There are all kinds of risks associated with any kind of economic activity, but the one that seems to have been overlooked in the training I received at the populist brokerage firm Schwab and Company or perhaps just seems to have neglected an appropriate emphasis on it is “legislative risk”; the fickle finger of government politicians and their inability to stand by the policies that created the economic climate in which we are operating.
By the way, when students ask me, “How many sentences have to be in a paragraph?” I often tell them, “I can do it in one, but I’m a professional writer, and you shouldn’t try that until you’ve managed to get better than I am.” (Actually the “required” number of sentences often depends on the grade, the school district and the individual teacher’s requirements as to what constitutes adequate number of sentences to satisfy their definition of “paragraph”, which the Online Etymology Dictionary defines as a section of text with no other specifics as to structure, size or anything else, because it was originally just a margin note “next to the writing” (para=near, graph=writing) to show that there as a “change of sense.”)
It certainly seems this is a propitious time to be writing about “legislative risk”, though, doesn’t it? I mean, the Iowa caucuses and New Hampshire state primaries are mere days away, with what many Americans like to think of as the fate of the free world hanging in the balance. I hate to think of it that way, but certainly in some senses they are correct about that too. Certainly with respect to the evolution of American foreign policy toward the Middle East in general and now, toward Pakistan more importantly than ever, balance of the world seems like not too strong a term for it. I’ll have more to say about that in a minute.
For the present, however, the effect of the recent legislation in the US with respect to energy policy is clearly a harbinger of things to come. Not only were the “improvements” to the CAFÉ standards pitiful, but Syntroleum and Tyson’s variations on biodiesel (synthetic diesel, non-ester diesel or whatever you want to call them) were fairly specifically excluded from the “goodies”.
As I see it, and admittedly I have three different optometric prescriptions to cover different focal lengths with respect to actual vision, never mind the fact that I’ve misplaced my “crystal ball”, so my insight and foresight might not be any better than yours, I think we are in for a significant change. I think it is clear that we will have a predominantly liberal Democratic congress after the next general election, and that it doesn’t even look like it matters at this point which Democratic Party candidate is put up against any of the Republicans (save the slimmest of chances that Ron Paul’s libertarianism might buoy him to the top) we will have a Democratic Party President. None of the Republicans are sufficiently anti-war, and specifically anti-Iraq-war, enough to find the majority of Americans backing them come voting time. Unforeseen events may happen, as the recent assassination has shown, but the weak legislation signed by President Bush is not going to get us anywhere near where we need to be in the next 8 or 9 years.
The fact that we have not had politicians with sufficient qualities of statesmanship to make some of the hard decisions, take strong steps, even if they are unpopular, to solve the nation’s and the world’s problems means that the next crop of legislators whom we elect to serve in Washington are going to have to make some of those decisions, quickly, decisively and with the determination to implement those policy changes with effective measures. Those measures must also prevent and avoid stalling and delaying tactics on the part of those in entrenched positions who might have to revise their thinking and their way of doing business in order to survive. Rio Tinto (second largest US Coal producer through its Rio Tinto Energy America division with almost 2 billion short tons in reserves after the recent purchase of an additional $150 million of US Government land in Wyoming, and 3rd largest mining company in the world) and Peabody Energy Corp. (US largest coal producer) may have to clean up their act at both ends. They will have to improve both in mining practices (although Rio Tinto’s safety record is good compared to many), and at the “market” end (selling to electric companies, producing electricity from coal). Companies scarring the land on that scale will have to put it right before they move on to the next hundred billions in profits. We may need better legislation to put an end to slippery practices like selling off “assets” near the end of their life cycle, only to watch the new “owners” go bankrupt and be “unable” to do the proper remedial land reclamation work required under their licenses. But they are also going to have to be enthusiastic partners in carbon dioxide sequestration and reuse or resorbtion by algae or some other source of cellulosic materials that can be blended into the fuel stream of the electric generating facilities which are their main customers and the main source of industrial carbon dioxide in this country (as they are in much of the world).
Perhaps Google’s dipping a toe into the energy research area is no threat to these giants at the moment, but it is unlikely that will remain the case for long, for the influence of the best and the brightest on politics is undeniable. When the power shifts from one party to another, the new broom may not sweep clean, as the old saying goes, but it is likely to knock some of the cobwebs out of the thinking that goes on at the uppermost levels. Inside the government, at some level, you get some of those outstanding people like George Stephanopolous, or Robert Reich, men of real genius who are willing to take time to serve their country. That is not to diminish the other side of the political street either, Dr. Milton Freedman, John Kenneth Galbraith and Alan Greenspan (all were trusted advisors to multiple presidents) were/are some of the cleverest people ever to provide advice to the White House. Ideas change people, and the liberal side of the political spectrum has been under-represented for over a decade in Washington.
And that was the GOOD news!
Are you ready for the bad news? I instantly became fond of the orchestra joke that the oboe is (as double reed instrument) “an ill wind that nobody blows good.” The real expression of course is, “It is an ill wind that blows no one some good.” So, indeed although this is bad news for much of Europe and for European farmers in particular, Germany is going to begin a new tax on biodiesel sold in that country starting tomorrow, January 1st, 2008. Although the tax is minimal, a few cents per gallon, the doom-and-gloomers are saying it is the end of the European biodiesel industry because the tax will gradually but relatively rapidly increase over the next few years to remove any competitive advantage it might otherwise have had with the subsidies it now enjoys. There is the effect of “legislative risk”. When the government policies change, the economics change and those who have invested heavily can be left holding assets that are suddenly worth far less than they were in the previous legislative climate. On the other hand, as I mentioned recently, Argentina is a net exporter of biodiesel, and even though Brazil is ramping up its biodiesel production, Argentina may well be a major beneficiary of the fact that German farmers are already planting less rape seed, in anticipation of declining prices.
On the other hand, and in the opposite direction, while it is hardly a good thing for biodiesel producers in America, soy bean prices reached US$12.48 beating a 1973 record ( and in particular soy bean oil) has hit a 34 year high according to the National Biodiesel Board. But again, by our old “ill wind” adage, that makes it a good time for farmers, and even potentially tax payers since fewer farm subsidy increases would be likely in the short term, one might hope. It surely does seem that the see-saw tips both ways, even if sometimes you have to wait your turn to be on the high side.
There is, somewhat suddenly, a flurry of activity in a company known as Biogold Fuels. Biogold is run by Steve Racoosin, who was introduced to me earlier this year (well, it is almost last year now) by a mutual acquaintance. Since then Mr. Racoosin, who has been actively “talking trash” as he likes to joke, for quite a number of years, has more recently acquired a CFO by the name of Chris Barsness, and relatively recently announced an agreement to partner with Universal Green Corp. As the name of the company readily implies they plan to be in the biofuels business, through a process they call “catalytic thermal conversion” taking trash and turning it into a synthetic fuel (close to biodiesel, though not exactly that). I can hardly state it more concisely, so here, from their recent press release are the basics of the alliance.
“The agreement allows Biogold Fuels to bring the energy and
waste stream contracts to joint projects, as well as its autoclave
technologies, while Green Universal Energy will bring the energy conversion technologies and plant design know how, as well as assist in obtaining the funding for each project the companies design and build.”
I liked Steve, and really enjoyed chatting with him on the phone. I wish him well, and hope that working with Alan Richmond and Moshe Kreinberg from Universal Green Energy on Biogold Fuels’ advisory board will be a highly productive and profitable enterprise for all concerned.
I would like to share with you a paragraph from my correspondent in Pakistan, Mr. Imran Khan. Mr. Khan works in the power industry in Pakistan, and writes for various publications around the world from Morocco to the American Chronicle. He has recently moved his family from a smaller town into the city following the death of his father. Here is part of the note he wrote to me, today, December 31, 2007.
“In 2007, I lost my father, a huge loss which I can never forget in my life. His kindness, his care, his love are with me and though I am under huge family burdens, I hope with the help of God I will be able to continue marching towards success. For my country, it was one of the worst year in the history of Pakistan. Continues suicide bombing and other barbaric acts thought 2007, resulted in the deaths of thousands of innocent people and in the end a great tragedy hit the country when we lost Mohtarma Benazir Bhutto. I may not be her supporter but still I can not believe that has happened and I have no words to express my feelings of great sorrow. I hope that 2008 will bring much needed stability in Pakistan, which is a desire of 160 million people. ”
My reply to Mr. Khan is included below:
You do me an honor to be remembered in your thoughts at a time of such great sorrow, not only for you and your country, but for the world.
I may have (and I admit, at least partially out of my own ignorance) been more of a fan of Ms. Bhutto than you were, but her loss is felt by all the world, for we had placed in her a sacred trust to help guide her country and much of the world to a state of greater peace and a resolution to at least some of the violent conflict that afflict us all.
I too have suffered a great loss in my family this year. My sister died last month. Her daughters have arranged a memorial service for January 3rd, but unfortunately I will not be attending. I did attempt to bring both some insight and some mild humour to the proceedings by writing a recollection of our life together. I expect that my “gift” of writing something for the occasion will better serve the intent of recalling her than would my tears if I were present at the ceremony.
I spoke of Ms. Bhutto’s death a moment ago as a matter of sorrow for the world. I assure you, that from my perspective the tragedy of her assassination echoes my reaction to the assassination of President Kennedy. You will recall that I was born in Canada, and that at the time of President John F. Kennedy’s assassination I was just 13 years old and still living in that country. Yet, I cried for days at the great sadness, not only of his loss, but of the inhumanity of such an act. That is the only event in my lifetime that I can equate to the feelings of sadness I want to express at this time. There are tears in my eyes, now, as I write about both our personal tragedies, and those of the wider scale of the world, and while my tears mean little in terms of condolences to you, your country and the world, I hope most sincerely that my words may help you feel the kinship that is a bond between all the people of this planet.
(a personal note was omitted here)
As you know, I like to end on a positive note. This is not it.
Following the events of this past week, and I haven’t even begun to touch on the violence following the elections in Africa, and I suppose, to some extent the uncertainties of the outcome of the political situation with both sides of the presidential races so much in the air, I think my mood was one of vulnerability as I attended a screening last night of “The Kite Runner”. The tale of Pashtuns and mullahs, Afghanistan and Pakistan, violence and intimidation, fear and courage tugged at my emotions deeply. The story of two boys growing up in Kabul before the Soviet invasion was almost entirely in subtitled dialogue. I am not fond of “reading my movies” but I guess I do still prefer it to badly sync’d dubbing. The movie was very well done. The amateur actors, in some cases, seemed a bit stilted, but overall were quite natural, and certainly the professionals left little to criticize. The photography was very well done, and the directing by Marc Forster precise and well tuned. The emotional effect was devastating. I was stuck early on by a terrible sense of loneliness and helplessness, and it never left. The evolution of the main character is both subtle and perhaps, a little too small a progression, given the magnitude of the challenges he faces (mostly rather badly). The acting of the young man, Ahmad Khan Mahmidzada, who plays Hassan was incredibly charming, a perfect “street urchin” type. I would say that I recommend the movie highly, but if you are feeling depressed when you enter this world, you may come out positively suicidal.
On to the brighter notes.
I mistakenly (apparently) believed, because of the involvement of Robert Lantos, founder and famous producer from Alliance (now Atlantic-Alliance) that the film Eastern Promises was a Canadian made movie that you can’t tell is a Canadian made movie. That’s about as high of praise as I can give to most movies from Canada. They don’t quite have an artistically unique character, and yet they normally have a technical quality that is readily distinguishable, at least to those of us raised on a diet of occasional “Made-in-Canada” movies. It is unfortunate that the political forces that be in Canada insist on the funding mechanisms from government sources must have their logos appearing in all the advertising as well as in the end credits. Sometimes it just puts me off. Not in this case, however. Director David Cronenberg, master or horror and suspense that he is, just happens to be from Montreal. Naomi Watts and Viggo Mortensen do good work as the heroes of the movie, although it is tough to tell sometimes who the “good guys” are (which is a good thing, in this case). Armin Mueller-Stahl is suitably menacing as the villain, and even he manages to looks mildly innocent at times. The story is well woven, the surprise twists and turns, including the violence (though bloody) well crafted too. Viggo has already won a couple of “best actor” awards, Cronenberg is nominated, Mueller-Stahl won at least one already too, and 3 Golden Globe nominations (upcoming) certainly speak well of the quality in this one. The production has “many fathers” as the old saying goes, including BBC and various other countries involved in the financing (Canadian Director, Stars and producer tend to make it eligible for Canadian government backed financing too, I believe, though I haven’t checked their ever-changing rules recently).
Lastly, on my list (if you were expecting a maudlin retrospective on all the famous people who died this year, I’m getting too old for that. I know too many of the names, and it would take me most of the rest of the year just to attempt to do justice to the contributions of all those who have left us in the preceding year) another film worth watching.
Rescue Dawn probably never should have been made. That is NOT, however, to say that you should not watch it. Christian Bale and Steve Zahn give riveting performances in a tension filled drama that had me so enthralled that I “forgot” to take a sip from my glass of juice for over an hour while mesmerized watching it. It is often brutal and violent, and almost constantly unpleasant, and yet, it seems to have some of that slow motion automobile crash quality that makes it hard to take your eyes off the screen. I saw this movie last night AFTER having watched The Kite Runner, so it is possible I just wanted to escape the very “real world” that The Kite Runner presented. Oddly enough, though, this was a “true story” from the early days of Vietnam, 1965 bombing the Ho Chi Mihn Trail in Laos that put the leading characters into a series of prison compounds controlled by various factions from Pathet Lao to North Vietnamese. The fact that it was actually told from the point of view of the pilot (Bale’s character) made it a “fictionalized account” that left the guards as cardboard cutouts, only the dwarf they called “Jumbo” had any more than one dimension. The jungle settings didn’t convey the sense of a harsh gritty reality achieved in the dusty Chinese locations that passed for Afghanistan in The Kite Runner. The overall tone was far more “Hollywood” and escapist fare, which was a relief after The Kite Runner. But as I say, it was completely absorbing, and therefore not entirely surprisingly that, thus far, the visitors to the films’ pages on IMDB.com have rated both films at exactly the same, 7.8 out of 10. That rating is certainly not bad considering that Eastern Promises with its tons of award nominations only rated a 7.9 from the regulars on IMDB.com. And to be fair, The Kite Runner has been nominated for Golden Globe and is expected to be seen somewhere in the AMPAS “Oscar” nominations soon, too.
This is probably the last of my regular WEEKLY columns for American Chronicle. From now on my contributions here will be occasional, not on any regular schedule. However, I plan to take this WEEKLY column to a “private” site. It usually takes me all day to write this column (sometimes more than one day), and if I am going to be able to keep it up, I am going to have to try to “monetize” it somehow. Check at http://winfotech.com or at http://thesecondmostimportantpage.blogspot.com/ or https://thesecondmostimportantpageontheinternet.wordpress.com/ for more information.
Stafford “Doc” Williamson
Why are you still paying retail for printer ink or toner?