Know Any Good Jewish Money Jokes?

Part of what my co-author, Levi Brackman, and I are trying to do with our book "Jewish Wisdom for Business Success", is to open up the public debate about Jews and money. The only way to avoid wondering why there are so many Jews on Wall Street and in the corner offices of corporations and on the rolls of philanthropy is to make the subject verboten. For some reason that's what our society has chosen to do.

Stifling public discussion leads to only one thing: the inevitable disentanglement of a subject from truth. While publicly discussing Jews and money might be uncomfortable for some, repression leads to far worse things (like mistaken assumptions, incorrect analysis of data and ,um, genocide).

Levi and I feel that there's no mystery here. The statistically relevant trendline of Jewish success in business is not due to "smart" genes or to a secret Yiddish cabal that controls the levers of power. It's the religion itself. And our attempt to prove that hypothesis is what our book is about.

As part of our attempt to open up the debate, we've decided to launch a video contest. We want you to video-record you telling your funniest joke about Jews and money. Then send in your video by email (samjaffe (at) gmail.com) or send us a Youtube link. We will be posting the best videos on both www.gatesofemporia.com and www.levibrackman.com. Once we've collected a suitable number of entries, the three winners will get a free autographed copy of "Jewish Wisdom for Business Success".

All you have to do is to include the line: "This is my entrant for the Jewish Wisdom for Business Success Joke Contest" either at the beginning or end of the video. The video should be no longer than 3 minutes (hopefully a lot shorter than that). And make sure you include an email or phone number which we can use to contact you if you win.

The jokes will be judged on the humor of the joke and the quality and effect of its delivery. And for the I.Q.-challenged, we don't consider anti-semitic jokes to be funny. Save it for the Klan rally.

Lessons From the Squeeze

The coming solar boom is going to quickly elicit comparisons to previous booms--and busts. The dot.com boom will of course be the most tantalizing parallel for pundits to make, however it doesn't hold much in the way in lessons. When people buy stocks based on complete fantasy, it's not hard to figure out why things went wrong.

The solar boom, however, will be based on real products being shipped and real profits being made. First Solar, for instance, has factories, warehouses and trucks. Its valuation might be insanely high, but at least its all being calculated on real kilowatthours being produced.

A better place to learn about how to deal with booms is in the current bust of financial stocks. In this case there are many fundamental points that are similar: the impact of subsidies on the run-up; the lack of expertise in analysis of complex subjects; and the mistakes made in how executives dealt with the capital markets. I'll write about all three, starting with the last one today.

There is a mistaken assumption that capital markets do what they are supposed to do: provide capital to business projects that are worthy while turning away unworthy suitors. That's because the capital markets ability to do things right are limited by the sum wisdom of the human beings who run them. When bull-fever is rampant, the capital markets overinvest. When a credit squeeze clamps down, they underinvest. The reason is simple: fear. A banker who is afraid of losing his job because of underperformance in comparison to his fears in the midst of a bull market will overinvest. A banker who is afraid of losing his fear out of losing the bank's money will underinvest.

So how does Buddha CEO ride this tiger known as the banking industry? The lesson of the current credit squeeze is clear: when the capital markets are flowing, take as much capital as you can. Because when the squeeze is on, there is simply nothing that can be done.

Let's take banking stocks today as an example. These companies had no difficulty finding private equity cash, sovereign wealth fund cash and lots of other kinds of cash in 2006. They were riding on the back of a housing boom that everyone wanted to benefit from. The Buddha banks (mainly JP Morgan and Goldman Sachs) took the cash while limiting their exposure to the very thing that was causing the cash flood: mortgage-based securities.

The rest of the banks took the cash too. But they reinvested their capital into the same thing that was causing people to wave bundles of Ben Franklins at them: the housing market.

The moral of the story for the solar industry is that when the floodgates open--take the cash. I'm not talking venture capital--that's a different type of beast and is not a limiting factor in the solar space now. I'm talking about debt. There will be a time in the near future where bankers will be beating a path to the Buddhha CEO's door, begging to lend money. Let them.

The key for managing the inevitable credit squeeze that will follow a few months or years later is not whether you got financing on the right terms. It will be in how you spend the money. Corporate jets and fish fries with celebrities for your sales staff are not Buddha moves. Creating real factories, real project development, real panels and real kilowatthours is what will make you look like a Buddha when the credit squeeze inevitably tightens.

To put it another way, take a hint from long-distance runners. When running uphill, they put their minds in a downhill mindset. When running downhill, they put their minds in an uphill mindset. During the boom, spend your new capital as if there were a credit squeeze. If you do that, then you will still be able to afford credit when it becomes outrageously expensive--the track record you've established will be what opens the closed gates.

Hizzoner's Plan

Another day, another prominent political figure releases a renewable energy Apollo plan. At least, when it comes to Mike Bloomberg, we know that this one will never materialize. Bloomberg's last five-year-plans were left crumpled by the legislative wastebasket after other politicians reminded him that he is the mayor of New York, not the totalitarian dictator of New York.

Mike's latest "idea" is to put wind turbines all over the place in New York. See a building? Stick a turbine on it. See a bridge? Why not put two or three there.

There's just one thing that the Mayor forgot: wind data collection studies. New York city is a relatively small patch of land. And it's not an especially windy place (except in places where architectural miscues lead to rip-roaring wind canyons). Why would a wind developer place his turbine on the Pan Am building when he could put it in the Texas panhandle and get three times as much revenue-producing power from it?

Can we please stop covering every public figure's "plan" as if it's important. These quarter-baked scribblings on a legal pad are not worthy of the tired, weary, life-bitten public's very short attention span.

Are You Picken My Nose?

Barack Obama met with Slim Pickens recently (“Oh, he’s not so bad,� he said to a liberal supporter about the man who financed the Swift Boat attack ads). A recent poll showed that 75% of Americans support his plan. I should be fuming mad about the reception America has given to the man’s napkin sketch of a strategy.

Yet, I’m not banging my head against the wall. Why not? Because I caught the nonegarian (he’s probably not really 90 years old—he just looks it) on PBS’ News Hour a couple of weeks ago and he mentioned something that he has previously omitted in his description of the plan. Cars, he says, are not his main target for NG conversion. “It’s the trucks. They belch diesel oil and they are bought and operated by businesspeople, not consumers.� What’s that, Slim? Are you actually starting to make sense?

Forget that taking NG out of power production is a disastrous idea. Forget that we don’t have the technology yet for cheap conversion of petroleum engines. The concept of incentivizing truck owners to switch over to natural gas has real merit. The technology is close. The space constraints and passenger safety issues aren’t there when you mount everything on the top of your trailer. And the pennies that can be saved over the course of several years are enough to make it worthwhile for a business owner.

The concept works on class 8 long-haul freighters as well as it does on the Dodge Ram your plumber drives. It thus removes our biggest NOx producing engines from the road while at the same time lowering the demand for diesel.

Now if Pickens could just figure out where all that extra gas is going to come from (No, Slim, it can’t come from the wells that you own), we might just have a real plan.

The Subsidy in Spain Falls Mainly on the…

Ask anyone in the solar field how the government to do subsidies right, and you’d better have a chair handy. Everybody has their own opinion—and is happy to spend a lot of time telling it to you. Not surprisingly, everyone’s opinion is different from everyone else’s opinion.

That doesn’t mean that there isn’t a best answer. If we remove the politics and intransigency (“That’s how we’ve always done it!�) and then settle down for some serious number crunching, I’m sure that a very good program can be determined. To work, it has to: a) cost as little as possible, b)incentivize the right things, c) have some self-termination clause programmed into its code and d) cost as little as possible.

As this blog proceeds, I’ll explore a number of factors that go into a good subsidy program. The first step should be looking at programs that have been tried in other countries and in individual states. Today’s case study is Spain.

If Spain’s solar subsidy program had a motto, it would be “Too Much, Too Fast�. The government declared that it would massively subsidize photovoltaics and solar thermal in the form of Feed-In-Tariffs. The idea was to reach 10% renewable electricity generation by 2010.

Just two years after this program was put into place, 12% of the country’s electricity is renewable. How great is that! Project accomplished two years prior to the deadline and goals over-achieved.

There’s just one fly in the mascara. The Spanish government has spent almost $7 billion in subsidy payments. That’s three times as much as it projected. They just didn’t anticipate that supply would increase (with the advent of thin film manufacturers) while external demand dropped (Germany’s market became less attractive because of demand congestion). They also didn’t expect that a whole lot of people would show up when they announced to the world that they were giving away free money.

The latest scuttlebutt is that the country will drop its feed-in-tariff from 45 Eurocents to about 30 Eurocents, while also dropping its cap for new solar installations from 400 MW to 300 MW. While industry spokesbugs jump and shout that such a move would be disastrous, it still makes for the best solar subsidy in the world.

What does this tell us here in America? Three points:

1. Do your homework. Don’t overpay, bankrupt your treasury and then change the rules.
2. Feed-in-tarrifs are difficult to calibrate and one year’s correct value could be dramatically overpriced for next year.
3. Base the plan on the technology that will be available in the next ten years, not what’s available now. Spain thought they would convince a few people to put silicon on their roofs. Instead, a huge amount of far cheaper thin film went up (why, after all, would you want to spend $4 in installation costs when you could spend $1.50 and still get the exact same price for your product, guaranteed by the government).

If our goal is to put up as much solar as quickly as possible, by all means, let’s do what Spain did. If our goal is to incentivize a clean technology with as little interference in a free market as possible, let’s file Spain’s plan under “G� for Grande ClusterF**k.

My Little GT Solar

In other “selling picks to goldminers� story, GT Solar is now a public company. The much celebrated IPO failed miserably in its first day of trading by dropping 15%--not an auspicious start. It has since stabilized at around $12.

Some claim that this IPO was actually a success. They’re wrong. Any IPO investor is going to look at this event as a harbinger of things to come in the new energy space, which means there will be fewer IPO’s in the next three years than there would have been had GT Solar gone up by 15%. Fewer IPO’s means less venture capital funds flowing into the arena, which means fewer startups.

GT Solar did get one piece of booty from their IPO: a great ticker symbol. SOLR should have gone to one of the upcoming solar public market births (NanoSolar, Miasole, Heliovolt, etc.). Instead the boring equipment-maker gets a snazzy name. Maybe they can sell it to one of the newcomers next year and make back that 15% for shareholders.

Inverters for Sale—Going Fast

One of my all-time favorite renewable energy stocks, Xantrex, is going away. Schneider Electric, a French company, is buying it at a 55% premium over market price. The reason for selling out, according to Xantrex chairman Mossadeq Umadally, is that it needs to build a vastly larger sales and marketing department. Borrowing Schneider’s, he says, is cheaper and faster than building one from scratch.

Another reason, of course, is that Ummadally—and other insiders—are ready to cash out. That’s a much more likely prime motivator than any “business� reason. The company has reached profitability and is on the top of its game—what a great time to sell.

So should shareholders rejoice, or should they upchuck on their charts? How about neither. A 55% premium is pretty good for a company that makes power boxes, although given a few more years of solar growth, the company’s stock price surely would have increased by more than that. One thing to watch is an exodus of skilled engineers launching their own startups in British Columbia. Now is the right time for new ideas and for cashing in your stock options.

How Not to Build Renewable Energy

My good friend Herb Rubinstein just called me to tell me he’s leaving the non-profit group he had been helping to run. The organization is called i-Cast and had an unusual mandate of finding renewable energy projects in Colorado for students to work on. Now i-Cast is changing that mandate to finding renewable energy projects for low-income residents. Nice notion, but can we please let the rich people pay for the bleeding-edge stuff first? Herb understandably disagrees with the change of focus—not because he doesn’t like helping poor people but because he just can’t make it add up. Good luck, Herb, and I have no doubt that you’ll find a better opportunity to improve the world.

Slim Pickens Picks a Plan Out of his Nose

The man’s a billionaire, so he must be smart, right? Then why is he putting forth such a stupid plan? T. Boone "Slim" Pickens, oil man and international financier, is spending a few million of his pieces-of-eight to publicize his “Pickens Plan� for energy independence. In a nutshell (actually, there’s not much more to the plan than a nutshell), the “Plan� calls for increasing the U.S. windpower generation capacity to 20% of all electricity generation and then taking all the natural gas that is saved to power our cars.

Reasons “The Plan� is destined for “The Trashcan�:

*The federal government is calling for 30% windpower generation by 2030. You can’t call your plan a plan if somebody else already planned it.

*Natural gas peaker plants are the only method we currently have to level out the stochastic patterns of windpower production. Eliminating them makes windpower drastically less effective and more costly.

*If we start using natural gas to power our cars, prices will rise dramatically, causing further pain to poor homeowners who rely on the already expensive fuel to keep their children from freezing in the winter.

*Adding natural gas compression, storage and combustion to a car costs at least $10,000 and could be as much as $20,000. That’s CHEAPER than an electric plug-in hybrid.

*Switching from gasoline to natural gas is somewhat cleaner, but it’s STILL A FRIGGIN FOSSIL FUEL, SLIM!