Tuesday, June 30, 2009


Growing up in Asia, we found it hard to understand the “real” value of all the different currencies we had to use when moving from country to country. In some currencies small numbered bills and coins bought a great deal and in other currencies the bills had numbers in the thousands and were worth far less than a dollar. Many Asian currencies were, and still are, illegal to trade outside their country so the exchange rates were “official” rates set by the government. The official rates were far higher than what the currency would have actually purchased, which resulted in an illegal “black market” where residents traded their currency for other currencies at a lower rate.

To understand the comparative values of these different currencies, we used an "ice cream cone equivalency"; the amount of currency it took to buy an ice cream cone became our basic value measure. This equivalency gave us a way to evaluate the cost of things: a taxi fare in New Delhi was 5 cones, a T-shirt in Jakarta was 4 cones, a piece of jewelry in Thailand was 10 cones, and a class trip was 300 cones. This comparison method made the currency values tangible and functional to us.

After we moved back to the US, we continued to convert money into equivalencies, but our comparison evolved from ice cream cones to weeks of vacation in Hawaii. When we considered the purchase of a new couch, for example, we equated it to a week of vacation in Maui which allowed us to understand our spending choices and the real value of our dollars at that time. The value of the dollar has varied wildly over the past thirty years which changed the value of a trip to Maui from one couch made in North Carolina in 1979 to ten couches made in China in 2009.

Since world-wide commodities, such as oil, are priced in US dollars, the US dollar has become the de-facto world currency. Countries such as Saudi Arabia, China, and Qatar control the price of their currency by setting their “official rate” in US dollars. China, Japan, and many other countries have been placing their US dollars, earned from selling manufactured goods and commodities, into US government Treasury Bills and Securities.

The massive US stimulus spending package and US economic downturn have led these nations, notably China and Japan - the two largest holders of US debt, to become very concerned about a huge loss in the value of their assets held in US dollars. These countries are reducing the amount of US dollars they own and converting them to gold and other currencies in order to find alternative ways to hold their assets and maintain the value of their currencies. The international divestiture of the US dollar is causing its rapid devaluation. Some have been calling this an international currency crisis.

As a result, many people are convinced that the US dollar will soon be formally devalued by the US government. But since currency is only valued by comparing it to something, we wonder what the US dollar will be devalued against? The old metric of valuing the dollar with gold was thrown out in 1971 and in its place the value of the dollar has only been its ability to buy basic commodities in the world market like food and energy.

Here in Hilo, Hawaii a devaluation of the dollar would result in higher prices for foreign imported goods, but a great deal of food is grown on our island and diesel and gas can eventually be replaced with bio-fuels. Though for most of the US this devaluation of the US currency will not cause instant change, we believe Hawaii’s proximity and popularity with Asia may result in an immediate and disproportionately large influx of visitors and real estate buyers from Asia. We are pretty sure that we are not the only ones that measure the value of their currency in “weeks of vacation in Hawaii”.

Thursday, June 18, 2009


The Environmental Impact Statement (EIS) review meeting in Hilo last night for the Thirty Millimeter Telescope (TMT), being proposed for Mauna Kea’s summit, disclosed for the first time the benefits the Big Island community will receive by hosting the new observatory.

Unlike the other observatories on the Big Island, TMT corporation based in Pasadena, California, is offering Hawaii County the same compensation that will be given to Chile if the telescope is sited there. Chile gets about $1 million a year for each major telescope and numorous scholarships from each University involved. Not surprisingly, Astronomy and the observatories are very popular in Chile. If the seven observatories currently on the island each matched the packages that Chile receives for similar sites, as TMT is proposing they will do, we think Astronomy would become very popular in Hawaii County.
For those that have attended the seemingly endless public meetings on the TMT and Comprehensive Management Plan (CMP) in cramped school rooms, suffering through presentations by contractors and UH employees, the meeting last night was a sharp and stunning contrast.

First, there was a free dinner. Food is a big deal in Hawaii and it was high quality food in large supply.

Second, Mayor Billy Kenoi was there, the first time I have seen an elected official representing the public at any of the meetings. And his remarks were the first I have heard focusing on what the community will get, what our kids will get, and not about what some select international astronomers and UH will get or what we won’t get if the observatories are shut down. This type of frank discussion about what’s in it for the community combined with TMT’s offering of a tangible benefit package to the community is long overdue.

After Mayor Kenoi was done speaking, he sat down and had a dialog with Kealoha Pisciotta one of the strongest anti-telescope activists on the island. Over the years, Kealoha Pisciotta has delivered compelling attacks on Telescopes and UH’s CMP citing their legal infractions, environmental issues, and lack of respect for the mountain. She won a case, with many other plaintiffs including the Sierra Club regarding the management of Mauna Kea where the court ruled against UH and the State Board of Land and Natural Resources (BLNR) for violations of the regulations protecting Mauna Kea as a conservation district. It was wonderful to see Mayor Kenoi taking the time to meet with her and have a discussion about the issue.

Before attending the meeting, I was on the fence about the TMT. I had gotten the shiny pamphlets and heard the marketing spiel about how a bigger, high-tech telescope would take “us” on a journey of discovery. Though I like the science, there were issues with the telescope that I found disturbing.

But after talking with Dr. Michael Bolte, Director of University of California Observatories and a member of the board of directors of TMT and Dr. Anneila Sargent, Professor of Astronomy at Caltech, I joined the “Yes TMT” camp.

They gave me the two key answers I needed to hear which were: 1) TMT Corp will give Hawaii County the compensation package that Chile would get if they were there 2) TMT Corp respects the law and fully intends to comply with all State and Federal laws. These are not the answers I always hear from Astronomers. After seeing the benefits that the community is going to get, I am convinced the facility makes sense to be on the island.

Here is the summary of the benefits to the community:
- An actual EIS has been performed and is getting public review following State law.
- Construction would start in 2011 and take approximately 7 years to complete. Construction would take place 6 days a week, 10 hours a day. An average of 2 trucks a day would bring components up to the summit and a concrete plant would be operated at the mid-level.
- The TMT will consist of the observatory on Mauna Kea on one of two proposed sites (roughly 6 acres), roadway and utilities to the observatory, improvements to Hale Pohaku – the mid-level facility for construction workers, a Headquarters facility at University Park in Hilo, and a satellite office in Waimea.
- The project is expected to employ 140 people full-time, 50 people would work up at the observatory daily. Carpools will be used to minimize vehicle trips to the summit.
- The TMT will create a community outreach office with at least one full-time person dedicated to managing a workforce pipeline program that would work with UHH and the DOE to train students for future TMT jobs and fill TMT operations positions locally to the greatest extent possible.
- The TMT will give $1 million annually to the community to be used for locally-chosen and managed education programs.
- The TMT will fund college scholarships.

Monday, June 15, 2009


Over the past year, the severe fall off of tourists to the Big Island has lowered income to local businesses and more than doubled the rate of unemployment. Unfortunately, starting July 1 Hawaii County will begin to experience additional economic shrinkage due to severe cutbacks in State and County wages, benefits, and spending.

3,450 Hawaii State employees on the Big Island will have their salary’s cut by 15%. Assuming an average salary of $40,000, the loss to Hawaii County’s economy will be $20.7 million a year or $1.725 million each month no longer being spent by Hawaii county residents.

An additional 5,550 State employees work for the Department of Education (DOE) and University of Hawaii at Hilo (UHH) on the Big Island. UHH has been told their $50 million yearly budget has been cut by at least $4 million. The DOE has been told it must cut $384 million State-wide over two years or $192 million a year.

The DOE and UHH budget cuts could be dealt with by giving all employees a 14% decrease in salary similar to the other State employees. Neither UH or DOE have decided whether to take the salary cut approach that other State employees face or make the cuts by doing layoffs, ending programs, and increasing class sizes. But the loss to Hawaii County can be estimated by calculating a 14% cut in salary for each of the 5,550 DOE and UHH employees on the Big Island. Assuming an average salary of $40,000 the yearly shrinkage to the county comes to $31million or $2.59 million a month.

Hawaii county is meeting their budget cut by reducing the salary’s of appointed staff in the mayor’s office for one day a month and un-funding 55 vacant county positions. County salary shrinkage totals a tiny $41,714 a year equivalent to the 15% salary cuts of just 7 State employees.

In addition to salary cuts through furloughs, the 11,750 State and County workers as well as some retirees on the Big Island face a medical premium increase of 24 percent this summer. For a family medical plan, it could increase the monthly payments by an additional $500 each month. This adds up to $70.5 million dollars that residents in Hawaii County no longer have to spend each year.

Totaled together, the loss of income to Hawaii County’s residents is a staggering $10 million a month or $120 million a year.

Wednesday, June 3, 2009


Though the “McMansion” gained a lot of media attention in the housing crisis as the ultimate symbol of American over-consumption, the technology that made them possible is rarely mentioned. One of the dramatic characteristics of McMansions is their grand open rooms with high ceilings. The great-rooms were in sharp contrast to traditional houses with small rooms.

In older mansions grand rooms were achieved by using very thick, heavy timber or metal I-beams similar to commercial building construction. The heavy building materials required robust foundations to support the weight and highly skilled construction workers were needed to handle the timbers to keep them from collapsing. The costs of building materials and construction made mansions exclusive to the exceptionally wealthy.

Commercial construction has used engineered metal and wood truss systems for some time to provide large open areas for stores and warehouses. These trusses, or pre-built components that function as a structural support member employing one or more triangles, were designed specifically for the building and not able to be modified during construction.

Pre-manufactured roof trusses have been used in residential construction since 1950’s which allowed faster and cheaper construction of suburban housing. But floor framing of multi-story houses were done with 2x10s and required load bearing walls underneath to support the weight. Multi-story houses were more expensive due to the extra foundation support, building materials and skilled construction workers needed.

Builders started using trusses in flooring to address weight and cost of materials. The housing boom allowed the large, national building companies to employ a staff of architects and structural engineers to design houses using floor trusses as structural members which created the technology for low-cost McMansions. These light-weight, high strength floor trusses allowed huge spans without the need for load bearing walls creating great-rooms on every floor of the house.

When used properly, pre-manufactured floor trusses were far cheaper than traditional materials and they were light and easy for unskilled construction workers to manipulate, cutting the cost of construction per foot dramatically and increasing the profitability for the national builders. In addition the trusses have built in spaces for utilities to be strung through them so the support is not weakened by drilling holes to put in electricity, plumbing and AC. Wood Truss Council of America reports that use of floor trusses in construction saves 26 hours of labor for floor installation and 1,109 board feet of lumber. Though the future of the McMansion is unclear, advances in home construction technology means the future for more affordable housing is bright.