulating "speculators," Congress!

Monday, July 21, 2008

Nuclear, American Style

I have written about nuclear power on two occasions, "Build Wind, Drop Nuclear? Germany Loses its Mind!" and "Nuclear, Silver Bullet or Money Pit." While I generally have a positive outlook on nuclear power, I must agree with William Tucker, author of "Terrestrial Energy: How Nuclear Power Can Lead the Green Revolution and End America's Long Energy Odyssey," which is due out in September, as to how the US can do it better.

In the 7-12-2008 edition of The Wall Street Journal, Mr. Tucker writes an editorial titled, "Let's Have Some Love for Nuclear Power." He outlines the strengths and weaknesses of the current energy situation in the US, and points out how coal, while abundant and efficient, creates significant amounts of CO2 and other pollutants. He also clearly spells out the costs and inefficiencies of solar and wind.

What makes Mr. Tucker's discussion unique is that he points out the need to allow investors to decide whether to invest in nuclear, and not just rely on subsidies. As I mentioned in my "Silver Bullet" post, some companies have decided not to pursue new nuclear plants. For nuclear to be successful, a stable, regulatory environment must be in place, as well as re-allowing the recycling of spent nuclear fuel.

Government, yes I said government, can help out in both instances. Regarding regulation, the US government has improved and streamlined the process for building new plants. Now all it needs to do is overturn that genius president, Jimmy Carter's ban in fuel recycling. Tucker gives an easy to understand example. France, which has produced 80% of its electricity needs from nuclear over the past 30 years, recycles its spent fuel. The waste product fits in one small underground room. Imagine if the existing spent fuel could be recycled for fuel, as well as industrial and medical purposes, not only would nuclear power be even less costly, but actual waste would be reduced.

Let's here it for more clean nuclear power, as well as nuclear recycling!

Friday, July 18, 2008

Sacrifice for Thee, but Not for Me

I will let this video speak for itself. Al Gore goes to give his energy speech (read tax, tax, tax) in Washington, and arrives in a fleet of Lincoln Towncars. One of which idles for 20 minutes, while running the AC.

Thanks to (http:\\

Thursday, July 17, 2008

Guess what?! I've got a fever, and the only prescription... is more cowbell!

Like Christopher Walken says in the Saturday Night Live sketch, leftists around the world say about taxes. However, it really goes something like this: "There is some made up crisis, and the only prescription is more taxes!" Or government control, but you get the picture.

In a previous post, "I'm the Taxman, Yeah the Taxman," I detailed how the United Kingdom is looking for more taxes to make the UK more "green." Not to be outdone, the wild man from Tennessee, Al Gore, according to CNN, "...has pushed for polices that would reduce the emission of carbon dioxide, such as greater energy conservation and the development of alternative energy sources like wind and solar energy. Gore has also advocated for governments to tax the emission of carbon dioxide."

Why is Al Gore promoting this? Because he is a big fan and shareholder in a carbon credit business, but I digress.

Green taxation, according to the Institute for Local Self-Reliance, has been around for 15 years. It seems that they want taxes to:

* to generate revenue to pay for damages created from past pollution and for measures to reduce future pollution

* to change behavior

* combine(s) a significant pollution tax with a major restructuring of the tax system to make the overall economy more efficient. This process is called "tax shifting."

While they recognize green taxes are regressive, that is they hurt poor people the most, and not folks like Ted Kennedy and Barbara Streisand, the ILSR states: "One way to deal with the inequities resulting from an across the board carbon tax would be to return a significant portion of the revenue to the low income community for energy efficiency."

Well look what we have here. It is all just another income redistribution scheme with a helping of Nanny State on top. So there you have it, the earth is falling apart! Tax everybody! Leftists have the answer! Do I need to put in a sarcasm tag?

Wednesday, July 16, 2008

Gee, Ya' Think?

While not specifically questioning green technology, today's post is about oil prices and the crystal clear example of economic efficiency/supply and demand.

The AP, via Yahoo!, posted a story titled "Oil prices tumble again on US surprise supply jump." As you may or may not know, the price of a barrel of oil has fallen approximately $10 in the last two days. As you also may or may not know, oil is sold on the world market in US dollars. While the discussion of using oil as a hedge against a weakening dollar and inflation is legitimate, the story highlights the real cause, people just aren't consuming!

From the article:

"The Energy Information Administration reported that U.S. crude oil supplies rose by 3 million barrels, or 1 percent, last week. That is the opposite of the 3 million barrel draw analysts surveyed by energy research firm Platts expected. Gasoline supplies also leapt unexpectedly."

So, there you have it. People and businesses are just consuming less. Whether it is gas at $4.08 a gallon, or crude at $146, people and businesses have reached the point where they will no longer bear the price, and thus supply is increasing. Provided that consumption remains flat or continues to decrease (globally), prices will continue to fall.

And guess what, the US government and states still collect about $.26 a gallon. However, they are concerned that reduced consumption will cut into their revenue stream.
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