Retrofits pick up the pace

A look at the current state of Property Assessed Clean Energy (PACE) financing across the US.  Legislation enabling this financing mechanism has been passed in half the country, and implemented at the city or county level in Berkeley and Boulder among others, but because the Federal Housing Finance Administration (Fannie and Freddie’s boss) chose to treat this particular property assessment as a lien, all the programs have been frozen since last July.  Lawsuits and legislative fixes abound, but in the meantime, people are struggling to find other financing mechanisms for these financially (as well as ecologically) worthwhile investments.  More background available at Pace Now.

The Finite World

The Finite World – Krugman at the NY Times talking about the resurgence in global commodity prices over the last year.  Economic recovery in developing economies driving the markets, with the US, and indeed the entire West, largely irrelevant.  Not only are we a smaller than ever slice of the pie, we’re not the ones building cities for hundreds of millions of people from scratch.  I’m not sure I really understand his conception of inflation though.  If rising commodity prices don’t constitute the most basic, raw form of inflation (you get less physical stuff in exchange for the same amount of labor performed), then I’m not sure what does.  Historically we’ve made the economic approximation that natural resources are infinite, and all you have to do is pay the cost of going out and getting them.  If that changes, then things will get weird.  Maybe even weird to the point of sensible!

Nils Gilman and Deviant Globalization: The Graying of the Markets

We watched a Long Now talk last night by Nils Gilman, entitled Deviant Globalization.  I first ran across Gilman in a shorter talk from a couple of years ago about the global illicit economy — black markets.  He describes deviant globalization somewhat differently.  Trade can be perfectly legal, and still deviant.  He used the example of US men arranging trysts with 14 year old girls in Canada… which amazingly could still be considered legal until 2008, since 14 was the nationwide age of consent.  Sure, it was legal, but who really thought it was okay?  So deviant globalization represents a kind of moral arbitrage.  Demand exists for goods and services which are proscribed in different ways, to different degrees, in different places.  Sometimes they’re socially taboo, and sometimes they’re outlawed, but in all cases there exists a kind of moral disequilibrium gradient that can be exploited.

What united all these extralegal commodity flows […] was the unsanctioned circulation of goods and services that either because of the way they are produced or because of the way they are consumed violate someone’s ethical sensibilities.

One of his main points is that the steepness of that moral or regulatory gradient translates pretty directly into profit margins.  Cocaine increases in value by 1400% when you bring it across the US border.  This creates incredible incentives to get around the rules, even at great risk.  This is why Prohibition rarely works as a policy.  Any attempt at eradication financially empowers those who are willing to continue taking the risks you’re able to impose.

Continue reading Nils Gilman and Deviant Globalization: The Graying of the Markets

Empirical Investing

In my previous post I described the stock and bond markets by analogy with a casino, but you might reasonably question the validity of that analogy.  Are market returns really as unpredictable as coin flips?  The real payoff probability distributions obviously aren’t binary; what do they actually look like?

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Links for the week of January 28th, 2010

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Links for the week of October 15th, 2009

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Links for the week of October 10th, 2009

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Links for the week of September 11th, 2009

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The Tragedy of the Marine Commons

I’ve made this parody before:

Give a man a fish, and he’ll eat for a day.
Teach a man to fish, and he’ll eat until the fish are extinct.

All indications are that our grandkids won’t be big fans of sashimi, as it will either be too expensive for them, or virtually non-existent, because we have driven the large fish species to (or near) extinction.  We’ve been making fish smaller, and less plentiful for millennia.  This is no huge surprise.  We ate all the tasty North American megafauna when we got here too.  We were hungry, and we didn’t know any better.  The world and its resources seemed vast beyond our comprehension.

Bluefin tuna in Tokyo fetch $25,000 each.
Attribution-NonCommercial-ShareAlike License by Sanctu

The situation today is tragic partly because we know exactly what we’re doing, and partly because we could be sustainably harvesting vastly more fish today than we are currently mining at an unsustainable rate, if only we could somehow contrive to let fish stocks rebound to their Pleistocene levels.  At those very high (pre-human) stocking rates, the sustainable take would be enormous, but we would have to manage the harvest carefully with quotas (which we didn’t do the first time around, and which we are much better equipped to do now).  Such quotas are sometimes discussed as if they were purely economic or political quantities, but in some important ways they are neither.

Continue reading The Tragedy of the Marine Commons