Another Explanation for the Financial Crisis

Peggy Noonan at the Wall Street Journal looks at the people and their mindset to explain the irrational risk taking.

Link: There's No Pill for This Kind of Depression – WSJ.com.

The sale of antidepressants and antianxiety drugs is widespread. In New York their use became common after 9/11. It continued through and, I hypothesize, may have contributed to, the high-flying, wildly imprudent Wall Street of the '00s. We look for reasons for the crash and there are many, but I wonder if Xanax, Zoloft and Klonopin, when taken by investment bankers, lessened what might have been normal, prudent anxiety, or helped confuse prudent anxiety with baseless, free-floating fear. Maybe Wall Street was high as a kite and didn't notice. Maybe that would explain Bear Sterns, and Merrill, and Citi.

Letter from T. Boone Pickens to WSJ

Here’s a letter published in the Wall Street Journal from T. Boone Pickens. He is responding to a letter criticizing his plan from Mr. Jenkins.

Link: Letters – WSJ.com.

This Is My Plan for American Energy, What’s Yours?

I read Holman Jenkins’s "Boone Doggle" (Business World, Aug. 6) about my energy plan and I’m convinced that he hasn’t even read my plan. So for the benefit of Mr. Jenkins and his readers, I’ll go over it again.

There are two numbers everybody should keep in mind. The first is 70% — that’s how much of our oil comes from foreign nations.

The second is $700 billion — that’s how much of our money is sent overseas to pay for that oil every year.

Mr. Jenkins argues that this isn’t technically a "transfer of wealth." You can call it whatever you want, but common sense would call it a crisis. It’s hitting every part of the economy, and it’s only going to get worse because we consume 25% of the world’s oil, but we only have 3% of the oil reserves. For years we paid foreign nations to send us their oil and didn’t worry about it because it was cheap. But now it’s not and it matters a great deal.

We’ve had warnings before. Some of us remember the oil embargo of 1973. Back then we were importing less than 30% of our oil but it was still a crisis. And what did we learn? Today we’re importing nearly 70%. We all have — and I emphasize all — allowed our nation’s energy future to rest in the hands of foreign interests. And if we need to know how dangerous it is to rely on other countries for our energy, just look at what’s happening in Georgia. Yes, we buy some oil from our friends, but we also buy from some who aren’t so friendly.

We have to develop domestic energy alternatives and set ourselves on the road to self-sufficiency. Ultimately, that will mean using domestic renewable energy to generate electricity and power our vehicles. Unfortunately, clean, renewable fuels for transportation aren’t ready yet. So here’s my plan to break the foreign stranglehold.

It starts with wind. A Department of Energy study says we can generate 20% of our electricity from wind. I believe that with private investment and proven technology, we can generate 20% of our electricity from wind within 10 years — which happens to be the same amount we currently generate using America’s natural gas. Moving to wind power will allow us to conserve domestic natural gas for transportation. It’s cheaper, it’s cleaner, the technology is ready now and it’s abundant — America only has 20 billion barrels of oil and we’re trying to drill for a few billion more, but we already have the natural gas equivalent of 110 billion barrels in proven reserves and 170 billion more that are being accessed through new technology.

But most importantly, natural gas buys us one thing money can’t buy — time — the time to develop the renewable fuels that will finally end foreign oil’s stranglehold on the U.S.

That’s my plan — to harness domestic resources to reduce the impact of foreign oil and buy us time to perfect the next generation of clean renewables, allowing us to invest more of that $700 billion a year in our own destiny. I don’t expect everyone to agree with it, but I think it’s a good one.

My father used to tell me that a fool with a plan is better than a genius with no plan. So I ask, what’s Mr. Jenkins’s plan?

T. Boone Pickens
Dallas

Who’s Going to Fix America?

Thomas L. Friedman gets on his soapbox about the need for a better-functioning democracy in the U.S.

Are we getting the leaders we deserve?

Link: Op-Ed Columnist – Anxious in America – Op-Ed – NYTimes.com.

My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans. We are the ones in need of nation-building. It is our political system that is not working.

I continue to be appalled at the gap between what is clearly going to be the next great global industry — renewable energy and clean power — and the inability of Congress and the administration to put in place the bold policies we need to ensure that America leads that industry.

“America and its political leaders, after two decades of failing to come together to solve big problems, seem to have lost faith in their ability to do so,” Wall Street Journal columnist Gerald Seib noted last week. “A political system that expects failure doesn’t try very hard to produce anything else.”

We used to try harder and do better. After Sputnik, we came together as a nation and responded with a technology, infrastructure and education surge, notes Robert Hormats, vice chairman of Goldman Sachs International. After the 1973 oil crisis, we came together and made dramatic improvements in energy efficiency. After Social Security became imperiled in the early 1980s, we came together and fixed it for that moment. “But today,” added Hormats, “the political system seems incapable of producing a critical mass to support any kind of serious long-term reform.”

If the old saying — that “as General Motors goes, so goes America” — is true, then folks, we’re in a lot of trouble. General Motors’s stock-market value now stands at just $6.47 billion, compared with Toyota’s $162.6 billion. On top of it, G.M. shares sank to a 34-year low last week.

That’s us. We’re at a 34-year low. And digging out of this hole is what
the next election has to be about and is going to be about — even if it
is interrupted by a terrorist attack or an outbreak of war or peace in
Iraq. We need nation-building at home, and we cannot wait another year
to get started. Vote for the candidate who you think will do that best.
Nothing else matters.

Converting Lawns into Mini-Farms

Kelly Spors at the Wall Street Journal describes how suburban mini-farms are providing fresh produce and supplemental income for enterprising residents.

Link: Green Acres II: When Neighbors Become Farmers – WSJ.com.

Farmers don’t necessarily live in the country anymore. They might just be your next-door neighbor, hoping to turn a dollar satisfying the blooming demand for organic, locally grown foods.

Unlike traditional home gardeners who devote a corner of the yard to a few rows of vegetables, a new crop of minifarmers is tearing up the whole yard and planting foods such as arugula and kohlrabi that restaurants might want to buy. The locally grown food movement has also created a new market for front-yard farmers.

"Agriculture is becoming more and more suburban," says Roxanne Christensen, publisher of Spin-Farming LLC, a Philadelphia company started in 2005 that sells guides and holds seminars teaching a small-scale farming technique that involves selecting high-profit vegetables like kale, carrots and tomatoes to grow, and then quickly replacing crops to reap the most from plots smaller than an acre. "Land is very expensive in the country, so people are saying, ‘why not just start growing in the backyard?’ "

Environmentalists embrace the practice because it cuts the distance — and the carbon dioxide — needed to get food from farm to consumer. It also means less grass to water and fertilize and fewer purely ornamental plants. The Environmental Protection Agency estimates that nearly a third of all residential water use goes to landscaping. Why not use it to grow food instead?

But for the neighbors, the new face of farming can have a decidedly ugly side. The sight of vegetable gardens — and the occasional whiffs of manure from front-yard minifarms — is not their idea of proper suburban living. Many homeowners associations ban growing food in the yard, believing it damages a neighborhood’s appearance and may ding property values.

Susan and Greg VanHecke planted a small, 6-foot-by-20-foot vegetable garden in the back of their house in Norfolk, Va., two years ago to help teach their two children to grow and eat more vegetables. Reaping a bumper crop last year, Mr. VanHecke asked the owner of a local restaurant called Stove for whom he once worked as a sous-chef, to buy vegetables. Soon, Mr. VanHecke was making weekly deliveries to the restaurant, averaging about $100 in sales per week. The VanHeckes have added another restaurant customer this year and are tearing up all their backyard flower beds to grow more vegetables.

They’re also trying to figure out how to more easily fit farming into their otherwise busy schedules. Even minifarms take a lot of time, and suburbanites with full-time jobs find themselves a little stretched.