Sometimes you have to go for it

Yesterday, golfer Gary Woodland won the US Open at Pebble Beach. For non-golf fans, I will be brief on the golf part. What was most memorable, Woodland decided on a key moment to not play it safe, but be aggressive and play to win. He hit an absolutely brilliant shot that led to a birdie on a par five and put him two shots ahead of the two-time defending champion.

As a former athlete who was limited in talent to playing on high school teams, the act of “going for it,” is an act of courage. You may fall on your face, but by taking a risk, even if it is a measured one, it may make all the difference. Why does the best basketball player usually take the key final shot when the other team is expecting him to do so? Because if you don’t and fail, you may regret not going with your best.

And, as one star basketball player said, I try to take the last shot because I can handle failure better than others. That last statement is vital. Taking a risk is a lot easier if you know you can handle a negative outcome.

There is a great line from the movie “We bought a zoo,” with Matt Damon. His older brother taught him “all you need is twenty seconds of courage.” I think that is priceless advice. In the movie Damon’s character summoned the courage to speak with an enchanting woman he had never met. And, she eventually became his wife. What if we don’t take that chance?

Again, the risk need not be foolish, but sometimes it is more than OK to go for broke. A measured risk is worth the chance. Yet, we often overstate the risk and perceived embarassment of failure, when the actual risk is more measured. As I told my kids, “What if the person says no? No, is just an answer, but it at least it is one.” Without asking, you will never know if there is interest in your company, your resume, your idea, etc.?

So, find that twenty seconds of courage and go for it. The answer may be no, but at least you gave it a shot.

 

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Coal can’t be made great again says conservative economist

Walter Block is a professor of economics at Loyola University in New Orleans and a Libertarian. He recently penned an op-ed piece in The New York Times called “Coal can’t be made great again.”

Block sets the context for free-market thinking using more basic purchases – shoes, clothes, restaurant meals. This “leave it to the market forces” is a mantra for free-market Republicans. Yet, as Block notes “One would think that Republicans would apply that same logic to our fuel industry.”

He adds while government has a “legitimate role” in ensuring the safety of nuclear and other plants, “it should not favor, or oppose, nuclear power, gas, oil, coal, wind, water, solar, or any other source of energy over any other.”

He also notes a couple of observations of data points which reveal “the market is moving away from coal.” First, he writes “In 2016, American reliance on coal had dipped to 30% of total electric energiy expenditure, from about 50% in 2000. In contrast, natural gas and even wind, solar and water power are becoming less expensive, and will likely take on a greater share of the overall energy industry.”

Second, he notes “For the first time, as predicted by the Institute for Energy Economics and Financial Analytsis, in April, renewables generated more electricity than power plants fueled by what was once called ‘King Coal.'”

It is through these lenses, he views the efforts to subsidize coal use and place tariffs on imported solar panels as a political attempt to “pick winners.” We should not be “propping up coal” at the expense of alternative energy sources.

In my view, we are passed the tipping point on coal. New plants are too costly to build and the present value cost of acquiring, transporting, burning, storing the ash, health and environmental degradation and litigation of coal exceeds other sources. Further, the solar energy jobs are 4x the number of coal jobs. And, wind energy is soaring in growth, especially through the plains states.

This is not a US-centric result. Renewables are growing rapidly abroad with Germany now getting more energy from renewables than coal. China has been heavily investing in solar panels. But, my favorite global example is southern Australia is now solar powered using American Elon Musk’s battery storage and a French company’s installation of solar panels. Three continents came together to forge a renewable future.

While I agree with Block for the most part, government can play a role to help move forward cleaner energy initiatives, at least temporarily. So, the temporary 30% tax credit for solar power installation makes sense, especially when our Department of Defense continues to cite climate change as a significant threat to national security, even under the current president.

But, as the renewable costs have become more on par from a production standpoint, they can stand on their own without the tax subsidy. Embracing future technologies that will drive the economy is essential. As an example, yesterday, Toyota announced the movement from 2030 forward to 2025 when 1/2 of their vehicle sales will be electric cars, with batteries being made in China. So, if our leaders look backwards too much, we might get passed by.

 

 

 

 

Rachel Carson, a silent, but forceful hero

It is hard to go against the grain. It is especially hard when you are a 5’4″ woman in a man’s scientific world that boldly said we can tame nature. Yet, when Rachel Carson wrote her provocative book “Silent Spring” in 1962, she rocked the world of the chemical industry. PBS’ “American Experience” has an excellent episode on Carson.

While her book was fiercely discredited by various “throw something against the wall” attacks by the chemical industry, it helped define how we need to proceed with more precaution. It laid bare the hubris of those who felt they could control nature.

It also started a grassroots environmental movement. Within ten years, the toxic chemical DDT would be banned and the Environmental Protection Agency would be created. Her testimony to Congress abetted these efforts. The Cuyahoga river in Cleveland catching fire also was a clarion call. Yet, she would not live to see them. She had cancer when she was being interviewed and testifying to Congress dying in 1964.

“Silent Spring” was her fourth best seller. The first was her “The Sea Around Us” published ten years earlier. Her first topic called upon her marine biology degree and work at the National Wildlife and Fisheries Department. Her first published book in 1941 called “Under the Sea Wind” was re-released after the second one’s success and sold well. Her “The Edge of the Sea” published in 1955 also was a best seller.

Her voice came at a time when “more chemicals” was the answer to any question. She was troubled that our arrogance was getting ahead of our wisdom. Her voice gained footing when it became apparent some fishermen had radiation poisoning from drifted winds from a hydrogen bomb test. But, she had been concerned about the unbridled use of pestiides for years.

A few chapters of “Silent Spring” were printed in The New Yorker and caused such an uproar that a Science Commission was set-up even before the book was released. President Kennedy made reference to Carson in a Q/A with reporters. She understood the use of pesticides is necessary – her main thrust is we need more testing before they are used. The chemical industry went after her and said she was undermining progress. She was called a communist and her data was more anecdotal. And, the fact she was a woman unnerved industry scientists, who felt she was infringing on their turf.

The book was a runaway best seller. It was highlighted in 70 newspapers. When she answered her critics, only then did they realize the power of her calm and informed voice. They were unable to silence her, though they gamely tried to stop a CBS Special Report featuring an interview with Carson. While two sponsors were pressured to drop out, CBS held their ground. For every question answered, there were 100 more raised.

The CBS Special Report was seen by as many as 15 million people. Carson was quite believable.  It was so impactful, a Congressional Committee was set-up the next day. A few months later, the earlier established Kennedy commission verified her findings as vindication.

As she told Congress we must measure the hidden costs against the potential gains. Shouldn’t we do that with every issue? And, for that she was vilified. However, her most telling testimony is our children have been born into this chemical age and we don’t know the full impact on their lives. As one historian noted in the “American Experience” documentary, she caused a “paradigm shift.” Thank you Ms. Carson.

The strangest thing

Listening to an interview with New York Times reporter David Enrich on NPR the other night, I heard a story that boggles my mind. When Donald Trump declared bankruptcy on six different enterprises, US based banks stopped lending him money. So, he went to German based Deutsche Bank for business loans.

Even there, Deutsche Bank’s investment bank soured on Trump and refused to lend him any more money. Then, its real estate mortgage bank soured on him and was owed US $50 million after refusing to lend him more. But, after bank leadership mandated no more lending to Trump, the story became even more bizarre.

Trump’s son-in-law, Jared Kushner, introduced him to a private wealth manager in New York for….Deutsche Bank. She arranged a $50 million dollar loan from Deutsche Bank’s private wealth group to pay back the outstanding loan with the real estate mortgage bank group within Deutsche Bank. Robbing Peter to pay Paul does not adequately define what happened. And, this is after Deutsche Bank leadership mandating no future loans with Trump. Enrich was unsure if this loan was still outstanding.

Having worked for a very conservative bank in my past, this is a quite surprising story. As a retired consultant, I am aware of one bank that had to be sold due to one very big loan defaulted. I am also aware of several banks who overextended themselves during the housing crisis that no longer exist. But, for Deutsche Bank to permit one part of the bank to pay off a loan from another part for a persona non grata individual, is quite strange and not in keeping with good stewardship.

It should be noted Deutsche Bank has been investigated and fined for money laundering for members of Russian oligarchy. It is also why there is interest in Trump’s financial dealings with this bank by the US Congress. Enrich noted Deutsche Bank is the “Rosetta Stone” to digging into Trump’s finances. This is why Trump has threatened to sue the bank to prevent such release.

Citing climate differences, Shell walks away from U.S. refining lobby

Last month. Reuters wrote an article entitled “Citing climate differences, Shell walks away from US refining lobby.” Here are the lead paragraphs.

“Royal Dutch Shell Plc on Tuesday became the first major oil and gas company to announce plans to leave a leading U.S. refining lobby due to disagreement on climate policies.

The review is part of Shell’s drive to increase transparency and show investors it is in line with the 2015 Paris climate agreement’s goals to limit global warming by reducing carbon emissions to a net zero by the end of the century.

It is also the latest sign of how investor pressure on oil companies, particularly in Europe, is leading to changes in their behavior around climate. Last year, Shell caved in to investor pressure over climate change, setting out plans to introduce industry-leading carbon emissions targets linked to executive pay.”

Shell is not the first oil company to cave to investor pressure. Exxon Mobil and Occidental Petroleum (along with utility PP&L) have to inform shareholders of their progress to addressing climate change after shareholder votes required them to do so. Exxon also has two lawsuits it is dealing with accusing them of misleading investors on the financial impact of climate change.

Climate change is real and is impacting us now. The greater number of sunny days coastal flooding, increased number of droughts, increased and more severe forest fires and the added flooding due to slow moving storns are traceable to the impact of climate change, so says climate scientists. I encourage you to ask politicians what they propose to do about this existential threat to our future. If they do not respond or fail to offer any tangible ideas, do not vote for them. We must move forward as we have squandered much of our window to act.

 

Twenty-three kids and a grandma show the way

As a 60 year-old man, I have grown weary of politicians acquiescing to industry funders who want them to permit industry to conduct environmental degradation with impunity.  So, when I see younger folks (or maybe an older one or two) making a difference for the environment, it gives me some hope. They see a future that must change.

Emily Stevenson is a 21 year-old UK woman who has been policing the shores of her country since she was a child gathering up washed up plastic items. Among her many collected items, a frequent item is used plastic chip bags, many made by Walker’s. She advocated successfully to get Walker’s to recycle these bags and look to more bio-degradable materials. One of her ideas to garner notoriety was to make a graduation dress out of Walker’s chip bags. She got Walker’s to partner with a company who recycles items (that previously went unrecycled) into reusable plastic pellets.

Maybe, she was influenced by a 70 year-old British grandmother who has combed 52 beaches in the UK for trash. Pat Smith may have a simple name and have a simple approach, but she is a dedicated exemplar of what we must do to keep our environment clean. Her persistence is refreshing.

Sixteen year-old Greta Thunberg has gotten notoriety for her climate change activism. The Swedish teen parked herself outside of the Stockholm Parliament building advocating more action on climate change. She spawned other teens to do the same around the world. Recently, she spoke eloquently to the UK Parliament. Were they listening? Let’s hope so, but the fact she was there speaks volumes.

Let me close with the twenty-one American kids who have a lawsuit that continues to move forward over all obstacles thrown their way by government and industry. They are suing the US Federal government for denying them due process by obfuscating the impact of climate change for years along with the fossil fuel industry. As reported on “60 Minutes” earlier this year, their case is pretty compelling. Why? It uses the government’s own data and reports against them. It should be noted a separate case against Exxon Mobil by three state AGs uses Exxon’s own data and reports against them. Their case is Exxon misled investors of the impact of climate change on its financials (note a similar case has been brought by Exxon shareholders).

Twenty-three kids and a grandmother are making a difference. We need to listen to what they are saying. As Stevenson noted companies need to pay attention or we simply won’t buy their products. The smarter companies are listening and acting.

A specific deficit problem – Social Security and Medicare

While we have an annual US deficit approaching $1 trillion on budgeted revenue around $3.4 trillion, nothing much is being done about it or our current debt of $22 trillion. A tangible subset of this problem includes Social Security and Medicare, which were reported yesterday by trustees to run out of money in the near future – Medicare by 2026 and Social Security by 2035.

A nonpartisan group called The Concord Coalition, who tracks and reports on our debt and deficit issues, offered the following statement.

“Today the trustees once again warn that Medicare and Social Security are not on sound financial ground,” said Robert L. Bixby, Concord’s executive director. “Sudden and substantial benefit cuts await beneficiaries in less than 20 years — well within the lifetimes of many current beneficiaries — if lawmakers fail to act. Any ‘political leader’ worthy of that title, including those out on the 2020 campaign trial, should make it a priority to find solutions that are both fiscally and generationally responsible.”

Bixby added: “The trustees’ warnings seem all the more alarming because the country is not in a position of current or projected fiscal strength. Delaying reforms, however, would simply exaggerate the generational inequities of reform. For example, the trustees say it would now take an immediate and permanent benefit cut of 17 percent to keep the Social Security trust fund solvent for 75 years. Waiting until 2035 to take action would increase that benefit cut to 23 percent.”

As a retired actuary, I have written before about a few ideas, not limited to the following:

– increase the Social Security taxable wage base to above $180,000 drawing more FICA taxes from employees and employers;

– reduce Medicare retirement age to 62 and use ACA funding for that group to shore up (it will help the risk pools of both groups);

– limit cost of living increases on Social Security benefits along with measured changes to select Medicare benefits;

– increase judiciously FICA taxes to shore up shortfalls (Medicare Part A is currently 1.45% and Social Security is 6.2% up to the taxable wage base of roughly $128,000). Medicare Part B premiums change annually.

Please encourage your legislators to act now on these issues. Bixby’s caution is a good one. As we age as a country, it will only add pressure. Also ask candidates what they propose. Do not let them off the hook with a non-answer. Deferring action has been the norm.