The Story of Iceland

Its a long one, but a good one, read on:

REYKJAVIK, Iceland -- A boy charged to the front of an angry crowd here recently and tossed a carton of skyr, a popular local yogurt-like snack, at the Parliament building. It splattered on the rough-hewn stone.

He and thousands of Icelanders were protesting one of the strangest economic failures of the global financial crisis. This past fall, every bank that matters in this tiny nation -- that is, all three of them -- failed. Iceland's currency, the krona, became worthless beyond its shores. The country's financial system stopped working.

"We are pissed off at the government," said one young man, pausing between fusillades of eggs. A roll of toilet paper arced across the Nordic sky.

Voices of Anger, Shame in Iceland

Halldor Kolbeins/AFP/Getty Images

In the whipping wind, a woman held a cardboard with a screaming mouth on Nov. 21.

Iceland is an extreme casualty of an era in which it became extraordinarily easy to borrow money. But it was more than that: An examination of the nation's banking system, which collapsed over about 10 days this autumn, reveals the degree to which Iceland was one of the international financial bubble's most enthusiastic players. Home to fewer people than Wichita, Kan., Iceland became so leveraged and so deeply intertwined with the global financial infrastructure that its collapse has rattled the world from Tokyo to California to the Middle East.

In Japan and Hong Kong, bond buyers got stuck holding all-but-worthless debt. In Beverly Hills, a real-estate developer was forced to default after teaming up with an Icelandic bank to build condos near Wilshire Boulevard. A German regional lender, Bayerische Landesbank, suffered big losses on its Icelandic investments contributing to its need for a €30 billion ($42 billion) bailout package.

And in recent weeks, Naomi House, a hospice in southern England, had to cancel a service in which aides made house calls to give the parents of dying children a helping hand. Some £5.7 million ($8.7 million) -- two-thirds of its available cash -- is frozen and may never be fully returned. It was deposited in an Icelandic bank.

Khalid Aziz, chairman of the hospice trust, says he didn't think twice back in 2005 when Icelanders bought the local bank. "With the globalization of markets," he says, "everybody owns everything these days, don't they?"

Reindeer, Gooseberries

How Iceland Collapsed

12:48

WSJ's Andy Jordan examines how Iceland's economic miracle came to an abrupt end and explains why the world should care about the collapse of the small country's financial system.

Until very recently, the 21st century had smiled on Iceland. Last year, it boasted the highest standard of living of any country, according to the United Nations -- outranking the U.S., for all its McMansions and drive-through coffee shops, and Sweden with its government-paid parental leave and other generous social benefits.

High interest rates set by the central bank kept foreign money flowing onto the island, strengthening the krona and making imported goods easily affordable. Iceland's ports unloaded ships full of swank Scandinavian furniture, building materials for new houses and sport-utility vehicles. Imports were boundless: Recently, cape gooseberries were a common adornment on the plates of Reykjavik's chic restaurants.

Iceland has long had many valuable natural assets. It sits amid some of the world's best fishing grounds, and that industry sustained the local economy for centuries. It is a wild, beautiful place where some people still believe in alfar, or elves.

The cinematic landscape of fjords, glaciers and reindeer attracts adventurous tourists and their dollars. The earth's innards bubble to the surface in volcanoes and geysers -- a product of Iceland's location atop the violent meeting point of the North American and Eurasian tectonic plates.

But in the early 1990s, some people felt Iceland could be more than a showcase for nature and producer of salt cod.

Leading the charge was David Oddsson. A shaggy-haired former mayor of Reykjavik, Mr. Oddsson was an Icelandic character: a writer of short stories and religious hymns, the one-time host of a comic radio program and, as a youth, an aspiring actor who dressed as Santa Claus to earn pocket money at Christmas.

He was known for his wit, says Hannes Gissurarson, a member of Mr. Oddsson's inner circle at the time. When Shimon Peres, the Israeli politician, visited Iceland, Mr. Oddsson jokingly said to him: "You are the chosen people, we are the frozen people," according to Mr. Gissurarson.

Mr. Oddsson became prime minister in 1991 promising to bring an end to the country's boom-and-bust cycles tied to the fish catch. He blamed the trouble on the state-controlled economy, which put bureaucrats in charge of fishing, the media, even a travel agency.

Within a few years, Iceland had sold off companies worth a combined $2 billion, a big sum for the small economy, says Mr. Gissurarson.

For Mr. Oddsson, what most held Iceland back was government control of banking, which put politicians in the position of determining how capital should be allocated. "The crucial factor," he said in a 2004 speech, "was the iron grip that the Icelandic state had on all business activity through its ownership of the commercial banks."

He sold them all.

From Fish to Finance

Icelanders embraced change. The highly educated populace launched biotechnology and software companies. Ossur hf, an Icelandic maker of artificial limbs, grew into a global supplier of high-tech prosthetics. At this year's Beijing Paralympic Games, the South African sprinter Oscar Pistorius won three gold medals wearing Ossur's "Cheetah" brand legs, running the 100-meter dash in 11.17 seconds.

Associated Press

Demonstrators crowd into a city square in Reykjavik on Dec. 1. The global credit crunch has brought down Iceland's three main banks, many businesses have failed, unemployment has risen, prices have shot up and the value of the country's currency, the krona, has plummeted.

Industrialists harnessed the energy of volcanoes and waterfalls to power aluminum smelters. Alcoa Inc. built a giant smelter among Iceland's eastern fjords.

But Iceland's biggest foray was into banking. Almost immediately, the newly privatized banks started looking overseas for growth. There was a simple reason: The local economy is small. With only 300,000 citizens, there aren't enough Icelanders to open new accounts.

In 2000, Kaupthing Bank, Iceland's biggest, had assets of just 208 billion kronur. By June 30 of this year, its assets had ballooned some 30 times, to 6.6 trillion kronur.

By earlier this year, the three main banks had grown so much that they accounted for around three-quarters of Iceland's stock-market value. Their loans and other assets totaled about 10 times Iceland's gross domestic product.

Central Reykjavik has a small-city feel -- rows of gabled houses and lamplit streets. But driven by banking, it became a mini financial capital.

Icelandic tycoons held court at hotel bars and hip eateries that overshadowed the port city's seafood shacks. At one, Sjávarkjallarinn, or Seafood Cellar, chefs put Icelandic fish in outré combinations with exotic ingredients. Its signature appetizer: a Mason jar of lobster, cauliflower and a truffle-flecked foie gras sauce.

Universities lured the children of fishermen and trained them in finance. In 2005, Silja Sigurdardottir, 26 years old, was an engineering student, then switched to financial math. "The banks were really big, and everything was going up," she says.

Ms. Sigurdardottir got her masters in 2007, and worked for Kaupthing for one year. During that time, "I didn't really worry about money," she says.

A Global Saga: Players in Iceland's Collapse

[David Oddsson]
[Silja ]
David Oddsson: The central-bank chief and former prime minister, he was a driving force behind Reykjavik's transformation into a financial hub.Silja Sigurdardottir: With a math degree, she landed a lucrative banking job in Reykjavik last year. This October, she was laid off.
[Jon Asgeir Johannesson]
[Geir Haarde]
Jón Asgeir Jóhannesson: Icelandic mogul who built a retail empire on his discount-grocery business.Geir Haarde: The country's prime minister, he jetted back to Iceland from New York to try to save the financial system.
[Larus Welding]
[Daniel Herzberg]
Larus Welding: CEO of Glitnir bank, which got trouble when euro-denominated bonds came due just as the krona was falling off a cliff.Daniel Herzberg: An expat Briton who runs bike tours in Spain, he'll likely lose most of the money he had in a high-yielding Iceland-affiliated account.

Those days are over. She was laid off in October. Next year she plans to begin studying for a new degree, in sustainable development. "Now I have to go back to being a poor student," she says.

Much of Iceland is on a similar trajectory. After years of growth, Iceland's GDP is forecast to shrink by 8% next year. Inflation, at 18% and expected to rise, is gutting the value of regular Icelanders' assets and crimping their once-flush household budgets.

"We have a major macroeconomic problem on our hands," says Geir Haarde, the country's prime minister.

To a degree, the wealth Iceland enjoyed during the boom years was a mirage. It was conjured by high interest rates, which attracted vast sums of foreign money.

Paradise of Returns

Iceland became a paradise of high returns, even for individual foreigners simply looking for a bank account. For instance, in July, Kaupthing's Isle of Man subsidiary offered 7.15% on one-year deposits.

High interest rates kept the currency, the krona, strong. The strong krona, in turn, made the prices of imported goods -- flat-screen television sets, SUVs -- low. So Icelanders went on an epic shopping spree. They dodged the expense of borrowing at those rates, though, by instead borrowing at lower interest rates in foreign currencies (Japanese yen, Swiss francs) to finance homes and other big purchases.

Like Americans who rode a housing bubble thanks to the U.S. Federal Reserve's maintaining low interest rates for years, Icelanders had found a cheap source of borrowing to finance their consumption.

As long as foreign money kept flowing into Iceland, everything remained fine. But an outflow would dangerously reverse the equation, and set the stage for calamity.

Iceland isn't the only small country to be whipsawed by foreign money flooding in, then gushing out. Hungary and Latvia were similarly hit.

What makes Iceland different: It tried to build a global banking center on top of a tiny currency. So when foreign investors tried to pull out -- converting kronur back into dollars or euros en masse -- its currency fell like a rock, spurring more withdrawals.

Amid Iceland's euphoria, there were warnings. In 2006, analysts at Danske Bank wrote a paper titled "Geyser Crisis" saying that Iceland's banks had grown too much, and the country was dangerously reliant on the willingness of foreigners to keep sending money.

Hedge funds attacked the Icelandic krona. The banks weathered the assault, and the krona bounced back. Fatally, Iceland viewed its successful defense as proof of the banks' resilience.

But the Danske Bank team wasn't wrong, just early.

Meantime, Iceland's new breed of tycoons was living large.

Among them was Jón Ásgeir Jóhannesson. He traveled by yacht, jet and helicopter all emblazoned "101" -- the name of a chic Reykjavik hotel owned by his wife.

Mr. Johannesson, who parlayed a discount-grocery business into a empire that spanned frozen food and high-end retail, went on a global acquisition spree.

In 2006, he scooped up famed London retailer House of Fraser. His holding company also owned a big chunk of Iceland's third-largest bank, Glitnir Bank hf.

One of Glitnir's predecessor institutions had been the state's Fisheries Investment Fund, which helped fisherman buy trawlers. In recent years, Glitnir became much more complex, borrowing heavily from European banks to finance a global expansion. It financed Mr. Johannesson's House of Fraser deal.

By mid-2008, strains in Iceland were starting to show. As the financial crisis simmered in the U.S., banks world-wide were getting warier of lending to each other.

They particularly worried about the remote and deeply indebted island nation of Iceland.

Days of High Crisis

In a matter of just days starting in late September, Iceland's entire banking system failed. This account of the final days is based on documents and interviews with a dozen or so people close to the banks and the government.

Inside Glitnir's headquarters in mid-September, CEO Lárus Welding and his deputies faced a problem: The bank had issued bonds five years earlier, to pay for its expansion, that were now coming due. Glitnir had to make a payment of €600 million on Oct. 15.

Glitnir feared it didn't have the cash.

Mr. Welding, silver-haired at age 32, had taken his job just a year earlier. Previously, he ran the London branch of Iceland's second-biggest bank, Landsbanki Islands hf, and helped run one of its most-popular products, "Icesave," a service that led Britons to sock away money at high interest rates. Hundreds of thousands of them did, pouring in billions of pounds.

Glitnir, however, didn't have access to piles of pounds or euros to pay back creditors. Unlike Landsbanki and Kaupthing, Glitnir hadn't bulked up on foreign deposits.

Mr. Welding's bankers tried everything to raise cash: They attempted to sell Norwegian subsidiaries. They tried to borrow foreign currency. But no one wanted the krona-denominated mortgages and car loans that Glitnir could offer as collateral.

Indeed, suddenly no one wanted kronur at all. The exchange rate was in freefall.

The mid-September collapse of Lehman Brothers in New York had panicked financial firms world-wide -- bringing lending between banks to a standstill. Given Glitnir's acute need for a loan, that was very bad news.

Glitnir hoped Bayerische Landesbank would let it be late with a €150-million payment on a loan, freeing up some cash for the bond repayment. No dice. On Sept. 24, the Germans asked to be paid on time.

Mr. Welding phoned Glitnir's chairman, Thorsteinn Már Baldvinsson. "This has not been a good day," he said.

Iceland was beginning to be cut down to size.

The Krona Crumbles

Mr. Haarde, the prime minister, spent Sept. 24 in New York City at the United Nations General Assembly. The talk there was of the financial crisis then laying waste to Wall Street. Yet while Lehman Brothers had just gone bankrupt, Europe hadn't yet felt the full force.

The Icelandic delegation headed across town to Nasdaq headquarters, where Mr. Haarde, smiling for the photo op, rang the closing bell.

Back in Reykjavik, however, Iceland's own Glitnir bank was flirting with disaster. With Mr. Haarde out of town, Messrs. Welding and Baldvinsson turned for help to Mr. Oddsson, the former prime minister.

In 2005, Mr. Oddsson had moved across town to another position of power: chairman of the central bank's board of governors. The Glitnir men said they could need between €500 million and €600 million.

Mr. Oddsson didn't commit. "Let's keep in touch," he said, according to a person familiar with the matter.

There was a problem: Iceland's central bank -- which is supposed to act as a lender of last resort when banks get into a bind -- hadn't stockpiled very many euros to lend. By the middle of this year, it held just €2 billion in foreign-currency reserves. By contrast, Iceland had more than $70 billion (€49.9 billion) in debts to foreign banks.

It had plenty of kronur. But nobody wanted those.

That weekend, Iceland's political and banking leaders scrambled to avert cataclysm. The chiefs of the three banks met at the offices of the state banking regulator to hammer out a shotgun merger. The most likely deal -- a tie-up of Landsbanki and Glitnir -- would still require the government to provide euros so Glitnir could make its payments.

Euros, of course, were just about as scarce in Iceland as cape gooseberries had once been.

Within the government, a split emerged about what to do with the few euros Iceland did have. Some advocated in effect lending Glitnir the money. But central-bank officials said a loan would be a waste: Glitnir would just be back later for more, they argued.

Instead, they proposed the government make a large investment directly in Glitnir, in return for equity.

This had its risks. The prime minister's chief economic adviser, Tryggvi Thor Herbertsson, worried that diluting Glitnir's shareholders would torpedo other banks' shares.

The evening of Sunday, Sept. 28, Mr. Oddsson summoned the top Glitnir officials. As Messrs. Welding and Baldvinsson arrived at the central-bank headquarters to learn Glitnir's fate, Mr. Welding turned to his colleague. "Do you realize," he said, "It's over."

Mr. Oddsson said the government would be willing to take a 75% stake in Glitnir for €600 million.

Monday morning, when the deal was announced, bank shares collapsed. Rating agencies knocked down the debt ratings of Glitnir, Iceland's other banks, and Iceland itself. The krona dropped like a stone.

Britons Take a Hit

In Spain, watching television at his home, Daniel Herzberg caught a news report about Iceland's banks. He got worried.

A few years ago, he and his wife had deposited £10,000 in the Guernsey branch of a British savings bank. A year later, Landsbanki bought the branch.

Mr. Herzberg, a 39-year-old expatriate Briton who organizes bicycle and walking tours, emailed the bank to ask whether his money was safe. He and his wife, Lucy, were saving for home renovations to accommodate their 2-year-old, Oliver.

On Friday, Oct. 3, Mr. Herzberg got an encouraging reply: Landsbanki would back foreign depositors. The email also pointed out that Icelandic bank regulators just a few weeks earlier had found Landsbanki "strong enough to withstand a severe shock to the financial system."

"Everything's fine," Mr. Herzberg said to his wife.

Except it wasn't.

The bad news about Iceland had startled many Brits with money in Landsbanki's Icesave accounts. That weekend, they withdrew some £200 million.

Alarmed, British banking authorities told Landsbanki it had until Monday afternoon to replenish the London branch with about the same amount.

The UK Financial Services Authority declined to discuss the Icesave sequence of events.

Reuters

The West Ham United wall in action this summer in an English Premier League soccer match in Manchester. West Ham was purchased by tycoon Björgólfur Gudmundsson in 2006.

A couple of hundred million pounds was something Landsbanki didn't have just lying around. Like any bank would, it had lent or invested the deposits it had taken in over the years.

Landsbanki had little choice but to turn to its lender of last resort, Iceland's central bank. Saturday, major shareholder Björgólfur Thor Björgólfsson paid a visit to Mr. Oddsson to ask for a loan. Mr. Björgólfsson and his father, Björgólfur Gudmundsson, are perhaps Iceland's most prominent tycoons. In 2006, the father purchased West Ham United, a top British soccer club.

Meantime, Prime Minister Haarde and other top officials -- bankers, regulators, labor-union leaders, parliamentarians and pension-fund administrators -- scrounged everywhere for euros that might be used to prop up the banks.

Brief Midnight Hope

Around midnight on Sunday, there was a burst of hope. Mr. Haarde told a small crowd gathered in the lobby of Iceland's Parliament building about a new plan taking shape: Iceland's pension funds would sell some overseas investments to raise foreign currency, then let the government buy the foreign currency for kronur.

By Monday morning, that idea was dead. The pension funds weren't eager to sell assets at fire-sale prices into a global crisis.

Iceland had run out of moves.

Monday afternoon, a weary-looking Mr. Haarde addressed his countrymen. He warned that the banks' grave troubles threatened the whole island. "The Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool," he announced on television.

The solution: Iceland would seize the banks. That evening, Parliament passed a new law enabling this to happen.

The next morning, Tuesday, Oct. 7, Landsbanki was nationalized. Iceland's depositors would be protected from losses, the government said.

In the U.K., banking authorities didn't like the sound of that. British depositors had billions of pounds in Icesave -- and no one was saying anything about protecting them.

In a heated phone call, British Treasury chief Alistair Darling asked Iceland's finance minister if British depositors were getting left out in the cold. "Do I understand that you guarantee the deposits of Icelandic depositors?" Mr. Darling asked, according to a transcript published in the Icelandic press.

"Yes," replied Arní Mathiesen.

"But not the branches outside Iceland?" Mr. Darling asked.

"No," Mr. Mathiesen said, not beyond the €20,000 minimum prescribed by European regulations. Later in the call, Mr. Mathiesen said Iceland probably didn't even have enough money to meet the €20,000 minimum.

"Well," said Mr. Darling, "that is a terrible position to be in."

Mr. Darling's office didn't respond to a request for comment. In public remarks, he has recounted a version of the call that is consistent with the transcript. Mr. Mathiesen couldn't be reached.

Despite the Landsbanki debacle, executives at Kaupthing remained hopeful about survival. Kaupthing hadn't seen massive outflows from its own British deposit service (which, luckily, didn't have "Ice" in its name). And Iceland's government had agreed to give Kaupthing the €500-million loan it needed.

Working late Tuesday at the bank's headquarters -- an airy glass building with a waterfall in the atrium -- they hammered out a proposal to take over Glitnir and sell its foreign assets. Thus, two of Iceland's three banks would pull through.

Early Wednesday morning, Kaupthing's chairman was working with his bankers to try to sell some UK assets, when bad tidings flashed across his TV screen: British authorities, worried about the solvency of Kaupthing's U.K. subsidiary, had seized its assets and transferred them to the Dutch bank ING.

The seizure would trigger a cascade of defaults for Kaupthing, blows it simply couldn't survive.

The next morning, Iceland's government took over what was left of Kaupthing. Glitnir, too, was eventually brought under government control.

In Iceland, the reaction has been shame and anger. Popular targets are British Prime Minister Gordon Brown and Mr. Darling, blamed for precipitating Kaupthing's collapse. They are also reviled for using an anti-terror law to seize other Icelandic assets. Also attracting a helping of blame is Mr. Oddsson.

His spokesman declined several requests for comment.

In a brief telephone interview in October, Mr. Oddsson said Iceland's foreign-currency reserves per capita were greater than most other countries. And in a spirited October interview on Icelandic television, he said it was the banks that should have been made smaller, not the currency reserves larger.

In a November speech to an Icelandic business gathering, Mr. Oddsson rejected blame for the crisis, saying the central bank had limited supervisory authority over banks, and that he had, in fact, warned of the banks' profligacy.

Blaming Mr. Oddsson is "totally unjustified," says his friend Mr. Gissurarson, also a member of the central bank's supervisory board." The currency crisis was brought about by Gordon Brown," he says. When the U.K. seized Kaupthing's assets, that ended Iceland's best hope keep that institution alive itself.

Mr. Brown has vigorously defended Britain's moves, saying they were necessary to protect British savers after Iceland signaled it would back local depositors but not foreigners.

Iceland's Global Fallout

One thing that might have saved Icelandic capitalism was joining the euro. Appealing to national pride, Mr. Oddsson long resisted moves to join the European Union and adopt the common currency. Perhaps most crucially, joining the EU would have meant bureaucrats in Brussels would then regulate Iceland's use of its fishing stocks -- a political third rail in Iceland.

In the October TV interview, Mr. Oddsson was unbowed in his views of the euro. "If we were tied to the euro, for instance, we would just have to succumb to the laws of Germany and France," he said.

The growth of Iceland's banks abroad was astonishing. When they fell, they left a mess to clean up that spills across the globe.

Glitnir owned two Norwegian banks. Landsbanki took deposits across the Atlantic in Nova Scotia -- then spread halfway across Canada to open a private-banking office in Winnipeg.

Kaupthing launched operations in Luxembourg, and raised an investment fund and bought a power plant in India. Two weeks before it collapsed, Kaupthing also wooed a Qatari sheikh, Mohammed Bin Khalifa Al-Thani, into buying a 5% bank stake for 25.6 billion kronur. A spokeswoman says the stake is now virtually worthless.

Kaupthing also hired a real-estate banker to drum up business. Among the resulting projects was the Beverly Hills condo development. Kaupthing teamed up with land developer CPC Group, and borrowed $365 million to help finance the purchase of eight acres of land abutting Wilshire Boulevard.

The loan was due Oct. 9 -- the day Kaupthing was seized by Iceland. CPC was unable to make the whole payment. The project is in turmoil.

In most countries, deposit-protection schemes cover at least some money lost by savers, at significant cost to local treasuries. Britain and the Netherlands are putting up billions of euros to cover their depositors. Iceland will reimburse some funds, but not for years.

Mr. Herzberg and the 2,000 other depositors in Landsbanki Guernsey have been paid 30% of their £120 million in deposits. But the bank's court-appointed administrator isn't optimistic that they'll get the rest back. Guernsey has no deposit-guarantee protection.

Account holders with large balances, like Naomi House, the British children's hospice, are out of luck. Some 250 children suffering from cancer and other diseases come to Naomi House each year. Many pass through its doors only for a temporary stay. Others come there to die.

In better times -- in fact, just three years ago -- Naomi house decided to start building a second facility, for teenagers. Construction isn't finished, so to keep the project going, Mr. Aziz, the charity's chairman, says the trust may be forced to sell its stocks and other investments.

Mr. Aziz hopes the government can help his charity, given that it is spending billions on bank bailouts. "Against the eye-watering sums that are being bandied around," Mr. Aziz says, "this is nothing."

Holiday sales were crap

Newspace/Private Space

Big news here: NASA has awarded resupply contracts for the ISS to SpaceX and Orbital Sciences, both newspace startups which have been working towards private space flight. Important to note is that the contract did not go to Lockheed Martin or Boeing, it went to the little guys. Lets hope that this is a step towards NASA becoming a customer of "regular" spaceflight, and a pioneer where pioneering is needed.

India vs. Pakistan, Part IV (maybe)

In the last 60 years, India and Pakistan have fought 3 wars. It looks as though they are getting ready for the 4th. After the terror attacks in India, which were almost certainly financed directly or indirectly by Pakistan, the two nations are ready for war.

Pakistan is deploying a 20,000 strong armored division into the cities along the expect path of an Indian armored invasion. The order of battle which is expected is that Pakistan's elite strike corps would invade India, eventually be repelled by the larger and superior Indian force, and then the newly moved in troops (along with a couple other divisions) would take the brunt of the Indian attack. They are not expected to be successful.

And that is where it gets interesting. Because if the divisions designed to defend against the assault fail, Pakistan is then expected to nuke the Indian armored columns. And if that happens, god knows what happens next - most likely a full blown nuclear exchange, the first in the history of the world.

This is not a good thing. Between this, the impending Israeli attack on Iran, the instability in Afghanistan, Iraq, and the middle east generally, as well as the idiot alliance of Iran, Russia, and Venezuela. And we will have a President who does not believe in hard power. To me, thats scary.

California Democrats Bypasses the Constitution

California, seriously short on money, and seriously unable to pass a budget for the state, is in pretty poor shape. The governators solution is less spending (good governator) but the democratic majority in the legislature has another solution: violate the constitution.

The Dems have a simple majority in the legislature, which means they cannot pass taxes, which require a 2/3 majority. Their solution: "user fees." For example, they are going to put a $0.39 "user fee" on gasoline, as well as "user fees" on personal income, and sales tax. Because the "fees" will go into a pool, in the case of the gas tax, for highway funds, and not general revenues, they are not a "tax" and dont require the 2/3rds majority.

It is another example of the complete and utter disregard the democratic party has for the constitution, and the rule of law. Thankfully, the governator will veto the bill (and the ACLU had promised to sue), but increasinly it seems as the only thing holding this country together is a few good men and the supreme court. Thank god for philosopher kings...?

Ireland Bans the lightbulb!

Well, kinda. They actually banned the incandescent lightbulb. From March 1st on, you will have to buy compact fluorescent bulbs.

Interesting - mostly because this should be a consumer choice (but because of government involvement in energy production, it is not).

Need a present? Look at skymall...

Taken from Gizmodo.. but just so good I had to republish..

What in the name of all that is good, sacred, and smells of PVC is this? A deer having sex with a trailer hitch? It's just one of the worst things in SkyMall's catalog.

Actually I like it. It goes perfectly with this:

But maybe I have had too much of accelerated wine and liquor:

the 6ht sense

Isn't our sense of heat a sense separate from the other 5? I have been thinking about this, and believe it must be the case. Heat is radiation - not touch. It would be a long-shot to claim that really excited electrons hitting your skin was a sense of touch. I posit that is the 6th sense.

Whistler gondola collapse

A gondola at whistler collapsed yesterday - which must have been pretty damn exciting. No one was hurt, but I am sure a lot of people were scared shitless.

http://news.bbc.co.uk/1/hi/world/americas/7786967.stm

The continued fall of Subaru

Once my favorite car company (and honestly, I do regret getting the S4 over a much more practical stickshift legacy sedan - for a lot less $), Subaru has fallen far.

Case in point: they just announced they are pulling out of the WRC (World Rally Championship). They have not been the champions they were in the 90's for a while now, but still, what the hell defines Subaru if it is not WRC? The WRX - the car that made Subaru famous for performance - is a RALLY CAR. Or really.. was.. I suppose. But without WRC, what the heck is Subaru going to claim for the STI and WRX? "These are our awesome detuned rally cars which.. um.. the last model.. a while back.. actually raced in rallys."

A big chunk of Fuji Heavy Industries (parent of Subaru) is now owned by Toyota, and it is beginning to show. Pretty soon, we will be assaulted by a never ending stream of boring, floppy, appliancemobiles. Crappy.

If you want to get really indignant and pissed off...

... read this. It is the amazing story of how Unions and the govt have come together to become an astoundingly inept drain on the taxpayer, called the Long Island Rail Road. The full article is worth the read, but the quick synopsis in copy and paste form is below:

The L.I.R.R.’s disability rate, which since 2000 has ranged between 93 percent and 97 percent for retired career employees, is three to four times that of the average railroad.

A worker, for example, could be considered disabled with “moderately severe antisocial ideas.” What constituted an antisocial idea was open to interpretation.

The board, with about $34 billion in assets, had not met formally in nearly two years, and no new meeting was scheduled. The three board members, all full-time presidential appointees, rarely met even in private,

The rail unions, which have remained powerful even as the nation’s labor movement has ebbed, have aggressively defended their interests at the retirement board. Management has largely avoided a showdown, choosing to spend its political capital in other areas, including contract issues, according to current and former board officials.

“It is a program that works,” said James M. Brunkenhoefer, national legislative director for the United Transportation Union.

"Under a 1951 law, the burden of paying most of these benefits has shifted to Social Security. Of the $3.6 billion that Social Security transferred last year to the retirement board, $418 million was for disability payments."

a federal commission studying the board’s solvency recommended that new employees be placed under Social Security and private pension plans, and that occupational disability benefits be limited to 24 months. Those recommendations were quickly discarded after the board solved its money problems by raising taxes on workers and employers.

“They can actually look at what the patient can or cannot do, rather than speculate,” she said. Should the right situation arise, Dr. Berendi said, she would ask for the test even though it is expensive. So how many tests did Dr. Berendi order last year? Zero.

“That board should not exist,” said Richard Parker, an economist who teaches at the Kennedy School of Government at Harvard. Mr. Parker said there was nothing structurally unique about the rail industry that merited a system separate from Social Security.

“They succeeded in creating this board,” he said, “that has essentially been self-recreating for no good purpose other than bureaucratic entropy.”




but the best part is this:

Since its inception, the board has been so riven with conflicts that it took a half century to update what were supposed to be temporary disability standards, leaving in place until 1998 archaic diagnostic terms like “cretinism,” “imbecility” and “middle-class moronism.” Simply having a “repugnant” scar could qualify someone as disabled.

I believe imbecility should still be allowed, along with "middle-class moronism:" you should just be paid what you deserve. Nothing.

Full article, from the NYT:
http://www.nytimes.com/2008/12/15/us/15rail.html?_r=1&pagewanted=print

Govt. Intervention

From Marketwatch:

"It feels like we've seen this movie before. It's called "Government Without a Cause," and features a moment where angst-filled protagonists play a game of chicken that goes horribly wrong. You remember the original, the scene in "Rebel Without a Cause" in which James Dean and the other young man try to see who will be the "chicken" and jump out of the car first.

The car, of course, is headed for a cliff and it's only after Dean leaps from the vehicle, laughing at the thrill of it all that he realizes the other guy never made it out. His sleeve got caught on the door handle and he went over the cliff with the car.

In the modern version of this movie, the American taxpayer is the poor guy with his arm stuck on the door handle, frantically trying to get loose. The major difference is that in this case, the Congress and the White House have actually tied him to the car and given an extra push on the gas pedal.

It isn't so much that Congress was wrong to have bailed on the bailout, or that the White House was wrong for advocating its passage, or even that Treasury Secretary Henry Paulson was wrong to have initially refused to use money from the financial bailout fund for the car companies only to reverse himself later. What's wrong, and might well remain wrong when the new Congress arrives in January, is the dithering and time wasting, the game of chicken that our leaders played for such incredibly high stakes. As we were racing toward the cliff, getting more and more afraid and unable to get out of the speeding car, it would have been nice if someone in the government had said, "don't worry, we have an emergency brake, no one is going to get hurt. At least not tonight."

watchmen coming soon.. new trailer = )

I am seriously looking forward to this movie. The book is amazing, in a dark screwed up kind of way (and befitting the fact that it was named one of the 100 most important books of the 20th century). The trailer looks sweet, and from what I have seen so far, they are keeping it pretty close to the book (as in every shot in the trailer is directly taken from a scene in the book). This will be the first time that I watch a movie where I have read the graphic novel first. Interesting because normally with books you create your own images in your head as you go along, and the movie never quite lives up to those. However, in this case, it is literally the book come to life. Very very stoked.

Big 3 Bailout died because of... The UAW!

In a not at all surprising turn of events, the reason that the bailout fell through was the UAW, which like most unions seems to believe that it is better to kill off the industry that employs you rather than take a wage cut. Idiots.

At 7pm last night Senate Republicans were in closed door session with the UAW. The Democrats were in, the Big 3 were in, everyone was ready to go, except the UAW. Part of the bill called for the UAW to cut wages so that they matched the wages paid to workers in non UAW factories (i.e. Toyota, Honda, Hyundai, Nissan etc.) They refused, offering only to cut wages after their current contract expires in 2011. Yeah, thats real helpful.

The crappy part is, the UAW might be rewarded for their idiocy, as the automakers might get their bailout from TARP - which may not come with the wage-cut strings attached.

My hatred of unions knows no bounds.

Big three will not get their $14 billion

Talks collapsed in the Senate.

GM is screwed. So much for my long term options... damnit.

Ford says they will be ok... which I think is seriously optimistic.

Chrysler is likely to sell itself to someone.. possibly Renault or Hyundia.

It is amazing to me that the govt. put up $30 billion to shore up Bear Stearns in a second. Offered $700 billion under tarp, $85 billion to AIG, and untold billions to Fannie and Freddie.... but wont give $14 billion in loans to the US automakers. As a single decision, I dont necessarily disagree... but looked at as a big picture, does that make a single damn bit of sense?

NBC passes on Top Gear USA.. because of Knight Rider...

Because the new Knight Rider failed, NBC is going to pass on Top Gear USA. The logic is impeccable.

Because one of the absolute worst shows ever made, one which simply infuriates car guys because of the complete stupidity of the events in the show and the it-can-change-into-any-shape-as-long-as-its-a-Ford car car in the show (its not KITT, i forget what the heck it is called), has something vaguely to do with cars, car shows must not be popular right now in the US. NBC is a bunch of idiots.

Seriously, in Knight Rider, in the first show (the only one I watched), KITT2000 or whatever the heck it is called is being chased by the bad guys.. in a Ford Edge (the family 'crossover' SUV/Minivan). And it cant get away. At all. On a mountain road. Except when it needs to, the car can do 400mph. Yeah.... ok.

So because that paragon of stupidity and unreality failed, they are not going to do Top Gear USA, and that show will be passed along to a cable station. Which is really too bad, because it is going to need a decent production budged to make it worth while.

Not that I am too bothered, because there is no way that any Top Gear other than the Top Gear is ever going to live up to the original.

Bush Looking to keep his Green record intact, start a Blue one

Bush, famous for undermining environmental protections, is looking to keep his environmentally-unfriendly reputation strong by hacking away at the Endangered Species act among other things before leaving office. Along with eliminating protection for polar bears (even though they are threatened), Bush is pushing through legislation that no means major projects will no longer need to undergo environmental review unless they are likely to threaten an endangered species. Sounds ok, but the decision on which those are will be made by the agency pushing the project: an agency which will have a vested interest. Obama has said he will work to undo the legislation, but it will be a lengthy process (and one of few things I agree with him on).

At the same time, Bush is looking to "blue" his legacy by creating a massive 700,000 square mile preserve in the Pacific.


Most of this will be along the Mariana trench, an area of diverse wildlife which has yet to be hit hard by fishing due to its isolation. We own the islands post-WWII, and the preserve would be created by extending preservation boundaries out from the current 3 miles from the shore of each island to up to 100 miles.

In this case, the locals are generally against the measure, afraid that it will damage their economy. On the cost/benefit side I would have to say that i dont much care whether the economy of the Mariana islands is damaged, and I think it is probably short-sighted, as was Utahns opposition to Moab becoming a national monument (which has turned into an economic boom due to tourism and adventuring).

Interesting dichotomy that Bush seems to be completely anti-environment on land, but wants to create the offshore preserve. My belief is that he is so fixated on "reducing US dependence on foreign oil" that he would do anything to get there.

LEGO turns 50.. and they made a sweet timeline..

http://cache.gizmodo.com/assets/resources/2008/01/lego-brick4-timeline.jpg

Tesla asks for $660 million, and announces they have sold their 100th car

Anyone see anything wrong with the above two statements being together?

1) Tesla has asked for $660 Million. Or roughly 10% of what GM would get.

2) Tesla announced they sold their 100th car, which means, in the last year, they have sold 100 cars. Or 0.00001% as many as GM sold in the same period.

I think they should get the money, dont you?

Telsa was "a new kind of car company" which builds only electric cars. They are a Silicon Valley startup, have enjoyed amazing publicity, but they will, and deserve to, die.

Basically all they did was figure out how to use laptop batteries to power a Lotus Elise. Admirable, but not groundbreaking. The car has decent range, and speed, and all the rest of it, but it cost $108,000 for what is a short-ranged electric track toy that would be beaten around the track by a Mazda Miata. Ok, maybe not the Miata, but a Sky Redline, shure.

Elon Musk (the guy who started Paypal) is now trying to get a friend to talk to Oprah, so that Oprah will talk to Obama, so that Obama will give them the money. Lets hope that convoluted connection falls apart, because all Tesla deserves is a footnote in automotive history.

Salton Sea at a Crossroads
Michael Cohen


Once a playground


Photograph of birds at the Salton Sea
All images courtesy of Milt Friend
More than 400 species of birds have been documented at the Salton Sea. It is a major stop along the Pacific Flyway, along which birds migrate between Central America and Alaska. The Salton Sea is an accidental lake, created out of a flood in the desert in Southern California in 1905. Since then, the lake has waxed and waned in both size and popularity.
Photograph of birds at the Salton Sea

Forty years ago, California’s Salton Sea was a popular destination. Resort towns dotted its shores, offering fishing, boating, swimming and waterskiing: The glitterati of nearby San Diego and Los Angeles flocked there for vacations. The lake was teeming with life, making it attractive to birds migrating between Central America and Alaska along the Pacific Flyway. Though all but one species of fish have since disappeared, birds continue to frequent the lake in tremendous numbers. More than 400 species of birds have been documented at and around the Salton Sea, the second-highest count in the United States. Some 270 species use the area regularly. Today, however, the Salton Sea is often described as “dying,” fueled by sensational stories of massive fish-kills and bird deaths.

In Salt Dreams, William de Buys wrote, “In low places, consequences collect.” Some 140 kilometers northeast of San Diego, Calif., the Salton Sea lies in one of the lowest places in North America — its bed is almost 85 meters below sea level. This shallow, largely unknown terminal lake collects and concentrates the biological and chemical remnants of the Colorado River.

Little more than a century old, the Salton Sea has come to a crossroads, its future clouded by the certainty of diminishing inflows, the impacts of climate change and the challenges posed by its tremendous scale. After decades of growing concerns as the health of the lake has deteriorated, California is finally starting to move forward with plans to save the great inland sea.

The Setting
The Salton Sea lies in the northern arm of the Colorado River Delta, atop sediments more than a kilometer deep. The lakebed has filled and dried many times over the centuries as the river meandered through its delta. Some 30 million years ago, the Gulf of California extended another 240 kilometers northwest, close to present-day Indio, Calif. The Colorado River’s heavy sediment load, eroded from the Grand and Glen canyons and numerous other canyons and washes, slowly filled in the uppermost part of the gulf. The river drifted across this delta, periodically flowing into a terminal lake to the north known as Lake Cahuilla, eventually meandering south again to flow into the gulf. As described by Godfrey Sykes and by Aldo Leopold, the delta was a lush, lazy place, where the river was in no hurry to meet the ocean.

In early 1905, the river unexpectedly flooded, tearing through an unprotected irrigation ditch cut into its right bank and scouring out a deep channel now known as the New River, which flowed north to fill the low place now known as the Salton Sea. The fast-rising lake flooded salt works, small towns and early attempts to irrigate the desert. After 18 months of Herculean effort, the river was tamed and forced back into its old channel. The new lake began to shrink, but only briefly. As thousands and thousands of hectares of lands nearby were irrigated with Colorado River water, the lake again began to rise, filling with the runoff from these fields. In essence, a substantial portion of the Colorado River still flows into the former delta. But instead of meandering slowly through green lagoons, it now runs through canals and headgates, across fields of alfalfa and other crops, eventually draining into the Salton Sea.

Photograph of farming
Drainage from farming in the Imperial and Coachella valleys supplies the Salton Sea with water and nutrients. This agricultural runoff feeds the lake’s hyper-productivity, but without it, the Salton Sea would quickly disappear.

Covering some 930 square kilometers (93,000 hectares), stretching 55 kilometers between the irrigated fields of the Coachella and Imperial valleys, the Salton Sea is an incongruous saline lake in the midst of the Colorado Desert. Temperatures in this desert exceed 100 degrees Fahrenheit (38 degrees Celsius) for more than 110 days each year. Precipitation averages less than eight centimeters a year, but the lake’s broad surface loses some 175 centimeters a year due to evaporation. Irrigation runoff that is equivalent to roughly one-twelfth of the average flow of the Colorado River offsets this deficit. Such inflows maintain a dynamic equilibrium driven by irrigation schedules and seasonal evaporation rates — until recently, that is.

In 2003, Southern California water agencies signed an agreement transferring water from irrigators in the Imperial Valley to users in San Diego and Coachella. In essence, the agreement pays farmers and the irrigation district to use their water more efficiently, transferring the conserved water. This efficiency, however, comes directly at the expense of the lake. Ultimately, due to the transfer and various other changes, inflows to the lake are projected to decline by more than 40 percent in the next 20 to 30 years.

No Small Problem
People sometimes refer to the Salton Sea as “dead” or “dying,” but in reality, the opposite is true. The fertilizers running off the fields of the Imperial Valley fuel a hyper-productive system, where waters may be choked by thriving algae and by the toxic byproducts of bacteria feeding in the lake’s murky depths. Rising salinity is further exacerbating the problem for life in the lake.

Over the past 40 years, rising salinity has driven dire predictions that the lake’s demise was but a decade away. (It hasn’t happened yet.) Three and a half million to 4 million tons of salts enter the lake each year, salts carried by the Colorado River from ancient seafloors now high in the Rockies and concentrated via evaporation from fields and reservoirs and the lake itself. From the Colorado River’s source, salinity rises more than eightfold by the time the river’s waters enter the lake. The lake collects these salts, its salinity already one-third higher than the ocean’s and rising inexorably.

Already, various fish, introduced from the gulf in the 1950s, have all but disappeared in the past several years. Only a hybrid tilapia, a freshwater species that has demonstrated a remarkable adaptability to low levels of dissolved oxygen and high salinity, has managed to thrive in the lake. Yet by 2020, if unchecked, the lake will be too salty for even the resilient tilapia.

Within the next 30 years, continued declining inflows will cause salinity to quadruple, the volume of the Salton Sea to fall by 70 percent, and the lake’s surface area to decline by more than a third. Under the Southern California water transfer agreement, change would be gradual until 2017, as “mitigation water” is delivered to the lake. Starting in 2018, however, that mitigation water will no longer be delivered to the lake and change will occur very rapidly, exceeding the ability of existing species to adapt and the ability of other, more salt-tolerant species to colonize this rapidly changing system. The existing ecosystem would quickly collapse as the fish and prey base perishes due to high salinity and very low concentrations of dissolved oxygen. Most birds would abandon the lake, their food gone and their roosting and breeding sites exposed to land-based predators as the lake shrinks. For many birds, there are few other places left to go, considering California has lost some 95 percent of its historic wetlands.

Birds and aquatic species would not be the only ones to suffer from the unmanaged decline of the Salton Sea. Air quality in the Imperial and Coachella valleys bordering the lake already fails to meet state and federal standards. Hospitalization rates for childhood asthma in the Imperial Valley are three times higher than the state average. The shrinking lake could expose some 350 square kilometers (35,000 hectares) of lakebed, greatly increasing the volume of very fine, unhealthy dust blowing throughout the region.

Two dusty lakebeds offer grim examples of the potential threat to human health of the shrinking Salton Sea. Owens (Dry) Lake, some 385 kilometers northeast of the Salton Sea, dried 80 years ago as Los Angeles diverted the lake’s tributaries to quench the thirst of the growing San Fernando Valley (a water grab made famous by the movie Chinatown). As a result, by the end of this year, Los Angeles will have spent more than $500 million in an effort to control the worst dust emissions in the country. Dust storms blowing off the dry lakebed can be seen from space, and cause widespread respiratory problems in people living downwind. In fact, dust blown off of the Owens lakebed can exceed regulatory standards more than 80 kilometers away.

Photograph of a massive fish dieoff
Wind-generated releases of hydrogen sulfide and ammonia that accumulate on the lakebed and infrequent low winter temperatures periodically cause massive fish dieoffs. Though many species inhabited the lake 50 years ago, today, only one hardy species of fish still survives, a hybrid tilapia.

Although conditions at Owens Lake bode ill for those living downwind of the Salton Sea, they do not begin to compare to the devastation at the Aral Sea in Central Asia. Fewer than 50 years ago, the Aral Sea was the fourth largest lake in the world. The diversion of 95 percent of its inflows caused the Aral Sea’s surface area to shrink by more than 75 percent, its elevation plummeting to such an extent that it is now effectively three distinct bodies of water. Its large fishing industry collapsed as salinity in the largest of the remaining lakes increased tenfold, while the southern shoreline has receded more than 145 kilometers from its once-active ports. The collapse of the Aral Sea has exposed about 52,000 square kilometers (5.2 million hectares) of lakebed. Massive dust and salt storms have led to some of the world’s highest respiratory-related mortality rates. Ironically, many of the fields irrigated with the water diverted from the Aral Sea are slowly being poisoned by the salts and other toxic materials blown off the lakebed.

Yet the Aral Sea also offers reason for optimism. A recently constructed eight-mile dike has aided efforts to restore a part of the Aral Sea, raising the surface elevation of the north lake and facilitating management of water quality. Given the loss of inflows, the key has been to create a flow-through system — in which salts and other contaminants pass through the lake to a downstream water body — for the lake, allowing for management of a portion of the lake while using the remainder as a sump for salts and contaminants.

People first began to propose ways to preserve the Salton Sea 40 years ago. Then, the concept of creating a flow-through system generally involved pumping some water out of the lake, usually to the Pacific Ocean, the Gulf of California or a dry lakebed, or by creating an area within the lake itself where saltier water would concentrate, allowing for management of the salinity and elevation of the remaining lake. Other proposals included building massive desalination plants at the lake. These various proposals never went anywhere.

The 2003 Southern California water transfer agreement completely changed the landscape. In light of dramatically reduced inflows, it would no longer be possible to preserve the lake as a whole. (The sheer volume of water and salts that would need to be moved via a pipeline or canal to and from the ocean would entail a project with capital costs exceeding $60 billion, plus millions of dollars each year to pump the water and maintain the facilities.) Given these changes, and the very dynamic nature of the lake, the concept of “restoration” does not apply. Rather, decision-makers face the challenge of determining what kinds of conditions they wish to create within the footprint of the Salton Sea.

The End Goal
California state legislation adopted in 2003 identified three key objectives for any project related to the Salton Sea: preserve wetlands habitat, avoid negative air quality impacts and protect water quality.

To that end, after years of discussion and debate among resource agencies, local governments, irrigation districts, farmers, tribes, conservationists and stakeholders with recreational interests, in late May 2007, the California Resources Agency delivered a “preferred alternative” to the state legislature for consideration. The plan designates 250 square kilometers (62,000 acres) of shallow, saline ponds to maximize habitat for birds and their prey, as well as 84 kilometers of rock and gravel barriers around the perimeter of the lake. These barriers would create a 182-square-kilometer (45,000-acre) horseshoe-shaped lake with roughly ocean-level salinity, to provide recreational and economic development opportunities, as well as habitat for larger fish. The plan would also include extensive water distribution canals for managing air quality. Total cost of the plan at full build-out: $8.9 billion, plus an estimated $142 million annually for operations and maintenance.

Photograph of birds at the Salton Sea

The plan is largely conceptual; the legislature has yet to approve the design, or even fund the extensive geotechnical surveys that will be required for a project of this scale. It is likely that the final project will include the three key components — shallow, saline habitats, a larger recreational lake and extensive air quality management — though their size and configuration will likely differ from the plan. The relative size of the individual components will be contentious, balancing costs and legislative requirements against the demands expressed by locals for an economic engine for the region.

In the short term, there appears to be broad support for the implementation of a comprehensive air quality monitoring network around the lake, and for the construction of eight square kilometers (2,000 acres) of shallow habitats to protect species as the full-scale project is developed, funded, permitted and constructed. In the long term, the huge cost of the plan, especially in the context of other pressing environmental challenges in California and in light of limited state and federal budgets, suggests that the future of the Salton Sea is not assured.

Too important to lose, perhaps too expensive to save, protecting the Salton Sea’s amenities will require massive intervention and ongoing management. Failure to act will lead to catastrophic impacts on the birds that rely on its rich waters, and will worsen the health of people in the fast-growing Imperial and Coachella valleys. An effective, well-designed plan could bolster the populations of imperiled species, protect public health, and attract tens of thousands of tourists to play in a cleaner lake’s waters, increasing economic activity in one of the most economically depressed regions in the state. Choosing the right path will require foresight and considerable investment from California and the rest of the nation.

Google book search includes full text of Pop Sci and Pop Mech...

...one word.. amazing.

All back issues of my favorite mag, since the beginning of time (or 1896)


The Geo Metro and consumer choice

While fuel hit $4.00 a gallon, Geo Metro's broke their original MSRP, even ones with 100k miles on the clock.
http://www.autoblog.com/media/2008/05/4dec_12_opt.jpg

The Geo Metro is a crappy car. It was a crappy car when it was built, and today, about 10 to 15 years later, it is uber crappy in comparison to what is on the market. A stipper Nissan Sentra (surprisingly, the cheapest car on the market today), is better by 1000% than the Metro.

Except for getting good mileage.

The Metro got 50mpg, and 60-80mpg if you were careful. Why is that? Because it is a death box on wheels, with a lawnmower engine. With 49hp, and weighing about 1/2 of a normal car, it got good mileage for the same reason a dirt bike does.

And you cant build one today, because of millions of safety regulations which dictate things like not dying when you hit a tree at 30mph.

Consumers, aware that the Metro was a deathbox on wheels, pushed its price way way up during the oil price spike, and that was a rational decision: they wanted to save money, and were willing to risk their life to do so.

If it were not for govt. healthcare, that choice would and should have been left entirely up to the consumer - especially since I can go out an buy a motorcycle, scooter, dirt bike, etc etc. why the hell cant I go out and buy a new Geo metro if I want to, or maybe a Tata Nano? Screw the Prius, you could get 60mpg for $2,500 and use the spare $23,000 and 20mpg you saved to buy yourself a Hummer H3 on sale and drive it around when you felt like it. The govt's regulation of choice in the auto market is completely illogical--not surprising, but frustrating as hell.

Why Thomas Friedman is interesting but none too intelligent

While I usually find Thomas Friedman interesting, I dont always think that he is the brightest spark. He likes the big picture, but he also likes bandwagons, a lot. And sometimes he comes up with interesting ideas, other times, he is way off base.

This is a case of the latter. He espouses the organization "Better Place," which is really a pretty decent idea (though there is a lot of BS thrown in, Better Place essentially replaces gas stations with battery replacement stations, and allows you to buy the electric car but lease/rent the battery). It makes sense, other than the fact that it is economically idiotic, and can only exist because of people's desire to "live green." With gas prices readjusting to reasonable levels, it will be one more casualty of the bubble, not Car 2.0 as Friedman sees it. I see it being successful in only one place: Israel. Buying gas basically finances those who wish to wipe Israel off the map (most of the Middle East, Russia, Venezuela), the nation is very small, and is for all intents and purposes, an island (I dont know the stats, but how many Israelis do you expect head down to Egypt for driving vacations?).

The Car 2.0 is not "Better Place." It is not electric cars, flying cars, hydrogen cars, solar powered cars, segways, unique factory customization with 1,000,000 possibilities, or powered bar stools. It will be a drive towards greater efficiency, product differentiation including unique design, and global models and manufacturing.

While Detroit Slept

As I think about our bailing out Detroit, I can’t help but reflect on what, in my view, is the most important rule of business in today’s integrated and digitized global market, where knowledge and innovation tools are so widely distributed. It’s this: Whatever can be done, will be done. The only question is will it be done by you or to you. Just don’t think it won’t be done. If you have an idea in Detroit or Tennessee, promise me that you’ll pursue it, because someone in Denmark or Tel Aviv will do so a second later.

Why do I bring this up? Because someone in the mobility business in Denmark and Tel Aviv is already developing a real-world alternative to Detroit’s business model. I don’t know if this alternative to gasoline-powered cars will work, but I do know that it can be done — and Detroit isn’t doing it. And therefore it will be done, and eventually, I bet, it will be done profitably.

And when it is, our bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay. It will be remembered as pouring billions of dollars into the CD music business on the eve of the birth of the iPod and iTunes. It will be remembered as pouring billions of dollars into a book-store chain on the eve of the birth of Amazon.com and the Kindle. It will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.

What business model am I talking about? It is Shai Agassi’s electric car network company, called Better Place. Just last week, the company, based in Palo Alto, Calif., announced a partnership with the state of Hawaii to road test its business plan there after already inking similar deals with Israel, Australia, the San Francisco Bay area and, yes, Denmark.

The Better Place electric car charging system involves generating electrons from as much renewable energy — such as wind and solar — as possible and then feeding those clean electrons into a national electric car charging infrastructure. This consists of electricity charging spots with plug-in outlets — the first pilots were opened in Israel this week — plus battery-exchange stations all over the respective country. The whole system is then coordinated by a service control center that integrates and does the billing.

Under the Better Place model, consumers can either buy or lease an electric car from the French automaker Renault or Japanese companies like Nissan (General Motors snubbed Agassi) and then buy miles on their electric car batteries from Better Place the way you now buy an Apple cellphone and the minutes from AT&T. That way Better Place, or any car company that partners with it, benefits from each mile you drive. G.M. sells cars. Better Place is selling mobility miles.

The first Renault and Nissan electric cars are scheduled to hit Denmark and Israel in 2011, when the whole system should be up and running. On Tuesday, Japan’s Ministry of Environment invited Better Place to join the first government-led electric car project along with Honda, Mitsubishi and Subaru. Better Place was the only foreign company invited to participate, working with Japan’s leading auto companies, to build a battery swap station for electric cars in Yokohama, the Detroit of Japan.

What I find exciting about Better Place is that it is building a car company off the new industrial platform of the 21st century, not the one from the 20th — the exact same way that Steve Jobs did to overturn the music business. What did Apple understand first? One, that today’s technology platform would allow anyone with a computer to record music. Two, that the Internet and MP3 players would allow anyone to transfer music in digital form to anyone else. You wouldn’t need CDs or record companies anymore. Apple simply took all those innovations and integrated them into a single music-generating, purchasing and listening system that completely disrupted the music business.

What Agassi, the founder of Better Place, is saying is that there is a new way to generate mobility, not just music, using the same platform. It just takes the right kind of auto battery — the iPod in this story — and the right kind of national plug-in network — the iTunes store — to make the business model work for electric cars at six cents a mile. The average American is paying today around 12 cents a mile for gasoline transportation, which also adds to global warming and strengthens petro-dictators.

Do not expect this innovation to come out of Detroit. Remember, in 1908, the Ford Model-T got better mileage — 25 miles per gallon — than many Ford, G.M. and Chrysler models made in 2008. But don’t be surprised when it comes out of somewhere else. It can be done. It will be done. If we miss the chance to win the race for Car 2.0 because we keep mindlessly bailing out Car 1.0, there will be no one to blame more than Detroit’s new shareholders: we the taxpayers.

The Luggage

For anyone who is familiar with discworld, the fantastic world created by Terry Pratchett, you will know the Luggage, a chest with 100 small legs which follows around its owner wherever they go, whether the owner wants it to or not, whether small creatures, armies, or continents stand in the way.

The RoboStool is one amazing step towards a real life Luggage:


Woot Weads the Wire. (their title, not mine)

My second favorite online shopping site now does new commentary as well, and it is of a very high quality = )

COLUMBUS, Ohio (UPI)—U.S. and French scientists say they’ve developed a new understanding of a process called adiabaticity that’s used to control atoms in magnetic resonance.

The scientists also believe that “Adiabaticity” would make an awesome title for a Genesis song.

WASHINGTON (AP)—The Bush administration asked the Supreme Court on Tuesday to let the nation’s older power plants draw in billions of gallons of water for cooling without installing technology that would best protect fish and aquatic organisms.

Representatives for the Bush administration argue that giant mutant fish would really add a new dimension to fishing, and maybe help the sport recapture the attention of today’s video game obsessed youths.

SHERMAN, Ill. (UPI)—A Sherman, Ill., man said he has created a 100,000-light animated Christmas display in his yard that synchronizes with a 43-minute loop of songs.

Forty-four minutes into the display, neighbors began petitioning for the homeowner to be tried as an enemy combatant.

MAASTRICHT, Netherlands (UPI)—A Dutchman known as Europe’s most committed sperm donor says he’s fathered 46 children and is willing to keep at it.

The Dutchman offered everyone his business card, but no one really wanted to touch it.

NEW YORK (UPI)—Crude oil prices rose slightly on the New York Mercantile Exchange Wednesday morning following an OPEC request to have Russia and others join their ranks.

More genteel, refined oil refuses to even discuss the issue, finding such matters crass and impolite.

10 Best engines of 2008

Wards has released their list of the ten best (below a car price cap of $50,000 or so) engines. The price cap means that Godzilla (the GT-R) and the Vette dont make the list, but a lot of good ones do. Below is the list, with my commentary.

  • Audi AG: 2.0L TFSI turbocharged DOHC I-4 (A4 Avant) - no two ways around it, this is a very nice, very smooth engine. The old 1.8T was good, but this thing is super smooth.
  • BMW AG: 3.0L turbocharged DOHC I-6 (135i Coupe) - hells yeah for twin-turboified v6's, the cultural successor to the 2.7t in my s4, and it is meant to be a great engine.
  • BMW AG: 3.0L DOHC I-6 Turbodiesel (335d) - Called amazing by Clarkson, this has to be a good diesel
  • Chrysler LLC: 5.7L Hemi OHV V-8 (Dodge Ram/Challenger R/T) - w00t w00t for the only American v8 on the list - this thing is a great engine and gets good mileage as well. Too bad it will probably be dead in a year, but right now, you can pick up a Ram for about 50% off list, and maybe get a PT Cruiser thrown in for free too.
  • Ford Motor Co.: 2.5L DOHC I-4 HEV (Escape Hybrid) Meh. It's on here because it is green. The new Fusion/Milan hybrid is way better (will get 45mpg in a full sized car).
  • General Motors Corp.: 3.6L DOHC V-6 (Cadillac CTS) Oh hell yeah. One of the main reasons the CTS is now a world class car, this thing should be dropped into performance versions of the General's other sporty cars... oh... wait... there are only 2 or 3.
  • Honda Motor Co. Ltd.: 3.5L SOHC V-6 (Accord Coupe) Boring.
  • Hyundai Motor Co. Ltd.: 4.6L DOHC V-8 (Genesis) Interesting. But its only going to be in the Genesis, and probably only 20% of Genesi will be sold with this engine. That said, it is a pretty sweet modern take on big V8 for v6 lexus bucks.
  • Toyota Motor Corp.: 3.5L DOHC V-6 (Lexus IS 350) Boring as any other Toyota - even though the IS 350 is meant to be a pretty good car, it will never compete with the 3 series or A4, because it is built by Toyota.
  • Volkswagen AG: 2.0L SOHC I-4 Turbodiesel (Jetta TDI) Seriously boring.

Afghanistan: Lessons from a Russian General

Just as Iraq started to stabilize, Afghanistan went down the tubes. Now, we are contemplating a "surge" there as well, as it worked in Iraq. Of course, Afghanistan is notoriously hard to invade or control, as the Russians found out.

The advice from a leading Russian general in the Afghan war is as follows:
You can expand your presence, but what will change? I think you need to do three things. First, create statehood. Set up a popular authority that would deal with corruption and social issues. Second, a combat-able armed force should be created in Afghanistan. And an economy should be created to help people. If you deploy 200,000 troops there, daytime is your time, you're in command. At night, the Taliban comes and they are in command.

Good news from around the world

Catching up on some defense news, and not a lot of it is good.

Russia is preparing to launch its behind schedule replacement for the aging Typhoon Class SSBN submarine (their nuclear missile sub). The Yuriy Dolgorukiy will be the first Borei class sub (a much more modern sub than the giant Typhoon), and will carry 16 of the new Bulava missiles. The important things to note here are the new development of Russia's delievery systems, something which has languished since the 80's. The new missile is aimed at breaking through our missile defense systems (which we have always claimed, and I believe, are aimed at Iran etc: small states with limited 60's era missile+nuclear tech, nonetheless capable of destroying a city).

Speaking of such states, Iran has launched their new two-stage solid-fueled Sajeel/Ashura missile, with a claimed 2,400km range, letting it hit a few European capitals as well as all targets in the middle east.

Thankfully, the US conducted another successfull test of the ICBM interceptor, bringing successes to 37/47, which considering most of the 10 misses were in the early development years, is a damn good rate. Along with that, there was a successfull test of the airborne laset, something I have been watching for a while. It is designed to loiter in a target theater and destroy missiles at the launch stage, very useful.

The long and the short of it is that the world is entering a more dangerous time, with many more states capable of world-altering and unimanginably devastating attacks. The US needs its missile defense programs, more than we need (in terms of protecting American lives) the wars in Iraq and Afghanistan. I hope that Obama (who has been against the shield) sees its value.

Israel's Border Solution: Sentry Turrets

Looking more and more like a sci-fi war book (or one large fortress), Israel has turned to unmanned but heavily armed sentry turrets to protect its borders. Right now, it is along the "hot" border with Gaza, but it could be expanded.

Developed by Rafael Advanced Defense Systems, the network consists of weapons towers, mounting a remotely-controlled 7.62 mm or 50-caliber weapon, linked to an observation station. The observation post, which are manned mostly by female soldiers (who are not allowed to have front-line roles in the Israeli army), monitors border activity around the clock. When an attempted border penetration (or other suspicious activity) is detected, operators can direct one or more towers to engage the targets. In addition to the tower-mounted guns, observers can also employ precision-guided missiles... yup.

Crazy Israelis, though in this case I understand the value of the system. However, as is often my fear with remotely operated weapons systems, one has to wonder to what degree the reduce cost and risk of engaging a target increases the likelihood of doing so (and thus the possibly preventable loss of life).

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"Who is the Stig?" Is #9 most popular question on Ask.com

Yup. Thats right. Above most world events, breaking news, and even "How do I turn off my iPod when it crashes?" is "who is the stig?"

As it should be.

This vital question, near and dear to the hearts of millions, is one of the greatest challenges of our time. Is it Perry McCarthy, Ben Collins or Damon Hill? Is it a robot? Does Lewis Hamilton occasionally wear the white? As there is no one in the world around the Top Gear track (including, intrestingly, Damon Hill and Lewis Hamilton), he has to be one of the greats. Of course, it could just be James May's alter ego.

Stopping Hurricanes

This is a pretty wild one..

Hurricanes, as we've seen, can wreak serious havoc when they strike populated areas. We've never had control over them before, but one researcher thinks they could be broken up with F-4 fighter jets.

In theory, sending in a pair of the jets to do loops around the eye of the hurricane while it's still out over the ocean, creating sonic booms, would break it up before it hits the shore.

Jet fighters flying at supersonic speeds along special trajectories with a hurricane/typhoon at various altitudes would create supersonic booms. In one such embodiment, the trajectories for the supersonic booms of the present invention are counter to the rotational component of the hurricane and/or typhoon being targeted. As such, supersonic booms can be tailored and/or designed to partially and/or fully -negate the basic rotational contribution in a hurricane by slowing down a hurricane's/typhoon's rotation. Additionally, when supersonic booms propagate downward to the surface of the ocean they also destabilize a hurricane's/typhoon's structure by increasing the pressure in the central part of a hurricane's/typhoon's eye.

More Auto News.. and its not good

So.. yeah.. been pretty heavy on the auto news recently, but it is something that I am really into, and we are in a market changing time.

The UAW has claimed in testimony to Congress that GM could fail this month if there are not loans approved. This is not actually that bold of a claim, as if the US govt. does not give them a loan, no one else will take on the counterparty risk, and GM is screwed.

On the other side, Ford, which has claimed it can survive without the govt. (good for you Ford), is now putting Volvo up for sale. The last of Fords "Premier Auto Group," this means that Ford will be left with Ford, Lincoln, and Mercury as brands, though the last of those hardly deserves the title, as it has essentially been a trim level for the last 20 years. Ford is hoping to get $6 billion for the generally unprofitable Scandinavian firm. One thing does have to be said though, unlike GM which has essentially killed Saab since taking it over, Ford has done good work with Volvo, pushing it into the modern era by hiring more than children playing with blocks into the design department, and supplanting agricultural equipment engine designers with people who have heard of power to weight ratio. I quite like Volvo's now, and though they are overpriced (largely blame the exchange rate for that one), they are nice cars.

So Ford will hopefully make it through, but it would be like GM selling off Saab, Wuling, Holden, and Daewoo, or something like that. The reality is that Ford is now looking to model itself after the wildly successful Toyota, by focusing its energy on a general brand, and luxury brand, and not taking the shotgun approach so long favored by the US automakers. If Toyota and Honda have proved anything is it that you can base a car company on one or two models (the Corrolla and Camry, Civic and Accord). Ford I think will go down that route, with the next gen taurus and fusion/mondeo, along with the supporting case of focus, flex, and fiesta (yes, the f thing was intentional, but they gave up on it after realizing that the fivehundred was a way crappier name than the loved but long abused name "taurus.")

The basic problem with the US automakers is that they did not make any money selling cars. They made it on trucks, SUV's, leases, financing, and all that extra crap. Long ago the actual selling of the cars stopped being profitable. Which means that when leases and loans go to crap, SUV and truck sales tank, and no one wants to buy your debt, you are in deep shit. And the thing is, there is little hope for them.

Today, all three big three CEO's drove to Capital Hill instead of flying, and they all drove in hybrids (the most impressive being Wagoneer's Volt test mule). The problem with that is, no one will car in two years when they all release their next gen hybrids. Oil is falling faster than you can say "hedge funds are screwed," and by the time the Volt is released, it may have picked back up some, but I am betting it will stay around $60 a barrel for a while.

And that means, why the hell would you pay $10,000 extra for a car which it will take you 10years to recoup your investment. It just does not make sense. Crappy economy + low oil price means more used cars please. Because of the fall off in loans to low-income and poor-credit buyers, the cheap new car segment has tanked. New car purchases are usually because of desire, not absolute necessity, and so they are one of the easier things to hold back on. When the Volt comes out, it is going to recognized as an economic disaster for GM. Wrong car at the wrong time.

So what can they do? Build their normal cars better, and compete on value. Cut back the number of models, cut back development costs on niche cars, and focus on getting the formula right on the ones that really count. We dont need more Chrysler crossfires, 6 versions of GM's Lambda platform, or the Taurus X (Freestyle) as well as the Flex. We can go without Pontiac G3's and G5's (the Chevy Aveo and Cobalt rebadged), we dont want the old Focus and pretty good Fusion when there is a new Focus and amazing Mondeo across the pond. The Jeep Commander, Dodge Nitro, Chrysler Crossfire and Avenger, GM Impala, and the entire brands Mercury, Hummer (sadly), and GMC should be taken behind the shed and shot, along with all but one of each set of GM triplet, quaduplets, quintuplets, sextuplets, and for a while they even had a septuplet off the Trailblazer platform. Thats just ridiculous.

I hope the US automakers make it, because they have started to produce good cars again, after many many years of turning out unremarkable crap. The new muscle cars, the Chrysler 300, the Chevy Malibu, Ford Mondeo, these are good cars. Imagine what the big three could do if they each designed one mid-size sedan, not five, if they paid workers, not the unemployeed and retired, and if they made money selling cars, not financing them.

Zimbabwe falls further

Zimbabwe has been well on its way to becoming a failed state for quite some time. However, as the article below shows, the deterioration in the last year has been incredibly rapid. Mugabe has managed to drive his "beloved" country into ruin, all the more terrible a crime given how stable and successful Zimbabwe had been before he "saved" it.

It is quite likely that we will see either widespread violence, or a completely failed state such as Somalia emerge from the wreckage that is Zimbabwe.

Zimbabwe Declares Cholera Emergency

JOHANNESBURG — The Zimbabwean health minister, David Parirenyatwa, has declared the nation’s cholera outbreak a national emergency and appealed for outside help, the state-controlled Herald newspaper reported on Thursday. The epidemic has claimed more than 560 lives.

The news emerged a day after riot police officers brandishing batons charged into a group of 100 doctors and nurses on Wednesday in Harare, the capital, breaking up a demonstration for better pay and working conditions in a nation suffering from both the cholera outbreak and an economy in free fall.

The health workers, many dressed in uniform, fled as the police approached. Nearby, teachers and other union members tried to join the protest but were clubbed by yet more police officers, and at least 15 were arrested.

Earlier in the day, armed men identifying themselves as the police officers took a human rights activist, Jestina Mukoko, from her home in what Amnesty International called “part of an established pattern of harassment and intimidation of human rights defenders.” Ms. Mukoko, whose whereabouts are unknown, is director of the Zimbabwe Peace Project, an organization that has been documenting rights abuses.

The cholera epidemic and the new crackdown on dissent come in a country already mired in desperation. The government is paralyzed by a stalemated power-sharing deal, and the official inflation rate is 231 million percent. Grocery shelves are largely barren. Most public hospitals and schools are closed.

According to the Herald, Mr. Parirenyatwa, the health minister, said many hospitals were in urgent need of drugs, food and equipment. He also cited the critical shortage of staff in hospitals adding that those remaining had “no zeal” to work, the Herald said.

By declaring an emergency, the health minister was able to appeal for outside help which, he said, “will help us reduce the morbidity and mortality associated with the current socio-economic environment by December 2009.”

The newspaper quoted the minister as telling potential donors: "Our central hospitals are literally not functioning. Our staff is demotivated and we need your support to ensure that they start coming to work and our health system is revived." He listed urgent requirements as including medicines, laboratory reagents, surgical sundries, renal and laundry equipment, X-ray films and boilers, the Herald said.

Since August, cholera deaths have risen to 565, according to the United Nations. More than 12,500 people are infected, and to make matters worse, in Harare water itself has become scarce as a dysfunctional government lacks the chemicals to purify the drinking supply. Many businesses have shut because of the sanitation problems.

To add to the chaos, soldiers, angered at the meagerness of their deflated pay, on Monday rampaged through central Harare, breaking windows, looting stores and robbing the money changers who deal in foreign currency. Armed police officers had to disperse the marauding troops with tear gas.

The demonstrations on Wednesday brought yet another macabre scene of violence. The police “assaulted several women, some of them pregnant,” said Lovemore Matombo, president of the Zimbabwe Congress of Trade Unions.

The protesters, upset about restrictions that kept them from reclaiming their increasingly worthless cash, had been marching with placards. One read, “We want all our money!” Another said, “People are dying of preventable disease!”

Many onlookers were standing in long lines at banks, and they watched with a contradictory set of anxieties, afraid of being shot but reluctant to risk losing their place.

“I don’t want to die now,” said one observer, Mary Muzanenhamo, a mother of two boys. “I have kids to look after. I just hope this crisis will soon be over and we can start on a new chapter.”

Among the protesters who were arrested were Wellington Chibebe, secretary general of the Congress of Trade Unions, and Raymond Majongwe, secretary general of the Progressive Teachers Union of Zimbabwe, Mr. Matombo said. All those arrested were released.

More than 50 others were arrested in demonstrations throughout the country, according to a statement by the Congress of Trade Unions, and several of those protesters remained jailed.

Earlier, some union members had presented a petition to Gideon Gono, the powerful governor of the nation’s Reserve Bank. The wages of many salaried workers are paid directly into bank accounts, and Mr. Gono had promised to raise the amount people can withdraw from 500,000 Zimbabwean dollars each day, which is now a paltry 20 cents, to 100 million Zimbabwean dollars, or about $40, each week.

The health care workers had their own particular complaints. “We are forced to work without basic health institutional needs like drugs, adequate water and sanitation, safe clothing gear, medical equipment and support services,” read a protest letter from the Zimbabwe Doctors’ Association.

Conditions in hospitals and clinics have been steadily deteriorating. Basic medicines are absent. There is no thread for suturing or needles for injections. The health system was already in collapse when the cholera epidemic struck.

This week, Unicef announced an emergency response to the worsening conditions. So did the European Commission and the International Red Cross.

“Cholera is a disease of destitution that used to be almost unknown in Zimbabwe,” Louis Michel, the European Commissioner for Development and Humanitarian Aid, told The Associated Press.

He was referring to a time when Zimbabwe was a breadbasket of the region. But during the past decade this nation has plunged into ruin, one reason being the confiscation of white-owned farms by the government of Robert Mugabe.

In elections last March, the 84-year-old Mr. Mugabe, who has headed the country for nearly 30 years, was outpolled by opposition candidate Morgan Tsvangirai. Forces loyal to the president then unleashed a campaign of violence before a runoff vote set for June. The brutality caused Mr. Tsvangirai to withdraw from the second election.

Regional leaders finally coaxed the two sides into a power-sharing deal with Mr. Mugabe’s remaining as president and Mr. Tsvangirai’s becoming prime minister. But though the agreement was hailed as a breakthrough, vital details have never been ironed out and the arrangement has been stymied by disputes over who will control central government ministries.