Monday, December 28, 2009

Buying individual or family carbon offsets? How about trading offsets for being a jerk!

Now you might consider this posting a little bit of a rant, but that's ok.

As a disclaimer. I know what carbon offsets are. I own a wind turbine that creates clean energy (no carbon emissions) and when I am not using that energy, it goes back to the grid. In a real sense I am doing something personal to help, and it costs me real money. We expect a payback in about ten years or so, if the wind keeps blowing.

I also know what "cap and trade" is. In the 1990's we used "cap and trade" to significantly reduce acid rain production caused by power plant emissions of sulfur dioxide (SO2). It worked. We should expect that "cap and trade" for carbon emissions to work for industries by setting a market price for carbon emissions. The market provides an incentive to bring new technologies on-line or retire old polluting technologies. Eventually the market disappears when the pollutant is no longer emitted.

Now for the crazy part. There is a market for your individual carbon production. You can pay companies like TerraPass (aptly and ironically named) $369.00 for your families offset. Here is what you get for that half house payment:

2 Car decals,
2 bumper stickers,
4 luggage tags
1 fridge magnet

 a "certificate", (read it and weep) and a promise: 

Where your money goes

When you buy a carbon offset from TerraPass, your money supports clean energy and other projects that reduce greenhouse gas emissions. Our offset portfolio consists of a mix of clean energy, farm power and landfill gas capture. If you want to decide the quantities of these projects yourself, you can build your own portfolio.
How the market set the price of $369 is a mystery to me, but I would guess they sat around a table passing  a bottle of McCallan single malt, smoking Cohibas and laughing about how much they could get out of a well meaning family for a couple of pieces of paper and a promise to do good.

OK, you want to do good for the planet and feel good about doing bad things like making carbon emissions in the first place. How about recycling, walking to work or the bus stop, or, god forbid, skipping a trip or two on an airplane. Get rid of the extra car. (no need for the second bumper sticker then).

I don't even want to get started with the big guys who jet around in private aircraft, watercraft and limousines and live in multi mcmansions and then claim to save the planet by buying offsets. It just doesn't work that way. Witnesses to that were Mother Teresa and Ghandi. If you want to change the planet, you need to act as if it needs saving, not just by buying a "get out of jail free" card.

However, you got to admire the TerraPass team, with a straight face it's a slick way to raise some cash in exchange for a bumper sticker and a certificate.

Taking a cue from TerraPass, I will be opening a business called JerkPass.

Ever made a mistake, cut someone off while driving, accepted the wrong change from the clerk and not gone back, made an offhand remark that hurt someone, forgot to flush the toilet or put the seat down, been insensitive to your spouse.etc. Well JerkPass can help.

We promise to do nice things for the population of the planet. We will hire well groomed and friendly people to hold doors for others, to give up their seats to the elderly or disabled, to NOT park in handicap spaces. We promise to spend our money on things that help others. We promise not to waste and always be respectful and cheerful. To be part of the solution, buy one of offset packages or send a gift certificate to the most un-thoughtful person you know. Make them happy in their ignorance.

What you get for $369.00 is

A certificate that allows you to offset your actions as a jerk, by saying "...HEY, CHILL OUT MAN, I HIRED SOMEONE ELSE TO BE NICE TO TOHERS.."

Two bumper stickers that say.

I hired someone else to drive their own car rationally!

You also get the peace of mind that you are doing something (albeit vicariously) good for others while you can just be yourself.

Personal carbon offsets, what will they think of next?

Anyone got some other ideas for other "OFFSETS"?

Monday, December 21, 2009

Merry Christmas, my gift of hope to GenX 'ers and Millennials

One thing a significant downturn in an economy always does is help the next generation afford the things that the previous generation has taken for granted and that they have overpriced.

For instance, maybe homes and maybe the stock market.

With home prices continuing to fall (and they will until all the defaulted mortgage and excess capacity is absorbed or demolished), and when our recent college graduates and Gen Xers start to recover they will find the cost of homes to be within their reach. In a few years a hardy bunch of young home builders will get out there again and start building small, energy efficient and affordable homes

I expect that the government will continue to find ways to keep home mortgage rates as low as possible. However, the curves of price and interest must meet to keep home ownership costs affordable. I think this is a given and maybe the economists idea of supply and demand will make sense again sometime soon.

Although the convergence of low mortgage rates and cheap money helped create our economic predicament, the politics of homeownership is not over by a long shot. (the poster's humble opinion).

When the bankers come to their senses and dump their stock portfolios to take their profits and resume traditional banking again, the prices of stock ownership (again, in my opinion) will return to a realistic level.

In the post-consumerism world, stocks will be priced on a company's ability to make and share profit (that used to be called paying dividends). Stock prices will not be based on your bet that there is someone willing to pay you a higher price for an overvalued stock. (The theory of the next greater fool.)

An added benefit:

In other areas, millennials and GenXers will find that, as the generation that screwed up the economy leaves that economy by death, retirement or other means, interesting jobs will open up. Some of those interesting new jobs will be in post-consumer businesses, green energy, and climate change adaptation.

So with the cheery time of the year upon us my gift to millennials and GenXers is HOPE that: 
  • they may be able to own their own mcmansion (suitably downsized)
  • they may gain wealth through industrial ownership.
  • they may find jobs more exciting than grocery bagger or barista.
And to all a good night!

Tuesday, December 15, 2009

Swimming in a sea of seasonal waste!

A recent post at the The Pink Slip Blog  pointed me to Scroogenomics:

In the U.S. alone $25 Billion, that's billion dollars, worth of gifts have no value to the receiver and then just become waste, according to Jel Waldfogel economics professor at Wharton.
We are not the biggest seasonal spenders, 12th out of the top 26 nations, isn't that amazing.

Add to that the waste of lighting, packaging, and wrapping, fuel etc and we are swimming in seasonal waste.

The more I think about that, the more I want to scream "I'm as mad as hell and can't take it anymore!" Peter Finch in Network, 1976.

Should this solstice celebration be a completely wasteful season?

No wonder we get crabby and our familial dynamics fall completely apart.

It is like a Potlach (see my July post). A Native American practice where wealth is given away or burn up to prove how wealthy you are.

But this year's waste comes at a time when we shouldn't be wasting precious resources, we need to be investing in our future and investing in those who have been hit the hardest by the ongoing recession.

So my suggestion for gifts this year:
  • More money given to charity and valuable non-profit organizations. I upped my amount significantly.
  • Gifts of time and energy to friends and families. Certificates for babysitting, dog walking, errand running, etc.
  • Gifts of stock in green/sustainable companies for infants and responsible older children.
  • Home made food" gifts that necessary, used up and create minimal waste.
  • Re-gifting, recycling, reusing.
So I am promising myself to redouble my efforts to use less next year. I have already started thinking of strategies to be much less wasteful and more post consumerist next year.

Sunday, December 6, 2009

32% of all mortgaged properties in the US are worth less than the mortgage.

As of June 2009, more than 32% of all mortgaged properties in the U.S. were “underwater,” meaning that the homeowner owed more on their mortgage than their home was worth, according to Brent White of the University of Arizona in his paper Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.

Caveat: before you read this blog and react, make sure you live in a non-recourse state. That's one where if you default on your mortgage the banks can only take the house and are barred from coming after your other assets to make up the difference.

While he doesn't quite come out and say "WALK AWAY YOU IDIOT", I will do it for him: if you are a slave to your bank for their blessing of a roof, run away. You don't owe them your soul. If you can continue to pay the drowned mortgage, continue to do so. (I am able to, so I do.)

In my world view your contract with your bank is just that a "contract" and not a moral obligation to a life of servitude. We had that before with the plantation owner making the slaves build their cabins and stay obligated to the master for food and clothing. We rejected that notion 150 years ago.

If shame and fear are holding you in mortgage slavery, shake it off, there are plenty of rental properties out there and over time you just might be able to save a ton of money.

For the sake of honesty: I am completely underwater on my main residence. Its worth exactly zero dollars. How do I know that? Half the homes in our subdivision are for sale, some for over two years. There are no buyers, nor are there any lenders, so the market value is zero.

Realistically, I am sure if we auction it, we might get something. Maybe about 1/4 of its former price point. I can afford to live in this home because the payments are under control, for the next four years anyway (and then I retire). I expect we will sell it for the mortgage amount or maybe a shade over/under.

I have no fear of having crappy credit. I have great credit and half my credit card banks have raised their rates to the state usury limits (or nearly so). I am lucky that none have cut my limit, so I have plenty of credit but at rates that make loan sharks look like a kinder and gentler business model.

PS I just bought my last car (should last the rest of my driving life) and I have a significantly diminished stash of cash for my impending retirement.

I would guess that if you are considering walking away from your mortgage, you already have nearly wrecked your credit. If you are safely making your payments and you like your house stay, its not worth the hassle.

However if you have $25,000 in credit card debt, no savings accounts, an income of less than $30,000 and a negative home equity of $100,000, then I can't see the downside of becoming a renter. Maybe you should have been a renter all along. If you need to be a mortgage slave to feel good, then I suggest finding a financial life coach to work through the issue of bonded servitude.

In the bloggers humble opinion, we should expect single digit increases in home equity over the next decade: so factor in that the boom is over and the "value" of your home will never go back to the heydays of your youth.

In a nutshell here is what Brent has to say about the non-walkers...This norm asymmetry has lead to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse. (WHITE ,2009)

If you want to read the whole paper, and I highly suggest it you can get it here.