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Sunday, May 20, 2012

Green Spot: Double Book Review

Posted by Tim Stobbs on September 4, 2009

Today I’m doing a double book review.  I’ll be covering two books by James Lovelock: The Revenge of Gaia and The Vanishing Face of Gaia.

Since The Revenge of Gaia was written first I’ll review it first as well.  This was a very interesting book for a several reasons first off James Lovelock is an independent scientist who was in his 80′s when he wrote this book.  So in general he’s straight forward to fault and has no problem hitting us over the head with a 2×4 to get his point across.  I suspect at his age the concept of playing word games is so utter pointless he doesn’t really care is he crushes our illusions.  So the fact he studies climate change and the feedback loops that have been holding it in check makes for a very refreshing read.

James is likely the most famous for proposing the Gaia theory where you can consider the planet is ‘alive’ in terms of a metaphor to explain the multiple feedback loops that the planet has to help keep the planet in a range that supports life.  The concept and the feedback loops are very interesting reading about.  For example, I didn’t realize algae growth in the oceans act produce water vapour that helps seed cloud formation which helps cool down the planet.  So there is some scientific parts to the book, but nothing too complex.

What is interesting was his general point about climate change: we are very closed to screwed if not past that point already.  He points out the IPCC predictions where done in a committee with heavy political influence so to expect us to have until 2050 to fix things he considers it laughable.  If anything the most recent data say we might already be at the point of no return and if you expect the planet to fix it self, well that will happen after about 200,000 years or so.  So life will continue, humanity will likely continue, but we can kiss goodbye civilization as a whole if we overheat the planet past it’s feedback loops ability to hold it in check.

He rightly points out that there is a lot of cherished ideas out there by environmentalists that are romantic in nature.  The concept of producing all our energy from renewables is laughable since the technology isn’t develop enough and cheap enough to keep civilization running.  Our civilization is based on cheap energy so to keep that you have really only one option to achieve massive CO2 reductions in the short term: nuclear.  He then goes about breaking down the myths of nuclear power generation’s safety record (it actually has less deaths per GWh than hydroelectric by a factor of 500), the issues with waste (size wise all our CO2 emissions per year in a supercritical state would be a mountain 1 mile high and 12 miles in diameter versus a swimming pool to hold all the nuclear waste to produce the same amount of energy).  Then to hammer the point home he says that if people want they can bury some nuclear waste in his backyard and he won’t mind at all.

So in general he calls for a sustainable retreat from our current methods of energy production.  Where we get serious about really doing something with the facts of the situation rather than the romantic nature of some people’s ideas like running everything from renewables.

After that book James wrote another one a few years later called The Vanishing Race of Gaia: A Final Warning.  Now in this book he does repeat some concepts from the early book, in order to introduce new readers to the critical concepts.  So you don’t have to read the first one before this one.

What was interesting was he pointed out average air temperature is a poor measure of the earth’s warming since after you melt the ice caps, like an ice cube in a drink, the water stays cold for a while keeping things cooler than they really are around you.  So in the end if you really want to measure warming you have to use rising sea levels since they can only rise from expanding due to heating or adding water from melting ice.  At that point he points out an article in the last few years that showed sea levels were rising by 1.6 or 1.7 times that predicted by the IPCC.

So overall he feels we are past the point of mitigating our emissions to prevent things, it will happen anyway. It’s too little, too later. So he is calling for international plans to now include adaptation to our new climate, rather than just trying to reduce emissions.  This leads us into the real issue with this point of view: we have very hard choices ahead of us.  We won’t be able to support the current population in our current lifestyles and for those areas that will support us in the long run we will have to choose who will be let in and who will not be.  He doesn’t propose how you would determine that but leaves that issue hanging.

He does repeat that nuclear power is still a good option and why.  Then he also points out some positive developments with solar thermal power generation that could work in some areas to produce power.

Perhaps the most interesting chapter in the book was towards the end called: To Be or Not to Be Green.  In this chapter he explored his own story of trying to be ‘green’ and how he learned how little he knew about the world and the best way to do it.  So in short he realized we often think we could be stewards of the planet which is laughable due to our ignorance.  Planting trees doesn’t make a forest, the interactions in a real forest are much more complex than just trees.  In the end he points out the one item we tend to forget.  We are part of Gaia, she’s the only home we have and just like a mother she can smack us upside the head when we’ve been stupid.

So overall these were very interesting books to read, but they will make you feel a bit depressed.  Are we past the point of no return?  To be honest it is possible, but I’m not sure.  Unfortunately we won’t know that until we have past that point.  I do know that just about any government in the world isn’t even close to meeting the recommendations of the IPCC so if they are really as wrong as James suggests it seems likely we are going to be in trouble sooner than later.

Watch That Last Step

Posted by Tim Stobbs on September 3, 2009

Ok, I’m guilty of this too.  Sometimes I think, why don’t I just leave a year or two early than planned.  It can’t possibly make that much of a difference to my retirement plan?  Unfortunately it does make a very large difference.   It’s rather like missing that last step on the stairs, it can cause you to lose your balance if not out right fall. Why?

Well it’s basically a triple threat to your retirement plan that consists of the following:

  1. Less Savings.  You are usually near your peak savings towards the end, hence it is a big deal to cut off an extra year or two early.
  2. Less Portfolio Growth.  Again towards the end your portfolio is growth very rapidly cutting back on this can reduce your final portfolio by tens of thousands per year easily.
  3. More Expenses.  You get another year of extra expenses on top of what you had planned for.

So for example, if you want to retire at 55 with $500,000 portfolio, expenses of $30,000 a year and savings at that time of $25,000 per year.  If you stop one year short with a 5% rate of return you end up being short $25,000 in savings, you have an extra $30,000 in expenses and your portfolio would have been short ($500,000-$25000) x 5% = $23,750 in growth.  So in grand total that last year is worth $78,750.

You can see how if you did that for more than a year how problematic that can be to a retirement plan.  The good news of this particular issue is it also works in reverse.  By working an extra year or two you can significantly increase your final savings.  In our example above, working full time for an extra year is worth $81,250.

So working is good for a retirement plan, so the interesting conclusion of this is then if you semi-retire and work just enough to cover you expenses for that extra year earlier then you final portfolio would be $498,750.  Also identical to the original plan.  By doing even some work you help reduce two out three issues, you allow your portfolio to grow and you reduce your extra expenses.

So if you are thinking about pulling the plug a little earlier than expected, give serious consideration to even working part-time during those extra years.  It will make a huge difference to your final numbers.

You Can’t Be Everything

Posted by Tim Stobbs on September 2, 2009

It’s amazing how people try to be everything to everyone.  We end up being a husband, father, friend, co-worker, engineer, writer, painter, Mr. Fix It, personal finance consultant, cook, general labourer, student, researcher…you get the idea.  Yet at some point people learn to say no to some things, because they understand you can get stretched too thin.  When that happens you really aren’t good at anything and often too busy and unhappy from it.

Money is very much a similar experience.  You can’t save for everything.  You can’t save for your child’s RESP, your regular retirement, your early retirement, pay off your mortgage faster, give generously to charity, buy luxury items and travel the world all at once and expect to be happy with the results.  By spreading your saving too thin you often end up feeling like you are getting no where fast, but often people are doing that very thing.  They try to save for everything all at once.

Yet if you don’t save for something how can you get to your goal?  That is true, but perhaps you should look at your goals and put it in a priority sequence.  What is the most important goal for you to complete.  Then the second most important goal.  Keep going until you have a list like this:

  • Pay off mortgage
  • Save for regular retirement
  • Save for early retirement
  • Save for RESP
  • Charity
  • Travel
  • Luxury Items

Now let’s list what you are saving/spending each month in each category.

  • Pay off mortgage $100
  • Save for regular retirement $500
  • Save for early retirement $200
  • Save for RESP $300
  • Charity $100
  • Travel $350
  • Luxury Items $200

Now you might have noticed a small problem.  Your saving/spending does not match your priorities at all.  No wonder people don’t feel happy about everything they are spending/saving.  They got the money going to all the wrong things for them.   Perhaps the solution is to either shift your priorities or shift you spending/savings.  Doing that you might end up with something like this:

  • Save for regular retirement $500
  • Pay off mortgage $400
  • Save for early retirement $300
  • Save for RESP $200
  • Charity $150
  • Travel $150
  • Luxury Items $50

Granted your trips won’t be as nice or you will be taking them less often, but you will actually see your mortgage start to fall off faster.  At least this way you will actually feel like you are getting somewhere.  That’s the point of not doing everything or trying to be everything to everyone.  It’s doing what works for you regardless of the opinions of others.  Yes it is difficult at times, but you will be happier in your own skin because of it.  So does your spending match your priorities?