Robert Paterson's Weblog

Hope is not a method

The car companies stop leasing Trucks and SUV's. Restaurant chains shut their doors. Banks fail. The big media companies are bleeding to death as advertisers pull back. People cannot move and their homes have taken a haircut. New York is preparing its citizens for really bad news about the budget the State and the City are really being squeezed and will have to make drastic cuts - as are many states and cities that depend on sales and housing taxes - all this is coming down into the future - it's inevitable.

Yet many commentators say that things are OK - that we will get out of this soon.

What are they seeing that I am not?

If we continue this then what?

There is news of fish kills die to the oxygen being squeezed out by algae etc on PEI rivers. I go swimming in the Hillsborough River with the dogs on hot  days and have been struck this summer by the huge clumps and mats of vegetation in the river - significantly worse than in previous years.

So what is the end game here?

Our rivers and streams are in enough trouble because of causeways that have choked the flow - but the accumulation of nitrates seems to be reaching a tipping point.

What will PEI be like if its rivers and stream become stagnant marshes?

Many hope that we have time to reduce nitrates. Many see the concentration only in the high use potato areas. But do we have the time? Systems don't change gradually - they tip. Are we Tipping?

Systems are also interconnected - is flow and hence causeways a related issue? Is not the water table also connected?

Some say it's only a few fish? Really - how can a place be livable if all its water systems atrophy? Hello it's all about us and our future.

I suspect that we don't have the time and that this is not as simple as we had thought. So what would I do?

I would change my time horizon to immediate and I would ask myself what would be the outcomes if our rivers died in say 3 years? That might change where I put this issue. I would expand the issue to riverine health - that would include flow.

Finally I would ask this question - what happens to a place that has no moving surface water?

Cotton Park Stratford PEI - What next?

Just down the road from where is live is Cotton Park. The dogs and I go there nearly every day - it is the best walking park on PEI. The Council are looking input for how they should manage the park. But as is often the case - few people knew of the public meetings and so turnout and input was modest.

Please consider the web? Why not set up a Ning site for the Future of Stratford? I keep getting reminders that I should go to the town hall and see the plan. I get getting told that great things are happening at Stratford. I believe it on faith but I am not going to drive to the town hall to get information.

Come on guys - the tools are there - the price is right.

By the way - here is my feedback for the Cotton Park - Please no minor Disney - not swings etc. Please keep it as an oasis from urban life. Maybe add some mystery such as the proposed labyrinth - of course make it consistent with the towns emerging sustainable values and use no presticides - make it a model and a learning resource for the rest of us who are struggling to do this in our homes.

More Cracks in the Credit World

Chrysler announced this week that they are getting out of the leasing business. Why? Because the residuals - the underlying value - of trucks and SUV's are next to worthless. No one wants to buy one for any price.

The company, now privately held, told its dealers on Friday that its financing arm, Chrysler Financial, would stop offering leases as of Aug. 1, a move that comes as plummeting resale values of gas-thirsty trucks and sport utility vehicles turn lease deals on those vehicles into big money losers for the Detroit automakers.

On Thursday, the Ford Motor Company took a $2.1 billion write-down in the second quarter, part of an $8.7 billion loss for Ford over all, related to unprofitable leases held by its finance arm, the Ford Motor Credit Company.

So what then are millions of car load and other leases worth? What about your net worth. What is your SUV worth?

The NYT announced today that bonuses on Wall Street will be off sharply.

A decline in bonuses of that magnitude would easily eclipse the drop of 2001, the year of the 9/11 terrorist attacks, when total bonuses declined by $6.5 billion, according to the state comptroller’s estimates. City and state officials said the coming plunge in pay would have wrenching effects on the local and regional economies.

It would mean about $10 billion less in taxable income and several billion dollars less to be spent on apartments, furniture, cars, clothing and services. For many investment bankers and traders, year-end bonuses traditionally account for at least three-fourths of their income. But the downshifting of the Wall Street lifestyle has already begun.

“As long as I’ve been in the business, I think this is the worst,” said Vincent Nastri, whose Barclay-Rex tobacco shop down the street from the New York Stock Exchange sells cigars for as much as $35 apiece. “It’s been a little on the quiet side — a little shaky.”

All told, Wall Street firms, which employ about 178,000 people in the city, have announced thousands of layoffs in the last year. One of the seven largest financial companies in the city, Bear Stearns, nearly failed in March before it was acquired by JPMorgan Chase & Company.

It is already clear that employees whose jobs survive the deep cutbacks will, as a group, take home much less money than they did last year or the year before. The latest financial statements from the remaining six of the seven largest firms show that their compensation costs declined by a total of $9.5 billion in the first half of this year, compared with the first half of 2007. Along with JPMorgan Chase, they are Citigroup Incorporated, Goldman Sachs, Morgan Stanley, Merrill Lynch and Lehman Brothers.

Analysts familiar with those companies said the cuts so far implied an aggregate decline in pay and benefits, including bonuses, of more than $18 billion for the full year. About half of that amount would have gone to people employed in New York City, they said.

The impact on the state and city budgets is likely to be severe because the financial-services industry provides almost one-fourth of all income earned in the city. That pay accounts for about 10 percent of the city’s tax revenue and about 20 percent of the state’s, said Kenneth B. Bleiwas, deputy state comptroller for New York City.

What is high end real estate worth in New York?

I know that this feels like. Years ago when I worked at CIBC, it was announced just before year end that there would be NO bonuses that year. Of course bonusses are meant to be at risk but when you get them every year, they become how you live. You expect them. 70% of my net came from my bonus. I had a 70% pay cut. It matters not how you are paid, after time, you live that that cash flow level. That was a "challenging" year. I only got through it because the one thing we had not done was bumped up our housing costs. We lived in a modest house and we had no second home. So the vacations, the summer camp, the new car, the dining out, the new clothes etc all went. My daughter got a job. My son went to cadet camp, Robin cut back on our household expenses. I lived on air. We made it and it made our family too.

But for many today, they have been living at full tilt. A 70% haircut will mean that houses and appartments, cottages, boats, planes, cars, jewels will have to be sold. Who will buy? What are many of these things now worth?

So as the lower end of the credit market dies, so too will the top end.

What will the banks do? I think that we have seen only the beginning of the problem.

Food in a post oil/industrial era

"Here in the United States about 40% of our population farmed for a living around the turn of the 20th century. By 1950 that number had dropped to 12%. Today fewer than 2% do the work of growing food in America as we too have industrialized and urbanized our population. The other 98% of us work at a job which provides us money that allows us to buy food from a small number of domestic producers and from others who grow it abroad. We have given up our own food sovereignty as a people and instead rely almost entirely on an economic system to provide us with meals.

Should we be pleased that the USSR shifted from a rural population towards a more urban population and were then unable to feed themselves leaving their leaders no choice but to consent to revolution in the face of a starving population and no way to pay for food? Maybe. But that is an oversimplification of the history of the collapse of the Soviet Union. Countries don’t collapse for any single reason but because of a host of pressures. However the agricultural situation surrounding the Soviet collapse suggests that America should be asking herself some questions. If the economic system in the United States, an economic system based on growth, runs up against a depletion of resources that physically slows or stops our ability to grow economically, will we face a similar collapse? Could our nation, like the Soviet Union, come to regret our willingness to hand over our food sovereignty? Will fewer jobs mean less food? If the American economy of growth falters, how will the 98% of non-farmers be able to buy bread? Are we in for a revolution when a certain percentage of the American people are unable to buy food?

I’m not talking about a revolution based on some sort of ideological difference like that between capitalism and communism. I’m talking about a revolution due to an increasing resource scarcity that chokes the life out of industrial agriculture. In an era of unprecedented growth and materialist prosperity, many people have come to believe that the grocery store aisles will always stay stocked, but there is only so much of the natural world we can convert into human resources. Mother Nature has her limits and infinite growth in our finite system is impossible even if short term growth seems to suggest that it is inevitable. Will our failure to recognize this fact visit our dinner tables/"

The Oil Drum continues to find great writers who are adding to the debate about a post Cheap Oil era. This article is written by Aaron Newton - above is only a snip.

I recall what it was like in the former Soviet Union. I was in Ukraine from 1997 - 2000. The Industrial food system had collapsed. Every weekend millions left town to work their garden - called a Dacha Plot. Maybe 1/4 of an acre in size it fed an entire family - without it, millions would have starved.

What is our risk here on PEI with only 2 days of food in the shops?

I say more here

BPP Friday - The Last Time?

Join the BPP Diner

The Curse of the Curmudgeons

The earnings at the New York Times fall by 82%. Ford posts a $8.7 billion dollar loss - the message is clear - that the old way of doing business is broken.

Many senior folks at Ford keep telling Alan Mulally, CEO of Ford, to keep the focus on SUV's and Trucks. He keeps telling them that only 15% of the world market is there. They retort that there is no money in small vehicles. He reminds them that the rest of the industry and the clients are there and that they have to find a way. They resist. Now Armageddon.

Large farmers on PEI say there is no money in small local farms and that they only need a bailout to get back to making money.

News directors in Public Radio tell Jeff Jarvis and Terry Heaton that the web is a sideshow.

BIg Oil tell America that all they need is to drill more in Alaska.

Many think that they can cut there way to profit:

“Everybody says cut and cut some more, but how are we going to sustain this company?” Mr. Mulally said in one meeting in his office on the 12th floor of Ford headquarters, according to people in attendance. “What does a sustainable Ford look like, gentlemen?”

Enough already! Wil E is over the cliff edge and now gravity is pulling him down. The Tipping Point has arrived.

Isn't our attachment to the old our worst attribute. It seems to take a heroic effort by a few leaders like Mulally to wrench an organization into reality. No wonder most fail.

This is no time now accept half measures. You are on firm groind to you are falling to the canyon below.

BPP Lives on The BPP Diner

The BPP Diner on Ning is now up - please join here

BPP - Death and Resurrection? - Will you help?

I have been very restrained in connection with the cancellation of BPP (Bryant Park Project) many in NPR are friends and some, such as Dennis, I also respect a great deal as well as value their friendship.

I have not contacted anyone directly. I hope that my language has been respectful as well. I had hoped that the hundreds of comments and the coherence of some arguments might have caused a rethink and a plan to see what could be done.

Well it's probably too late for that and Dennis' email seems to shut the door. By the way Dennis, did you write that or did Andi? Didn't have your lucid voice.

So what's to do? For folks - if there is to be a future for BPP - its' now up to us.

I would be happy to open up a Ning/Diner/@bpp site tomorrow.

Here we could:

• Harness the huge energy out there
• Keep in touch
• Help the staff get work
• Maybe relaunch the show?
• Raise money

Be grown up - maybe the future is in death and then resurrection. Maybe the future is in our hands?

What do you think? Would you join such a venture into the unknown and help?

Local Food is a silly idea - say PEI big Farmers

Local large farmers attacked the preliminary results of the commission set up to study the future of agriculture on PEI.

They do not accept that if you are a small place that you cannot compete in a commodity market.

They say that moving to a local food system is ridiculous - they claim that it will take only 7 farms to feed all of PEI.

They demand immediate help for their real and pressing financial problems

They claim that only they know how to farm and that if they go - we will lose everything.

I want to address their claims. But first of all I want to acknowledge their fear. Like every sector of the economy that has relied on having a large capital plant to be successful - they cannot make ends meet. They cannot get paid enough to pay for their plant. In the newspaper world the plant is the press, the paper and the distribution system, in TV and Radio it is the studios, the towers etc, in Autos it is the plants and the labor agreements of the past. For our potato farmer it is their tractors, equipment, storage and inputs.

It must be soul destroying to wake up at 2am and worry about how you are going to make ends meet - to worry about losing the farm that might have been in your family for generations.

So I acknowledge that this is more than hard. It is brutal. Who would not have sympathy? But now let's look at what is the reality and then at the end of the post - let's rethink.

• In a commodity business scale is the only issue. If you don't have it - you have to get out. This is not a theory it's a reality. There are farms in Idaho that have the acreage of all of PEI. There are pork operations that on their own in South Carolina have a multiple of all our pigs. Even in beer, Bud gets bought - even Bud is too small.

• So lets get real here. We are talking about developing a softer landing or exit for our commodity producers. All discussion about how they can stay in the long term as commodity producers has to stop.

• It gets worse - the entire commodity food system is based on cheap oil. There will be no cheap oil. All inputs and all the industrial system that supports commodity farming is based on cheap oil. Not the least the distribution system and the just in time food system. All of this will come to a end in the next 5 years. There is no future in commodity farming.

• So the idea that 7 farms will feed PEI is nonsense - it is based on the idea that 7 highly mechanized farms with a mass of oil inputs will provide the food.  On Cuba, they have had to shift to a highly localized organic system - no oil = a high labour - local system. There will be masses of new jobs that are derived from this system. Big fields, big farms, big equipment will not work. It will mean a return to small. In some cases to micro units.

• The one thing we can be sure about is that the future will not look like the present. The End of Cheap Oil means the end of nearly every art of how we live today. Food, being most dependent on cheap oil will change the most

• There is also another powerful trend - people want real food. The only possible export will be food that has been raised in a healthy way. Industrially raised and killed animals will be like SUV's.

• Our large farmers need a lifeboat not a bailout. We have been bailing out a dying resource for a decade. The lifeboat takes them to shore where they have to start a new life. Committing public funds to a way of working that has no future is bad policy. Helping Islanders out of the stormy water is part of the Island way. So there should be help. Help now but it too must come with a price - the help must been seen as an exit strategy.

• We have done this in Tobacco - we have done this with the closing of the base in Summerside. No help without an exit intention and plan and timetable

• Finally the big farmers claim to be the only expertise. This is simply not true. They know how to manage large scale industrial processes. But are they the ony people who know how to grow food? Surely not. I have met many many people who know who to grow food. Growing food is the key issue not knowing how to grow 800 acres of potatoes. So many of us are stuck on the idea of a viable farm is 1,000 acre operation. This will not be the farm of the future. The farm of the future will be small and part of a network

News in 2010 will not rely on Newspapers or Network TV. GM and maybe many car makers will not be in business. Most of the large airlines will not be in business. Large supermarkets will be on their heels. Trucking and shipping firms will be on their heels. The entire idea of making stuff cheap far away will be over. Our financial system will still be barely capable of lending.

So why should commodity farming be the same or any better than it is now?

Any business that depends on cheap oil and a lot of capital equipment will be dying.

This is the reality.

So let's grieve with our large farmers - let's have a wake - but let's bury the body and get on with life.