The Power of Fear

When I went to Salem, Massachusetts a couple weeks ago, I had the chance to learn a little about the witch trials that took place there.   As I mentioned in an earlier post, it brought to mind that conventional wisdom can sometimes be a very dangerous thing.   As many of us know, fear is probably the most dominate emotion that controls our lives.   Our fears of rejection, failure, the unknown, and sometimes even success, can lead to behaviors that limit ourselves from realizing our true potential as a race and can cause societies do irrational things to alleviate that fear.   And do the leaders of societies recognize the power of fear and use it to manipulate its people by defining a convenient conventional wisdom?

Below is a brief snip from wikipedia that describes the initial events of the Salem witch trails.

In Salem Village in 1692, Betty Parris, age 9, and her cousin Abigail Williams, age 11, the daughter and niece (respectively) of the ReverendSamuel Parris, began to have fits described as "beyond the power of Epileptic Fits or natural disease to effect" by John Hale, minister in nearby Beverly.^[13] The girls screamed, threw things about the room, uttered strange sounds, crawled under furniture, and contorted themselves into peculiar positions, according to the eyewitness account of Rev. Deodat Lawson, a former minister in the town. The girls complained of being pinched and pricked with pins. A doctor, historically assumed to be William Griggs, could find no physical evidence of any ailment. Other young women in the village began to exhibit similar behaviors. When Lawson preached in the Salem Village meetinghouse, he was interrupted several times by outbursts of the afflicted.^[14]

The first three people accused and arrested for allegedly afflicting Betty Parris, Abigail Williams, 12-year-old Ann Putnam, Jr., and Elizabeth Hubbard were Sarah Good, Sarah Osborne, and Tituba.^[15] Sarah Good was homeless and known to beg for food or shelter from neighbors. Sarah Osborne had sex with her indentured servant and rarely attended church meetings. Tituba, as a slave of a different ethnicity than thePuritans, was an obvious target for accusations. All of these outcast women fit the description of the "usual suspects" for witchcraft accusations, and no one stood up for them. These women were brought before the local magistrates on the complaint of witchcraft and interrogated for several days, starting on March 1, 1692, then sent to jail (Boyer 3).

Other accusations followed in March: Martha Corey, Dorothy Good (mistakenly called Dorcas Good in her arrest warrant) and Rebecca Nurse in Salem Village, and Rachel Clinton in nearby Ipswich. Martha Corey had voiced skepticism about the credibility of the girls' accusations, drawing attention to herself. The charges against her and Rebecca Nurse deeply troubled the community because Martha Corey was a full covenanted member of the Church in Salem Village, as was Rebecca Nurse in the Church in Salem Town. If such upstanding people could be witches, then anybody could be a witch, and church membership was no protection from accusation. Dorothy Good, the daughter of Sarah Good, was only 4 years old, and when questioned by the magistrates her answers were construed as a confession, implicating her mother. In Ipswich, Rachel Clinton was arrested for witchcraft at the end of March^[16] on charges unrelated to the afflictions of the girls in Salem Village.

The people of Salem were fearful of the uncontrollable behavior of the young girls and the possibility of it spreading to others in the community.   Something had to be done.  Because the science of the day could not explain what was happening, the community accepted the explanation that witchcraft must be the cause, and the only way to eradicate the problem was to accuse woman of some mystical powers that were being used to threaten the town.   These 'witches' had to be eliminated.

Was this story created for economic and control reasons?   Did the land that some of these 'witches' own revert to others if convicted?

I look at the controversy over the Ground Zero Mosque and the anti Islamic sentiment surrounding it as a similar situation.   Most people in our country don't understand Islam and the people that practice it.  They think that the 1.6 billion Muslim people on our planet are terrorist and are fearful that any tolerance toward this religion is a threat to our survival.   The images of WTC only reinforces that.   Fear is causing people to act irrationally.    Is there a subliminal resentment that our economic woes are caused by the Islamic world because of our high reliance on their oil?   Could the mood swing to such that we begin to believe it is our moral obligation to 'take over' these countries to free the world of such vial people... and maybe get control of the oil.

The New Einstein

Every hundred years or so, someone comes along that truly changes the world.   Someone that makes a contribution so significant that mankind is changed forever.   It seems like we're due.   We have our revolutionary figures in the arts, politics, and to some extent business.   We can list them all, but the hero I am envisioning hasn't showed up yet.

On a planet of many billions, we know they are out there somewhere.   Studying physics in one of our premier universities.   Maybe it is a young inventor/business person in the mold of Thomas Edison that is still developing ideas and thinking of how to make it a reality.   Maybe this person hasn't been born and won't be with us for another generation or so.   But this world needs them more than most of us think.

My last couple posts were articles about the uncertainty of the world economic climate and green energy.   The article about green energy made the point that the cost of producing environmentally friendly energy is too expensive to be mainstream.   Another post highlighted that 42% of our trade deficit is related to energy and transportation.    I think most of us believe the dangers from carbon based energy is a danger to our planet and the long term viability of mankind.

So who is this new Einstein?   They maybe is from India, China, or any other country on our planet.   It could be a woman.  Their passion will be to develop the science that leads to the engineering, business, political, and environmental breakthroughs that harness the energy in our universe in a way that safely helps man continue his inhabitation of the planet earth.   This science will be used run factories, homes, vehicles, and cities.  The countries that harness and develop this technology will be the new global leaders.   They who own the energy, will own the world.

No doubt some of our world's brightest minds have been working on this endeavor.  It is evident in the statistics about how much of the energy in the US is derived from renewable sources.   But the percentage needs to increase from 7% to 100%.    The next Einstein, or Edison, or Ford will be the one that makes this possible.   And it needs to happen soon.

Rick

Clean Energy. Why we are not using it.

From sfgate.com

The United States expends a lot of energy studying green energy. There's no shortage of ideas. For example, San Francisco considered installing giant turbines under the Golden Gate Bridge and harnessing tidal power to generate electricity. There are all kinds of research projects, coalitions and advocacy groups touting renewable energy, but the country is still heavily reliant on fossil fuels. Only 7% of energy consumed is from renewable sources. So why haven't we made more progress and what can be done to change the numbers?

IN PICTURES: Top 10 Green Industries

It's Too Expensive to Produce. The total cost to research, build and operate new green energy plants combined with storage and transmission expenses is significantly higher than traditional coal burning plants. According to the U.S. Energy Information Administration, the average cost of solar power is almost four times as much as traditional coal burning electric generation. The costs are difficult to compare due to the widely disparate nature of individual technologies but the net result is that startup costs are steep.

The U.S. government is attempting to jump start green energy projects through the American Recovery  Reinvestment Act of 2009 by allocating $16.8 billion dollars for energy conservation, research and development. The bill includes everything from grants to tax credits to encourage green energy activity.

Most projects have a long-term horizon, so results are not immediately available.

Eco-investing has been around for a while now with green mutual funds and bonds available to both individual and institutional investors. Private equity dollars fund the green technology industry through venture capital firms like Kinetic Ventures of Atlanta. Nonprofit organizations also supply grant money for emerging technology that enables the production and conservation of energy. So, the money is flowing in from multiple sources. (Learn more about green technology in The Future Of Green Technology Investing.)

Which Green Energy Source Is the Best? The local environment determines whether wind, hydro power or solar energy generation is feasible. The availability of fuel, technology and transmission are factors in the long-term success of a new energy project. Some of the most efficient and economical energy solutions combine energy sources. Also, the local government's willingness to provide tax incentives has a large impact on the costs.

Solar photovoltaic (PV) cells, which use solar panels to directly generate energy are popular for individual buildings or small geographic areas, but large scale use is expensive. Solar energy used to heat liquids that power large electric plants is actually less costly. Sunlight can be inconsistent, so solar is often used in conjunction with other power sources.

Biofuels have been around for a long time and they are the least expensive renewable energy source. One of the fastest growing segments was ethanol, aided by the Environmental Protection Agency's (EPA) Renewable Fuel Standard which requires fossil fuels to be mixed with a minimum amount of bio-fuels when they are transported in the United States. The regulations attempt to reduce greenhouse gases and increase the use of clean energy.

Wind energy requires a certain amount of sustained wind speeds to be effective. Huge wind turbine fields in various parts of the country produced 1.3% of the electricity in the U.S. in 2008. New technology for storage and transmission make wind power cheaper than solar, but it is still 50% more expensive than coal-powered electrical plants. Offshore turbines are almost twice as expensive. (Wind and solar energy can be used at home. Find out more in Taking Your Home "Off The Grid".)
Hydro power and nuclear power cost about the same amount. Both are more expensive than traditional electric plants and environmental issues plague both. The transportation and long-term disposal of nuclear fuel is remains a concern for nuclear plants. Hydro power poses a threat to wildlife.

Renewable Energy is Really Hot It is politically correct and even "cool" to use green energy. Businesses, governments, celebrities and anyone else gains immediate recognition for buying, using or promoting renewable energy. The economic consequences are serious. Increasing global demand for energy is creating a sense of urgency for the United States to produce domestically generated renewable energy. It is not just an economic concern, but a political one, as oil rich countries assess their future.

The Bottom Line
The reason we are still dependent on fossil fuels for energy is about as old as the fossils themselves. A complicated mix of costs, technology and environmental issues means no one source is best. The diverse implementation of energy sources is a positive step toward energy independence and sustainability. (To learn more, see 6 Reasons Nations Don't Go Green.)

Catch up on your financial news; read Water Cooler Finance: A Diving Dow And Rotting Eggs.

Original story - Green Energy: Why We're Still Not Using It

Copyright (c) 2010 Investopedia ULC. All rights reserved. Investopedia.com is a Forbes Digital Company.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/08/25/investopedia46566.DTL#ixzz0xeDJw2if

Weak Data

Tough economic news this morning.  

Orders for durable goods increased 0.3% in July against average forecast of 3%.     Excluding transportation, orders fell 3.8%.   This is an indication of slowing down of demand for US Manufacturing.

New home sales fell 12.4%.   Low interest rates and lower housing prices are not enough to get people to buy homes.   An indication that people are fearful for their jobs, if they have them.  

Without jobs, people are going to be cutting back on spending leading to decreased demand for goods.   Where are the jobs going to come from?

http://www.ft.com/cms/s/0/1d1dc496-b051-11df-939d-00144feabdc0.html

Back

This is a personal note about my trip through New England last week with my friend Cecilia.  Our adventure started where Routes 17 and 287 come together in Mahwah, New Jersey and we made a 1,300 mile loop through a beautiful part of our country; one that I don't know all that well.

We drove to Saratoga Springs, took the back roads to Lake George, and found a ferry that took us to Vermont. Serendipitously, we used our GPS to find a Bed and Breakfast gem ouside of Burlington appropriately called Hidden Gardens.   Tucked away in the middle of nowhere, this place had acres of gardens tucked away on a wooded hillside that one could explore for hours.  http://thehiddengardens.com/


The next day, we made our way across Vermont, stopping in Montpelier and had another breakfast at a local diner where we were served by a waitress who was quick to point out that she gave up her  executive job to be there.   Also in this charming town we managed to pick up a parking ticket because of our lackadaisical approach to parking meters.    The afternoon drive brought us to Mt. Washington where we took the Cog Rail train to the top.   The weather was spectacular and Cecilia was so blown away by the majesty of the mountains.    After stopping at just about every place we could find, we finally found a historic hotel in Littleton, NH that was built in the mid 1800's that was visited by presidents all the way back to Ulysses Grant.   Littleton seemed like a very tired town.

The next leg of our adventure took us on a delightful drive through New Hampshire and Maine to Bar Harbor and Acadia National Park.  The beauty of Cadillac Mountain, Thunder Hole, and a late day cruise through the harbor made for a very relaxing and enjoyable day.  Seeing bald eagles, seals, lighthouses, rocky cliffs, and the marine layer flowing over the little islands was truly breathtaking.    Walking through the quaint town of Bar Harbor was highlighted by tasting the best Cookie Dough ice cream sampled by yours truly to date.

We started our trek back home with a beautiful drive down the Maine coast.   As we drove, we often spotted interesting things to take pictures of, and turned around to capture them.   Lunch at an organic cafe in Camden that served ridiculously good brownies and treats fueled us for the afternoon drive.  Our intended resting stop that night was Gloucester, Massachusetts, but after losing the accommodations battle, we found our way to Salem where we stayed in a wonderful and historic Inn next to the Witch Hunt museum on Washington Square.   While Salem was very historic and interesting, I think the thought of witches gave us both the creeps and reminded us of how dangerous conventional wisdom can sometimes be.

Our final day included a drive through Marblehead, the Big Dig tunnel in Boston, and lunch in Newport.  On the way home through Rhode Island, we found a driving range that Cecilia insisted we stop at so she could work on her chronic slice, which she seemed to cure.

All in all, it was a great trip.   It is good to get out of the congestion of New Jersey and enjoy the beautiful countryside we have in this part of the country.   As usual, I go through the fantasy of imagining living in each of the beautiful spots I visit.

I just realized that the word business probably comes from the word busyness.    Maybe we should be less busy, and more thoughtful.

News Flash - China Overtakes Japan as World's Second-Biggest Economy

As reported on Bloomberg this morning.  
China surpassed Japan as the world’s second-largest economy last quarter, capping the nation’s three- decade rise from Communist isolation to emerging superpower.

Japan’s nominal gross domestic product for the second quarter totaled $1.288 trillion, less than China’s $1.337 trillion, the Japanese Cabinet Office said today. Japan remained bigger in the first half of 2010, the government agency said.

China led the world out of last year’s global recession with an economy that’s more than 90-times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free-market reforms in 1978. The country of 1.3 billion people will overtake the U.S., where annual GDP is about $14 trillion, as the world’s largest economy by 2027, according to Goldman Sachs Group Inc. chief economist Jim O’Neill.

A couple interesting points/statistics from the rest of the article are snipped below:

1. China overtook the U.S. last year as the biggest automobile market and Germany as the largest exporter
2. The nation is the world’s No. 1 buyer of iron ore and copper and the second- biggest importer of crude oil
3. China’s economy is cooling as the government trims credit growth from last year’s record $1.4 trillion and discourages multiple-home purchases to cool surging property prices.
4. The country’s property market is beginning a “collapse” that will hit the nation’s banking system
5. Four of the world’s top 10 companies by market capitalization are from China, including PetroChina Co., Industrial & Commercial Bank of China Ltd., China Mobile Ltd. and China Construction Bank Corp.
6. Since introducing free-market policies, China has lifted 300 million citizens out of poverty, according to the United Nations. The country remains a developing nation, with its per capita gross national income ranked 127th in the world at $2,940 at the end of 2008, behind Angola and Azerbaijan, according to the World Bank.

Please be sure to read the entire article in the link:

http://www.bloomberg.com/news/2010-08-16/china-economy-passes-japan-s-in-second-quarter-capping-three-decade-rise.html

The United States, Inc.

Sometimes I wonder whether the United States of America should be called United States Incorporated.   We all know that if a company is to be successful and provide economic value to it's employees, it needs to sell goods and services to customers for a price that is higher than the cost of creating them.   This is profit and prosperity.   A company that creates goods, but at a cost higher than it can sell them is known as just another bankruptcy. 

Can a similar analogy be made for sovereign economies?  If we look at a nation and see that it consistently spends more money on goods and services acquired from other countries than it sells to those countries, can we assume that country will not be in business very long?  Over time, capital will slowly move to the countries that are the best producers from those that aren't.  Unemployment, lower standards of living for it's citizens, security issues, and a host of other problems can only result.    It seems to me that the balance of trade is the equivalent of the corporate earnings report.

Each country's balance of trade is made up of the buying and selling of Goods and Services.  Goods are defined as tangible objects that are purchased that provide economic value to the acquirer, while Services are defined as activities that the gives the acquirer economic value.   The purpose of this post is to look at the June 2010 Balance of Trade data for Goods and see our economic earnings report.    (The source of the this data is published on the US Census Bureau website - http://www.census.gov/foreign-trade/data/index.html

In June, 2010,  the US imported $60 bln more than it exported.  The following chart and graph show the top 5 categories of goods that made up the deficit, in terms of dollar value.

Represented as a pie chart, the data looks as follows:

Of a trade deficit total of $60 bln, Oil, Gas, and Transportation Equipment represents about $25 bln, or 42% of the deficit.   The US buys its vehicles and the fuel to run them mostly from other countries.    It would seem that a policy of creating incentives to develop world leading alternative energy vehicles has the potential to significantly reduce our dependence on other countries for transportation related goods and improve our country's 'Income Statement.'  

Computers and Electronics makes up a huge percentage of the deficit at 31%.   I believe this is primarily consumer electronics like televisions and cell phones.   What this number also represents is the outsourcing of computer systems manufacturing to others.   Is Dell and Apple designing cutting edge products in the United States, but purchasing all the necessary components like memory and disk drives from other countries?    Do we have the intellectual capacity to design these components as well as our overseas suppliers?  Can improvements and automation of our factories help bring these functions back to the US?   Do the trends we see in manufacturing productivity give us the potential to start bringing this outsourced production back home?  

What else is interesting about these numbers is that all the other product catagories outside the top 5 represent only 8% of the overall deficit.   This seems to imply that there is trade parity across these other catagories.

Another way to look at United States, Inc. is to see what our key products are.   The chart below shows our countries Top 5 Goods product lines. 

Most of the items are self explanatory.   Transportation is an important product for United States, Inc.  Transportation related items, such as automobiles and commercial jets probably make up the bulk of the Transportation Equipment category at 14%.  Chemicals, Machinery, and Computer Equipment make up the other key products.   Re Exports defines the activity of brokering imports from other countries and immediately exporting them.

Conversely, we can also look at the key products we import from other countries.

As you would expect from the Deficit chart. Oil and Gas, Computers and Electronics, and Vehicles are the key products we buy from other nations.

More to follow...

By the way, our top product catagories where we run a surplus in the trade balance are Reexports and Scrap Metal...