Two quotes from a nice and effective public servant

The Charlotte Observer reported today that Boyd Cauble, a long time aide to many mayors of both parties passed away. Three things stand out about Cauble – he did not bring attention to himself, he was very effective working with officials in Raleigh and DC, and was a genuinely nice guy.

More than several of Charlotte’s major accomplishments can be traced to Cauble’s tireless advocacy. Rather than list such milestones, let me focus on two bookend quotes from Cauble from the article penned by Jim Morrill.

Morrill writes “Boyd Cauble lived by a simple credo: ‘Just be nice to people – you’ll be amazed what will happen.'”

When Cauble retired from the City, in an Observer article called “The City’s most influential guy you have never heard of,” he said at the time:

“‘I am a firm believer that if you don’t care who gets credit, you’ll gey a whole lot of things accomplished.'”

I encourage you to read these two quotes and contrast them to today’s partisan win/ lose debates that are a poor substitute for governance. All politicians (and business people or any team) from top to bottom could learn from these words.

Mayors from both parties lauded Cauble’s efforts. Vi Lyles, Charlotte’s current mayor and long time City leader, said “He helped bulld Charlotte.'”

Pandemic accelerates renewable energy surpassing coal energy in US

In an article by Brad Plumer of The New York Times (see below) called “In a first, renewable energy is poised to eclipse coal,” the growth of renewable energy has been further fueled by the pandemic. This year, renewable energy (solar, wind, bio-mass, geothermal and hydroelectric), will surpass coal as the second largest energy source.

Per Plumer, efforts by the current president to keep propping up coal-burning plants have proven ineffective against market conditions. He notes “Those efforts, however, failed to halt the powerful economic forces that have led utilities to retire hundreds of aging coal plants since 2010 and run their remaining plants less frequently. The cost of building large wind farms has declined more than 40% in that time, while solar costs have dropped more than 80%. And, the price of natural gas, a cleaner-burning alternative to coal, has fallen to historic lows as a result of the fracking boom.”

Plumer adds the impact of COVID-19 which has reduced electricity usage with fewer stores and restaurants open is hastening this trend. “And because coal plants often cost more to operate than gas plants or renewables, many utilities are cutting back on coal power first in response.”

Further, “Coal is the dirtiest of all fossil fuels, and its decline has already helped drive down US carbon dioxide emissions 15% since 2005. This year, the (Energy Information Administration) expects the US emissions to fall by another 11%, the largest drop in at least 70 years.”

Coupled with people driving less and avoiding traveling by airplanes, an upside to COVID-19 is 2020 will be an impactful year on less carbon usage which will help in cleaning air (which is noticeable from satellites) and addressing climate change. As the economy slowly recovers with the majority of people being cautious in their movements and spending patterns, at least this positive impact will continue for more than 2020. And, hopefully with the coal plants being used more and more in the bull pen for extra need, more may be retired.

Still, some folks are surprised by the news of the decline in coal. They should not be. About eight years ago, oil tycoon T. Boone Pickens was on “60 Minutes” and said the future energy source in the windy plains states is wind energy. He added fracking for natural gas will buy time until the cost of wind is more economical. Now, oil rich Texas bears that out with wind energy surpassing coal by itself this year. While Texas produces more wind energy than any other state, Iowa gets over 40% of its electricity from wind and most of the top states in percentage of electricity are plains states.

Not only has coal become relatively more expensive due to the cost declines in other sources, its costs and risk continue beyond the life of the fuel and the plant. Duke Energy and TVA have had to clean up messes from coal ash that have bled into the water systems. And, Duke’s Dan River spill was from a long-ago retired coal plant.

The people I feel for are the coal miners whose hopes have been propped up by politicians who have not been forthcoming. I have known about coal’s demise since that Pickens’ interview and through other news and reading sources. My guess is so have the politicians, yet rather than be truthful and help them plan for new careers, they kept feeding their hopes. And, last time I checked, the wind blows and sun shines in those coal producing states. So, these miners are owed long-time-coming truths and help to find and train for new jobs.

Inspector Generals and Auditors

What do Enron, Healthsouth, Adelphia and Tyco have in common? All were found guilty of fraudulent activities. And, each were misled by CEOs and even CFOs. The names Kenneth Lay and Richard Skilling of Enron (accounting and tax fraud), Richard Scrushy of HealthSouth (accounting fraud), John and Tim Rigas of Adelphia (fraud, corruption and theft) and Dennis Kozlowski and Mark Switz of Tyco (massive theft) will not be remembered in a good light. The Enron scandal even brought down one of the largest accounting firms, Arthur Andersen.

Because of their activities, the SEC passed a rule stating that the Board of Directors’ Audit Committee must be given greater authority and independence. In short, the Audit Committee must be independent of the Executive Committee and cannot include the President or Treasurer. It also must:

– Not include anyone employed by the organization or the audit firm
– Have at least one “ financial expert ” who is familiar with the audit process
– Avoid conflicts of interest.

In the federal government, the Inspector General’s office imbedded in each of the departments of the Executive branch serves like an auditor. The equivalent Board oversight is the Congress of the United States, not the president. It is a very important role that keeps America running like a democracy and not an autocracy. When this oversight is compromised, America’s democracy is diminished.

I raise this now as the president of the United States seems to be at war with the Inspector Generals in the Executive branch. Friday night, the president sent a letter that he was firing Michael Atkinson who did his job and reported to Congress the veracity of a whistleblower complaint. To Atkinson’s credit, he publicly defended his role and encouraged whistleblowers to still come forward.

This week, the Glenn Fine, the appointed IG overseeing the $2.2 trillion coronavirus stimulus fund, was removed and will be replaced by a Trump appointee. Fine was well regarded in this role coming out of the Department of Defense. Something seems fishy here.

If that were not enough, the president was critical of a US Department of Health and Human Services IG report led by Christi Grimm. The report was critical of the hospital preparedness for the coronavirus, which is not a surprise, since hospitals and governors are begging for help.

What does all of this mean? Why is the president at war with the Inspector General’s office? Is he hiding something? Are they saying things that run counter to his own storytelling which is well-known to be less than truthful? If this were a publicly traded company, these actions would raise a red flag with the Audit Committee. They should do the same with Congressional oversight.

In short, the US is not a kingdom. It is not an autocracy. The president has never reported to anyone before his swearing in, except for his father. He is highly accustomed to not being questioned. In fact, he does not like being questioned, which is apparent on a daily basis. Yet, he must answer to Congress. I urge Congress to do their job. They must represent Americans, not a political party.

For profit drug and medical supply companies are geared to maximize profits

This topic is not a new one and is one I first wrote of several years ago. The concern is the number of for-profit companies who make drugs and medical supplies are not geared toward fighting pandemic or new bacterial strains that keep cropping up. They are geared toward profit. What do I mean by this?

Think of all of the television commercials about new prescription drugs. It will not be hard as there is a growing number with new names that make you ask, now what does this do? Quite simply, a drug company makes more money creating a maintenance drug you take every day for the rest of your life than they do making cures for major diseases.

It is not unusual for the company to codify a new illness which is neatly packaged with this new pill. Or, the new pill may be a supplement to an existing drug to make it better or address the side effects. Did you know there is an anti-constipation drug that is sold to help alleviate the constipation caused by opioid painkillers? Please note this is not intended to slight anyone who is gaining benefit from one of these drugs.

Making a drug that will cure something, simply has a low or negative ROI. One reason is the company would look poor if they charge to high a price for a cure. This is where the CDC and NIH must garner funding to pay for the development of drugs before the pandemic catches fire. The other risk is the new bacterial strains that may develop beyond our ability to fight the strain. This is where I first learned of the funding deficiency for massive exposure problems.

The same can be said of medical equipment. The New York Times has a good piece on the recent history of ventilator production. Agreements have been made then voided by acquisitive companies. These acquisitions were either to protect a higher priced ventilator or a market share. So, there were a number of false starts. What is frustrating is how easily contracts can be voided after an acquisition. This is horribly unfair to the buyer of the service or product, especially when the contract could help many.

There are a couple of larger points to be made. This is a great example of where there needs to be a blend of financial responsibility on investment for the greater good. This is not new. Our country has a history of a blend of corporate, venture capital, private and government investment. This is a key theme of Pulitzer Prize winning author Thomas Friedman’s book “That Used to be Us: How America fell behind in the world it created and how it can come back.”

Per another economic advisor, David Smick (“The World is Curved”) who advised Republican and Democrat presidents, this blend of capital investment need not occur on every investment or in some set order. Sometimes government funding leads and sometimes it may trail. The point is we have way to many either/ or arguments when the right answer is a blend of both or multiple. This is known as the “tyranny of the or.” Our history is built on the blend of capital investment, especially for large infrastructure projects.

So, greater good investments need to be evaluated as soon as possible. When the risk is identified, that is when the spend is needed, if not before given what the challenge is. Not having a COVID-19 vaccine early on is one thing that should have been addressed a few months ago given the development time. Not having enough ventilators is something that should have been addressed well before given their need. Leaving certain things to solely a for-profit lens will mean that some needed investments may not get made or not made soon enough.

Poor (or not so poor) Richard’s Almanac

One of my two North Carolina Senators is Richard Burr. While I do not agree with everything he opines, this independent voter has voted for him on occasion and against him as well. Yet, he has always seemed to be one of the more reasonable Republicans and Senators in office. I have actually even met him twice, once at a meeting about the state’s homeless population and once at my boss’ request to brief him on employer health care issues when he first ran as a Congressman.

So, this makes it even more troubling that he has been alleged of insider trading on stocks to pocket the upside gain on hospitality stocks when he had knowledge those stocks would suffer as the coronavirus became more known. He and Kelly Loeffler, the new Senator from Georgia, have been accused of such. From a Reason.com article called “Senators Richard Burr, Kelly Loeffler accused of coronavirus motivated insider trading” (see link below):

“Plague trading? Privately, Sen. Richard Burr (R–N.C.) warned constituents weeks ago that coronavirus was “akin to the 1918 pandemic,” NPR reports. Publicly, he towed President Donald Trump’s line that the new disease would not be a big deal.

Worse still, ProPublica reports that Burr sold off between $600,000 and $1.7 million in stocks on February 13, suggesting that he used his private knowledge about the coming economic impact of the pandemic to prevent personal financial losses. Burr chairs the Senate Intelligence Committee and is a member of the Health Committee. At the time he sold the stocks—a significant proportion of his wealth—he was being briefed regularly on COVID-19.

It was the largest single-day stock trade for Burr in 14 months.”

Insider trading is a crime for “named executives” according to the Securities Exchange Commission (SEC). Note Burr is not a named executive of these companies. Yet, it is also in violation of the STOCK (Stop Trading on Congressional Knowledge) passed in 2012, which Burr ironically voted against. This act was passed after “60 Minutes” did a report that noted former Congress members were leaving office much wealthier than when they arrived due to insider knowledge. This is where Burr’s action may lead to trouble for him.

People may not recall the Enron scandal which hit the fan in the early 2000s. This is where Enron executives had over 40 fraudulent schemes to hide losses and artificially prop up earnings for stock appreciation and bonus determination. What is also infuriating, the CEO told employees to keep buying and not divest Enron stock, even when he knew the price was artificially propped up. He and his CFO went to jail for securities fraud. Senator Burr was telling people the president’s party-line of not to panic about the coronavirus and this will blow over, when he had been briefed as chair of the Senate Foreign Relations and Intelligence Committee to the contrary.

He argues that he was selling based on public knowledge, but the above paragraph reveals concerns. Right now, a shareholder of Wyndham Resorts, one of the stocks, is suing the Senator for insider trading. I am certain other shareholders will be asked to join the lawsuit to make it a class action. They will have standing, meaning they lost value, while Burr sold and pocketed gain on the advance knowledge.

A recent poll in The Charlotte Observer, cited 50% of all NC voters and 31% of GOP NC voters want Burr to resign. Even Fox News talk show host Tucker Carlson has asked for his resignation. This is why it is critical that elected officials must be divorced from the handling of their investments, either placing them in blind trust or selling them. It should be noted NC Congressman Robert Pittenger resigned his position two years ago due to his unethically remaining involved in the management of his business when he said he was not.

Senator Burr, I recognize this an alleged crime, but the optics look very poor. I know you asked for an investigation, which sounds good, but if it is done correctly, it may not come out in your favor. Even if it does, the shareholder lawsuit will be even more invasive. I do not see you escaping hard scrutiny. It is sad that you will likely be remembered more for this, than other more reasonable efforts you have made. I know you have announced last year you won’t be running again in 2022, but you may be forced to reconsider this.

Sens. Richard Burr, Kelly Loeffler Accused of Coronavirus-Motivated Insider Trading

The Fed needs to act independently

The Federal Reserve was set up to be a nonpartisan governing board over the money supply in the US, which impacts the economy. The president would only appoint members for Senate vetting when terms expired. The Fed is supposed to be independent from pressures from the White House.

Yet, the bull-in-the-china shop president wreaks havoc over what is supposed to be done. He acts regally in what is supposed to be a democracy with rules of governance. The Fed should not succumb to any president, but especially this one, who routinely places his self-interests above the country’s. And, that does not lead to good governance.

Presidents have little impact on the economy, only providing some headwinds and tailwinds. This president has done a little bit of both. But, he championed himself as a superior dealmaker and business person when campaigning and since elected. Yes, he has had success, but given his starting point, some financial people think he should be wealthier than he is.

He touts a $1 million loan from his father, but that is fable. An in-depth study was reported by The New York Times in the fall of 2018, that Trump’s father transferred tax free over $400 million to his son before he died. That is well north of a $1 million loan. Plus, there are Trump’s six corporate bankruptcies on failed projects. That caused US banks to stop lending to him, so he went to Deutsche Bank for money. But, there have been other failed investments – airlines, mortgage company, etc.

Trump has eagerly patted himself on the back about the economy. But, the economy was just over 7 years of economic growth and the stock market had more than doubled under his predecessor when he took office. But, as with Trump, Obama should not get too much credit for the economy either. He provided mostly tailwinds and a few headwinds. What is revealed by the stock market fall off due to global softening, falling oil prices and the coronavirus, is the president does not have much to do with the stock market. As Warren Buffett once said, if the president is going to take credit for the stock market increase, then he must take the blame for the fall.

So, the Fed would do well to ignore the president. Yes, the president is entitled to his opinion, but what has been shown over his history, is maybe his financial advice is not as sound as he (or his followers) think it is. My concerns are we are using tools that should be reserved for even tougher times. The stock and bond markets seem to be more jittery with moves like this. And, when people are staying home, traveling less and eating in, reducing interest rates may not be creating a needed salve, if less spending is occurring.

Yet, as noted earlier, what bothers me most is the president is interested in his own optics, not fixing a problem. He has and wants to trade short term gain for his benefit, at the expense of future problems. He did this with the debt and deficit and he has and will do it with the Fed. They need to tell the president, thanks but no thanks.

Fossil fuel energy may have seen a global turning point

Earlier this week, Reuters in the UK posted an article called “Fossil fuels for power at turning point as renewable surged in 2019 – data.” A link to the article is below. A few excerpts from the article are telling:

“The use of fossil fuels such as coal and oil for generating electricity fell in 2019 in the United States, the European Union and India, at the same time overall power output rose, a turning point for the global energy mix. Those countries and regions are three of the top four largest producers of power from fossil fuels. The declines suggest the end of the fossil fuel era could be on the horizon, said Tomas Kaberger, an energy professor at Chalmers University of Technology in Sweden, who provided the power generation data to Reuters.

Kaberger, who is also the chair of the executive board for Japan’s Renewable Energy Institute and a member of the board at Swedish utility Vattenfall AB, provided data covering more than 70% of the world’s power generation that showed for most of 2019 the amount of power sourced from fossil fuels dropped by 156 terawatt hours (TWh) from the year before. That is equal to the entire power output of Argentina in 2018.

The data also indicates that renewable power generation increased at a faster rate than the overall growth in power output for the first time, rising by 297 TWh versus 233 TWh for overall output, Kaberger said.

‘It is economics driving this as low-cost renewable electricity outcompetes against fossil and nuclear power plants,’ said Kaberger.”

The last quote from Kaberger is extremely important. The economics of renewables relative to their fossil fuel counterparts are driving the movement. The argument that renewables cost more is not relevant any more. And, when you factor in the present value of all costs – acquisition, transport, environmental degradation, production, water loss, health, storage, maintenance and litigation – renewables beat the pants off fossil fuel energy.

So, when you hear fossil fuel arguments such as cost, use the above example. When you hear fossil fuel arguments such as jobs, solar and wind energy jobs are growing at double digit rates. The big picture question is if we can use a non-polluting, renewable energy at the same or better cost, and create jobs, is that not the best path forward?

https://uk.reuters.com/article/uk-electricity-fossilfuel-decline/fossil-fuels-for-power-at-turning-point-as-renewables-surged-in-2019-data-idUKKBN20R0I6?feedType=RSS&feedName=worldNews

The Bahamas is rebuilding with solar power

With more devastating hurricanes, The Bahamas has been subject to several disasters. As reported on “60 Minutes” last night, following Hurricane Dorian, they are rebuilding with micro solar power grids. The island of Abacos and its largest town were hit hard.

The islands have been powered on diesel fuel generators for decades. It is very costly to freighter over diesel fuel. Plus, every island does not have its own power generation, so the electricity has to be transmitted over long distances.

The over head power lines are devastated in certain areas, with poles snapping and transmitters and lines torn to the ground. Regardless of the power source, the lines need to be buried.

In the interim, micro solar farms have been built. Some are on top of schools which actually weathered recent storms, while others are a series of panels in fields, which can withstand 185 mph winds. And, they are building larger arrays of solar panels that take advantage of the improved efficacy of battery storage.

The Bahamas are showing the way and doing their part. Yet, small nations like this are overburdened by the climate change causes of the industrialized nations. They have petitioned the United Nations to get the greater polluters to help fund the cost of transition.

While the cost of solar power is on par or better than the diesel fuel generation, there are implementation costs, especially with the burying of power lines, which is needec regardless of the source.

Climate change is making hurricanes more damaging. These island nations bear the brunt. It is good to see them act more strategically going forward.

China bets on wind and solar power in Brazil

With the US government overly concerned with protecting non-renewable fossil fuels, other countries continue to move forward. An article called “China bets on wind and solar power in Brazil” by Manuela Andreoni in Dialogo Chino last August showed how China is filling the void.

From the article:

“It took just two months and a few billion dollars for China General Nuclear Power Group (CGN) to become one of the largest providers of clean energy in Brazil. Between May and July, the company acquired two solar power plants – including the second largest in the country – and six wind farms.

Chinese companies were already a powerhouse in Brazil’s energy sector, owning about 10% of the country’s capacity, mostly because of big acquisitions in recent years by State Grid and China Three Gorges; not to mention the thousands of kilometers of transmission lines being built.

But the new move by CGN solidified China’s presence in Brazil’s flourishing new energy market. According to a Diálogo Chino analysis of public records, the new investments mean Chinese companies now own 16% of Brazil’s wind power capacity and 21% of its solar capacity, or 2,822 megawatts in total.”

American companies, states and cities are moving forward on renewable energy. Their efforts would be so more impacful if leveraged by the federal government.

Our planet needs more leadership on this issue than America is showing. Countries like Germany and China are filling that void.

Being candid on obvious concerns

Last night, “60 Minutes” did a piece on the continuing forest fires in Australia. The risk has heightened due to climate change on this very hot and dry continent.

One of those whose home has been destroyed is incredulous by the lack of planning and execution by the prime minister and government. She said our country is on fire and the risk will continue and they cannot focus on that? Another person joined others and refused to shake the prime minister’s hand saying “you’re an idiot, mate.”

Not to be outdone, former conservative PM Malcolm Turnbull noted climate change is making the Australian forest fires worse. He referred to climate change naysayers in his own party as “idiotic.”

Their candor is needed. In the US, Republican lawmakers are now pushing the planting of a million trees. This is a good start, especially after twenty years of varying degrees of climate change denial, but addresses only one side of the issue. We need to also stop putting so much carbon and methane into the atmosphere as well as taking carbon out of the air with more trees (and other measures).

I am not advocating the use of derogatory terms like idiot or idiotic, but in the case of the current Australian PM, Scott Morrison, many would not shake his hand after he took a planned vacation to Hawaii while the fires were raging back home. That was not the wisest of moves.