Monday, November 28, 2011
Hipness is not an easily measurable concept, but its very intangibility is part of what makes in interesting. If we imagine a hipness quotient connected to cities, we would include, high on the list, places like Palo Alto, Berkeley, Boulder, San Francisco, even New York. Detroit would probably arrive toward the bottom. Recently, however, Detroit has been getting attention that may be boosting its credentials.
Not long ago, the documentary Detroit Wildlife was filmed. In it, one protagonist asserts that Detroit wasn't much affected by the 2008 blackout. People in the city were are already living off the grid, squatting in abandoned buildings, foraging for food. They didn't have electricity, so why would they notice when it was gone? Detroit is offered as a harbinger of a post-fossil fuel future, where wild animals are returning to a dessicated urban landscape.
But things seem to be changing. Last year's Chrysler advertisement, released during the Superbowl, featuring Detroit denizen Marshall Mathers, aka Eminem, didn't hurt. The ad featured Detroit as hip in a gritty hard-working kind of way, a place so exotic that its cars were "imported" by other parts of the U.S.
Other indicators preceded the Eminem spot. One was the appearance of the HBO Series, Hung, which began airing in 2009. The series features divorced father and public school teacher Ray Decker, who, unable to support his children properly after his uninsured house burns down, becomes a male prostitute.
Created by the brilliant filmmaker Thomas Payne (Election), Hung is hilariously funny as it traverses the borderlines of bad taste. And while the series does not exactly portray the city of Detroit in a positive light, the mere appearance of an HBO series tends to elevate a hipness quotient significantly. (Look at what The Wire did for West Baltimore.)
Two weeks ago, The Huffington Post launched a new section, "Detroit News and Opinion," with a heterogeneous mix of Detroit bloggers, from the worlds of political reporting, sports writing, cultural analysis, and the non-profit sector. The articles provide insightful analysis of Detroit’s continuing economic plight, sprinkled with a strong dose of optimism about the possibilities for the city’s resurrection. Detroit now finds itself as one of only six local sections in the Huff Post, sharing space with New York, Los Angeles, and San Francisco.
So what’s happened? Why does Detroit seem to be rising on the pop cultural hipness index? The Obama administration's decision to save the auto industry has a great deal to do with it. If the government had not intervened to save the thousands of jobs that were at stake, Detroit's utter collapse would have been inevitable. And while the domestic automobile industry is a shadow of its once-proud self, it still employs more people than Google, Facebook, and Apple combined.
Detroit, moreover, is re-writing its books on the meaning of industrial. A new generation of digital engineers is being hired by the automakers to develop the complex software necessary to run the current generation of cars. While Detroit has not exactly become Silicon Valley-on-the-river, young people are actually moving back and into downtown areas that were being abandoned.
Detroit, in other words, has the potential to create a new kind of hybrid city, where the digital, the industrial, and the green collide in interesting ways. What could be more hip than that?
Monday, November 21, 2011
Two cities, one in Western New York, one in Western Pennsylvania: One was once a manufacturing town. One is a football town. One has been economically damaged by globalization. One has been more insulated, given that it is home to one of the state's premier public universities.
In the first town, a young black man is charged with spreading the HIV virus to a group of consenting partners, two of whom were underage. In this case, the defendant was characterized as a monster. Posters, with his picture on it, were placed around the area in an attempt to track him down. He found himself on the cover of national magazines. Suggestions were made that he should be tortured and given the death penalty. The state’s governor declared him guilty before he was brought to trial.
He was appointed a public defender. He was held without bail. He was offered a plea deal of 75 years in prison, an offer that he declined, in spite of the atmosphere of hysteria that surrounded his case. Eventually he pled guilty to reckless endangerment and statutory rape. He was placed into protective custody in prison, where he faced harassment by other prisoners and guards, hostile to him because of the publicity that the case generated. He is still confined to prison, and has served almost two years longer than his maximum sentence.
In the second town, State College, Pennsylvania, a man is accused of abusing his position as a football couch and the leader of a nonprofit organization involved with at risk youth. He is accused of raping boys, some as young as ten years old. The indictment against him involves forty counts of sex crimes. He has been a respected and established presence in a community where football is valued in almost religious terms. Evidence appears that he was carrying on questionable activities for years. Calls to investigate his behavior went nowhere, in spite of truly horrifying accusations of his having raped a young boy in a shower.
When charges were finally brought, he is released on $100,000 bail. Finding the money is apparently not a problem. He is seen walking through a local shopping mall, wearing a t-shirt for the college where he was once a coach.
When newscasters discuss the case, they seem very careful to use the term “accused.” High state officials, such as the governor, have made no statements regarding his innocence or guilt. In fact, everyone seems to be exceedingly careful to be sure that his constitutional rights to a fair trial are not violated. After all, he will, no doubt, have good legal representation at his trial.
He is even offered an opportunity to defend himself on national television, an offer to tell his story to one of the nation’s most highly respected sports analysts . While the wisdom of doing this might be questionable, he gets the opportunity, and questions are asked and answered in a civil, moderate tone. Attorneys on a national cable news network debate dispassionately whether the prosecution has a valid case, given the amount of time that has passed, and issues regarding the credibility of accusers.
The two cases in question are Nushawn Williams in the first instance, and of course Jerry Sandusky in the second. The two cases are not equivalent. No two cases ever are. Nushawn Williams was apparently HIV positive when he engaged with sex with young women. Whether he knew of his status is a matter for debate, but it was never debated in media accounts of his case. All of his acts were consensual, although, again, you would be unlikely to learn this from various media reports that circulated at the time.
Jerry Sandusky is accused of truly heinous acts of raping very, very young children. He may have engaged in such behavior for years, raising very troubling questions about the power and irresponsibility of institutional authorities, from the athletic department to the governor's office.
Having been closely involved with following the Williams case for a long time, I try to maintain a reasonable skepticism about the charges that are now being brought against Sandusky. I know that it is very difficult, if not impossible, to determine what happened in criminal cases from press reports. But I am also struck by the moderate, almost analytical tone that comes across when discussing Sandusky. The absence of hyperbole, hysteria, not to mention declarations of outright guilt, offers a stark contrast to the Williams case.
Monday, November 14, 2011
What can you learn about fracking from seeing the recent film Margin Call? Quite a bit actually. In the film, analysts at a New York investment house discover that they are holding large quantities of increasingly worthless mortgage backed securities. The drama involves their attempts to figure out what to do about it.
Serious questions have also been raised about the value of thousands of leases that have been generated over the last few years by the natural gas industry. Keep in mind that fracking is very capital intensive, much more so than conventional gas drilling. All the trucks that tear up local roads. All the chemicals. All the pipes. All the drilling rigs. It costs a lot of money to carry out that level economic and environmental destruction.
While the industry estimates that fracking is profitable when gas sells at 5 dollars per thousand cubic feet, independent analysts put the figure at 7. Natural gas wellhead prices peaked in 2008 at 7.97 dollars per thousand cubic feet. As result of the recession and mild winters, the price fell to 3.67 dollars per thousand cubic feet in 2009, recovering modestly to 4.16 dollars in 2010.
In general, we expect business activity to decrease when prices fall, but that hasn't been the case with natural gas fracking. This fact is largely attributable a change in SEC rules that allows producers to put undeveloped reserves on their balance sheets. As a result, companies can maintain share value while not actually pumping and selling the gas.
You might argue that it’s just a matter of time before gas prices increase and the drilled wells become profitable, but this is highly doubtful. The gas companies, it turns out, have vastly overestimated the amount of natural gas that can be tapped from shale gas generally, and the Marcellus shale in particular.
A U.S. Geological Survey Report released last summer cut by 80% the estimate of available gas in Marcellus deposits. And there is considerable other evidence that drilled wells are not producing at near the promised capacity. A New York Times report on this drew a massive defensive response from the industry.
This explains why the companies are so determined to expand their reach into New York and Ohio. Quite simply: they have to. They need to expand operations to keep inflating share price values and to secure loans to continue expansion. If they stop, and have to maintain profitability by pumping and selling gas, at the same time revealing what their assets are actually worth, they risk collapse.
Morning Star, with regard to Chesapeak Energy Corp, notes that there are “ongoing questions about the sustainability of the firm's business model, given its propensity to outspend available cash flow.” Still, it gives the company a “bullish” rating, due its “knack for creatively financing its operations and the relevance (that is, the attractiveness to third-party investors) of its current leasehold positions.”
Translation: "Chesapeak is good at cooking its books, and may be able to unload this crap before investors figure out that it’s a scam.”
If you’ve seen Margin Call, that should sound eerily familiar.
Leases tied to natural gas fracking are essentially like mortgage backed securities. At some point, they will be proven to have much less value than originally promised. And when that happens, shareholders, and--more importantly--those of us who live in the Marcellus Shale region, will be left holding the proverbial bag.
Monday, November 7, 2011
This posting is part of occasional series, based upon a bicycle tour around the Great Lakes, starting with Lake Huron.
July 24, 2011
I wasn’t exactly sure where to begin this journey, but eventually decided upon Sarnia, Ontario. Mostly this is because it was the shortest drive from Ithaca, and close to the U.S. border. After a little web investigation, I learned that it had a train station where I could leave my car, free, “at my own risk.” Ideal.
It’s about a six hour drive to Sarnia from Ithaca, across the New York State Thruway, and then over the Lewiston Bridge into Canada. It’s not exactly a picturesque drive. It seems that the area up from Buffalo over to Hamilton, St. Catherines, and Toronto, has become quite the megalopolis.
I haven’t been to this part of Canada in a while, and you notice the ethnic and racial diversity that has resulted from Canada’s relatively liberal immigration policies. As anti-immigration sentiment has increased in the U.S., Canada has become increasingly attractive to immigrants, a factor that has no doubt contributed to the vibrancy of its economy, not to mention its cultural diversity.
When I needed gas, the station's pumps wouldn't take my credit card. I went to ask about the problem. "The machines won't take American cards," the clerk informed me. "You need to scan it in here." "Don't trust Americans, I see." I joked. She laughed. "I don't blame you."
I checked into a Comfort Inn in Sarnia and asked where the train station was. The clerk at the registration desk directed me to the other side of town. The ride over gave me a chance to check out the place. The city was quite deserted on a Sunday evening, exactly as you might expect. I noticed a nice park along the river.
Unfortunately, the interstate runs right through the city’s center, bifurcating it. Still, it seemed like a nice place, with active businesses and stable neighborhoods. Sarnia, with a population of just over 70,000, is the largest city on Lake Huron. As a general rule, I like Canadian cities.
The great French explorer LaSalle named Sarnia “The Rapids,” due to its location on what was eventually called the St. Claire River. Sarnia is an oil town. Nearby Oil Springs was the location of the first commercial oil drilling operation in the U.S. or Canada. The oil complex along the river is legacy to this past, and was apparently once featured on the back of the Canadian ten dollar bill.
Oil, of course, means chemicals, and Sarnia has a central place in what’s known as Canada’s “chemical valley.” Although the chemical industry has declined here, there are still a number of plants.
As a result, Sarnia has the heaviest air pollution load of any city in Ontario. In 2005, the area released 131 million kilograms of air pollutants from the 23 chemical plants nearby. Sarnia is also, it turns out, one of the leading producers of greenhouse gasses in Canada, representing 21 percent of Ontario’s total emissions.
Near to Sarnia is an Aamjiwnaang First Nation reserve. The health of the residents there has been severely affected by all of the chemical pollution. Live births of males are nearly half of those for live females, making it the lowest recorded anywhere on earth. Such a pattern would be consistent with exposure to chemical toxins.
Miscarriage and stillborn rates have been reported to be as high as 39 percent. Moreover, it isn’t just the native population being affected. A study comparing hospital admission rates between Sarnia and London found much higher rates for cardiovascular and respiratory diseases in Sarnia. You won't find this information on the Sarnia Wikipedia page or city website.
Sarnia had a moment in the pop cultural sunlight when Michael Moore came to interview residents for his 2004 film, Bowling for Columbine, and he later returned for more interviews for his 2007 film, Sicko.
I found an ATM that would work and decided to take a fair amount of cash. Conflicts over the debt ceiling increase have been raging in the U.S. I was a little worried that there might be a default. The dollar's collapse would make the Canadian part of this trip a lot more expensive.
I found a Thai restaurant for dinner. The owner was very friendly, and I ate as a violent storm made its way through. It had rained heavily for much of the drive over. I was hoping that it would clear out a little. I don’t mind riding in the rain, especially if it’s a warm rain, but lightening makes me nervous.