Nice to meet you, and you, and you, and you (etc.)

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Today's big events were two meetings, one with a group of jurists (lawyers, judges, etc.), the other with faculty, administrators, and students at the local medical college.

But first, our first morning on the Caribbean, I happened to wake up early enough to catch the sunrise from the beach.

In the shallows you could see sea urchins, some of them further along than others in gathering pebbles and scraps of wood around themselves to make some sort of camouflage.

And I got a shot of the swimming pool in the early-morning light.

On the way into Cienfuegos, Jesus gave us some of the history of the city. It was founded in 1819 by a group of French settlers, and so its architecture bears the imprint of French colonial style more than Spanish.

On the way into town we can see slogans on walls. The one below says, “Por siempre, Revolución”. The “o” in “revolución is the emblem of the CDR, the Committees for the Defense of the Revolution. We’ll see lots more of those.

Savings gluts, bubbles, and the state

A common term in macroeconomics for the last many years has been captured in the phrase "savings glut." An example is Martin Wolf in his book The Shifts and the Shocks, cited in this post by Brad deLong.

The idea is that there are people saving significant portions of their income: thrifty people in Asia, people looking toward their retirement in countries with aging populations (some of them also in Asia), and wealthy people everywhere.

And what do you do with your savings? For you as an individual saver, it may feel like you're just putting your money "in the stock market" or in the bank. But collectively, the reason we savers get a return from the stock market (or, in the old days, from the bank), is that the money one way or another found its way into the hands of companies who could make use of it in their businesses, and make more money, some of which found its way back to you.

In any kind of glut, you've got too much of one thing, relative to how much there is of something else. In a savings glut, the thing there's too much of is savings. And what's in short supply? Things to do with those savings that will earn a decent return - or rather, that will earn the sort of return the savers think they're entitled to.

Two obvious candidate explanations for this involve aging populations and wealth inequality.

And so it begins ... (Day 1 - Jan. 5th)

The take-away impression from my first day in Cuba has been sensory overload.

The airport in Santa Clara is too small for there to be a jetway into the terminal. They wheel up a set of stairs and you walk from the plane out into the sun, the heat, and the aroma of tropical vegetation burning, which sets off childhood memories from the half year we lived in Peru.

On the tarmac at Aeropuerto Abel Santamaria in Santa Clara
(Photo: Pat Dopazo)

The two-hour drive from the airport to our hotel outside Cienfuegos is an overwhelming array of things to see. Fields of sugar cane and banana trees, with palms sticking up here and there, and mountains in the background. The two-lane highway we're on serves equally well for our bus rolling along at 50 mph, for bikes, for bikes carrying two people, for old, smoke-belching Soviet cars, for horse-drawn carriages, for tractors, with or without a farm implement or a wagon full of people in tow, and for pedestrians.

No, these aren't fields of sugar cane, but they do capture the
sense of small fields, with livestock scattered around.
(Photo: Chris Shaw)

Along the drive we keep passing settlements that don't seem to connect to anything. It seems like too many people for the farmland around it, but not near enough to a city for the residents' work to be tied to the city.

A settlement glimpsed from the bus on the way from
Santa Clara airport to Cienfuegos (Photo: Chris Shaw)

Happy 2015!

This is a sort of grab-bag check-in on my perennial concerns with energy and the economy.

First, some tempered optimism, then bringing some energy perspective to an otherwise reasonable conventional view, and lastly a sampling of just what a range of views there is out there.

The optimism comes from a piece in Grist about changes in bidding rules at ISO New England, the independent system operator that decides which power sources to buy from for the New England market.

In the New England ISO, some renewable sources have been bidding in at $0/MWh. That is, they’re confident the actual price at which the market clears will be positive, so they’ll get paid for the power they sell, but since their “fuel” cost is zero, they want to make sure that they get chosen.

The ISO has implemented a rule change that allows sources to bid in at negative rates: take the electricity I’m producing, and I’ll pay you.

Why on earth would anyone bid negative? Because these producers are eligible for “renewable energy credits,” but they only receive those credits if their power is actually bought. So they’re willing to pay the system operator to take their power, and they’ll still make money on net because of the credits they receive.

And not only have there been negative bids, there have even been periods when the market-clearing price has been negative.

The article concludes, “Within the next year or two, New Englanders are going to enjoy cheap, dispatchable renewable energy, something VSPs said was impossible. It must be a Christmas miracle.”

But it’s not that simple, because of the role that those credits are playing in the whole scheme.