Thursday, May 28, 2009

The Supreme Court Meets Humpty Dumpty

Supreme Court nominee Sonia Sotomayor is undoubtedly headed for confirmation by a Senate overweighted with Democrats. Still, there's plenty about her that is disturbing.

She's now famous for stating:

"I would hope that a wise LATINA WOMAN with the richness of HER experiences would more often than not reach a better conclusion than a WHITE MALE who hasn't lived that life."

Is her statement more acceptable than its inverse?

"I would hope that a wise WHITE MALE with the richness of HIS experiences would more often than not reach a better conclusion than a LATINA WOMAN who hasn't lived that life."

Even more than her opinions, these words are a guide to Sotomayor's likely behavior on the High Court. She is a judge from the legal school of identity politics. This is not the same as taking justifiable pride in being the first Puerto Rican-American nominated to the Court, as both she and the President did yesterday. Her personal and family stories are admirable. Italian-Americans also swelled at the achievement of Justice Antonin Scalia, as Jewish-Americans did at the nomination of Benjamin Cardozo.

These men saw themselves as judges first and ethnic representatives second. Judge Sotomayor's belief is that a "Latina woman" is by definition a superior judge to a "white male" because she has had more "richness" in her struggle. The danger inherent in this judicial view is that the law isn't what the Constitution says but whatever the judge in the "richness" of her experience comes to believe it should be.

Or, borrowing from Through the Looking Glass in a scene with Alice and Humpty Dumpty --

`When I use a word,' Humpty Dumpty said, in rather a scornful tone, `it means just what I choose it to mean -- neither more nor less.'

`The question is,' said Alice, `whether you can make words mean so many different things.'

`The question is,' said Humpty Dumpty, `which is to be master -- that's all.'

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Monday, May 25, 2009

Flight Plan for the Auto Industry

When it comes to commercial aviation, there are two certainties -- bankruptcy and better airplanes. Warren Buffett said it would have a favor to every airline investor if someone had shot down the Wright Brothers on their big day at Kitty Hawk. Instead, airlines have come and gone while engineers have designed better and better aircraft over the last 100 years.

However, it appears that Boeing now believes the creative destruction of capitalism may pose too big a threat and that a little relief is in order. How much lighter and more fuel efficient can aircraft become? To ensure its future the company has proposed a plan to improve the entire aviation industry with a mix of private and public capital. It's interesting to see this development in an industry in which every airline has gone bankrupt, and it is especially interesting considering the bankruptcies of Chrysler and GM. Nevertheless, a hundred years of existing on the edge of failure has led to extraordinary developments in aviation.

For much of the last 50 years most of the auto industry was insulated from the harsh discipline of the markets. However, those days are gone. The painful and transforming experience of the aviation industry over the last century shows that the domestic auto industry can respond with equal or greater success. No doubt it will survive and probably begin producing some great cars and trucks soon. But it's all about giving the customers what they want. Not what politicians and bureaucrats want.

MAY 23, 2009

How Boeing Fights Climate Change
The efficiency of jets has increased by 70% over the past 50 years.

Addressing climate change is a particularly difficult challenge for commercial aviation. While technologies like batteries work for cars, they don't work for airplanes that require powerful propulsion systems. The good news is that there are things we can do to significantly reduce the carbon footprint of commercial planes -- and we're well on our way.

At Boeing, we're tackling carbon emissions on three fronts.

First, we are working to make each new generation of airplane lighter and more fuel efficient. There's plenty of incentive to develop more efficient airplanes.

Historically, fuel has been the airlines' second-biggest operating expense next to labor. Last year, with oil reaching $140 a barrel, fuel costs even outstripped labor costs, rising to 40% of total airline operating expenses. So airlines have demanded increased efficiency from airplane and engine manufacturers. And manufacturers have responded big time.

Over the past 50 years, the efficiency of commercial jets has risen an astounding 70%. This means that carbon emissions per mile flown have dropped 70% -- all without a regulatory requirement for greenhouse gas emissions.

That said, we believe properly structured regulations could be useful. It's not often that an industry asks for additional regulation, but Boeing, GE and other airplane and engine manufacturers are convinced that a fuel-efficiency standard for new airplanes is an effective way to drive the development of fuel-saving technologies.

Specifically, we're advocating for an efficiency standard for new airplane designs. An efficiency standard would be straightforward and easier to implement than a standard for aircraft operators. And it would help ensure that we continue to see the kind of technological and environmental breakthroughs we pioneered with the 787. The International Civil Aviation Organization should define the new standard, just as it successfully established global standards for both airplane noise and oxides of nitrogen emissions.

While it's important to make airplanes more efficient, it's also critical that the system in which they fly is modernized. That's why our second major initiative is the work we're doing to improve air-traffic management.

Fortunately, the technologies needed to give controllers and pilots a more precise picture of weather conditions and airplane positions, and the networking technologies needed to instantaneously share that information, already exist.

Precision information, commonly shared, safely enables such fuel-saving and emissions-reducing operational changes as continuous, low-power descents, more direct routing, closer spacing, and curved approaches to landing. The challenge is getting the government to make the Federal Aviation Administration's plan for implementing these technologies, called NextGen, a priority.

The government should commit long-term funding to ensure that it's completed as swiftly as possible.

Third, we have been testing various advanced, sustainable biofuels with the goal of finding renewable fuels for aviation that don't compete with food crops for land and water and that emit 50%-80% less carbon than petroleum.

We have conducted test flights using mixtures of standard jet fuel and several different sustainable biofuels, among them fuels made from algae and camelina (a plant that produces seeds that aren't used for food). All performed extremely well in flight.

What's more, we have demonstrated that these and other sustainable biofuels have a lower freeze point than petroleum -- a very important characteristic for aviation. They also can have higher energy content per gallon.

We're confident that sustainable biofuels will be price competitive with petroleum in the long-term. But government help -- consistent with international trade agreements -- is needed to get an aviation biofuels industry up and running.

One proposal is that government could provide loans to refiners to make biofuels competitive when the price of petroleum is low and get repaid when the price of petroleum is high. We hope government officials will seriously consider such ideas because biofuels, in our view, are the ultimate answer to aviation's carbon-emissions challenge.

These three initiatives represent the best path forward for reducing aviation's carbon footprint. Establishing an international fuel-efficiency standard, modernizing air-traffic management, and commercializing an aviation biofuels industry would seriously address the issue of climate change. Our industry is eager to take on this challenge, but we need government help to make it happen.

Mr. Carson is president and CEO of Boeing Commercial Airplanes.

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Wednesday, May 20, 2009

Bizarre Car Czar

The government has informed taxpayers of two developments. First, that it will begin operating its newest department -- Government Motors -- June 1, 2009. Second, that the money originally loaned to the old GM has been declared a gift. No repayment required. Thanks America. You're the greatest.

When the company gets into full swing, it will probably introduce a model named Cameleopard, a daring hybrid that will combine the best aspects of bicycles, solar energy, sailing and electric lawnmowers. It is also expected that the United Auto Workers will receive substantial ownership in Government Motors, eventually.

Giving workers a stake in the means of production is a step that is coming way too late. Sad. The old GM was a company with a relatively small equity base. It would have been easy and smart for UAW members to have accumulated a substantial stake in the company over the last 60 years. They would have had an important place on the board of directors for decades if they'd been smart.

Instead, workers formed the opposition and forced the company down a path filled with compromises that have led to the pending bankruptcy.

What lies ahead for the newest state-run enterprise? Think Amtrak. Part of that railroad business works well enough to produce an operating profit. But most of it is a loser, providing rail service that survives on government funding. Government Motors will become another make-work program for auto-workers who will build a lot of cars no one buys.

GM bankruptcy plan eyes quick sale to government

NEW YORK, May 19 (Reuters) - General Motors Corp's plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source.

The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.

GM has about $6 billion in secured debt, including a secured revolving credit and bank debt.

The government's plans include giving stakes in the new company to GM's union and bondholders, although the ownership structure of the company is still being negotiated, said the source who is familiar with the company's plans.

In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said.

The government has given GM until June 1 to restructure its operations to lower its debt burden and employee costs.

If those talks failed, the company has said it would follow rival Chrysler LLC into bankruptcy.

Setting up a new company to buy the healthy assets is aimed at reassuring consumers who might not be willing to make a major purchase from a bankrupt company, fearing it would not honor warranties or provide service.

The board of the new company would be established with the tacit approval of the government. Fritz Henderson, who took the helm of GM earlier this year after the government pushed out Rick Wagoner, would likely head the new company, the source said.

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Tuesday, May 19, 2009

Universal Self-Health Care

My grandfather liked to say that if you've got your health, you've got everything. Unfortunately, a heart attack nailed him when he was 60, in 1956. He might have avoided, or at least postponed his myocardial infarction if he'd followed a few simple rules. Don't smoke, and keep the drinking to a minimum. A better diet might have contributed to a longer life too, but he was lean when he died, a result of a life of labor. However, death from a heart attack suggests something was clogged internally.

Our lousy life style is the factor that kills too many of us too soon. Smoking, drinking and bad food. That's what it boils down to. That means our health is mostly in our own hands. We can drop a couple of bad habits and choose better food and live longer. These stark facts also mean that if we continue to live self-destructively, we will bankrupt ourselves while perpetuating the delusion that we can spend our way to a longer and healthier life.

It's as though people see the healthcare system as a form of air-bag that will save us from head-on health crashes that we cause. Rather than living sanely, showing some awareness that good health is as temporary as we make it, we punish our bodies in senseless ways and hope increasingly expensive technology will undo the damage we inflict on ourselves.

However, instead of wrestling with our own suicidal impulses that are killing a million people a year, we've chosen to focus on imaginary health issues that are predicted to cause harm about a century from now.

This is mass psychosis. A societal delusion as preposterous as the long held belief that the Earth was flat and that it was at the center of the planetary system.

Losing Control

With all the talk of swine flu, universal health insurance and computerizing medical records, you'd think epidemics and inadequate medical care were the major threats to public health in this country. But an important new study on preventable deaths will quickly disabuse you of that notion. Read the report and you'll likely conclude that the biggest premature killer of Americans is . . . Americans.

Too many of us appear to be bent on slow-motion suicide. Consider smoking; if we could get every American to stop, we'd save 467,000 lives annually. Solving high blood pressure (much of it arising from unhealthy lifestyles) would save 395,000. And if we could get everyone to slim down to an appropriate body weight, we'd save 216,000 lives.

You can't aggregate all the lives that would be saved from the 12 lifestyle factors covered by the study because of some serious overlap; obesity, for instance, causes a lot of hypertension. But Dr. Majid Ezzati, a Harvard School of Public Health professor who co-authored the report, estimates that if you net out the double-counting, somewhat more than a million people die annually from the 12 behavioral risk factors, which include the obvious (immoderate alcohol consumption) and the less so (eating too little fish, which provides omega-3 fatty acids).

Put more starkly: Of the 2.5 million deaths that occur annually in America, something approaching half could be prevented if people simply led healthier lives.

The study, "The Preventable Causes of Death in the United States: Comparative Risk Assessment of Dietary, Lifestyle, and Metabolic Risk Factors," has some serious policy implications. Take universal health insurance -- which Dr. Ezzati fully advocates. It would surely save lives, but as the authors acknowledge, "the results of our analysis of dietary, lifestyle, and metabolic risk factors show that targeting a handful of risk factors has large potential to reduce mortality in the US, substantially more than the current estimated 18,000 deaths" that advocates say universal coverage might avert.

Indeed, while health care makes a difference, that difference is relatively small, especially in light of how much we spend on it. "Although inadequate health care accounts for only 10% of premature deaths . . . health care receives by far the greatest share of resources and attention," writes Steven A. Schroeder, a professor at the University of California, San Francisco medical school who researches such matters but wasn't involved in the study.

What the new study implies is that our big problem is self-control. No one puts a gun to our heads and commands that we overeat, smoke cigarettes and lead the life of a couch potato. Yet we do these things anyway as a result of circumstances, ignorance and, perhaps most of all, what the Greeks called akrasia, or weakness of will.

Clearly a lot of Americans are dying prematurely as the result of their own behavior. The question is whether they are happy with their current trade-off between the risks and rewards -- or whether they understand the risks well enough to make an informed decision. A closer look at smoking suggests that they know the risks and would like to act differently. The American Lung Association reports that, in one survey, 70% said they'd like to quit. Another survey found that 44% had actually tried quitting in the previous 12 months. Many eventually succeed; the prevalence of smoking in the U.S. today is roughly half what it was in the 1950s, thanks at least partly to cessation efforts.

Unfortunately, obesity may be the new tobacco; two-thirds of Americans weigh more than they should, and too much weight kills. But here, too, the prevalence of dieters -- and diets -- suggests that people aren't happy with their own behavior.

So why does it continue? Humans evolved to be highly susceptible to short-term rewards, yet smart enough to know what's best for us in the long run. The result is that our short-run behavior often moves counter to our longer-term preferences, which for the most part are the ones we'd dearly love to uphold. The economist David George has argued that when these greater preferences are subverted, people suffer quite a large welfare loss.

What is to be done? Dr. Ezzati says it will take more study to figure out the costs and benefits of possible actions -- such as risk education, regulation, taxes, medical testing and treatments. Some issues, like inadequate exercise, may be especially tough in a nation built around the automobile.

But some things seem obvious. One is that banning what people want doesn't work, as we should have learned from Prohibition and the disastrous "war on drugs." Higher sumptuary taxes on unhealthy items might help but would run into practical problems (is candy unhealthier than cheese?) and would penalize those who eat and imbibe in moderation. Dr. Ezzati's study, for example, notes that a little alcohol is good for you.

One answer is more and better public education on the ways Americans get into trouble, including lifestyle choices and personal finance. It's noteworthy that less-educated Americans are significantly more likely to succumb to behavioral risks, either because they have inadequate information or tend to be worse at deferring or foregoing gratification. And a vigorous media campaign, along with higher cigarette taxes and social approbation, has worked wonders against tobacco.

Beyond this, people need binding ways to commit themselves to their enduring preferences. For instance: Several states offer self-exclusion programs through which problem gamblers can have themselves barred from casinos for a fixed period of time -- or even forever. The programs seem to help; an evaluation of 161 participants published in 2007 in the Journal of Gambling Studies found a reduction in gambling problems as well as in the urge to bet. One can imagine all kinds of equally voluntary analogues; people could agree to be taxed for excessive weight or blood pressure, for example (as they already are by life insurers, which charge higher premiums for such reasons).

In the modern world of freedom and affluence that we've made for ourselves, self-regulation may well be our biggest challenge. What we need is more aggressive promotion of healthy choices by governments and schools, and better tools to help us manage ourselves.

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Thursday, May 14, 2009

Good Debt, Bad Debt

Credit problems exploded after too many people with questionable credit, shaky jobs and NO downpayments were given mortgages. The extension of nearly unlimited credit to everyone came on top of historically low interest rates.

Low interest rates and low or no downpayments are the two most compelling variables in the equation for calculating the price of a house. The combination of falling rates and easy credit led to housing prices that marched uphill until the lending terms were squeezed to their mathematical limits. Possibly beyond, since some people were actually given cash for downpayments.

When terms could get no better and every borrower had borrowed, there was only one possible set of circumstances ahead for the real estate market -- a slowdown in sales and a decline in prices. Despite the fact that mortgages were collateralized by houses, both lost value and the defaults and foreclosures began.

However, it appears the foreclosed homes will sell for at least 50% of the mortgaged amounts.

Unfortunately, that's not the case with goods purchased with credit cards. Nevertheless, Obama wants to keep the credit-card industry floating along by using the same strategy used to keep the mortgage business flying: Once again -- Low Rates and Easy Credit.

Obama wants Credit Card Companies to give Americans more capital at lower rates. That's his idea of a solution to problems caused by wild spending at higher rates. More money and lower rates. Yeah, that'll do it. It seems he unaware that a bad policy gets even worse when it is expanded.

We're in for it with this guy.

Credit-Card Fees

Obama also prodded Congress to pass restrictions on credit- card issuers, saying consumers need “strong and reliable” protection from unfair practices and hidden fees.

“It’s time for reform that’s built on transparency, accountability, and mutual responsibility, values fundamental to the new foundation we seek to build for our economy,” the president said.
Obama called on Congress to pass a credit-card bill he can sign into law by May 25 that would clamp down on what he says are sudden rate increases, unfair penalties and hidden fees. He wants the measure to protect consumers, strengthen monitoring and impose penalties for credit-card company violations.

The U.S. House of Representatives passed the credit-card bill last month after adding a provision requiring banks to apply consumers’ payments to balances with the highest interest rates first. The bill also imposes limits on card interest rates and fees.

The Senate is debating its version today. It also would require credit-card companies to give 45 days’ notice before increasing an interest rate. It would prohibit retroactive rate increases on existing balances unless a consumer was 60 days late with a payment.

‘Complicit’ in Debt

The president said Americans have been hooked on their credit cards and share some of the blame for the current system.

“We have been complicit in these problems,” he said. “We have to change how we operate. These practices have only grown worse in the midst of this recession.”

The House and Senate will have to iron out any differences and vote again on a final, compromise version before sending it to Obama for his signature.

The American Bankers Association, which represents card issuers, has warned lawmakers and the Obama administration against taking punitive action or setting requirements that are too stringent. Doing so, the lobby group says, would limit consumer credit and worsen a credit crunch.

Obama said that restrictions “shouldn’t diminish consumers’ access to credit.”

Uncollectible credit-card debt rose to 8.82 percent in February, the most in the 20 years that Moody’s Investors Service Inc. has kept records. Lawmakers have said they’re under increasing pressure from constituents to respond to rising interest rates and abrupt changes to consumers’ accounts.

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Friday, May 08, 2009

Don Quixote has a Sun-Stroke of Genius

The country that gave us the fictional Don Quixote and his fight against windmills is coming back with a real battle between sun and oil. It seems the government of Spain is singing The Impossible Dream these days. Somehow the idea of charging the Spanish citizens 10 times the going rate for electricity is a good idea. But only when the electricity comes from the Sun. Inevitably this means Spaniards will pray for the rain to fall mainly on the plain and everywhere else, if possible, thereby cutting the cost of the electricity needed to watch The Man of La Mancha on television, or playing the soundtrack on the CD player.
Moreover, there is some truly cockeyed thinking at work in Madrid. Spain wants to switch from oil to solar power to save the country from rising oil prices. It hopes to save the nation from higher oil prices by selling electricity for 10 times the price of electricity from oil. Thus, until oil reaches $500 a barrel, it will remain cheaper than today's price for Sun-made electricity in Spain.
Meanwhile, Spain is exporting its solar technology because it believes the spread of solar technology will lead to less oil use. If Spain is right and oil loses some ground, then, like any commodity facing weakening demand, its price will drop. Therefore, it appears Spain is actually creating a market in which oil becomes less costly while solar power remains insanely expensive. At that moment Don Quixote would put a bucket over his head, point his lance at the setting Sun, put his spurs to Rosinante, and leave Sancho Panza behind to wonder what just happened?
Spanish Solar Subsidy Seduces FPL, Scorches Consumers

May 8 (Bloomberg) -- Spain has turned itself into the world’s biggest builder of solar-energy plants, attracting developers from the U.S. and France by guaranteeing prices that weigh down Spanish consumers.

The government promotes clean fuels by letting generators charge as much as 10 times more for power from the sun or wind than from burning coal. The premium, added to bills of homes and businesses, has spawned a solar-investment boom by utilities, from Florida’s FPL Group Inc. to Electricite de France SA.

As a result, developers now plan enough solar thermal projects to generate the power of nine new atomic reactors, or 14,000 megawatts if all get built, Spain’s industry ministry said. That’s the biggest project pipeline, beating sun-blessed Australia and the U.S., where Congress increased aid this year for alternative energy, an Emerging Energy Research study said.

“Who wouldn’t want to enter a business that’s paid many times more than the market rate, and where the customer is guaranteed for life?” said Gabriel Calzada, an economist and professor at Rey Juan Carlos University in Madrid.

Spanish law forces distributors to buy all clean energy produced in the first 25 years of a plant’s life and resell it to consumers. With little oil and lots of sun, Spain is betting the sacrifice will pay off as fossil fuels get more expensive and need costly emission permits under global-warming treaties.

Forty-two percent of power bills, or 95 euros ($127) for every Spaniard, will cover subsidized clean energy in 2009, the ministry estimates.

‘Heavy Price’

“We’re all paying a heavy price for green power,” said Calzada, an opponent of subsidies.

The government raised rates in May 2007 for solar thermal plants, which concentrate sunlight to make steam for power generation. They now earn about 300 euros a megawatt-hour, seven times the average rate coal- or natural gas-fired plants got this year.

A megawatt-hour supplies about 1,500 Spanish homes for an hour, or about half as many homes in the U.S.

Florida to Spain

Spain’s solar deal was interesting enough for Juno Beach, Florida-based FPL to cross the Atlantic and propose two 50- megawatt solar thermal plants. EDF, France’s biggest power company, raised its stake last year to 90 percent in Fotosolar, a Spanish photovoltaic developer. FPL, the largest U.S. producer of wind power, wouldn’t say which subsidy system it preferred.

“I would not define Spain as more or less attractive, rather it is a new opportunity,” Steven Stengel, a spokesman for FPL unit NextEra Energy Resources LLC, said in an e-mailed response. FPL plans two U.S. plants totaling 325 megawatts.

Neither country gets more than 1 percent of power yet from solar thermal or photovoltaic plants, which use a technology that turns sunlight directly into electricity. Spain installed the most of both technologies last year, trade group data shows.

U.S. Momentum

The U.S. now is regaining momentum lost almost 10 years ago when the government “changed policy, leaving solar technology on the shelf,” said Edward Soler, a business development executive for Spanish builder Abengoa SA. During that decade “Spain underwent a learning curve that was aided by a change in regulations” that improved incentives, he said.

Abengoa, which set up a 20-megawatt solar thermal plant near its Seville, Spain, headquarters, plans one 14 times that size, billed as the world’s biggest, about 60 miles outside of Phoenix to feed local utility Arizona Public Service Co.

In the U.S., where President Barack Obama backed increased incentives this year, 6,000 megawatts of solar thermal projects are under way, said Fred Morse, an official at the Washington- based Solar Energy Industries Association trade group.

Promoters in the U.S. must convince utilities to contract their power, a necessary step for most project financing. Also, they may be reimbursed for 30 percent of the plant’s cost through a tax credit or grant and can apply for federal loan guarantees. They earn no special power rate.

The U.S. can’t catch up until more rules on aid are published, Morse said.

Better Incentives

“The incentives, if implemented promptly and effectively, should greatly facilitate the financing of these plants” in the U.S., said Morse, who prepared the first study on solar energy’s potential as a national resource for the White House in 1969.

In Spain, subsidies already spurred local utility Iberdrola SA of Bilbao and Madrid-based builder Acciona SA to become the world’s largest investors in wind, ahead of FPL and EDP-Energias de Portugal SA of Lisbon, with turbines in more than 20 nations.

Premium prices for solar, wind, biomass and co-generation power will cost Spaniards 4 billion euros in 2009, the National Energy Commission regulator estimates.

Photovoltaic Boom

Iberdrola said today it completed Spain’s seventh solar thermal plant, a 50 megawatt array of cylidrical reflectors in Castellon. The new plant matches the capacity of Spain’s Andasol, the largest thermosolar plant in Europe, owned by Solar Millenium AG and Actividades de Construccion y Servicios SA.

Acciona and Heliosolar of Navarra, Spain, are among a group of developers that switched to solar thermal after doing photovoltaic projects. In two years, so many photovoltaic plants were rushed online that the Spanish government tightened rules for eligibility. For solar thermal, an unlimited number of licenses will be given out until at least 2011.

Developers bank on Spain continuing to force utilities Endesa SA, Iberdrola and Gas Natural SDG SA to buy all alternative energy produced. On especially windy or sunny days, they must ramp down coal- or natural gas-burning plants.

Brent at $40/Barrel

“All the investment in clean energy in the European Union grew from the summer of 2004, when Brent passed $40 a barrel and was giving clear price signals of a tension that wasn’t going to go away,” said Tomas Diaz, spokesman for the Spanish Photovoltaic Industry Association.

Spain’s premium price paid to photovoltaic plants drew in 20 billion euros of investment in those projects in about one year, before the government made the terms less generous in 2008, the trade association’s Diaz said.

“Cash poured in since 2007 as investors fleeing the subprime crisis in the U.S. looked for a safe haven for their money,” Diaz said.

Even the U.S. insurer American International Group Inc., bailed out last year by the Federal Reserve, bought 300 megawatts of solar plants in Spain that it has since sold.

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When the Wheels come Off

Where will the old cars and pick-up trucks go? The junk yard? A gift to Mexico? Housing for the homeless? Like formerly worthless carbon credits, suddenly the titles of old cars will have great value.

Senators Agree on ‘Cash for Clunkers’ Auto Plan

May 7 (Bloomberg) -- A group of U.S. senators agreed to a plan that would give consumers as much as $4,500 toward the purchase of a new, fuel-efficient car or truck, Senator Debbie Stabenow said.

The Senate proposal closely tracks a deal struck in the House earlier this week, said Stabenow, a Michigan Democrat. Congress needs to move quickly on the plan to respond to a drop in auto sales that has affected all automakers producing cars in the U.S., she said.

“Across the board, sales are down,” Stabenow said. “The house is on fire right now. We’re trying to put the fire out before it engulfs the entire house and the entire family.”

The goal of the plan is to stabilize sales at struggling automakers including General Motors Corp. and Chrysler LLC, which are surviving on taxpayer aid. Chrysler filed for bankruptcy on April 30, and GM faces a June 1 deadline imposed by the Obama administration for cutting costs and debt.

The Senate plan, like the measure members of a House panel agreed to on May 5, would provide rebates to consumers for any car that meets certain fuel-efficiency requirements.

Only vehicles getting 18 miles per gallon or less would quality for trade-in under the Senate plan. Buyers would get a voucher worth $3,500 for a new model with a 5 mpg improvement. Those buying a new car that gets at least 10 miles mpg more or a light truck with a 5 mpg improvement would get a $4,500 voucher.

Germany, Italy, France

The plan wouldn’t add to the federal deficit because it uses funds already set aside for stimulating the economy, said Senator Sam Brownback, a Kansas Republican. Preliminary estimates put the cost of the legislation at $3 billion to $4 billion, Stabenow said.

U.S. automakers including Ford Motor Co. are pushing Congress to approve such a measure after the success of a similar program in Germany. France and Italy also provide payments to scrap older vehicles.

Representative Betty Sutton, an Ohio Democrat who proposed a cash-for-clunkers legislation in March, has said the measure would improve the environment and may spur sales by more than the 21 percent increase witnessed in Germany in February.

Monday, May 04, 2009

Saturn to leave GM Orbit

GM Stock Chart

Obama says Americans want cars that go far on a gallon of gas. He says Detroit, especially GM, has suffered because it failed to build those cars, the cars Americans really want. Instead, he says Detroit made big cars hoping for big profits, and is now suffering for its poor strategy.

Really? If that's true, why would GM -- the old General Motors, known today as Government Motors -- seek to sell a division that produces cars getting better than 30 miles per gallon? Furthermore, Saturn sells its cars at low low prices. High mileage, low price. Sounds like the right combination for today's car market. Why is GM dropping Saturn?

If the auto world operated the way Obama believes, Saturn would be GM's most valuable property. The last division it would want to lose. Maybe Obama believes Saturn is the company's most valuable property and its sale will raise enough money to pay down a big portion of the company's debt. But what would replace it at GM? The Chevy Volt?

The Volt is an electric vehicle that is already an obvious failure. Nevertheless, Obama wants to give large subsidies to buyers willing to buy a car with a $40,000 price tag and a battery range of 40 miles. The subsidy given to Volt buyers is in addition to the subsidies already given to companies building wind generators and solar panels. Despite the subsidies to these bit players in the production and consumption of electrical energy, the electric alternatives are financial failures. Even if our anti-oil president imposed taxes on gasoline that returned prices to last year's peak, electric vehicles, wind generators and solar panels would fail to compete with oil, the greatest vitamin this economy has even taken.

GM retains adviser for Saturn sale

General Motors retains adviser to evaluate offers for sale of Saturn brand

On Monday May 4, 2009

DETROIT (AP) -- GM says it is retaining a former company adviser to help it review potential buyers for its Saturn brand. The automaker says several parties expressed interest in buying the brand and its dealerships.

General Motors Corp. is hiring S.J. Girsky & Co. to manage the transaction. The firm is run by Stephen Girsky, who spent less than a year as a full-time adviser to GM, leaving in June 2006. Prior to GM, Girsky ran Morgan Stanley's auto research team.

GM is looking to sell or phase out Saturn by the end of the year as it races to a June 1 deadline to restructure. Among the bidders for Saturn is a group led by Oklahoma City private equity firm Black Oak Partners LLC.

Detroit-based GM began selling Saturn vehicles in 1990.

An Ill Wind Blowing

Free as the wind. That's the belief. Wind is free. Sunlight is free. Tides and rivers of running water are free. With all the free energy around us, it should be cheap and easy to power the country. But converting all that free energy is, unfortunately, expensive. However, a lot of people are slow learners. Or they know a gift-horse when they see one. The gift-horse, in this case, is the hapless American taxpayer, represented by Barack Obama, the president who wants Americans to believe in a free lunch.

Alternative Energy's Fortunes Shift With the Winds

Cedar Rapids, Iowa -- James Dehlsen has spent decades trying to build a bigger and better machine to convert a breeze into electricity.

"The industry has been impacted pretty heavily," says Mr. Dehlsen, chairman of Clipper Windpower, one of a few U.S. wind-turbine makers. Asked about the demand for turbines, he says: "It's not up."

Just a few months ago, Clipper Windpower's turbines were in high demand. The company recently laid off workers.

President Barack Obama and politicians of both parties vow a renewable-energy revolution. The ups and downs of Mr. Dehlsen's company show both the promise and the difficulty of that vision. Creating reliable energy from a fuel as fickle as the wind is difficult. Doing so without predictable and prolonged help from Capitol Hill and Wall Street is all but impossible.

Few industries are as hard to change as energy. Fossil fuel, entrenched and convenient, follows a boom-and-bust cycle that keeps interrupting the development and adoption of alternatives. Phasing in new energy sources on a scale big enough to matter would take consistent effort over decades -- something that, so far, hasn't happened in the biggest oil-consuming country in the world.

Europe has been more consistent. Longstanding subsidies there have incubated renewable-energy companies that now have gone global -- much like higher gasoline taxes have pushed most Europeans away from gas-guzzling cars.

Before the recession hit last fall, renewable energy, such as wind farms, were seeing a boom in jobs, growth and funding. But now financing has dried up and layoffs are occurring.

Today's recession is whipsawing renewable-energy companies regardless of their nationality. Layoffs and production cutbacks are spreading throughout the industry. In response, the U.S. is moving to boost its subsidies, largely to generate what Mr. Obama calls "green jobs."

That's a big opportunity for Clipper -- if it can get past the recession. In the past few months, Clipper has laid off one-quarter of the workers, and it has slashed its production of wind turbines by more than half. Like many of its competitors, it's spending huge sums fixing mechanical problems that couldn't have come at a worse time.

Today's wind turbines weigh more than 300 tons and stand some 300 feet tall. Their three fiberglass blades slice through a circle of airspace covering nearly two acres. The blades turn gears, which run generators, which produce electricity.

Mr. Dehlsen founded Clipper and began developing an even bigger turbine. In 2005, he tested it in a howling Wyoming snowstorm.

Clipper leased an abandoned printing-press factory in Cedar Rapids. The arrival of Clipper and other wind-energy companies was a blessing for Iowa, which had been losing manufacturing jobs.

In 2007, Clipper's first full year of production, cracks developed on the blades of some turbines the company had installed, and the teeth on some turbines' gears began to wear prematurely. In response, Clipper reinforced the blades of all its turbines. It also brought the gearboxes of all its turbines back to the factory to check and, if necessary, repair. Then, last year, more problems emerged with blades and with a few gearboxes. Clipper says the problems originated with suppliers.

But the industry can't control the economy. Last fall, the debt markets collapsed, the recession set in, and orders for new turbines screeched to a halt. Clipper halved production, to about four turbines per week. In January, it laid off about 80 workers.

Other wind-turbine makers also have had layoffs. Clipper is seeking a loan guarantee under the Obama administration's economic-stimulus plan. At the Cedar Rapids plant, Clipper's chief executive, Douglas Pertz, invokes national interest as a reason the government should help his firm. As the country assists its automotive icons, he argues, it also should help loosen up funding for its renewable-energy companies. It would be problematic for the country "for Clipper to not survive," he says.

Out behind Clipper's plant, shrink-wrapped in plastic, the finished pieces of wind turbines are piling up as they wait to be picked up by buyers facing financial difficulty themselves.

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Saturday, May 02, 2009

Swine Flu -- A Fine Brew

When it comes to getting a few days off, there's nothing like a little hysteria to do the trick. Swine Flu. Oooh, let's party like it's 1918. Ha. Financial fears, the crumbling housing market, falling stocks, job losses. Terrible news from all over. When people face man-made calamities, they like to say "if you've got your health, you've got everything."

Then comes the Swine Flu. Hysteria emerges, threatening people in ways that have them believing every aspect of life is headed into the toilet. Thoughts about the end of the world as we know it rise up and no one can stop them from affecting life. Even the Conspiracy Theorists have gotten into the act, claiming the Swine Flu is the result of a bio-terrorist attack.

However, it will all be forgotten in about two weeks, when a new crisis has surfaced to replace this one. Maybe Americans will shift their focus back to banks and the possible Armageddon of our financial system. However, most Americans are tired of that fear and would prefer a new one.

Swine flu may be less potent than first feared

May 1, 2009

The swine flu outbreak that has alarmed the world for a week now appears less ominous, with the virus showing little staying power in the hardest-hit cities and scientists suggesting it lacks the genetic fortitude of past killer bugs.

President Barack Obama even voiced hope Friday that it may turn out to be no more harmful than the average seasonal flu.

In New York City, which has the most confirmed swine flu cases in the U.S. with 49, swine flu has not spread far beyond cases linked to one Catholic school. In Mexico, the epicenter of the outbreak, very few relatives of flu victims seem to have caught it.

A flu expert said he sees no reason to believe the virus is particularly lethal. And a federal scientist said the germ's genetic makeup lacks some traits seen in the deadly 1918 flu pandemic strain and the more recent killer bird flu.

"It may turn out that H1N1 runs its course like ordinary flus, in which case we will have prepared and we won't need all these preparations," Obama said, using the flu's scientific name.

New York officials said after a week of monitoring the disease that the city's outbreak gives little sign of spreading beyond a few pockets or getting more dangerous.

All but two of the city's confirmed cases so far involve people associated with the high school where the local outbreak began and where several students had recently returned from Mexico.

Almost everyone who became ill before then are either recovering or already well. The school, which was closed this past week, is scheduled to reopen Monday. No new confirmed cases were identified in the city on Friday, and Mayor Michael Bloomberg said the outbreak in New York had so far proved to be "a relatively minor annoyance."

So far in the United States, he said, the virus appears to look and behave like the garden-variety flus that strike every winter. "There is no real reason to believe this is a more serious strain," he said.

The president also said the U.S. government is working to produce a vaccine down the road, developing clear guidelines for school closings and trying to ensure businesses cooperate with workers who run out of sick leave.

He pointed out that regular seasonal flus kill about 36,000 people in the United States in an average year and send 200,000 to the hospital.

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