Category Archives: Current Events

150 Episodes Often About the Machining World!—EP 155

By Noah Graff

Today we’re celebrating the milestone of 150 episodes of Swarfcast. This is actually Episode 155. We just didn’t get around to doing this one until now. I hope you enjoy as we look back at four of our favorite past episodes spanning the last four years. Four years! Not much has happened for me? Besides getting married, surviving a pandemic, and having my first child a month and a half ago.

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Making this podcast I’ve been privileged to meet and learn from a ton of interesting people and then share our conversations with the world. When we started the podcast we racked our brain to find some interesting guests. What we quickly discovered was that rather than interviews with famous people or “experts” on manufacturing or business topics, often the interviews our audience liked the most were with owners of machining companies. Every machining company runs differently, and people love to learn how others approach the same type of work they do.

In today’s podcast I inserted some old clips of two past interviews with owners of machining companies. In Episode 63, I interviewed David Wynn, CFO of ABF Engineering, a third generation screw machine shop in South Fulton, Tennessee. Wynn’s business philosophy is to run his machining company as though it were a modern tech company. This is somewhat ironic because at the time of the interview in 2019, more than 50% of the company’s work was produced on ancient Brown and Sharpe screw machines. One of ABFs management strategies that sets itself apart from typical machining companies is its undefined work hours. Its employees have the flexibility to work when they like and choose how many hours they work, as long as they get their work done and do it well as a team.

Lloyd and Noah Graff recording 155th podcast

Another clip I included in today’s podcast comes from Episode 121, Finding Customers Through Great Networking with Jay Sauder. Jay’s company Sauder Machine in Plymouth, Ohio, makes casings for mechanical pocket watches as well as wheel cylinders for horse drawn buggies driven by Amish people. Jay is Mennonite, which has enabled him to develop a customer network of Amish companies. He also has a large customer base of companies not owned by Amish people, but he says all of his customers came to him through word of mouth, as opposed to advertising on the Web or using salespeople.

Over the past four years, I have interviewed several experts on the show who have had a profound effect on my life. One of my all-time favorite interviews was Ep. 80 and 81, with negotiation masters, Chris and Brandon Voss, who wrote the best selling book, Never Split the Difference. Chris is a retired FBI hostage negotiator who adapted his negotiation skills for use in the business world. In the interview we talked about the advantage of having one’s counterpart in a sales negotiation name price first, as opposed to starting a negotiation with a high asking price or extremely low offer. We also discussed why it is best to make the other party in a negotiation say “no” rather than “yes.” Over time, I have incorporated their techniques into my daily personal and professional life. I still sometimes watch video clips from the interview to review some of their brilliant lessons.

Another interview that has had a profound influence in how I approach my life is Episode 123—How to find Serendipity with Christian Busch. Busch is the author of the book, The Serendipity Mindset: the Art and Science of Finding Good Luck. He gives strategies to enable people to “be in the right place at the right time.” One of his techniques to find serendipity in conversations he calls “serendipity hooks.” The concept is to purposefully bring up topics that inspire connections between people.

For example, if someone were to ask me what I did for a living, instead of telling just them I was a used machinery dealer, I could say, “I’m a used machinery dealer, I also have a podcast, and I love salsa dancing.” That response would create three possibilities for interesting conversations, rather than just one that might not lead to talking about anything of substance.

Christian also emphasizes the importance of keeping one’s eyes open for serendipity. If a person believes that important “lucky” things might happen on a given day, there is a better chance they will.

Interviewing all the interesting guests on Swafcast creates a fountain of serendipity that really energizes me. I need that energy because making a podcast is often a grind! Thankfully, I have some good help to make the podcast possible. Ridgely Dunn, our Managing Editor, gets these pesky blogs and podcasts up, takes care of social media, and helps make the whole thing happen. Our editor Patricio Garcia does a good job making me sound a little smoother than I really am on the mic. Obviously, Lloyd is the great Lloyd Graff! He is the creator and nucleus of Today’s Machining World. He is my occasional cohost, mentor, and most importantly my dad.

Much of the podcast-making process is fun, and it fulfills my need for a creative outlet to some extent. Perhaps one day it will be a profitable business. But what really motivates me to make Swarfcast is the propose it gives me. I’m not a heart surgeon helping people cheat death, or a therapist helping someone cope with depression, or a philanthropist working to end world hunger. It’s easy to identify purpose in those occupations. Swafcast is my vehicle to effect a lot of people, to leave my mark on the world, at least just a little. If 500 people listen to it and 1000 people read the summary and they learn something important, or they reflect on a new idea or just have a nice 45 minutes of diversion, I feel purpose. 

Questions: 

What is one of your favorite episodes of Swarfcast?

Would you like to appear on the show?

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Where Have All the Men Gone?

By Lloyd Graff

Why aren’t kids wanting to go to college, especially guys? 

I’ve been intrigued by this question since seeing the stats showing college enrollment continually dropping over the last decade. We are now at the point where women comprise almost 60% of college students, although in our politically correct world I am probably offensive to some if I choose a gender. 

We just received the latest bombshell from the esteemed Harvard College newspaper, the Harvard Crimson, which published an unsigned group editorial in support of boycotting Israel for its apartheid policies towards Arabs. 

I see this as related to the falling enrollment at many colleges. Harvard has given up on standardized testing because it would force them to admit too many Asian applicants with perfect scores and unblemished grades. That court case will be decided at the same time the abortion case will be ruled on by the Supreme Court. It probably will not be pretty for Harvard, which heavily favors the Bush and Obama kids and its many other legacies. Poor Harvard, but I am sure it will fight fiercely for its history, which also includes slavery.

Harvard’s fight song by Tom Lehrer

I can see the indifference about college in my oldest granddaughter who is an excellent student. She loves theater much more than the academic world. She is also having a problem finding a school where a Jewish woman who cherishes Israel can bond with a group of people who dare to come out as Jews. Can you blame her after last week’s Harvard Crimson unsigned group editorial? 

For men, the increasingly belligerent wokeism of college faculties makes the campus life I loved at the University of Michigan more of a nostalgic memory for alums than a real place for an 18-year-old kid, who also will face at least a $100,000 in school loan debt if he stays around to graduate. Heaven forbid he becomes a high school teacher or social worker. He will have debt until he’s 80 unless President Biden decides to forgive it. 

It also appears the well-publicized examples of billionaires like Marc Zuckerberg and Bill Gates who dropped out of school almost immediately to seek their fortunes as entrepreneurs may be influencing the career paths of young people. Noah recently did a podcast with a young man from Wisconsin who moved to Bozeman, Montana, at 21 after completing technical school. He worked at two machine shops for four years, making his own parts for bicycles on nights and weekends. At 26 he started his own 1-person machining company and made enough money to quit by age 40. Now he spends the majority of his time on his passions, snowboarding and mountain biking. He still does some machining as a hobby.

The old myth seems to be fading that going to college, getting a desk job in a big office, and collecting a gold tie clip after 40 years was a life to hope for. Even with the current decline in college enrollment, much because of obscene tuition costs, not enough desk jobs are available for the huge volume of college graduates trying to play that game. On the other hand, jobs in the trades are in demand and growing in popularity. 

The lefties have done a good job of turning good colleges into factories of AOC followers and Bernie Sanders lovers, but the trend seems to be shifting just when they thought they had won the culture wars and silenced questioners.

Thank you, Harvard, for making everything more clear this past week.

Question: Do you need to go college to be successful?

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Sports Refuge

By Lloyd Graff

The war in Ukraine is a genocide. The economy is a perplexing complex of boom and missteps. Politics has degenerated into angry posturing and eliciting cheers from your fans rather than changing the minds of voters who are capable of listening to challenging ideas. 

Today I will write about SPORTS.

***

The NBA playoffs are in mid-flight, and I am loving it. 

The game has evolved. The caliber of play is much better than I have ever seen. Defense is active, incredibly athletic, and mobile. It has to be better, because the 3-point shot has revolutionized the game since Daryl Morey as General Manager of the Houston Rockets used statistics to deduce that a good three-point shooting team would win more often than even a disciplined screen and drive team. Players 7ft tall are shooting and making 3-point shots. Guards like Steph Curry win the MVP award and get endorsements for cryptocurrency exchanges. The NBA has become a world game that now challenges soccer, with immense popularity even in China.

NBA teams draft players come from around the world. Giannis Antetokounmpo, AKA the Greek Freak, is reigning MVP and should win the award again. He is 27 and so phenomenal his team, the Milwaukee Bucks, put his brother on the squad just to cheer. He is not good enough to play much, but nobody cares. 

With the 24-second clock dictating the speed of play, fast breaks are cherished, but when the pace slows up enough to set up plays, the old days of big guys with hook shots playing the pivot are now over. Wilt Chamberlain would have had to alter his playing style. Today’s game is pic, roll, drive, and pass to the corner for the 3-ball. New stars like Nicola Jokić, Ja Morant, Luka Dončić, and Devin Booker invigorate the game year after year. Streaming networks are currently featuring various series based on Kevin Durant, Jerry Buss, and Magic Johnson. LeBron James has become a billionaire with NBA and Nike money. The NBA is the world game, the NFL is the American white guys game, and Major League Baseball is still looking for the next Mickey Mantle and Willie Mays.

***

Kenny Pickett’s hands

The NFL just held its annual draft. Despite the enormous emphasis on the passing game, only one quarterback was picked in the first round. Kenny Pickett of the University of Pittsburgh was chosen by the Steelers as the likely replacement for Ben Roethlisberger who has been playing since the Vietnam War. Pittsburgh ownership has always been unorthodox in how they run the team. They keep head coaches for 20 years. Mike Tomlin was the first black head coach and is still there. Now they have drafted a quarterback with the smallest hands in the game. Will he prove the cynics wrong?

Ending the NFL discussion, the North Dakota State Bisons likely will soon have produced two starting NFL quarterbacks, Carson Wentz and Trey Lance. Wentz plays for the Washington Commanders (not Redskins) and Lantz for San Francisco. What are the odds of that?

***

Last, a little about baseball. 

Major League Baseball continues to slip in popularity, but as an old white guy, I still love the game. They keep tinkering with the sport, but the players and managers cannot seem to make it better by jiggering with it. Computer analysis of millions of pitches and thousands of games have shown that shifting infielders can deprive hitters the chance to get on base. This approach has crippled most left-handed hitters who pull the ball. It is almost impossible for them to hit a ground ball through the shift into right field for a hit. 

Add to this today’s pitchers’ improved ability to throw sinking fast balls to the bottom of the strike zone or just below it, and the catchers’ talent for “framing pitches,” making them appear to be strikes. This has reduced batting averages by 50 points. 

One of the beauties of baseball is that the players adjust over time. We are starting to see left-handed hitters learn to hit to an empty left field side, but power hitters who get paid for pulling home runs are still struggling.

Baseball could eliminate shifting. It is being tried in the Minors, but the game is very slow to change. 

I keep watching. The Cubs could be contenders in 2024 or 2025.

I miss you, Ernie Banks.

Question: Who will replace Tom Brady and Aaron Rogers as the great quarterbacks of this decade?

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Are We the Promised Land?

By Lloyd Graff

My family celebrated Passover this past weekend. It is called the “Holiday of Questions” for many reasons, but especially to pull children into the story of the Israelites leaving Egypt, hoping to reach the Promised Land despite all obstacles. 

My 6-year-old grandson is an inquisitive boy, and we enticed him to join the storytelling by promising him a prize for each good question he asked or answered. (He was the only youngster present).

The questions quickly gravitated to the Israelites being slaves in Egypt. He wanted a smart 6-year-old’s definition of slavery and slave masters and why the slaves desperately wanted to leave to get freedom. 

I wanted to educate him this Passover because I think he has no understanding about what bondage is, yet a drama similar to the Passover story continues to be played out all over the world and very dramatically here in Texas, Arizona, and California, as today’s equivalent of slaves pour into the United States. 

The Rio Grande river near Del Rio, Texas, could even be compared to the “Red Sea” or the “Sea of Reeds,” which the Israelites waded across to reach the promised land of Israel. Instead of Egyptians chasing them as in Cecil B Demille’s The Ten Commandments, they walk into a new country, facing armed officers, both with fear and hope.

Immigrants wading across the Rio Grande

“Give me your tired, your poor, your huddled masses yearning to be free,” is in the poem etched on the back of the Statue of Liberty. Could any verse be more representative of the slaves from communist Cuba and Venezuela wading across the Rio Grande, as well as the brutalized people from Honduras and El Salvador escaping tyranny and drug lords. And now refugees from Ukraine are congregating in Tijuana waiting to enter the country they pray will give them the chance to live in relative peace and prosperity.

I see this huge immigration to America as an economic opportunity for our country to restock with similar kinds of people as my grandparents and great-grandparents when they were crammed into the steerage of boats after walking to the ports of Russia and Lithuania in the early decades of the 1900s. Some went to Israel and South Africa, but most came to New York and Chicago because they had family who could give them a bed until they got a job. My great uncle Simon Pinkert met his wife, Ida Graff, in one of those Chicago houses. He was a baker who worked at night. She worked in the big house’s kitchen. The story goes that they both slept in the same bed, he in the morning and she at night, and then they met on the Sabbath. They had 12 kids, eleven survived. All were successful.

My wife’s maternal grandfather came on a boat at 16. He traveled the country as a peddler for years, and then started a clothing store in Raleigh, North Carolina.

I know many people see the undocumented immigration from Mexico as scary. They think the dirty and wretched folks wading across the border without papers pose a threat to this country. 

I see it differently. Our legal immigration system is a mess. We are supposed to have a lottery to admit 55,000 people a year. Last year we documented half of that number because the bureaucracy was missing in action, supposedly because of COVID-19. Many people entered the country on tourist visas and never left, hoping to find a legal way to stay or otherwise work the system to keep their ticket to hope. 

Many politicians and media hacks play immigration fear for personal gain by making illegal immigration seem to be our downfall. I see it as our future. The workforce has lost an estimated 3.5 million people in the last few years. Many people who could work have chosen for some reason not to work. These are not prisoners. They are dropouts for many reasons such as childcare, government welfare programs, laziness, depression, opioid and marijuana addiction, and many other causes. America desperately needs a shot in the arm to our workforce. Most of the waders across the Rio Grande are young and have many dreams. It wasn’t easy to get here. 

I am grateful we have our “Sea of Reeds” to give a chance to millions of people “yearning to breathe free.” Some will fail. Some will eventually go back to their old homes. But I believe most of them will contribute to the America my 6-year-old grandson and my newborn grandson will share with them.

Question: Should we send undocumented immigrants back?

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One for the Small Guy

By Lloyd Graff

I hate unions.

I love Amazon. I’ve made a bundle on its stock. Their delivery service was a lifesaver during the COVID pandemic. 

Yet the story of Chris Smalls and the first union victory against Amazon Corporation at one warehouse, JFK 8 on Staten Island, excites me. It is a classic story of underdog triumphs against the Godzilla of American corporations. 

Amazon had two union elections last week, Birmingham, Alabama and Staten Island, New York. Amazon easily crushed the corporate union types who spent lots of money and brought in professional organizers from New York City to wage their battle against big bad Amazon. 

Their problem was they were outsiders who were all paid and believed in the “union movement.” Their problem was that Amazon’s Birmingham workers were not angry enough at the company to jeopardize their wages and benefits that were so much better than the other job alternatives they had. 

Amazon bashed the union organizers in two straight elections in Birmingham. It wasn’t close.

The situation in Staten Island was totally different. 

The union in Staten Island was not part of any national organization. It was started by a pissed-off former employee who got fired for complaining about the working conditions at the huge fulfillment warehouse

Amazon pays well. $18 per hour to start for relatively unskilled people. But they expect employees to work hard. They closely monitor productivity, how many packages they sort, how many items they pack, and did they show up on time. They have cameras and computers continually checking up on people. 

There are a lot of hand and back injuries at fulfillment centers. Carpal tunnel is common. They would really like people to be replaced by robots, but robots are just not as productive as humans at this point. 

Breaktimes are short, warehouses are enormous. All in all, it is not a real fun place to work for many folks. Chris Smalls was one of those dissatisfied workers. 

Smalls is a single father, part-time rapper, and the kind of annoying guy Amazon hates, and they fired him when he started talking to other workers about his gripes and began discussing starting a union. 

Mighty Amazon totally underestimated Mr. Smalls. Angry and unemployed, Smalls started a one-man campaign against the trillion-dollar company. 

Chris Smalls organizing Amazon

He hung out with a sign at the bus stop where many employees came and went. He employed social media to be noticed and started a GoFundMe campaign. He had barbeques near the warehouse where employees gathered and traded their gripes. Volunteers, including some lawyers who understood how labor elections worked, counseled him. 

Amazon had no idea how to deal with this kind of guerrilla attack by somebody who knew the territory. They saw Smalls was starting to get traction so they hired ad agencies, lawyers, and union fighters from the outside. Mr. Smalls had more barbecues, started another GoFundMe round, and handed out a little free marijuana at get-togethers. 

Amazon knew how to combat national unions, but had no plan for combating an African American, 32 years old, dedicated local guy named Smalls. 

The irony of the story is that Jeff Bezos started Amazon in 1995 on a shoestring. He was born in poverty to an 18 year old mother. His father owned a tiny bike shop in Albuquerque. He retired this year to work on other ventures, especially going into space. 

Howard Schultz, his counterpart at Starbucks, just came back to the company he built to deal with a similar kind of union challenge. Schultz, son of a New York City cab driver, failed as a quarterback at North Michigan University and went to Seattle in the mid-90s to build his fortune in the coffee shop business. 

Amazon and Starbucks were models of American business success, and made their founders incredibly rich. 

Maybe these companies have now lost their ability to deal with their growth. The changed labor climate today has found weaknesses in their approach toward their workers. 

Is Chris Smalls the labor entrepreneur that Amazon and Starbucks cannot deal with? Is he a little bit like Bezos and Schultz were 35 years ago? We will find out in the next few years.

Question: Would you want to work for Amazon?

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Putin’s Folly

By Lloyd Graff

Why did Vladimir Putin start this war to take Ukraine?

I’ve heard and read a dozen theories about why he started this evil venture, which now appears to be both madness and failure. I think that a year ago or even a decade ago this invasion would not have seemed foolish to him because he was so blinded by what he saw as his destiny and his foes’ weakness. 

Putin grew up in the Cold War in the Soviet Union. His college was the KGB, which hated the West. He was stationed in East Germany when the Berlin Wall was pulled down, and it seemed like that sowed the seeds of revenge for the humbling of the Russia he loved.

Poland, Hungary, Romania, the Czech Republic, and the Baltic states dumped Russia as soon as they dared. Those events must have sickened him and left him with a burning rage. It appeared to grow as he got older and he shrewdly seized more power year by year. Putin never seemed to mellow with age.  

The KGB experience taught him to mistrust everybody. It also seems to have inculcated in him the belief that everybody could be corrupted and those who sought power and wealth were the easiest to corrupt and blackmail.

His corrupting of the German head of state, Gerhard Schroeder, must have reinforced this belief as he attempted to weaken Germany, the strongest European country economically, by making it almost totally dependent on Russian natural gas with the Nordstream pipelines. 

After Schroeder left government, he became the economic head of the Nordsteam company, though Putin and his henchmen held the real power. It was the ultimate buying of a prominent politician, and it must have confirmed Putin’s belief that he could own anybody by putting enough money in their pockets

Putin’s cynicism about Europe and America is limitless. He surrounds himself with KGB types, sycophants, and oligarchs who owe him their wealth and power. 

The photo of Putin sitting at the head of an endless table with generals and spies at the other end became the symbol of his regime. He isolated himself in his castle like a czar. He listened only to people who saw the world like he did. His observations of the prosperous Western countries surely galled him as his lust for power and revenge festered.

Russia took over Crimea in Ukraine in 2014 and then a Russian speaking region after that. If he could capture Ukraine, with its agricultural resources and its Black Sea port of Odessa, he would be well on his way to putting the Soviet Union back together. The Baltics would be pushovers. America was divided with no taste for war. The Afghanistan pull out only confirmed that view. NATO countries were captives to Russian energy exports and intimidated by his nuclear bombs and missiles as he saw it.

Vladimir Putin as the shirtless horseman

It must have seemed like the perfect time to invade Ukraine. Its head of state was an actor and former comedian, almost a perfect counterpoint compared to Putin, the virile shirtless horseman.

Putin trucked 150,000 troops into Ukraine and nobody raised a finger in Europe or America. NATO did nothing. It was all so easy. 

Then it all fell apart. Zelinsky stood up to the bully. Ukraine did not fold or give up. Zelinsky did not flee. Putin’s army was soft, and his tanks were the helpless elephants of WWII. All Russia could do was shoot missiles at civilian targets, kill helpless people, and destroy cities. 

Overnight, Vladimir Putin became the new Hitler. Western countries attacked the Russian economy with potent sanctions. He became a pathetic a joke. His reputation was shattered and the weaknesses of Russia—rampant alcoholism, an average lifespan of 10 years less than the rest of Europe, a bankrupt army, poorly led unmotivated soldiers, and a war criminal running the country—became obvious.

Vladimir Putin is finished as a world leader. He is a victim of his own folly, blinded by a pathetic desire to avenge the demise of the Soviet Union. Suicide is a more likely ending for him than a trial as a war criminal.

Question: How do you think the war in Ukraine will play out?

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The Fracking Revolution and Ukraine Part II, with Andrew R. Thomas—EP. 151

By Noah Graff

Nobody knows how the current tragic war in Ukraine will play out, but I hope that those listening to the second half of our interview with Dr. Andrew R. Thomas will get a little bit of new insight into how the conflict fits into the world’s energy economy.

Andrew is an author and business professor at University of Akron. In 2018, he published a book called American Shale Energy and the Global Economy. He also published a book in 2014 called Geopolitics, Development and National Security, Romania and Moldova at the Crossroads. His latest book coming out in 2022, is about the Panama Canal, The Canal of Panama and Globalization: Growth and Challenges in the 21st Century.

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Main Points

Where Ukraine fits into the current situation of Europe

[02:17] Andrew points out that the Russia has been at war with Ukraine for eight years, starting with invading Crimea. The rest of the world did very little in response, partly because United States was already in Afghanistan and Iraq. The US imposed a few sanctions to appease the media and try to demonstrate it was doing something, but Russia never faced real consequences for its actions from the US or Europe. People didn’t realize what had been happening until Russia ratcheted up the violence in the last few weeks.

What the Ukraine-Russia Issue means for Global Energy

[03:54] Andrew says the war in Ukraine is going to put a lot more unpredictability into the world’s energy system. When nations do not buy Russian energy in order to punish Putin, it dramatically alters global energy production, pricing, and availability. In the past the variable in the energy economy was energy suppliers who refused to sell, but in the current situation we have energy consumers saying they are not going to buy

Andrew says that companies cannot instantly start mining more oil and gas. It will take several quarters to “turn the spigot on.”

Canada Mining for Oil and Gas in the Tar Sands

[08:17] Before fracking took off in the United States, the Canadians had figured out how to extract oil and natural gas from tar sands. Tar sands contain a lot of energy, but extracting it is a very intensive and costly process. When oil prices were shooting up in the early 21st Century, processing oil from the tar sands made more sense.

The Environmental Aspects Mining Tar Sands

[08:51] A key issue with mining in the tar sands is that if it’s not managed properly the environmental damage can be huge. This makes it an expensive process. It requires a massive amount land, water, and labor, and can produce a lot of residue. Because we have been living in an era, starting with the fracking revolution, where the price of energy has been pretty low, mining in tar sands has not been that attractive. But if oil stays consistently at $120-$150 a barrel, there is a good chance for investment and activity going in that direction.

Is Putin “putting the Soviet Union back together?”

[10:10] Putin cannot to put the Soviet Union back together because that would involve many other states that are now in European Union and NATO. Currently, Russia is faced with several ongoing crises. One is a demographic challenge. The life expectancy in Russia is low, and Russians are not having many children. 

Putin is on the defensive. Russia has a lot of territories to defend. With the expansion of NATO and Romania joining the European Union, those organizations push right to the boundaries of Ukraine, which historically has been a buffer for Russia. Putin views NATO’s expansion near Russia’s borders as an offensive gesture. He does not want to see military bases and nuclear missiles pointed at Russia from such a close range. This fear is similar to what the United States felt when missiles were pointed at it from Cuba in 1962.

[12:55] Belarus is playing a very important role in facilitating the invasion of Ukraine. Russian troops have used Belarus to enter into Ukrainian territory. Rather than a reconstruction of the Soviet Union we are witnessing an alliance network in Eastern Europe, made up of Belarus, Russia, Moldova, and parts of Ukraine. This is a reconstitution of some elements of the Soviet state as it existed in that portion of the Black Sea region.

Timing of the Invasion

[13:28] It seems as though Putin timed the recent invasion carefully. The United States will not have reconstituted its military following the wars of Afghanistan and Iraq until 2028, according to the latest DOD estimate. Europe doesn’t want to get into a conflict. The United States does not want to send American soldiers anywhere to fight. Also, Andrew says that he does not think Russia would have invaded if it did not have China’s blessing. Russia needs China’s help to withstand the sanctions from Europe and the US. 

The Panama Canal

[17:48] The Panama canal was originally built to avoid developing a 2-ocean fleet navy. Yet, within 25 years after World War Two, the canal was rendered useless because US had created a multi-ocean fleet navy, and its ships were too big to fit through it. Eventually, President Carter gave the canal back to a dictatorial government of Panama, which the country has done a brilliant job running. Panama has made more money with the canal in the last 20 years than the US did in the entire time it ran it. 

In 2006, Panama decided to invest billions of dollars, about 15% of the country’s GDP, to expand the canal to handle larger ships. This timed well with the fracking revolution in the US. The US can now send ships transporting liquefied natural gas (LNG) to Europe and Asia through the expanded canal. The canal is also being used for transporting agricultural goods to Asia from Argentina and Brazil. 

America is reluctant to send troops around the world 

[21:09] The United States has become incredibly reluctant to intervene worldwide at a national level. Most people agree that the US exited Afghanistan poorly, but at the same time most Americans are still glad that we left. 

The nations of the world are realizing that the United States is not going to be the policemen of the world anymore, that the American people do not have the stomach to send their soldiers and their treasure to fight in faraway places. The US is spending less money on its global military, from 60% 30 years ago at the end of the cold war to around 40% today. Other countries are increasing their spending on their own defense because they know the US is not going to defend them. Andrew thinks we’re going to enter back into a period that will be much more dangerous, unpredictable, and violent.

Has the Green Energy Movement reached its peak ?

[26:07] Andrew says the European Union admitted it was impractical to reach its goal to sustain itself without fossil fuels in the coming decades when it quietly reclassified natural gas as a “renewable” in January.

Learn more about Dr. Andrew R. Thomas at https://andrewrthomas.us/

Question: Have you donated to help Ukraine? If so, how have you done it?

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What I Learned Driving to Work Yesterday

By Lloyd Graff

I backed my 2016 Acura sedan out of the garage and headed toward Bergstein’s Deli to pick up the chicken matzo ball soup I had ordered a few minutes earlier on the phone. 

It is six minutes away. I order it a couple times a week. A teenager delivers it to my car five steps from the entrance. I always give the person who delivers it a couple dollars tip. I figure they are poorly paid and I want them to stick around because I value the good service. I got in the habit during the pandemic of picking up the soup and I’ve continued it since. 

In the little strip center with Bergstein’s is an Asian owned nail salon on one side and an African grocery store on the other. Next to the grocery is a gaming shop, and next to it lies a newly opened “Dixie Food Store.” All tiny independent businesses.

Leaving the parking lot, I see an office building which has been converted into a dialysis center. On my way to Graff-Pinkert, I will pass a bank and two other office buildings that have been converted to dialysis facilities in the past three years. Obviously dialysis is more lucrative than vacant office space or local banking. 

Lloyd Graff in his parking spot at Graff-Pinkert

At my second stoplight after the deli, I hit a red light. A car drives up beside me with music blasting. I hear it loudly, even with hearing aids and my windows tightly shut in the 20 degree winter air. I know it is a cultural statement, but I am annoyed anyway. 

Soon I pass by my dentist’s office. He is an entrepreneur and has a flashing billboard in front of his recently-built office addition. He is advertising “walk-in cleanings.” Another irritant. 

In three minutes I pass a local shopping center with a Walgreens. It used to have a Starbucks and Panera Bread. Both closed, I’m guessing because they did not have drive-thrus. Panera’s space is still vacant, and the Starbucks is a pizza by the slice joint now. There are several other vacancies, but Walgreens still looks busy.

I pass several office buildings. Most are either for sale or advertising vacant space for rent. 

I’m getting close to my office now. I pass a Walmart and a bunch of fast food franchises. McDonald’s, Wendy’s, Sonic, Panda, Subway. Sonic is always empty, but the others are all advertising looking for workers. 

The shopping center takes up a small fraction of the space in this one square-mile acreage. Most of it has been vacant for many decades despite being across from I-57, an Interstate Highway. It is only a half hour from downtown Chicago on a good traffic day.

Two years ago, they started building massive warehouses in the open space. There are now four 500,000 square-foot buildings with 30-foot high cement wall buildings. Amazon occupies one, but the others appear to be empty. They are advertising for tenants. I’ve talked to the leasing agent and they sound very confident about filling them soon.

My 20 minute drive is now about finished. I turn into the Oak Forest Industrial Park. The building with a 20 ton overhead crane that my father built is now owned by another machinery dealer, but we have our offices in it and share the factory space. The 32,000 square-foot vacant lot next to the building has a for sale sign, but it is being sold as part of an Aldi’s grocery store, soon to be built. It will be a parking lot. 

I know the territory very well, but it keeps changing every month. 

***

What did I learn? 

First, treating kidney failure must be a lucrative business. Office buildings are a disaster area. Entrepreneurs in the kidney business obviously see opportunity in moribund office space. 

Second, if you do not have a drive-thru restaurant or delivery to your car, you probably are “toast” in the dining business.

Third, small businesses can still make it if they make good soup or do nails, but they have to be really good at it and run with a smile. 

Fourth, fulfillment centers are everywhere. People moan that they can’t hire people, but Amazon and others have figured out a way to lure them. 

Fifth, the amazing thing about America is that businesses will always come and go. The successful ones shift when they see an opportunity. 

The last business I have to mention is a funeral home located five minutes from Graff-Pinkert that has a primarily African American clientele. When they are not hosting funerals, they are doing COVID testing and vaccinations. 

Opportunity is always knocking while I keep driving to work.

Question: What changes have you noticed lately on your way to work?

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The Fracking Revolution and Ukraine, with Andrew R. Thomas —EP. 150

By Noah Graff

Today’s podcast is Part 1 of a two part series discussing the current state of the global energy supply and how it ultimately relates to the war in Ukraine.

Our guest is Dr. Andrew R. Thomas, author and business professor at University of Akron. He has published 25 books, most of them at the intersection of global strategy, business development, security and energy. In 2018 he published a book called American Shale Energy and the Global Economy. He also published a book in 2014 called Geopolitics, Development and National Security, Romania and Moldova at the Crossroads

Scroll down to read more and listen to the podcast. Or listen on your phone with Google Podcasts, Apple Podcasts, Spotify, or your favorite app.

Andrew started the interview by explaining the fracking process. Fracking is defined as fracturing the rock under the earth’s surface to extract trapped carbon fossils, particularly oil and natural gas. Fracking in the United States first began in the late 19th Century, in Titusville, Pennsylvania. People shot artillery shells down holes using old Civil War cannons to break up rock.  

By the 1940s, companies like Halliburton started experimenting with shooting water down holes in the ground to break up rock. The process pretty much remained the same until 1995, when Nick Steinsberger, an engineer at Mitchell Energy, discovered that by shooting water 20 or 30 times more intensely than had been done previously one could break up the rock enough to release substantially more oil and natural gas. Fracking suddenly had the potential to be a sustainable and profitable business. Other technological advancements in fracking were developed in following years, namely, drilling horizontally. In the mid 2000s the United States suddenly found itself energy independent for the first time in decades. Energy independence dramatically changed US foreign policy, which often had been dictated by its reliance on oil and gas from other countries, who were not always the friendliest to the US.

Dr. Andrew R. Thomas, author and professor

Fracking does have some environmental problems, which Andrew says have been significantly reduced in recent years. There are two main environmental issues fracking companies run into. Sometimes drilling can pollute drinking water if it is too close to the water table. In the fracking process the fluid that is shot down to break up the rock contains chemicals such as sulfuric acid and guar gum. Guar gum happens to be an ingredient in Twinkies, but it’s not a good addition to drinking water.

For a while, drillers didn’t know of a good way to dispose of the fluid they used for fracking, and sometimes they dumped it into rivers. Also, frackers dispose of fluid shooting it down into concrete-lined injection wells, going 20,000 to 30,000 feet beneath the surface of the earth. The fluid usually doesn’t leak, but the process can cause earthquakes because it’s done around geological plates. The US Federal government, primarily under the Obama administration, insulated itself from handling the environmental regulations of fracking by designating most oil and gas drilling under the jurisdiction of state governments. Most States with fracking industries have dramatically improved their environmental regulations for fracking. Unfortunately, Oklahoma and Texas have not self-regulated significantly. Texas happens to have the greatest supply of oil and natural gas in the country.  

In recent years, the private investment going into fracking has softened because releasing large amounts of energy resources into the world causes prices of oil and gas to fall, making the business less profitable. Also, energy producing countries such as Saudi Arabia and Russia flooded the world market with their oil and gas in an effort keep energy prices low, which would put American frackers out of business. Vladimir Putin even put out propaganda arguing the negative environmental effects of fracking. Some fracking companies did not survive the falling energy prices, but the ones who did survive improved their companies, coming up with new creative, more efficient processes. 

European countries, aside Great Britain for a time, have stayed away from fracking, primarily for environmental reasons. They don’t have a federalist system like that of the United States, which grants autonomy to state governments to make their own environmental regulations. Russia has enough easily accessible oil and natural gas that it has no need to frack. 

In 2010, Germany set a virtually impossible goal to no longer rely on fossil fuels or nuclear energy by 2020. During that period, the Germans became reliant on Russia to supply them with natural gas, which they deemed more environmentally friendly than other types of energy. Because it has become clear that for the foreseeable future they will remain dependent on natural gas, they have started building liquified natural gas (LNG) terminals that enable them to import natural gas from the United States. Natural gas must be converted into LNG when it is transported long distances. When it reaches its destination it then must be converted back to its former state.

The three largest importers of natural gas are China, Japan, and South Korea, and now there is an increasing demand for US natural gas in Europe because it is cheaper than most other sources. Andrew says China is in an energy crises right now. The country has had rolling blackouts since October because they don’t have enough coal and natural gas. In October, China started buying coal from North Korea (violating US sanctions). China also relies on Russia for energy, which explaines Putin’s visit with Xi Jinping a week before the Olympics. There is a pretty good chance they also discussed an invasion coming in the next few weeks.

Tune in next week to hear how all this relates to the war in Ukraine. 

Question: Would you mind if fracking was done near your home?

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Real Estate Populism

By Lloyd Graff

As Putin impersonates Hitler and attempts to steal a big piece of real estate with 44 million people, I’d like to discuss a few small pieces of the American real estate dream where ambitious folks are trying to build an investment safety net that will grow in value.

In the last five years, accelerated by COVID-19, Americans moved away from staying in hotels. They are seen as sterile, institutional, unsafe, and boring. The remarkable entrepreneurs who run Airbnb and their competitor Vrbo picked up on this trend early and figured out how to capitalize on it. When some observers saw the pandemic as their armageddon, they turned it into an opportunity.

Maybe pleasure travel would die for a while, but Americans travel from one place to another for millions of different reasons. Many are tired of hotel boxes, waiting at front desks, and sleeping on institutional beds with the wrong pillows.

The Airbnb business model is brilliantly thrifty in its use of capital. Let individual owners be the host. Airbnb is the enabler, the rental agent, who takes a commission off the top for their internet marketing, branding, and knowledge of the business. A multibillion-dollar enterprise was born from this contrarian idea. Conrad Hilton would have smiled if he was alive. 

In the last decade, hundreds of thousands of regular people have scraped together a few bucks, lined up bank loans, very cheap money until recently, and looked for properties, usually in areas they know well, planning to convert them into Airbnb rentals.

This week I spoke to a machinery business acquaintance who gave me a free education on building an Airbnb side business with his wife, who recently retired after 21 years as an airline attendant. Before entering the Airbnb business, Chris had little real estate experience, but he understood borrowing from a quality lender, the value of a well-connected real estate agent, and the power of the Airbnb brand. He moved from Chicago to Charlotte with his wife. His business office was his phone and home. He quickly realized that Charlotte was a spot that many people wanted to move to, and if he was ever going to take the property plunge, Charlotte was the place. 

Over the last few years, he bought three rental homes, all in Union County, a middle-class suburb outside of Charlotte, and gradually learned how to turn them into cash cows.

He told me the first thing to do when getting into the Airbnb business is to make sure an area is accepting of rentals and that there are no regulations to get in your way. A good real estate agent will know where to check before the buying process gains momentum. Chris, with his machinery selling experience, knew how to check the pricing comps and borrowing costs, which would establish price ground rules.

Airbnb, with its fees, takes around 14% of the rental proceeds. Short-term rentals tend to be more lucrative but require more work by a host. Cleaning costs money, bedding gets holes in it, and big parties alienate the neighbors quickly. 

Being an Airbnb landlord is a second job with a lot of annoyances, but Chris and his wife felt they could handle the task. They took the jump and bought their first house, hoping for the best. Over the next couple of years they purchased two more, despite the red-hot Charlotte home market. 

Chris’s wife welcomes each tenant and gives them a bottle of wine. She makes sure the towels are clean and ample. She is available in emergencies and Chris is handy enough to do a lot of repairs. 

 One house has been continuously rented by a single person whose own house burned down. Insurance has paid the rent for 18 months. That property brings in less money but is less trouble than the other two homes, which average 5 to 7 renter changes a month. 

Airbnb and Vrbo provide most of Chris’s renters. He says he and his wife average about $7,000 gross rental per month. For the lodgings with frequent renter turnover they try to screen the renters, but outward appearances can be deceiving. He said their biggest partier was a woman who was celebrating after earning her Ph.D. 

Chris would like to buy another property for short-term rental. The tax benefits with the depreciation have made these investments extremely worthwhile, but high prices in the Charlotte area have him sitting tight. Also, three homes are plenty of work for him and his wife at the moment. 

The Airbnb game is definitely not for everybody, but it seems like a nice side gig and a great opportunity to build wealth. It’s America, not Russia. Opportunity is all over the place if you have the guts and are willing to work. Have you tried it?

Questions:

What’s your favorite place you’ve ever stayed in your travels?

Would you stay at an Airbnb?

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