Category Archives: Uncategorized

The Humbling of One Ugly American

A meditation on ‘shit-holes’, given relevance by our Commander-In-Chief.

In the early eighties, I made my first trip overseas, to Europe specifically, on business for a multi-national company.  I traveled there with a colleague whom I had just met a week earlier. She was a US citizen of Mexican origin, educated in Canada and with a BA in French and an MBA in finance.  The first thing notable about her was an elegant dialect that seemed an amalgam of her Spanish, French and English education, blended seamlessly into one.


We arrived in Portugal and traveled to Oporto on our first day.  After settling into the hotel, we met to take a walk and get acquainted with our surroundings.  We walked the cobbled streets of Oporto among the shops and vendor carts and I slowly began to absorb a new reality;  a sense of ‘old Europe’ quite different from my experience.  At one point, she asked me what I thought of the place.  I said, “I can’t decide whether it’s quaint or a dump.”  As we continued to stroll through the streets, we passed produce carts.  At one point I observed how unappetizing the produce looked.  Without missing a beat, and in her understated, elegant way with a tone of mild but powerfully delivered condescension, she replied, “That’s because the good stuff is shipped to the US as a cash crop”.  She not only explained the circumstance of my observation, but revealed my ignorance in fact and attitude.  We laugh about that episode to this day as I often reflect back on that experience in our conversations about current events.


I wish I could say that was my only instance of American hubris.  But it was most definitely the beginning of my education in the myth of American Exceptionalism.  In the days that followed, we traveled to the Douro region, the port wine growing region in Portugal where our company maintained a house.  In this particular village, our residence was one of three, all owned by port wine-producing companies, which had power and indoor plumbing.  As we descended on winding roads into the valley, one could observe thousands of little plots of land with houses and working gardens, surrounded by vaster commercial vineyards.  If my sense of Oporto was like going back 80 years in time, the Douro was like traveling back yet further.  What I perceived at first was poverty.  But upon further reflection, I have come to understand that what I saw was a vastly simpler and humbler way of life defined by its own circumstances which were quite different from the ones I had always assumed were universal up to that point.   I would not trade my circumstances for theirs, but I gradually came to understand that I could not look down on their circumstances without questioning the justification for my own.


My colleague departed early from our assignment to attend to other matters, and for the next few days, I was left on my own to explore the streets of Oporto in my spare time.  I was struck by the number of bookstores that I saw among the shops, and displayed prominently in the windows of many were ‘do-it-yourself’ books.  It suggested to me a people and a culture that had not yet entered the ‘service’ economy, where individuals were still their own primary resource for meeting their needs. It suggested a less sophisticated economy on the one hand, but a more resilient one on the other.

I wandered into a neighborhood store and saw a shelf of aseptic milk, unrefrigerated.  I had never before seen that in the US.  It was a product of necessity in Portugal, where electricity was expensive and home refrigeration at that time was probably much more limited.  But it made perfect sense for them, and I wondered ‘why don’t we do this too?’

I could recite other instances in my brief experience in international business where I made comments or assumptions that were utterly ignorant of a greater world and its varied circumstances, but I gradually came to understand that, while we may live on varying planes of material well-being, there is an underlying plane of human values that is universal, and on which we can relate, and must.  When we speak of ‘shit-holes’ as our Commander-in-Chief has so chosen, we demonstrate our own ignorance of the world’s realities, many of which include our own wanton conduct in contributing to their circumstances in pursuit of our narrowly conceived and often unjust goals.


I remember my political science professor observing that the US won World War II not by brilliance of strategy, but by overwhelming the enemy with sheer material and human resources.  My father, a private in a combat engineering platoon of Patton’s Third Army put it a different way.  “We made fewer mistakes than they did.”  Yet, in Vietnam and in Afghanistan, our material might and superior training did not and are not winning the day, and likely will not.  We are fighting in the terrain of human values; a battle-scape that our mythology asserts we should win.  But we’re not.  That should give us pause for thought, but it hasn’t.  We still see ourselves as WWII conquerors and saviors of the world order.  And we confer upon ourselves the right of preserving that order in our image and to our liking.  It is not working, and will not.  We have reached the limits of our advantage.  We have squandered much of our advantage.  And, though many at the top of our particular national pyramid cannot see it or refuse to acknowledge it, we are sliding into 2nd world status in many areas, and 3rd world in some.  Without a mid-course correction of some dramatic scope in our national psyche and values, it is now conceivable that we will reach escape velocity from the orbit of material prosperity and national unity.  The Portugal I remember may come ever closer to the America of our future experience.  But Portugal has evolved and prospered.  I am no longer so certain that we will.


I am reminded of another moment in my undergraduate experience.  I worked with a colored lady in the university library reserve room.  She had a high school education, but had obviously earned a doctorate in life’s lessons.  She wore a smile that radiated the warmth of the sun, but betrayed traces of weariness of a life that had its challenges as well as its gratification.  One afternoon as we both sat at the reserve desk observing the antics of some of my peers, she remarked with a weary but warm smile: ‘Honey chil’, there’s ignorant and there’s stupid.  Ignorant is curable. Stupid is forever.”

We might contemplate that truth as we reflect on our president, and ourselves.



Copyright 2018  Integratedman  All rights reserved.


Facts may be optional. Reality Isn’t.

“People that say that facts are facts — they’re not really facts . . . there’s no such thing, unfortunately, anymore of facts. And so Mr. Trump’s tweet amongst a certain crowd . . . are truth.”     Scottie Nell Hughes, a Trump surrogate.

Last month, I was mildly disturbed to learn from the media that my profession of auditing, as well as the professions of science and journalism and medicine and to some degree law, have all been rendered irrelevant by a society that has elected to disregard fact and truths that emanate from facts, and embrace opinions posing as truths and  rooted in thin air,  grown in the hothouse of anger and ignorance.

Such was the result  of the election postmortem in which the Forces of Trump declared that facts no longer matter.  It’s what people choose to believe, by whatever means they come to their beliefs, dubious or otherwise.  You have to give them their due; their election results have validated their hypothesis, at least in the short-term.

But in the short or long-term, ‘truths’ must ultimately reconcile with reality, or they are not true.  Reality trumps belief.

I’m not worried about job security.  But my job and those of my colleagues in various organizations and capacities become more difficult when we operate in a world where our stakeholders demand the facts they want to hear to comport with the beliefs they cherish, rather than the facts they need to know in order to define the truths that will sustain them.

My profession of auditing is about reconciling ‘truths’ as have been reported  in financial statements to supporting facts, and reconciling those facts with reality.  Reality is the key here.  It is immutable.  It can be ignored for only so long, but eventually, it dominates.  See sub-prime mortgages, LIBOR, pension plan assumption of returns s on investment versus realized returns, unemployment statistics versus household income, the Boomer generation’s retirement aspirations versus asset accumulation, military budget versus military power effectively and conclusively applied, health spending versus health outcomes.

Let’s do a brief overview of the information ecosystem as it has evolved with human-kind.  In the beginning, all that humans needed to know confronted them directly and often overtly without any subtlety or obfuscation of intent: hunger, climate, illness and injury, bigger predators, or more aggressive predators of kind from two caves down the road.  Threats were immediate; responses were immediate or irrelevant; outcomes were immediately determinable and of little interest to anyone but the subject and his immediate dependents.

But we evolved, dare I use that term.  We learned from  experiences that informed our understanding of our environment, limited as it was, and we explored options. Our experience became intelligence, accumulated information that we could draw upon with the same utility as stone tools.  Intelligence gradually replaced emotion as our considered response to events that confronted us.  And as intelligence grew, we concluded that we could control events to our preferences rather than be at their mercy.

Eventually as we became more complex societies, probably due to facing more daunting challenges that could not be overcome alone, we determined the need to share information. Our languages and means of communicating evolved with the scope of our experience and the sphere of our social engagement.

Information at this stage became more symbolic as it was shared beyond the bounds of an individual’s personal experience or observation and confirmation.  And the more symbolic it became, the greater risk that  it diverged from the reality it represented.  So if I had two shiny rocks in my hand, I knew I had two shiny rocks in my hand.  But my shiny rocks might not be the same as the fella’s downstream, and without some reliable way of differentiating them and explicitly communicating what each of us has, we really haven’t communicated very much.  Facts matter.

The rest, as they say, is history.  Trusting that you can see where my primitive example is going, I won’t belabor it, but will get to the point.

Our sustainability  as individuals and as a  society is based on an informational paradigm that goes something like this:

Sustained existence depends on productive action against forces of decline and deterioration.

Productive action depends upon proven theories or ‘truths‘ of how the universe works (scientific law and principles, public policies, law, social customs, business models).

Truths depend upon a system of facts and logical relationships among those facts that inform actions which understand reality and reliably achieve intent.

Facts are symbolic representations of realities that we seek to understand  and communicate in order to relate to them in intended ways.

Reality is immutable, irrefutable,  and will ultimately trump (small t) all else.

But over time, a problem has developed with this paradigm. As our world has become more complex and our spheres of dependency have expanded, we have depended on ever-growing networks of intermediaries to give us the facts that we depend on for truth and guidance for actions that we hope to take for our sustainability, and hopefully our prosperity beyond the barest requirements of our existence.  And to repeat, those facts are symbolic representations of reality, not to be confused with reality itself.

So what could possibly go wrong with this?  First, we may not gather all the facts we need.  Second, the facts we gather may be imperfect representations of the reality they purport to represent. Third, the intermediaries we rely on for facts may be incompetent or deceitful in providing information we can relay on. Finally,  we may choose to exercise concerted ignorance to the facts that do not comport with our preferred beliefs or ‘truths’.

When facts are compromised or disregarded, our sustainability is at risk. When the truths on which we take action no longer comport with reality, there will be a collision between our expectations and reality, often referred to with the euphemism ‘unintended consequences’.

    *    *    *

We should distinguish between truths and opinions.

Opinions can exist free of facts, dangerous as that is.  Truths cannot.

Truth:   “the property (as of a statement) of being in accord with fact or reality”

Opinion: “a: belief stronger than impression and less strong than positive knowledge b :  a generally held view”

For example, I may have an opinion that my pension fund will be able to meet projected obligations based on an assumed rate of return of 8% over time, but if historical facts inform that I am only earning 3%, and known information does not provide credible basis for a prudent person to reasonably expect that 8% or better will be achievable in the foreseeable future, then my opinion on the assumed rate will not matter against the truth of realized (real) rates of return.

Short form:

Facts do not always fully or accurately represent reality.

And Truths and Opinions are not always supported by complete and accurate facts.

But truths and opinion without complete and accurate facts will inevitably collide with Reality.

And Reality will always win.

I hope we have enjoyed this respite from facts in 2016.  2017 awaits, as does Reality.



In our next exciting episode: Escalating Ignorance in the Information Age

Hindsight is Foresight Foregone

It’s not that we can’t see the future; it’s that we don’t bother.

Granted, none of us can predict it, nor do I presume that some magic algorithm applied to some special pile of Big Data can ease the Fog of the Future.

In part, it’s laziness. Here in the USA, we’re predisposed to the here and now and me, and the rest will sort itself out.  As indeed it does.  But often not as we hoped.

In part it is because we know from abundant experience that too many pious prognostications by proselytizers of progress have turned to sink-holes of time, effort and money.  So why bother.

In management we have evolved the discipline of ‘risk management’ which is part institutionalized experience and part pseudo-science.  ‘Risk management’ is somewhat of an oxymoron like ‘military justice’, ‘artificial intelligence’ and ‘virtual reality’. It trades on a figment of truth to create the illusion that it is more than it is.

Risk management has some level of foundation in its effort to deal systemically with known and knowable risks, but today’s world is increasingly subject to unknowable risks for which there is no statistical basis of quantification of either loss, cost of prevention or remediation.   But that’s not the real problem.

Many in my profession of accounting and auditing gravitate to the  ‘risk management’ mantra, and strive to incorporate it into their mission statement. After all, if you can’t be a ‘risk taker’, being a ‘risk manager’ or a ‘risk something’ is the next best thing. It’s sexier than mere accounting and auditing.  And besides, there’s plenty of precedent for the need for ‘risk management’ given the losses that businesses have incurred for themselves, and more frequently for others in their carefully contrived relationships.

But, truth be told, even the growing cadre of risk management acolytes have trouble peddling their wares to the C suite where hype and hope too often trump (no pun intended) reality and even the crudest calculations of probability.

Let’s take a few examples out for a test drive:

  •  Does anyone see any problem with Jeff Bezos and Elon Musk and Larry Paige and the other space cadets filling the skyways and byways with their latest magical brain-farts without benefit of adequate regulation and incubation for proof of concept within laboratory controlled settings, much less in the free-fire environment of that freaky place we call the ‘real world’?
  • Is the latest episode of the Theranos melodrama really a surprise?  Or was it the highly probable outcome of a flaky premise sold to incredibly greedy people willing to believe and suspend critical judgment?
  • And let’s not beat unduly on Theranos. It’s just one of a number of Unicorns in the magical kingdom of Silicon Valley and other tech redoubts where people with more money than brains can throw it at the wall, hope that something sticks in the lottery of high-tech chance,  and praise themselves that their failures are really essential tuition and down-payment for future greatness.  In their magical kingdom, failure is virtue.  In the real-world, failure gets you fired.
  • Where is China going, and where is it taking us?  The West lost that gambit four decades ago with an essential, but ill-conceived opening of relations.  The drive of corporate greed for access to a billion consumers overtook any attempt of western governments to modulate the normalization in a manner that would minimize the foreseeable disruptions we have experienced economically and strategically.  Accordingly, China has grown into an unruly adolescent (in modern world terms, its considerable historical lineage notwithstanding).  Given its desperate economic and environmental constraints, and it’s likely belief that its salvation is in expansion, military conflict with its neighbors and the West seems inevitable in the near to intermediate term.  Trump and China should easily understand each other: a coercive bully that believes he\it has a right to dominance on its terms without obligations to others. I suspect that this is in part an act China has found it can get away with because, unlike with Trump, no one has yet drawn a firm line in the land, the water or the air that they are prepared to defend (although we are beginning to with questionable allied support). Corporate executives are now marveling at how they could possibly have lost their technological edge (which they often willingly gave away in many cases for access to that one-billion consumer market)  and now are losing the market itself in a tightly controlled totalitarian environment where the ‘rule of law’ is more a farce than even a mere political fig leaf of cover.  Who’d a thunk?
  • Was the Shell Oil retreat from the Arctic really a surprise,  or merely unfettered stupidity colliding with reality?  When we have so much evidence of failure to properly engineer and install  and monitor and regulate and mitigate such ventures in much less hostile and much more stable environments, what would make any prudent executive or government think that Arctic exploitation would be just another hole in the ground?  Did BP’s experience give anyone in Shell’s HQ pause for concern?
  • How about them GMOs?  Scientists are complaining that the average clod on the streets is unjustifiably suspicious of the risks of GMOs.  But when we look at the recent history of our ‘conventional’ food supplies, the engineering of obesity, the evisceration of regulatory oversight and quality control, is there not reasonable cause for concern by the public of what will next be foisted upon them in the guise of progress at their ultimate risk and cost?  This is actually a case of the person on the street exercising ‘risk management’ in the suspicion that those in the Corporate suite will not. At least, not in the consumer’s behalf.
  • And then there’s fracking; a mindless grab for resources beyond any exercise of prudence, with costs to society measured only in financial terms to date, with studied ignorance of the collateral environmental, social and economic costs beyond the measure of defaulted securities.

There are a number of simple questions that executive management could ask itself and save a lot of grief when contemplating a new venture or circumstance, or coping with an existing or intractable situation  (like Palestine):

  • Has the situation ever happened before, and what can we learn from it.
  • Are there any parallels, if not direct precedents, to this situation that can give us a clue of dynamics and outcomes?
  • Do we understand the context (historical and present circumstances) of our intended act, and do our assumptions take that context into account?
  • Have we tested our assumptions about what should happen if we take this action?
  • Have we defined performance standards for our expectations that will give us quick feedback if we’re going off the rails of our expectations.
  • Have we asked ourselves how the opposition/competition/stakeholders/regulators are likely to respond, and have we taken appropriate steps to address reasonable concerns.
  • What could possibly go wrong, and what’s the worst that could happen….?
  • ….and if it does, what are we prepared to do about it?

These are so simple, they don’t even deserve to be sexified as ‘risk management’.  They’re basic management, or even common sense.  Yet the frequency with which they are ignored and often even disdained by the supposedly educated meritocracy has numbed us of any sense of amazement.  Rather, it has implanted a cynicism and contempt and suspicion of all forms of authority: legal, moral, scientific, political, religious, social that accounts more for the rise of Trump, Sanders and Br-Exit than any conventional political explanation.

We could go on, but I’ll trust the point is made, if not accepted.  In the corporate, government and personal world, risk-taking trumps risk management more often than not, and often with predictable consequence.

It’s not that our capacity for foresight is so bad.  It’s that we don’t bother to seek answers we know we’re probably not going to like. And when they’re thrust upon us, we often find ingenious ways to ignore them rather than to deal with them.

So, to say that hindsight is 20/20 because we have the benefit of knowledge that is not previously available is at best half the truth.  As often as not, we just don’t give a damn.

*  *   *

Word of the day:  de-escalate.




The Bully-In-Chief and the Naked Empress

You would think that a society that has spent the past ten years wringing its communal hands over how to deal with school yard bullies and their consequences would recognize one in the man-child Donald Trump, and have a clue of how to deal with him.  Obviously not.

Most interesting is the self-inflicted dilemma of the Repugnantlan Party; those stalwart wearers of flag lapel pins,  supporters of our troops and police, champions of right to life until born, true believers that they have a monopoly on patriotism, self-appointed protectors of the constitution that they are systematically raping in the name of God, country and free enterprise….They stand trembling in the shadow of Trump.  Ironically, the shadow is less than the man, but the Repugnantlans are less still in their collective incapacity to confront this breathing amalgam of narcissism, arrogance, deceit and rank ignorance, and say to themselves and the society that they presume to lead “This man does not represent our values, and we will not lend our Party’s label to his twisted and destructive enterprise.”   Or something to that effect.  But that apparently demands more courage than they can collectively muster.

Nor were the alternatives all that attractive.  A party that has embraced a thinly disguised agenda of bigotry, religious zealotry, misogyny and elitism under the brand Conservatism, and thus done severe damage to the meaning of that term; that same party has looked desperately in its wings among the kooks and Hucksters, and mini-narcissists in waiting, for an alternative to the Enfant Terrible, to no apparent avail.  Short Form: they’re screwed.

The question before the Repugnantlans is: Do we face a firestorm at the convention in the effort to save the party?  Or do we face a firestorm at the voting booths and watch the party be bludgeoned into dust, at the possible tangible loss of Congressional majority.

Given the level of courage and integrity currently in evidence in the party leadership, it is conceivable that they would rather suffer the risk of defeat in the less frightening confrontation and anonymity of the voting booth, than to risk the physical, in-your-face, mano-a-mano confrontation that is promised by Thugs for Trump at the convention.

And as disturbing as all this is in what it says about the state of Party leadership, what is even more disturbing is that there is a constituency that is big enough to give Trump this power.  The question is: is this a constituency of mini-bullies supporting a master bully in their greatest fantasy of power, or as some observers suggest, are Trump’s followers mostly very angry people who see Trump not so much as their leader, but their hammer to render a failing system to the dustbin of history. A similar speculation has been rendered of Bernie Sanders, who is beginning to sound more like Trump in his prognostications for the coming Democratic Convention.

Then there’s the Demo-crass.  They have a different kind of fear, or should.  They face the risk that fewer people will turn out for Ms Inevitability, a.k.a ‘Hillary Don’t-Cry-For-Me-Argentina Rodham-Clinton’, than the die-hard crazies who will turn out for Trump.  On paper, she should have this thing licked.  She’s got ‘credential’s.  She’s engineered the back room of the Convention.  She’s got an enviable Rolodex ( because, as she acknowledged in the prvate computer server grillings, she’s not particularly tech savvy) and the financial backing.  What she lacks is credibility.  Not necessarily an insurmountable problem for a politician.  But she has such an incredible knack for shooting herself in the foot, that it’s totally reasonable for the average person to wonder if she can be trusted with nukes.

In one of her rare moments of candor, she acknowledged after the Florida primary that she is ‘not a natural politician’,  like her husband or Obama.  So why is she running for the position of Politician in Chief?  Is it because she’s a superb, wonky tactician like her husband?  Uh-huh!  When the press were battering her phalanx of flacks, she carefully sequestered behind her security wall.  When an attack was needed, she sent out Bill.  When credibility was needed, she grasped for Barack’s coat-tails, and when that was inconvenient as in the case of the Pacific Trade agreement, she let go.  She claims to fight for the underdog, but what has she ever won for the underdog of substance? Health care, voting rights, better treatment of women anywhere in the world?  She claims experience, but where is the wisdom?  Health care? Libya? the Russian Reset? Syria?  Is her wisdom and pragmatism possibly hidden in that gold-plated speech she gave to Goldman Sachs which remains more closely guarded than her official emails as Secretary of State.  Could it be that if that text ever saw the light of day, it would reveal her to be as shallow and vacuous as the Mitt-ster?

Hillary is nothing but an avatar of women’s and minorities aspirations, but without the substance and quite possibly the will to deliver more than pious platitudes. A candidate whose image quite likely has to be re-invented every two weeks by her army of ‘advisor’s who are still groping for a credible product, isn’t much of a vehicle for progress.  An individual who has struggled against as improbable opponent as Bernie Sanders, in spite of all the advantages she amassed for her presumed coronation, must be profoundly lacking in substance.  A person, whose chief praise in recent weeks is that she has broken many barriers, but always seems to do it the hard way, is not a strong credential for endorsement.  I can’t really picture myself pitching my wares to a prospective employer with the line:’I git it done, but always the hard way’.   Endurance is fine, but competence would be better. She is the Demo-crass equivalent of Jeb Bush.  They  could make an awesome fusion ticket of irrelevance and incompetence.

On any rigorous assessment of substance, Hillary is an empty suit.  Indeed, the Empress has no clothes.

Hillary’s only claim to viability as a candidate is that, next to Trump, she looks at least sufferable, and may almost pass for presidential.  But even that may not be enough to save her if the terminal boredom or revulsion of so many independents and many in her own party is enough to deny her the critical margin for victory.

And then there’s the wild card:  The Republican Convention is July 18 to 21.  The Democratic Convention is July 25 to 28.  What if the Repugnantlan Party finally found the testicular fortitude to deny Trump the nomination on merits (or lack thereof), and installed Romney as the plug-and-play answer?    A contest between two equally brittle avatars.  But on surface, it is conceivable that Romney, an executive in private and public enterprise, could appear to have more chops than Ms Inevitability.

The Demo-crass High Command would have to assess  very quickly which old horse has the better chance.  The Demo-crass will be in the same convention dilemma as the Repugnantlans of reconsidering the ‘presumptive’ nominee, but the Repugs will have gained first mover advantage, which Mitt, the consummate capitalist, knows is critical.  Could the Hillary Horde pivot quickly to a new opponent and a new strategy?  Not likely, if two presidential campaigns are compelling evidence. Could the Democratic Party?  Probably not a prayer.

Can Elizabeth Warren save the ticket?  She would likely carry the ticket.  But if I were her, I’d be extremely wary of signing on to the HIll ‘n Bill show.




Fracking Idiocy

Having dealt in my prior two posts with Climate Change idiocy, (and there’s so much more fertile ground to be tilled on both sides of that subject) I’d like to turn my attention today to Saudi America’s continuing delusion of energy independence.

The news of late in the energy arena continues to be of energy abundance and resultant low consumer prices, with some necessary casualties in the oil patch.  Peak Oil is dead.  Fracking will set us free.  Except in Denton, Texas and a growing number of Texas towns that see fracking as an insidious oppression, joining folks in Pennsylvania, and Ohio, and North Dakota and other places where the wildcatters have run roughshod, aided and abetted by local officials whose greed is comparatively modest in scale, but no less deleterious in effect.

Being an accountant, I try to marshal my humble skills to understand events as they are, and not as they are presented. Among the core tenets of accounting is the principle of substance over form.

So what is the substance of our current fracking bonanza?  Have we unleashed unlimited energy wealth?  No.  Hydrocarbons are still a ‘non-renewable’ resource in the sense that we are depleting them far faster than natural processes can replenish them, and at some point, we are bound to hit a wall.  That it may not be in our lifetime does not absolve us of the moral and ethical obligation of stewardship for future generations. (Moral obligation. Such a quaint notion.)

Do we have an abundance of energy?  No, we have simply found a way to exploit a limited resource faster than before. And in absence of any regulatory discipline of the markets, save the Saudis who are NOT our friends, we have driven down the price of a precious resource by exploiting it unconscionably and creating an illusory abundance.

But aren’t the low prices of the  moment good for consumers and the greater economy, even at the expense of the oil industry?  Yeah,  like sub-prime mortgages and liar loans.  But what about the blow-back that will follow, when the closed-in wells and abandoned rigs don’t snap back to production as fast as prices in the inevitable shortage that will follow?  Remember the boom/bust of the 80s. Or any other period in the history of the industry, which is riddled with boom/bust. And, at the risk of stating the obvious, how long can the consumer expect to benefit at the expense of the industry whose own foolishness has made that benefit unsustainable for both?

Another thing that accountants like to do is to match revenues with expenses.  As I have maintained in prior blogs, if we were to do so with the extractive energy industry, energy prices would be much higher than they are, and we would be conserving much more than we do.  The price of oil and gas does not reflect the burden on the inadequate infrastructure that bears the strain of the current boom and will likely be left severely depreciated without adequate economic recovery when the bust occurs.  It does not reflect the costs of social and environmental degradation, which the industry will not likely clean up before it leaves town. It is consuming water at a voracious rate, frequently in places where it is competing with agriculture and basic human consumption for priority of an exceedingly scare resource.  And while water is a renewable resource, that is not the case for much of the millions of gallons of fracking cocktail that are being permanently sequestered deep in the earth because it is too toxic for recovery and recycle by natural or technological means.  Unless of course another New Madrid quake manages to un-sequester those wells back to the surface, or close enough for unpleasant consequences.  Even folks in Oklahoma and Ohio are beginning to have second thoughts.

No, we don’t match revenues with expenses in the near term, or over the long haul. The energy industry is taking the profits up front, and deferring the knowable costs and plausible long-term contingent risks for others to bear; and in many cases, the ‘others’ bear the costs disproportionately to the benefits they hoped to derive from royalties, or jobs, or tax base or whatever other mirage was flashed in front of them.

Most interesting is how fracking seems to elude serious scrutiny for the economics that underlie the current surge in production.  It is generally known that fracked wells deplete much faster than conventional plays, and that for a company to continue to generate growth in revenue, it must continue to frack new wells faster than the older wells are depleting.  This is often referred to as the Red Queen Syndrome, the need to keep running faster and faster just to stay in place.  It is not a winning game in the long run.  This is a form of ‘kiting’, a term in auditing for a particular type of serial fraud that usually ends badly for the perpetrator and his victims.  Or one could call it a Ponzi scheme and still be close to the truth.

I have to wonder if the major producers backed away from a significant push into fracking because they saw too clearly both the economic folly and the potential long-term contingent liabilities that would befall them with their perceived deep pockets.  Hit-and-run wildcatters don’t worry about the long-term.  So where do the majors go to replenish their depleting reserves?  Deep ocean.  The Arctic.  Russia, a fun place to do business if you don’t have the stomach for Iraq.  Do they take these risks because there’s an abundance of oil and gas to be had under reasonable conditions?  No.

So it may be true that the earth has an abundance of hydrocarbons waiting to be exploited.  But when you add the true costs of exploitation, in every sense of that word, you no longer have cheap and abundant energy.

We have the technical capacity to rape the planet from pole to pole.  That is not in question.  The question is what will be left that is worth the energy.




What’s In a Name: Climate Change, Weather or Not

Alarmists will attribute every weather event to climate change. Deniers will dismiss climate change as just weather variability. Apathetics will dismiss the whole discussion as irrelevant. Is it?  What’s in a name? Identity, understanding, specificity,

There has been a running battle between meteorologists and climatologists as to the interpretation of the day-to-day events that we know as weather. Neither side has been all that helpful.  Meteorologists seem to argue that the two are different, and ignore that daily weather, cumulatively, is climate on the installment plan.

Climatologists think in long-range terms transcending the boundaries of individuals’ personal timelines, and threshold of caring.  Thus the possibilities that trouble climatologists are generally dismissed by most of the population which doesn’t view events in the same parameters.  Further, while climatologists generally paint scenarios in decades or centuries, the time frame in which cumulative daily weather events will trend to undeniable consequence, they are generally shy about making definitive statements regarding what recent events add up to.  Has recent tornado activity increased in severity? Dunno. Will a warming planet spawn more tornadoes or hurricanes with greater force? Dunno.  When will sea level rise reach critical levels of impact in various areas? Dunno.

I can respect the admission of what we don’t know, and I prefer it to brash projections based on what we think we know.  But, from a managerial point of view, it makes very difficult the task of positioning one’s self for a future that could be radically different in unpleasant ways…or not.

The recent National Climate Assessment repeats the urgency of preparing for climate change.  I accept it as a working premise, in spite of all we do not know, because of what we do know. I have paid attention to weather during the past ten years.  No, I don’t play a weather personality on TV.  I’m just like you and Bob Dylan.  I don’t need to be a weatherman to know which way the wind is blowing.

I perceive that weather events of all kinds in aggregate have increased in frequency and severity and impact over the past ten years. Since 2010, even weather personalities and many bona-fide meteorologists have come to speak routinely about ‘extreme weather’ with each such event. How long until they acknowledge that which they now call extreme as ‘the new normal’?

In corporate circles where the words ‘climate change’ dare not be acknowledged, because one knows not which wing-nut among customers, clients or other stakeholders might be enraged, the term ‘sustainability’ has served as a proxy for discussing adaptive strategies for the unspeakable.

Hunters and farmers and gardeners, and business people who will vehemently dismiss climate change in one breath will acknowledge in the next breath that the norms of the environment on which their avocations and occupations and ventures depend are undergoing undeniable change; not merely variability.

Firefighters who once spoke of ‘wildfire seasons’ now acknowledge that wildfires no longer have ‘a season’.

Despite warnings of approaching drought, the West is belatedly coming to grips with a future that is not likely to improve in the near term, and for which adaptation will be wrenching, with collateral impacts for the rest of us.

Does it matter whether we call all of this climate change or weather?  One can choose to look at storm surge, or future sea level rise, or drought, or deluges, or wildfires or flooding or extreme temperature  fluctuations,  or species migration and extinction, or tornadoes and hurricanes or economic loss from extreme weather events and resulting damage to the built environment… as individual issues. Coloradans can dismiss sea level rise. Connecticut Yankees can dismiss the risk of wildfires. But when these disparate constituencies find themselves competing for constrained resources to cope with their individual crises, they may belatedly acknowledge that they are in the same boat on the same turbulent sea.

We have witnessed the economic and political trauma resulting from storm impacts, property loss, and resultant economic hardships from the rising cost of flood insurance premiums.  What happens when comparable costs associated with all the hazards listed previously come to bear on all of us in unison?

Connecticut is today actively engaged with the issue of storm surge, courtesy of Storms Irene and Sandy.  But its legislature is beginning to look down the road at its water resource relative to future projected droughts before we become Texas and Arizona and Nevada and California.  Next we might want to think about fire hazards at a level we have not previously experienced as we observe some of our most prominent species in our heavily forested state fail over the progressively warming years.

This is the importance of a name. If we do not begin to recognize these diverse hazards as part of a shared paradigm; if we do not begin to comprehend that we will have to prioritize our limited (yes, limited) resources across this array; if we do not grasp that they are all a part of a paradigm that is driving each of them in various ways, then we cannot begin to intelligently manage the situation to our best advantage.

*   *   *

This week’s announcement of an agreement between the US and China on greenhouse gas reductions is a bit of drama without very much substantive impact at ground zero.  China has agreed to do what it must anyhow to avoid environmental suicide, but has likely been granted flexibility in approach that does not grate on its imperative of not succumbing to ‘foreign domination and dictates’ (not too different from our own ‘People’s Congress’).  And Mr. Obama will return to face a semi changed but not evolved group of Luddites in the opposition and cowards in his own party who will continue to stall progress at the national level where we can best move action to critical mass and momentum.

We are told that, while Congress may be morally, ethically and intellectually bankrupt on this issue, real progress is beginning to happen at the local and state levels where public executives have to deal with the real problems.  That may be true, but in my own state, which I affectionately refer to as ‘the land of good intentions’, because we really can’t afford more than symbolic acts of enlightenment, we have a long, long way to go.  And for all that we know,  few leaders have the courage to speak in terms of Climate Change.

What’s in a name? Identity, understanding, specificity,  Or sometimes, sustainable obfuscation.






James Hansen’s Dilemma…and Ours

James Hansen has left the building. The Elvis of Climate Change has departed his scientific life to become a social activist in the cause to which he has devoted his scientific life.  I understand his motivation, but view his new role with some concern.

I was disappointed when he chose to get arrested as an act of civil disobedience. It diminished his stature as a purveyor of reason to yet another player on emotions. That’s what demonstrations and street theater speak to. Emotions. They represent the surrender of reasoned discourse.

In a recent article reporting his imminent retirement, Mr. Hansen is quoted to have said “At my age, I am not worried about having an arrest record.”  If this glib comment reflects the definition of his future activities, he should be worried, for it will diminish his scientific stature at a time when we need an authoritative voice more than ever.

In recent months the press has presented a series of stories which would appear to cast doubt on the validity of climate change and much of Mr. Hansen’s work and advocacy…assuming you don’t read beyond the titles, and then between the lines.

For example, a recent article in the Economist suggests that the divergence in trends between atmospheric warming and the rise in greenhouse gases may be undermining the validity of the theory of greenhouse gas warming.  The article supported this observation with a model that claims to demonstrate a lower sensitivity of warming to CO2 than alternative model that has previously dominated the discussion. The interesting point is that both models have inherent advantages over the other, and both suffer from constraints of those advantages.  We need a tie breaker.

Yet another article lays out various contradictions between model projections and facts on the ground.  There are various observed anomalies that demand explanation, but it is premature to say that they dismiss the fundamental premise of accelerating climate change, or its hypothetical driver of hydrocarbons.  Further, whatever the discrepancy between theory and fact, there remains the accumulating facts that weather trends and natural transformations consistent with expectations of climate change are occurring at an escalating rate and pace.

Climate science has had the benefit of intensive escalation of projects, addressing many issues for the first time, and reaching a level of data that provides greater direct assessment that has previously relied heavily on proxies with their own limitations, inferences, and inherent questions of relevance and reliability. I suspect that we are arriving at a time in climate science that often happens in other scientific and quantitative areas where we have more data than insight.  We need to digest much new-found information to reach relevant conclusions.  We need to know that the process of that assessment is transparent, professional, objective and verifiable.

This brings us back Dr. Hansen, and his second act. His reputation as a credible voice has been sustained to date by his science, and not by his passion for his cause.  If he now chooses out of frustration to forsake his scientific standing to speak to ‘other passions’, he will surrender his most powerful influence.  We need now more than ever scientists who can not only comprehend this complex and rapidly evolving subject, but can communicate it to those of us who are not scientists but endeavor to translate it into policies and strategies that can effectively address its implications.

I can appreciate Dr. Hansen’s frustration.  In my own small realm of endeavor, I have observed public officials at various levels of government exercise concerted ignorance of credible information in order to pursue policies of short term convenience with long term detriment, or to avoid the challenge of educating their constituencies to contingencies that they must plan for. Even in the wake of realities of Storms Irene and Sandy, they strive to sustain the notion of business as usual.  I wonder how many more Sandys it will take to strip the public and its purported leadership of their self-delusions and deceptions.

But where facts and logic do not work, street theater and civil disobedience will not succeed. I think of the Vietnam War. Did protests end it? The left would like to believe so.  I think it was cold hard facts: our body count, and our walking wounded and living dead who gave mute testimony to the futility of that effort.  Perhaps it will be the same with Climate Change. It will not be accepted until the body count and casualty statistics and economic costs reach a point that registers with even the dullest of minds.

An arrest record will not enhance Dr. Hansen’s scientific standing, and it will deny serious advocates a credible source of information at a time when credibility is in extremely short supply.  There are plenty of climate change adversaries who will be delighted to see Dr. Hansen become a side-show in a climate change melodrama. Dr. Hansen has a dilemma. He can remain true to his science, or succumb to his passion.  But he cannot do both.

Choose wisely, Sir.