Thursday, May 24, 2012

Another gunfight at the Wall Street corral

Many many years ago, when I was a corporate finance reporter, I developed a deep cynicism about government's ability (or perhaps its willingness) to stop bankers from doing anything they wanted to do. This was in the waning days of Glass-Steagall, the US law that forced banks to keep their banking activity (bank accounts etc) separate from their brokerage activity (selling stocks, managing portfolios etc).

Over and over, I watched the banks find ways to breach the so-called Chinese wall that in theory separated the two activities. Over and over, I watched the regulators chase furiously behind, trying to plug the leaks one by one as they discovered them. They'd write a new regulation, and the banks would swiftly find a way around it. The regulators would try to stop that trick, and the banks would invent another. In this war, the regulators were hopelessly outgunned; however smart and hardworking they might be (and they were), their skimpy budgets were no match for the banks' armies of smarter, harder-working and much better paid lawyers of their own.

Fast forward to this recent piece in the Financial Times by Sallie Krawcheck, now apparently a full-time mother, but formerly deep in the trenches as head of Merrill Lynch and Smith Barney She describes how regulators are now trying to stop banks from trading in derivatives (the complex securities that started out as a way to manage risk and rapidly became instead the main vehicles banks use to take on more and more of it) for their own profit - the so-called Volcker rule. The theory is that if the banks can't use derivatives to make money for themselves, they will be good boys and use them only to manage real risks.

Fat chance, Krawcheck says - and she's absolutely right. Once again, the regulators are trying to - as she puts it - regulate by topic: stop an exact scenario that has caused trouble in the past from repeating itself. Trust me, faced with the Volcker rule, the banks will immediately find hundreds of ways to confuse the issue so thoroughly that nobody will have a clue whether a given deal is covered or not - just as they found hundreds of ways to evade Glass-Steagall even as they claimed strict adherence.

The banks, of course, are fighting the Volcker rule, as they fight any effort to control how they do business - but I wouldn't be surprised if secretly, their top executives were sniggering. Once again, the regulators are trying to outgun the banks, and even more than last time (as budget-cutting and deregulatory fervor have taken over governments around the world) they haven't got a chance in hell of succeeding.

So just stop, Krawcheck says to the regulators. Stop letting the bankers lead you by the nose through thickets of their own creating. Don't regulate the structures. Regulate the risk itself. Figure out how much risk the banks are taking and then insist that they have enough money on hand to cope with those risks - all of them.

And if you don't know how much risk the banks are taking in some areas (and not only do the banks to do their level best to keep that a dark secret, but often they don't even know themselves), then don't let the banks operate in those areas. Period.

Krawcheck's time in the trenches has given her a hard-nosed common sense. Would that government regulators - not to mention our bought-by-the-banks legislators - had as much.

Thursday, July 7, 2011

Storytelling and global warming

So - is the news media (especially that always-handy villain, Fox) to blame for public skepticism about global warming? Al Gore certainly thinks so, and said so with his typical length and vigor in a Rolling Stone essay. The bad guys are winning the war because the media, which should be refereeing this battle, are at best distracted or intimidated, and at worst, deliberately lying at the behest of - as he puts it - Polluters and Ideologues.

I don't think so. I think the reason many people doubt global warming (and many people who don't, including Gore and to a considerable extent me, behave personally as though it didn't exist, flying around the world, leaving their cable boxes running 24/7, and generally going about life very much the way they always have), is much simpler. We don't know how else to live. Though our carbon-heavy lifestyle is relatively new in the long scope of humanity's existence, it's the only one any of us have ever known.

What we need is not more facts, more argument, more convincing. What we need - as Julian Dobson, a self-described "urban pollinator" keeps saying - is better stories.

Unlike most of my green friends, I think Colin Beaver and his No Impact Man stunt, and all the other green stunt-ers out there, have done as much to hurt the cause as Fox. Because if this revolution demands that I cut stop watching TV, limit myself to staycations, and give up fresh orange juice because the oranges are shipped across the country, and then doesn't offer me anything appealing to replace all that, why should I bother? No revolution has succeeded by promising people that it will make their lives uglier, more deprived and more depressing than they are now. Who would want to buy into that story?

So the environmental groups and experts that UK blogger Mark Brown calls the Green Ghetto talk to themselves, and wonder why nobody else is listening. Brown - about whom I know nothing except that he's involved in Transition High Wycombe - argues that the people that other people do listen to are their neighbors, the people they meet at the pub, on the High Street, at at the school fete and the car boot sale.

And I am convinced that their message can take hold only if they're spreading it, not out of fear of the grim future that awaits if we don't change, but because they're living in a story that excites them, one that offers challenge, satisfaction and a whole lot of fun.

I'm not surprised that Brown (who I hope is going to the Transition Conference in Liverpool this weekend, so that maybe I'll meet him) is active in Transition, because more than any other group I'm aware of, Transition captures this sense of excitement and even playfulness.

I spend a good deal of time in Totnes, Devon, which a New York friend calls (accurately) the "mother ship" of the Transition movement. Transition is inspiring some big changes here: a new cooperative is planning half a dozen local and sustainable energy projects, from wind farms to biogas.

But possibly its most characteristic project is very simple. Groups of neighbors get together to go through a workbook of simple energy-saving tools. That's it. But these groups have come up with all kinds of ways to change their lives. One group set up a community cinema, and recently got a grant so that it can stop using a borrowed projector and buy its own. Others have started sharing cars, tools, and child-care time.

Last weekend, the Transition Together organizers invited town residents to a coffee morning at the Civic Hall, with snacks, and entertainment for the kids, and a bike-powered blender to make smoothies. (They weren't very smooth, because the contraption wasn't really producing the power the blender needed, but kids were peddling away madly nonetheless.) Members of different Transition Together groups got up to talk about their experience. What they all said, in one way or another, was "I got to know my neighbors."

So there's one story: a life where we have a chance to get to know our neighbors. What other stories are out there?

Monday, March 1, 2010

You SURE you want those energy-saving government subsidies?

There's nothing like getting into the middle of a great idea for seeing its pitfalls. Case in point: government subsidies for energy-saving home renovations. I've spent the last month or so wrestling with two different subsidy programs, and I've spent more of that time than I'd like wondering why on earth I'm even bothering.

The bigger of the two, Home Performance with ENERGY STAR, sounds terrific. Who could quarrel with a rebate of up to 20% for energy-saving steps like new heating, insulation, and energy-star appliances?

I could. And here's why. To get this rebate, you need to get an energy audit from a contractor approved by NYSERDA, New York's Energy Research and Development Authority. The contractor then gives you a fancy illustrated list of recommended changes, with their cost and an estimate of how much you'll save. Once you and NYSERDA agree to them, that contractor does the work.

Ours were estimated to cost us $20,000 and save us about $1000 a year. To begin with, this is not a breathtaking payback; we went ahead largely because we plan to rent out 3/4 of our house and the changes would definitely make it more rentable.

But there's a bigger problem. $20,000 is a lot of money. In the real, responsible-consumer world, you'd want to get a second and maybe even a third estimate on that amount of work. But in NYSERDA-land, that would mean getting - and paying for - one or two additional energy audits.

That's if you can even find another contractor or two to do them; the long list of NYSERDA-certified contractors on the agency's website is, I discovered, very out of date, and many of those I called never bothered to call me back. And NYSERDA-certified contractors don't come cheap. When we called the only NYSERDA-certified heating contractor we could find, for an estimate on a new boiler, he wanted more than twice what a non-NYSERDA contractor would charge.

So here's what NYSERDA doesn't tell you: Participants in this program are effectively, if not officially, stuck with the first contractor they call and have no control over the prices they're charged. And now that we're moving into the non-NYSERDA parts of the job - things like painting and electrical work - and I am able to get competing estimates, I'm beginning to wonder whether I'm getting such a good deal after all. If I can get the place painted for about 2/3 of what the NYSERDA contractor would charge - and I can - how much good is that 20% rebate on the NYSERDA work actually doing me?

Then there's the Great Appliance Swap-out, New York's version of the much touted cash-for-
clunkers appliance program. For reasons known only to bureaucrats, the state gives you two options. You can replace freezers, clothes washers and refrigerators, individually or together, with any old Energy Star model, and get a roughly $100 rebate for each. Or, you can get the super-high-efficiency bundle and get a $500 rebate for three appliances. ($555 if you can prove you've recycled the old ones). The problem is that in that case you must buy a clothes washer and a dishwasher and a refrigerator but not a freezer. And all three must have high ratings from the Consortium for Energy Efficiency. What's CEE, and why are its ratings better? I had no idea - and when I went hunting for appliances, neither did the salesmen.

Between CEE's exoticism and the whole program's rigidity, it's no surprise that the demand for these rebates has been less than overwhelming. Originally supposed to last only a week, the program's now going to run till the money's used up. Which may be a while - after more than two weeks, the $16.8 million program still has about $8.8 million to give away.

$500 of that is coming to us. (Sending the appliances to a recycler that wouldl give us an acceptable certificate would cost way more, in money and trouble, than the $55 we'd get for it, so we passed on that bit.) And there's another $4,000 or so coming once we're done with our retrofit.

But will we turn out to have actually saved money on either? Damned if I know.

Thursday, October 15, 2009

How to flight climate change? Let's try honesty.

This is blog action day, and we're all supposed to be blogging about climate change. Which, one way or another, is what I generally blog about.

My suspicion, though, is that the blogosphere is going to give us, today, a great deal of just what - in my view, at least - we don't need. Which is terror, gloom and doom.

Granted, it's hard to avoid. The situation is grim, and the prospects for the kind of dramatic global action that will address the issue look pretty flimsy. But I think one reason they do look flimsy is that we have spent so much time and energy on the grim prospects. If, in fact, there is little hope that we can avert the worst effects of climate change, why bother? And especially why bother when averting those effects would involve economic peril and enormous (and unwelcome) changes in our lifestyle?

It's not that the press, as well as organizations fighting global warming haven't noticed this. And they are making furious efforts to convince the world's citizens that they really can do something to combat global warming. The problem is that the changes we really need to make sound so terrifying that they're scared to be honest about them.

So instead we are encouraged to believe, by well-meaning folk - including the UN itself, with its glitzy, ad-agency designed, Facebook-oriented Hopenhagen website - that washing your clothes in cold water and installing fluorescent lightbulbs will make a significant contribution to the problem. It won't. As Bill McKibben said last spring at a showing of a film about the (small-scale) efforts religious groups were making to address global warming: those are all good things, but it's too late for them. (One indication of the essential frivolity of the project: one of its partners is Coca-Cola. Another: so far, the petition's garnered less than 80,000 signatures. Stop Animal Cruelty has 4.5 million.)

Meanwhile, stunts (or, as Elizabeth Kolbert calls them in a wonderful New Yorker critique, eco-stunts) proliferate. My current favorite is Dirty for Swain. That's Christopher Swain, who, backed by Timberland, is swimming from Massachusetts to DC to publicize ocean pollution and encouraging his followers to support him with their own get-dirty stunts and then publicize the stunts on Facebook, Twitter and Flickr.

We don't need this kind of nonsense. We need truth. We need a global discussion about the real costs and consequences of addressing climate change. How can we, as a society, figure out what changes we are willing to make if we don't talk honestly about our options?

Because guess what? Once we get past the scare tactics of politicisnas and corporations who insist the steps we need to take will destroy a) their business, b) their consituents and c) the global economy (conveniently not mentioning that they've said exactly the same thing about every new environmental regulation passed in the last 30 years), we may discover that the changes we need to make will actually lead us not to the cold, dark, uncomfortable future we all, on some level, dread, but to a way of life that is more resilient, more sustaining, and just plain more fun.

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Monday, October 5, 2009

But I want to take the train!

I'm heading off to Madison, Wisconsin tomorrow, which may be one reason that a couple of items about high-speed rail travel caught my eye this morning. Not that I'm going to be taking high-speed trains. I only wish....

I did think about taking a train. When I first came to New York, I used to take the train home to Chicago for Christmas; in fact, it was in the dining car on my first trip home that I first ate plum pudding, now a Christmas-dinner staple in our household. But apart from the cost (which unless you want to spend the night sitting upright, is prohibitive), you can't get there from here. At least not the day I needed to travel.

Actually, make that days. The Lake Shore Limited - which, at 19 hours, is the quick train - only runs three days a week; if you happen to want to arrive in Chicago on one of the other four days, you take the Cardinal, which leaves New York at 6:55 AM and spends 28 leisurely hours wandering down to Washington and as far south as White Sulphur Springs, Virginia, before turning north again towards Cincinnati and (ultimately) Chicago. In Chicago, you hang around for six hours before getting a bus to Madison, finally arriving - after 38 hours of travel - at 8:30 pm.

Given the pathetic state into which we've allowed our once-proud passenger rail system to fall, the best use of it I've ever come across was that of a friend who had a major exam in front of her. She shut herself, and her books, up in a train bedroom, and studied her way from New York to San Francisco and back again. Lots of time, lots of solitude...and lots of scenery.

Of course, the reason we only have three direct trains a week between New York and Chicago is that for years, rail travel in this country has struggled under the myth that it has to be self-supporting. We'll build highways, we'll build airports, but trains? They were a marvel of the 19th-century free enterprise system, and if they can't make it on their own now, well, the world has just passed them by. Tough luck.

In a review in today's Financial Times of Christian Wolmar's Blood, Iron & Gold (which sounds like a book every rail nut should rush out and buy), UK Transport Secretary Andrew Adonis demolishes that fairy tale. From the very beginning, he says, railways benefited from the efforts of enthusiastic supporters like Abraham Lincoln ("a pro-railway lawyer before becoming US president"), who pushed the Pacific Railroad Act through Congress and then gave it "tens of millions of taxpayer dollars in loans, grants and land." Nor was Lincoln unique. Railways around the world benefited from government support, with Tsar Nicholas II, Bismarck, Cecil Rhodes, Hitler, Mussolini, Stalin, Mao and the Emperor of Japan all playing major roles in Wolmar's book.

It's the same today: the high-speed rail revolution that's swept Japan, Europe and China (if there were a bullet train from New York to Chicago, the trip would take about 3 hours) depends heavily on government support. That's why Britain, which under Thatcher bought into the myth of a self-supporting rail system, is lagging so badly. The Channel Tunnel is all very well, but when you get to Paris, you can keep traveling at high speed. Once you get to Euston Station, though, you're back to dawdling.

But if Britain is dawdling, we in the US are crawling. The train from London to Totnes, in Devon, takes about three hours. The train from Burlington, Vermont to New York City (yes, there is one) , covers roughly the same distance in nine hours. And that's when it's on time.

So what of the high-speed rail funds that the Obama administration squeezed into the stimulus bill? says the stimulus bill's $8 billion barely enough for a good start, and the $4 billion the transportation department might get in its 2010 budget doesn't help matters much. Spain, which wants to put 90% of its population within 30 miles of a high-speed rail system, expects to spend more than $200 billion to do it. A decent system in the US could cost $500 billion - or even more.

Why don't we think it's worth that kind of money? I think one of the reasons is that we have fallen captive to the notion that the aim of business is to give people what they want - and of course, since hardly any of us take trains (because they're not there to take), we don't even think about them, let alone ask for them.

That's foolish even from a free-enterprise perspective. Haven't the greatest fortunes been made by people who created not what consumers already knew they wanted, but products or services they had never thought of wanting because they had never existed?

And where the climate is concerned, as Eric Wilmot points out on GreenerDesign, it's also a recipe for disaster. (He's talking about design, not transportation, but the argument holds good.)

So, since I really do have to get ready for my trip, I'll leave you with his wise words:

The current interpretation of human-centered has expanded to indulge human desires at the expense of other equally critical considerations. This is a dangerous interpretation that has become default for many leading academic and professional creative practices. Don Norman explains the main concern of such unquestioning adoption of human centered approaches: "The focus upon individual people (or groups) might improve things for them at the cost of making it worse for others."

In reality, our human-centeredness has driven us to the brink of unsustainable lifestyle through the strain our over-consumption is putting on our natural resources, and may represent the largest self-inflicted problem a species has ever created for itself short of Easter Island.

Ironically, and perhaps controversially, our current overload of media is in many ways widening the gap between our habits, actions, and understanding of the consequences of our lifestyle choices. A recent study showed that children could identify on average, over a 1000 brand logos, but could identify less than 12 native plants and food types.

The inertia of mass adoption of ever-changing technologies makes it a component of our evolutionary history. Period. But a question we must now ask is, "Where are we going with all of this?"

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Monday, September 28, 2009

Programmable thermostats stirring up heat. Really.

You wouldn't think the subject of programmable thermostats would spark a passionate argument, but there's one going on right now at Green Building Advisor, where Martin Holladay included the devices in his list of the 10 most useless energy-related products.

Well, actually, he says, "these devices aren’t really useless — they’re just unnecessary and insufficient." The point he's making is that buying a programmable thermostat will do absolutely nothing to curb your energy use. You have to program the thing.

Holladay argues that a plain old thermostat is just as good - all you have to do is remember to turn it down when you leave for work and back up when you come home. (He neglects down when you go to bed and back up when you get up.) And he states flatly that the vast majority of people who buy the programmable variety don't actually program them.

He's getting a lot of grief in the comments on the piece. Now possibly, this is simply the programmable-thermostat lobby getting excited. But I'm wondering about his basic premise.

I mean, come on....if you're worried enough about the environment (or your energy bills) to remember to go to the trouble of adjusting your thermostat several times a day, how could you not welcome a gizmo that turns the heat up automatically 15 minutes before you get up in the morning, and warms your house before you arrive home from a cold commute? Our house has steam heat, and one of winter's luxuries is to lie cuddled under the blankets, listening to the sound of heat rising in the pipes.

And how do we know that people don't program their thermostats? True, you can find articles all over the web saying that something like 70-80% of the people who buy them don't set them up. But how do these writers know that? None of them actually cites a source.

So, a few years back, while writing an article about saving energy, I decided to track that number down. I spent a whole day at it. I called energy experts, I searched websites, I even called up the country's biggest maker of programmable thermostats. Nowhere could I find an actual study - or an actual expert - with any hard information about the habits of programmable thermostat buyers.

Which is, when you think about it, not surprising. After all, does it make sense that millions of people would pay good money for a gadget designed to save them even more money, and then not use it? Does the majority of those buying a DVR (a much harder machine to set up) leave it sitting useless on a shelft?

Is this just an urban myth?

Or - even worse - have we now said so often that programming thermostats is difficult, that we've managed to make the myth come true?

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Wednesday, September 23, 2009

Adventures in energy-audit land

About a year ago, I went to a meeting sponsored by our local councilperson about saving energy. Frankly, I expected it to be the usual pablum - put in CFLs - but in fact it was fascinating. I was especially entranced by a Con Edison official who'd done his own green retrofit and took us through all the tax credits, rebates and tax deductions that made it practically free.

This summer I finally decided that it was time to put our money where my mouth is and try to make our 140-year old brownstone at least somewhat energy-efficient. So last month we got an energy audit. Somewhat to my surprise, it turns out our house is in pretty good shape, and our appliances are pretty green. The big exception (no surprise): our oil-fueled boiler, a noisy, smelly hulking black monster that once upon a time burned coal.

The surprises have come since, and the biggest one is that getting all these tax breaks is by no means a simple business. Our energy audit was conducted by a contractor licensed by NYSERDA (New York State's energy department), which hands out the state's 25% rebate for green improvements...but only if the work is done by a NYSERDA-licensed contractor. Unfortunately, there are very few NYSERDA-licensed contractors in the New York City area. There are, in fact, even fewer than NYSERDA thinks there are, as I discovered when I started calling them and discovered that several had gone out of business. Most of those left - like the company that did our energy audit - specialize in insulation.

Our contractor knew of
only one NYSERDA-licensed heating contractor, so we called him for an estimate on replacing our boiler, either with another oil-burning boiler or with a gas-burning one.

First surprise: the most energy-efficient heating systems use forced air or forced hot water. They do not use the system endemic in New York City (as well as, presumably, in the Iowa city where The Pajama Game is set): steam heat.

Second surprise: if you want a NYSERDA rebate, gas is out: there are no gas-fueled steam boilers efficient enough to meet NYSERDA's standards. (Of course we could install a whole new heating system, but replacing all the radiators and much of the plumbing in a four-story brownstone is stratospherically beyond our budget.)

It is, however, possible to buy an oil-burning boiler that just scrapes by. So I had the contractor come over to give me an estimate.

It was when I got his seven-page contract, two copies, all ready for me to sign and return, that I realized this really wasn't going to be simple. To replace the boiler, he wanted $20,500. To replace a single radiator valve, he wanted $600. (There are 15 radiators in our house, and they probably all need new valves.)

I knew it was going to be expensive to replace the boiler - why else hadn't we done it in the 30 years we've lived here (at 62 degrees in wintertime - with plastic on the windows - to keep the oil bills under control)? But $20,000? Sure, the NYSERDA rebate would cover roughly a quarter of that. And since getting NYSERDA certification takes time and trouble, I'm willing to pay a slightly higher price. But $20,000?

I called up Heat USA, the highly-to-be-recommended (if you use heating oil) coop that's helped us keep our oil bills at a manageable level, and asked what one of their plumbers would charge to replace a boiler. The answer? Even if we bought the most efficient boiler made, we would be hard-pressed to spend as much as $10,000.

Armed with that information, I called up National Grid (formerly Keyspan and before that, Brooklyn Union Gas, and stuck forever in my memory as BUG) and got them to send a plumber out to give me an estimate on the cost of switching to gas (which is what I, an at-least-halfway believer in peak oil, wanted to do all along). That estimate? $7,000, give or take - and a $500 credit from National Grid.

As I talked to all these guys, I discovered that there's an oil vs gas battle raging in New York, and right now the gas forces have the oil army on the defensive. Oil won't explode! the oil guy says. You can't get a service contract for a gas boiler! You have to install a chimney liner! It costs thousands of dollars!

Well, actually, said the gas man, you do have a steel lining. (I suspected as much, because we'd paid a small fortune some years back to replace the damn thing.) You can get a service contract - but when was the last time you had problems with your gas water heater?

What about price, I asked? Oil has generally been cheaper, said the oil man. Gas was cheaper last year, said the gas man. No help there. Faced with a decision whose results will likely outlive me, I consulted my son, who will inherit them. Since future prices are a mystery, he advised, go with the option that's cheaper to install.

So gas it is (ta-da!). And just one step into what's obviously going to be a long and painful road, here's realization number one: whoever wrote the rules for NYSERDA's program lived in the suburbs. Closely followed by realization number two: there's at least one NYSERDA contractor out there who doesn't expect customers to figure out that 75% of $20,000 is a hell of a lot more than $10,000.

Next problem: asbestos. Stay tuned.

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