Empire of DEBT's Woes
Depression Collapse is here !
Last Black Swan Landing ?

Right now the stock market and the economy seem to be "recovering," along with consumer confidence, the GDP and everything else except housing--if you believe the MSM headlines. But perhaps, as Jed suggests, a flock of Black Swans is just over the horizon, and we'll finally spot them in, say, October....

Housekeeping notes:
1. I am pleased to announce that my new young adult novel Claire's Great Adventure is now in print and available from amazon.com or from me, if you'd like a signed gift copy sent to a deserving teen (or even a recalcitrant teen).

2. To my astonishment, it seems this little outpost on the world wide web received its 2 millionth visit sometime this month. Thanks to the quality of you, the readers, correspondents and contributors, the "unique visitors per month" count has risen from 1,500 3 years ago at the start of this weblog to 65,000 or so this month. The site logs about 130,000 visits per month now, so every recipe, commentary and essay you write is finding readers. It is my honor to host this forum of ideas and solutions.

I know--blah blah blah. OK, on to the topic of the day.

Correspondent Jim S. checked in recently with this cogent take on the nation's urgent and increasingly grim infrastructure problems. The starting point of his analysis is T. Boone Pickens' recent call for a large-scale wind-generated electricity program for the U.S., and former V.P. Al Gore's call for a crash energy independence program in the U.S. (Emphasis added: CHS)

Gore is misguided, and Pickens is smart but incomplete. I watched Pickens govt hearing on C-Span...decent but significantly incomplete presentation for our govt. representatives. The entire electrical grid in the US goes back to before 1900. It has grown layer, upon non-standardized layer for all this time. Much is decrepit. Current solar and wind installations are off-line obligatorily, when the capacitance of the grid is not capable of absorbing the energy generated now...the absorption rates are INEFFICIENT, and determined by local conditions at the entry point.

The system, to absorb the 20% of national energy requirements envisioned by Pickens and alluded to by Gore requires a TOTAL restructuring and renewal of the ENTIRE ELECTRICAL GRID. Are there any cost estimates and time frame estimates for the entire grid to be rebuilt?...could the $875 billion in Obamas’ Senate bill for treating worldwide AIDS be channeled for the rebuilding of our energy grid??!!

Rebuilding the grid and the roads as well, as the grid rebuilding depends on good roads, are issues deserving recognition in our current Presidential campaign, along with so many other deserving, important, compelling, grossly inarticulated issues.

Without a new electrical updating of the old grid, the grid graph in green lines on Pickens map, is only a wind generating connection map of the new structure with no plan for integrating its distribution to the existing, incompetent grid. Major disconnect is built into the presentation by an absence of discussion of how the new energy will be absorbed into the system.

As in, "Too many cooks spoil the broth." Although few seem to notice or comment on this flaw, it is difficult to get anything built in this country anymore except McMansions in rural counties desperate for a larger tax base. And with the housing bust in full swing, that's over now, too.

How about replacing an earthquake-damaged bridge in the nation's 6th largest urban area, San Francisco Bay? Try 20 years and counting. The Loma Prieta earthquake damaged the S.F. Bay Bridge back in 1989, and the replacement bridge is now under consruction--a mere two decades after it should have been started.

Needless to say, the costs has doubled or even tripled in the endless dilly-dallying, dickering, agency negotiations, etc.

Want to tear down that old crappy building to build some housing close to jobs, shopping and transit? Not so fast, pal--that building is historic. Or so I say. Here is a real-life scenario which is played out again and again in growing urban areas of the nation: a new building is proposed which requires the teardown of an existing structure. Obstructionists suddenly appear in great, keening numbers and squash the project for any number of reasons: preservation, density is too high, NIMBYism (not in my back yard) and so on.

All too often, a single obstructionist can kill a project which would have benefitted the entire community. In our urge not to repeat the terrible mistakes of early 1960s "urban renewal" which bulldozed irreplaceable theatres and destroyed entire neighborhoods, now we are fearful to take down shacks and decrepit buildings if even one "resident" raises a protest.

I know of several cases in which the obstructionist--often a retired person with plenty of time and a character which revels in their newfound power--kills a decent project and then 2 years later moves to another community.

How about adding a passenger station to an existing rail line? Who could complain about such a useful and seemingly benign addition to the infrastructure? Try five years of "process" and counting. It seems every agency under the sun has a say about the little station, and the railroad has its concerns--and so on. So the idea languishes year after year, and people who might have ridden the rails to work sit fuming in traffic, needlessly burning costly oil year after year.

Rebuild the nation's electrical grid? Nice, as long as you don't do it where anyone lives, where agencies galore have jurisdiction, or within line of sight of some well-heeled enclave.

One root of this crippling abundance of stakeholders can be found in the new book, The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives

Here is a summary from amazon.com:

Every so often an idea comes along that transforms our understanding of how the world works. Michael Heller has discovered a market dynamic that no one knew existed. Usually, private ownership creates wealth, but too much ownership has the opposite effect—it creates gridlock. When too many people own pieces of one thing, whether a physical or intellectual resource, cooperation breaks down, wealth disappears, and everybody loses. Heller’s paradox is at the center of The Gridlock Economy.

Power to the people, right on--except when it takes 20 years to replace a dangerous bridge. If you drew a political "stakeholders" map of the U.S. in the manner of a map of "ownership," you would find almost countless overlaps.

Democracy is inherently messy. I know architects who gaze at China with great envy because there, your project is greenlighted in days or weeks and construction starts yesterday. Yes, it may have required a bribe or three, and maybe poorer residents were bulldozed out of the way, but infrastructure projects get built in China at astonishing rates.

Obviously, there is some sort of balance needed between "competing interests" and an obstructionism born of a profusion of demands, agendas and voices. Thus we recently were treated to the BLM (Bureau of Land Management), a Federal agency which oversees millions of acres of Federal land (essentially owned "by the people"), deciding to hinder the placement of solar electrical generation plants in its empire. Uh, right. Great thinking, folks.

A hue and cry was quickly raised from across the political spectrum and this bit of obstructionism was quashed--for the time being. The truth is a vast desert with no residents or private owners is just about the only place in the U.S. you can build infrastructure in a timely manner.

What is "timely" in the U.S. (i.e. mere months for approval as opposed to decades) would be painfully slow in China.

The "Ownership Society" was hyped during the housing bubble as a self-evident "good thing." Perhaps, but when everybody owns a piece of everything, then it's almost impossible to get anything done.

I personally am persuaded that offshore drilling can be done with sufficient precautions with current technology to render it a low-risk activity. With gasoline at $4/gallon, a number of citizens who were adamantly against the idea for legitimate environmental concerns about spills and coastlines are now open to the idea.

Care to hazard a guess as to how long it will take to actually get a permit to construct an offshore drilling rig? Please make your guess in years. the possibilities for obstruction are plentiful, and our courts guarantee years of countersuits, appeals, stays, etc.

Once the permits are finally in place--let's be optimistic and say it will only take 5 years--in 2014, then you have to drill some test wells, many of which might turn out to be dry. Add a few years for this process. After locating the petroleum, then you have to construct a huge offshore platform and rig it with reduntant safety features. Add a couple more years. Then there's the pipelines to the mainland, and so on.

It would be miraculous if the first drop of oozing oil were pumped before 2018. On a practical basis, wind farms and large solar arrays built on private lands could be up and running at least 8 years before this first drop of oil flows.

That's something to ponder as we consider: is there any way to "greenlight" basically benign alternative energy and electrical grid projects? How about a one-month process without appeal, and a special "infrastructure" Federal court which convenes solely to dispense with appeals in short order?

Various stakeholders will scream, just like all the patent holders who hoped to get rich off their stake in some "gold mine." Some reduction in the number and time scales of obstruction, i.e. the number of "stakes" and approval processes, is necessary on a national scale, or the "gold" of new infrastructure and alternative energy will never make it out of the ground.


Excellent New Readers Journal Essay:

Read all five of this month's superb essays if you missed them

Why the Trend in Oil Is Up
(José de Freitas, July 30, 2008)

Although I'd be lying if I said I am certain of which direction the oil price is going, my gut feeling is telling me that it's going up as a general trend, despite brief respites. A few points have not been sufficiently made, and I think Rainer H.'s piece exhibits some of the problems those points would address.

Thank you, Cheryl A. ($50), for your second outrageously generous donation this year and for your many contributions of ideas, books and topics to this site. I am greatly honored by your support and readership.