Friday, October 31, 2008

Ambitious energy plans lose momentum as oil prices drop


Al Gore has a plan for the nation’s energy crisis. Reformed oil man T. Boone Pickens has one, in addition, to his devious plan to win Oklahoma State a national championship, and Google even has designs on reforming the way we procure and consume energy.

Each plan features nuanced methods focusing on biofuels, solar and wind energy along with natural gas.

The similarities? How about a whole lot of money.

Speaking at the Commonwealth Club earlier this month, Google CEO Eric Schmidt (pictured above) said the total price tag of focusing the country’s attention to alternative fuels could run between $4-5 trillion over the next 22 years.

Schmidt said the overall savings from weening the U.S. off oil could be as much as $5 trillion.

“Cheaper to fix global warming than to ignore it,” he said.

Google’s philanthropic interests unabashedly intersects its desire for profits.

“Why is Google doing this?” Schmidt asked Commonwealth Club members, “Well, it is important to our business. We are a large consumer of electricity and we’re likely to be consuming more, and we want the prices to go down.”

A A New York Times piece Oct. 28 by Miguel Helft shows Google’s thirst for energy to be a sensitive topic.

Google has gone to great lengths to conceal how much electricity it uses in its data centers. For example, Google agreed to build a $600 million data center in Oklahoma only after the state legislature passed a law exempting public utilities from disclosing the energy use of their largest customers. Google has also vowed to be carbon neutral, but unlike its rival Yahoo, for example, it has refused to reveal its overall carbon emissions.

The Times story goes on to say that Google sees the disclosure of its energy consumption as a breach of its competitive advantage.

Billionaire oilman-turned-wind-prospector T. Boone Pickens, like Schmidt, sees alternative energy as a business opportunity and an ideological endeavor second.

At Pickens' website, he makes clear his belief that through erecting wind farms in desolate, yet windy Midwestern states and focusing on cleaner energy, oil consumption can be pared down by a third within 10 years. Pickens' plan also touts the ability to bring jobs to poor, rural areas.

David Morris at AlterNet, though, believes the financial crisis and legislation favoring electric vehicles may hamper Pickens' plan.

While Gore's plan may ultimately have the largest price tag at $5 trillion over 10 years, it may also come the closest of the three initiatives in forcing Americans to take their medicine rather than being sold a bill of exotic goods.

Jason Pethokoukis at the U.S. News & World Report money blog, Capital Commerce, believes the plan is pie in the sky, though. 

"Gore's fantastic—in the truest sense of the word—proposal is almost unfathomably pricey and makes sense only if you think that not doing so almost immediately would result in an uninhabitable planet," Pethokoukis wrote in July.

The plan calls for a wholesale change in how American consumes energy. It calls for transforming the U.S. into a renewable energy juggernaut by focusing efforts to produce 100 percent of the nation's power from wind, solar, and geothermal energy.

While Schmidt and Pickens put profitability over responsibility and Gore speaks in apocalyptic tones, the final arbiter of any energy plans will be the American people.

In just a few months, high energy costs went from a sensitive campaign topic to a fairly tame talking point.

When Pickens unveiled his proposal in July crude oil prices hit a record-high of $147. The cost of a barrel of oil today? $67.

Pack up the station wagon, Clark, the family's driving to Walley World.

Studs Terkel, RIP

The great Chicago-based author, broadcaster, and historian Studs Terkel passed away today at the age of 96.

Film critic Roger Ebert -- a legend himself -- remembers the literary giant in an article on the Chicago Sun-Times web site today.

We, of course, remember Terkel for his visit to The Commonwealth Club Silicon Valley on October 30, 2003, when he charmed the audience and talked about all of the "forgotten voices" of the 20th century.

Rest in peace, Studs.

The Global Election?


The front cover of the new issue of the British libertarian news magazine, The Economist, features a stark shot of Barack Obama under the words, "It's time." Inside is an endorsement.

It's only the latest in an avalanche of endorsements of both major candidates; it is, after all, the waning days of the seemingly never-ending presidential election. But this election and the endorsements reflect something new, in terms of a global interest in the U.S. presidential election that experts say is far higher than normal levels of interest.

Our friends over at CBS 5 have posted an interesting new report on this global election, and it's worth checking out. Columinist Frank Viviano (photo above) writes about this extraordinary interest, and notes that international polls "confirm an astounding level of overseas support – exceeding 70 percent in most nations – invested in Barack Obama, crossing all lines of race, ethnicity, history, religion and ideology."

Read more here.

Commonwealth Club members recently got a taste of international opinion about the United States when Steven Kull, director of the Program on International Policy Attitudes at the University of Maryland, spoke at The Club. Despite all of the talk lately about how America's reputation has suffered in the world, he found that majorities in every country surveyed did not see the United States as an enemy and did not expect a confrontation with it.

Will Americans agree with the international verdict in this election or will they go their own way? Find out on Tuesday ...

Thursday, October 30, 2008

Christopher Buckley Won't Back Down


Christopher Buckley, the Republican apostate and conservative scion of the late William F. Buckley, is harboring little remorse after endorsing Sen. Barack Obama earlier this month.

In a humorous attempt to write Sen. John McCain’s concession speech in today’s Financial Times, Buckley continues to not back down from conservative critics who believed he shattered, as Ronald Reagan once said, the eleventh commandment, “Thou shalt not speak ill of any fellow Republicans.”

Buckley, who spoke at the Commonwealth Club, Sept. 18, uses the satirical essay to illustrate the possible talking points Republicans might use for why McCain lost the election.

Among them, his early decision to cozy up to the religious right, the role of the media, and concerns about his health

On age, Buckley writes: “Looking on the bright side, it looks like I’ll get to go to bed a little earlier than I’d hoped to tonight.”

Choosing Sarah Palin as his running mate: “So let me thank Governor Palin for ... all that she did to me. For me, I mean. Little Freudian thing, there.”

On the same day of his appearance at the Commonwealth Club last month, Buckley seemed to telegraph his intention to vote for Obama at the Hoover Institute at Stanford three weeks before his infamous column in The Daily Beast, wishing him good luck, while adding, “give me a call if I can help.”

Tuesday, October 28, 2008

A Fishing Expedition with Senator Stevens

Senator Ted Stevens (R-Alaska), fresh from his conviction for concealing gifts from supporters, has vowed to fight on in his Senate career. Republican presidential candidate (and fellow U.S. senator) John McCain has called on Stevens to resign.

Stevens' history in Washington and his role in channeling funds to his home state, are legendary, and in the September 2008 issue of The Commonwealth magazine, Dr. Gloria C. Duffy wrote about her experiences dealing with the Alaska senator's "tithes" to his home state, even if they came from vital national defense funds.

We reprint her column below:

A Fishing Expedition with Senator Stevens
By Dr. Gloria C. Duffy, President and CEO, The Commonwealth Club

In July, Senator Ted Stevens of Alaska, the powerful member and past chair of the Senate Appropriations Committee, was indicted in a Washington, D.C., court for apparently trading upgrades to his vacation home and favorable auto deals from oilman Bill Allen for favors he did for Allen’s now-defunct company, Veco. Now that Stevens has been collared, I can tell my story about him. Many people who have served in the U.S. executive branch have a Ted Stevens story.

Within the U.S. government, Stevens is legendary for inserting earmarks into virtually every piece of legislation to come before the Senate Appropriations Committee, guiding a portion of the funds to projects in Alaska. The “bridge to nowhere,” a pork barrel project for contractors in Alaska, has become the iconic representation of his craft. Stevens supports his constituents in Alaska by handing them chunks of the federal budget, and they support him . . . sometimes too well and under the table, apparently.

In 1993 I arrived at the Pentagon with a new job and an urgent mission – use $400 million in U.S. defense dollars annually to cause the former Soviet countries to dismantle their nuclear, chemical and biological weapons before they decided to become nuclear weapons states or the weapons made their way to rogue states or terrorists. As I reviewed my first year’s budget with my staff, I noticed a strange item, listed at $10 million, called “Arctic Nuclear Waste Assessment.”

I asked my staff what this was. They explained that it was funding a research project on the migration of nuclear waste from abandoned Soviet submarines in Arctic waters. It was conducted partly in Alaska and included employing Alaskan scientists measuring the presence of radioactivity in seal blubber along the Alaskan coast. What?!?!? I said. What does that have to do with dismantling weapons of mass destruction in the former Soviet Union? We were supposed to be securing highly enriched uranium and plutonium, cutting up missiles, closing down nuclear bases, removing nuclear warheads. All that seal blubber measurements had in common with nuclear weapons aimed at the U.S. was radioactivity; a commonality without a connection. A naïve newcomer to the ways of the federal government, I proclaimed this a diversion of taxpayer money and declared that we would see that this item was removed from our budget.

The Pentagon staffers who had been assigned to me, veterans of many government budget battles, turned pale and began to quake. They pointed out that this was Senator Stevens’ project, which he had inserted into the Nunn-Lugar budget when it came before the Senate Appropriations Committee, and it was the quid pro quo for Stevens passing through the other $390 million in the budget. We didn’t dare object to Stevens’ project, they said, or we would risk losing the rest of the budget. They urged me to not even hint that there was a problem with his earmark. The senator’s staffers were fiercely protective of his earmarks and were likely to punish us if we raised any question.

I made another half-hearted attempt or two at eliminating this diversion of funds, which appeared regularly in each year’s Nunn-Lugar budget, before giving up. Thirty million dollars eventually flowed into this study, although it never found any evidence of radioactive pollution in Arctic waters.

The Arctic research project probably wasn’t the worst of Stevens’ earmarks, since to our knowledge none of it was paid to members of his family or came back to him as illegal contributions. But each year, the Nunn-Lugar program made its $10 million tithe to Senator Stevens, and that was $10 million less going into dismantling weapons aimed at the U.S.

Over the past four years, Senator Stevens has made 891 earmarks, channeling $3.2 billion to projects in Alaska, or almost $5,000 for each Alaska resident. Multiply this by hundreds of members of Congress and a similar interaction where executive agencies are afraid to challenge the earmarks for fear of what will happen to their larger programs, and you have the magnitude of this national problem.

The word on the street is that Senator Stevens will survive his indictment and trial to be re-elected by the citizens of Alaska. Given his largesse to his constituents, one can understand why. In truth, he is simply another victim of the way our political system is structured.

We can talk ourselves blue in the face about the need to change direction in this country, to shore up our infrastructure, protect our environment, reduce taxes, improve health care, make government more effective, and so on. But we are unlikely to see real change until we eliminate the way private campaign contributions skew our national priorities toward the needs of those individuals and groups who pay to elect our office holders.

Thursday, October 23, 2008

Wells Fargo's Kovacevich: Recovery Sooner than You Think?

Despite the stream of bad economic and investment news these days, there are still some optimists in the financial world.

At his sold-out speech to The Commonwealth Club on October 221, 2008, Wells Fargo & Co. Chairman Dick Kovacevich had some good news for people who are trying to figure out how long the expected (worldwide) economic downturn will last. The recover "will get done and sooner than most people think," Kovacevich told The Commonwealth Club audience, according to an article in the Sacramento Business Journal.

Kovacevich said he believes governments around the world will "do whatever it takes to stabilize the financial system."

We'll post full video here of the program as soon as it's available.

Monday, October 20, 2008

Financial Lessons from 1929?


So what comes next? If the various national and global financial rescue initiatives have, as some argue, staved off collapse, what sort of economy are we looking at for the next year or two?

As noted in our previous blog posting on the financial crisis, even optimistic projections about what's coming up are not, well, optimistic. The Financial Times newspaper reports today that the current thinking of economists is that collapse of the system has been averted and we're not headed for another depression; nonetheless, says the FT, we could be in for the worst recession since 1982.

We won't try to predict what will happen here; that's for others to do. But we did take a look into the archives of The Commonwealth magazine and found one of the earliest Commonwealth Club speeches reacting to the stock market crash of 1929. Titled "The Panic of 1929," the December 6, 1929, speech by William C. Van Antwerp of E.F. Hutton, offered some initial reaction to the market panic and included some surprisingly thought-provoking ruminations on the human spirit.

Here are some excerpts from Mr. Van Antwerp's speech:

A panic is a state of mind in which fear supplants reason. It cannot be stopped by statute law or arrested by the police. The best that can be said of such a phenomenon is that it doesn't occur very often.

In the panic of 1907, there were fundamental conditions that were not sound -- in 1929, we merely suffered a case of nerves following a debauch. It is not to be expected that sound and conservative industry will be shaken this time.

This present panic had its roots back in 1917, when our masses found that they could invest money in bits of paper called Liberty Bonds. From investing to speculating was an easy step.

Whether it be public excess, saxaphones or modern art, the American public always goes too far. If we emerge from our excesses somewhat sadly, we are also somewhat wiser.

The stock market was running wide open and good judgment was forgotten. Most of the post-mortem warnings we now hear about were never given until after the panic occurred.

The recent rise had to stop in one way if it did not in another. Even a billion dollar pool would not have averted the panic.

We have for some time been "rotten rich" -- now for a short time we are to be merely "affluent."

President Hoover will bring into action the confidence reserves which everybody knows we possess. When we start forward again as we surely shall, trade and prosperity will go forward to heights not now imagined.

What do you think about Mr. Van Antwerp's ideas? How applicable are they to today? Leave a comment and let us know.

Wednesday, October 15, 2008

Financial Crisis: The Who, What, When, Where and Why


As of this writing, the Dow Jones is down 306 points, just two days after European governments super-charged the world's markets by laying out aggressive programs to deal with the frozen credit markets. The United States also announced a program to deal with the crisis, but markets have been weak-to-faltering even as the newspaper headlines start to sound optimistic for the first time in weeks.

What is happening? What will happen next?

Much of the problem stems from the easy credit and large amounts of money lenders were pushing into the housing market for many years. And though some critics have put blame on the people who bought subprime loans and other insufficiently securitized financing, "the people who should have know what they were doing was people who had experience lending money," said former Secretary of Labor Robert Reich in a Commonwealth Club speech October 1, 2008 (see the embedded video above for his complete speech). "I think they did know what they were doing."

Perhaps they didn't. In the same speech, Reich said that he spoke with Wall Street financiers about the various financial instruments they were using to repackage bulk loans and sell them to investors. "Two years ago I asked a hedge fund manager, 'Please explain to me what's in your hedge fund,'" said Reich. He said the fund manager laughed and replied, "I have no idea."

"Thanks to high technology, you could slice and dice these [financial] packages into your appetite of risks," Steve Forbes told The Commonwealth Club on August 7, 2008. "You could have packages of sub-prime mortgages; you could own a piece of it that may be worth today 80, 90 cents on the dollar. you could own another piece that is zero cents on the dollar. Lots of institutions didn't even really realize how much of this junk they had until the crisis hit."

That, say experts, has led to the frozen credit markets, where banks are unwilling to lend to other banks because they literally don't know if the other bank's liabilities in bad loans are frighteningly awful or just frightening. Therefore, we've seen governments stepping in to provide liquidity for banks and trying to provide the confidence banks need to make the loans.

Where this will all lead is not clear, though even the optimistic predictions of many economists is that the United States is in for a serious recession lasting one or two years. That has people and businesses battening down the hatches and preparing for a tough time.

"The consensus among mainstream economists is if – if – we can avoid a meltdown, this is likely to be an extended but comparatively shallow recession," said Peter Gosselin, a financial journalist who spoke on a Commonwealth Club Inforum panel on "Surviving the Great Recession." He added that even a "shallow" recession can be very serious. That panel discussion was in July, but even then Gosselin said the country was likely to hit a crisis soon. Events would soon prove him correct.

ADDENDUM: The Dow Jones closed down about 733 points.

Monday, October 13, 2008

Paul Krugman Wins Nobel


Princeton economist and New York Times op-ed columnist Paul Krugman has won the Nobel Prize in economics.

The Royal Swedish Academy of Sciences gave him the $1.4 million award in recognition for his work on a new theory regarding free trade. His work "thereby integrated the previously disparate research fields of international trade and economic geography," the Academy said, according to the Associated Press.

Krugman's whose most-recent Commonwealth Club speech was on October 30, 2007, as the first speaker in the A-Ha Speaker Series, presented by The Club and Orrick. In that speech, he spoke about the future of the middle class in the changing economic world, a topic that could be even more relevant today in light of recent stock market meltdowns. See the above video for the Fora recording of that speech. Or you can listen to streaming audio of that speech.

And if you want to go back in time nearly five years, you can listen to streaming audio of his January 6, 2004, speech to The Commonwealth Club, entitled "From Heroes to Scandals: The Collapse of Fiscal Responsibility."

Thursday, October 9, 2008

Valley Girl's Lifestyles of the Rich and Tech-ish


If you thought video interviews with technology experts are a sleep-inducing exercise in endurance, you might want to meet the Valley Girl -- better known as Jesse Draper. Draper is the daughter of venture capitalist Timothy Draper (of Draper Fisher Jurvetson, and a member of The Commonwealth Club's Board of Governors). Jesse Draper's Valley Girl -- as in Silicon Valley, not San Fernando -- interviews various Valley bigwigs such as Eric Schmidt (Google's CEO and a recent Club speaker), Steve Jurvetsons, Scott McNealy, Ron Conway, and many more.

With Ms. Draper in full Valley Girl mode, the video interviews are short, fun and VERY pink. See what we mean. (Lower-resolution videos, such as the one embedded above, are available on her YouTube page.)

Friday, October 3, 2008

Meg Whitman: Could She Save the Finance System?


Reacting to the ongoing struggle between Wall Street, Main Street, and the federal government, Republican presidential candidate John McCain recently mentioned that he would consider appointing investor extraordinaire Warren Buffett and former eBay president Meg Whitman to senior financial posts in his administration, if he is elected.

Whitman spoke to The Commonwealth Club on September 23, 2008, and in the video above you can get a sense of what her priorities and approaches might be if she were to be appointed Treasury secretary or some other economic post.

A side note, to all voters who watched last night's vice presidential debate in St. Louis between Republican Gov. Sarah Palin and Democratic Sen. Joe Biden: Meg Whitman was on McCain's short list for vice presidential candidates. How would she have performed in the debate if she had been chosen? Only she knows, but you can get an idea from her speech in the above video.

Whitman's speech was part of Orrick's A-ha Speaker Series at The Commonwealth Club, generously underwritten by Orrick.

Wednesday, October 1, 2008

Ralph Nader: Obama Banned Me from Debates


Just two days before Republican Sarah Palin squares off against Democrat Joe Biden -- and only days after the tops of the tickets had their own debate -- five-time presidential candidate Ralph Nader spoke to The Commonwealth Club of California's Inforum about his own exclusion from the presidential debates.

Nader blamed Sen. Barack Obama for excluding him from the debates, saying that the Illinois senator refused to participate in the debates if Nader was present. Though Nader has a negligible presence in the presidential polls, he warned that the failure to include him in the debates was a significant reason why the issues Nader champions are not being exposed to the voting public.