Wednesday, March 21, 2012

way out for Greek economic suffering and resulting risk

A colleague visiting Greece told me on Monday about the huge economic suffering going on there, which many believe could still spread and engulf us all, with or without a loss of the euro. Since this guy works in electric power, I responded in plain English (but
can later add a few comments about the technical aspects):


Hi, ...!

It is ever so frustrating to see the suffering, to know it is unnecessary...
and yet not to know the channels needed to open the door to consideration
of common sense solution.

It reminds me a bit of October 2001... when I first ran the electric power area
here at NSF. California had been losing something like $25-50 billion per year DIRECTLY from its electricity crisis,
but I knew technology from Brazil which could have solved the problem in six weeks.
(Basically, their SIL technology could have retrofitted key power lines from the Rockies to Los Angeles,
getting them access to electricity from underutilized low-cost power plants.) In that case, I had SOME
leverage. I made a deal with EPRI.... but wait, you probably saw that story already in Computational Intelligence Magazine,
August 2011. Something which would take six weeks in reality, for people playing the world of reality...
somehow may take more than ten years, and be too late, in the fuzzy world of
"high statesmen" outsmarting themselves

In this case... I have read the stories in the Financial Times. Of course, I know that political opinion
in Germany has limited what Germany can do for Greece. I know that Germans are afraid that
giving away more money to Greece will cost THEM a lot.

And... since "Werbos" is German.. I find it easy to see things through German eyes -- but more intelligent German eyes
than the bankers seem to have.

It seems clear... the problem in Greece is lack of JOBS, newly found unemployment, lack of economic demand.
As German, I can ask: "with my money, is there anything I can BUY from Greece which I really want, so that I can give
them money and jobs but also benefit myself?" That is the concrete reality underneath all the lost-in-space failure of
abstract thinking. hat is the real question I don't see Financial Times even asking.

And there is an obvious answer, obvious at least to me: electricity.

WITH the most cost-effective solar technology (which the bankers probably don't know anything about),
one can certainly get reliable daytime electricity from solar at an initial cost of 13 cents per kwh (much lower with time and effort),
which is much better than the unreliable intermittent 20 cents per kwh that Germans are planning to buy in massive quantity
from offshore wind farms! A massive crash program of European investment, a kind of private public partnership, to build
minimum cost solar farms in Greece (and Spain and Italy), to be available on the entire EU grid... (and also to strengthen
that grid, maybe with some HVDC, maybe even a little SIL)... Europe really needs this kind of rational boosting of demand.

But of course, it would require competence in the investment body, and perhaps that is too much to hope for.
The bean counters would probably discover some noble or some Nobelist with an ideas for 50 cents per kwh electricity,
and would not be able to resist the social attraction... and the German labor unions planning to work on the wind farms would
need a quick lesson in Pareto optimality, and perhaps some compensating investments... (new rational power electronics projects,
based on more modern technology in that sector, helping EU become independent of oil?)... and perhaps the oil companies and the sheiks
would use their money and leverage to make sure it doesn't happen.

In fact, maybe that's where we are already right now...

Though I gather some folks in France are clear that they feel somehow this new depression may not be necessary...

Best of luck,


Behind this talk, there is a lot of very serious economic and technical analysis.

For what it's worth -- I do have a degree in economics from Harvard, and a degree
in European systems from the London School of Economics. For my first tenured job
(about ten years at DOE), I designed and built the major econometric models used to
forecast oil and gas production, and industrial and transportation sectors, for their annual report to Congress, and also managed the long-term energy modeling and analysis.
And I read the technical economic analysis which appears in the Financial Times.

There are a lot of folks who insulate themselves from this pain by adopting a "technocratic" persona, which also allows them to ignore some aspects of their own future reality while they are at it. A lot of folks have been thinking "we really can't do much about aggregate demand right now, because it's tough enough just to keep the banks from falling apart, and we don't have much leverage anyway."
But fortunately enough, the US, EU and China all have remarkably similar levels of overall percentage government debt right not; if they stay in balance, they can all afford to hold down interest rates, and strongly encourage faster useful economic investment. (In China, it is more the debt of provinces, which in some ways have more
independence than nations in Europe, but it's still a balance overall.)

Friends have said: "OK, but why not biofuels too?"

I wish. But the more I learn about certain scaling and technical problems with biomass, the more I think Europe would need to pass something like the Open Fuel Standard bill ( and, to avoid gross waste in that kind of investment. Still, it could be done, and done quickly...
if people had a will to survive. But do they? What about the people who are going totally nuts all over the world these days? I have a paper which discusses some of these sanity issues recently published (electronically) and in press (physically) in
Neural Networks explaining the foundations of that issue: "Neural networks and the experience and cultivation of mind." this is serious technical stuff; it is a follow-on to the 2009 paper which won me the Hebb Award.

Best of luck....