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Construction Toys

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Today in our world…

Toys

Well, it’s summer, we just finished a holiday week, and we met Crispin Richey, co-owner of The Construction Site, a fabulous toy store in Waltham.  Crispin is going to tell us not only what are the best toys for kids and adults, but also about how kids play, how adults play, common misjudgments parents make when buying toys for their kids, and whether kids today are that different from before.

To listen (right click to download):
Toys with Crispin Richey

Global Warming

Last Friday, I had the opportunity to ‘discuss‘ global warming with Todd Feinburg on WRKO 680 AM here in Boston.  Todd is skeptical about global warming, which is not an uncommon position for a conservative.  I am interested in the following:

• why are conservatives so skeptical about global warming?
• if global warming had first been talked about by the insurance, agricultural, and tourist industries, rather than environmentalists, would conservatives be so skeptical?  would liberals be so quick to agree?
• how do we make a decision about an issue as complex as global warming when we are not scientists?
• if you are skeptical, what would you have to see to be convinced?
• if you are a ‘believer,’ what evidence would it take for you to be persuaded that it is no longer a threat?
• what do you think about the Earth Live concerts?
• have you taken Al Gore’s pledge?

China is known for being a heavy polluter – coal is a primary source of energy.  On a business trip to Beijing, I was dismayed to find that wiping a tissue on my face revealed black power that had collected in the course of the day, and when I blew my nose…  well, let’s just say the air quality is not pristine.

This is why it is notable that China is building the world’s first eco-city just outside Shanghai.  Called Dongtan, the city:

“will ban all polluting cars, even the most advanced hybrids.  It will dig canals for waterways.  On its streets, people will get around using electric cars, bicycles, or just their legs.  ‘Cities today are build around the automobile,’ says Malcolm Smith, an urban-design team leader at Arup.  ‘You build a very different type of city of you know the automobile isn’t the central form of transportation.’

The city will recycle as much as possible, including all its wastewater; grow food on its own environmentally sensitive farms; and create all its own energy in nonpolluting ways- wind, solar, and the burning of human and animal wastes.  It will encourage, and in some cases require, the use of local labor and novel building materials, such as a concrete-like substance that can be made from ash and used cooking oil.” Spectrum Online, June 2007

The United States is one of the very few countries that is still debating the reality of global warming caused by human activity, primarily because the Bush administration and many conservatives continue to doubt the scientific evidence.  It is understandable why the Bush administration does – they are beholden to the oil and coal industries who want no restrictions of any kind on fossil fuels. 

However, I would have thought that conservatives would have by now managed to distance themselves from an obviously partisan policy from an extremely unpopular administration and at least considered the issue from the point of view of the insurance industry.

Why do I single out the insurance industry?  Because, as Warren Buffut said in his annual letter to Berkshire Hathaway shareholders:

“The big unknown is super-cat insurance.  Were the terrible hurricane seasons of 2004-05 aberrations?  Or were they our planet’s first warming that the climate of the 21st Century will differ materially from what we’ve seen in the past?  If the answer to the second question is yes, 2006 will soon be perceived as a misleading period of calm preceding a series of devastating storms.  These could rock the insurance industry.  It’s naive to think of Katrina as anything close to a worst-case event.

Neither Ajit Jain, who manages our super-cat operation, nor I know what lies ahead.  We do know that it would be a huge mistake to bet that evolving atmospheric changes are benign in their implications for insurers.

Don’t think, however, that we have lost our taste for risk.  We remain prepared to lose $6 billion in a single event, if we have been paid appropriately for assuming that risk.  We are not willing, though, to take on even very small exposures at prices that don’t reflect our evaluation of loss probabilities.  Appropriate prices don’t guarantee profits in any given year, but inappropriate prices most certainly guarantee eventual losses.  Rates have recently fallen because a flood of capital has entered the super-cat field.  We have therefore sharply reduced our wind exposures.  Our behavior here parallels that which we employ in financial markets:  Be fearful when others are greedy, and be greedy when others are fearful.”

The insurance industry consists of accurately assessing and pricing risk.  Which is why I believe their scientists more than I believe the reports coming out of the organizations that have been funded by ExxonMobil and the coal industry.

War News Radio

Apocalypse Now?

This week on War News Radio, we hear how a surge in Shi’a apocalyptic belief is changing the politics of mosque bombings. Listen now to the extended report by Sonny Sidhu and Will Godwin.

We also meet Josh Rushing, a former U.S. Marine Captain who is now a correspondent for Al Jazeera English. Listen now to Alex Imas’s report.

These stories, plus the week’s war news, from War News Radio.