The American suburbs are a giant Ponzi scheme

Suburbia as Ponzi scheme.  We have subsidized suburban growth through debt and taxes, and reaped the short-term financial rewards of that growth, but at the expense of taking on ever larger long-term liabilities in terms of infrastructure maintenance and a very energy intensive transportation system.  I disagree with Strong Towns on the appropriate overall scale of habitation (more people and a much larger fraction of our overall economy live in cities, not towns), but this is (another) good critique of the American Nightmare.

Why Isn’t Wall Street in Jail?

Nobody from Wall St. but Bernie Madoff is going to jail.  No wonder the banksters continue their trillion dollar white collar crime spree.  They and their regulators are one in the same.  Favorite quote from a congressional staffer: “You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street. That’s all it would take. Just once.”  Meanwhile we jail a mom in Ohio for trying to send her kid to a better school across town.

Energy Efficiency and Economics at Walnut Mews

Our condo HOA had a meeting last fall, and somebody brought up selling the flat plate collectors on the roof that are part of our defunct solar thermal hot water system.  The 750 gallon cylindrical storage tank rusted out in 2003 after 20 years of service.  The outbuilding that houses it was basically built over the tank, so swapping it out for a new one would have meant either chopping the thing up in place with a cutting torch and building a new one on site, or removing the roof, which nobody was keen on.  Some plumbing got re-routed and the tank sits there still, derelict.  It was also mentioned that the main boiler for our hydronic district heating might be nearing the end of its days.  I volunteered to look into whether it would make economic sense to repair the solar thermal system, and what the options were for the boiler.

Given that flat plate solar thermal collectors generate an average of about 1kBTU worth of heat per day per square foot (according to the US EIA), and given that we have about 250 square feet of collecting area (nine 28 square foot panels), the current system ought to collect something like 250kBTU/day.  Our current boiler consumes 520kBTU/hr worth of gas, meaning that the solar thermal system could at best displace a half hour’s worth of operation each day.  Gas costs about $8/million BTUs, so the boiler costs about $4/hr to run.  If we assume optimistically that system losses are negligible, and that the boiler runs at least half an hour a day 250 days a year (it was only hooked up to the baseboard heating, not the domestic hot water) then the solar thermal system is capable of displacing something like $500 worth of gas each year.  This is a best case scenario though, since the hydronic system needs water that’s hotter than the flat plate collectors can make it (so the boiler will have to do some work to boost the temperature) and because the system losses are almost certainly non-negligible.

Still, $500/year might be a significant savings.  To know whether it’s really worthwhile, we need to know how much it will cost up front to get this savings, and how long we ought to expect to be able to collect it (i.e. what’s the system’s expected lifetime).  I got wildly varying estimates of the cost to get the system up and running again.  At the low end it was $5000, to leave the rusty tank where it is and put a collapsible storage bladder in the crawlspace.  At the high end it was $20,000 to remove the old tank and build a new spray-foam insulated stainless steel one in its place.  I used this calculator to sanity check my energy numbers above (which don’t seem crazy), as well as the estimates.  It suggests that all in, the total system cost including installation would be something like $28,000.  I suspect that a plastic bladder in the crawlspace wouldn’t be as efficient or as durable as the new stainless tank.  For the sake of argument, let’s say the cheap option will only last 5 years, and the expensive one will last 30 years.  The original tank lasted about 20 years.  Here’s what it looks like today:

Derelict Solar Thermal Storage Tank

Continue reading Energy Efficiency and Economics at Walnut Mews

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?

Continue reading Empirical Investing

Links for the week of January 28th, 2010

If you want to follow my shared links in real time instead of as a weekly digest, head over to Delicious. You can search them there easily too.
Continue reading Links for the week of January 28th, 2010

Links for the week of October 15th, 2009

If you want to follow my shared links in real time instead of as a weekly digest, head over to Delicious. You can search them there easily too.
Continue reading Links for the week of October 15th, 2009