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  • Why Do Recessions Occur?... One Answer Points To Productivity [View article]
    To Salmo trutta

    << ... time deposits are not irrevocably lost to investment until destroyed. >>

    I'd have to disagree: Time deposits are never lost to investment, they can always be liquidated and invested. Much the same as the money under my mattress.

    Even the "destruction" of time deposits is debatable, unless you specify that when a bank fails, someone does lose the deposit, be it the account-holder or the taxpayers.

    I'm thinking that you're not focusing.
    Oct 28, 2014. 04:47 PM | Likes Like |Link to Comment
  • Why Do Recessions Occur?... One Answer Points To Productivity [View article]
    To The Angry Bear

    << The key is that the productivity gains during the increased unemployment of the recession are not lost as unemployment comes down. >>

    You're torquing the wrong key in the wrong lock. This idea that "productivity gains are not lost" is not borne-out by your graph of productivity, above. Productivity is clearly shown falling after a recession ends, presumably because workers are hired at a faster rate than production is increased.

    Productivity can be reduced (or increased) if price changes require (or allow) new production methods. This is true regardless of a recession or boom. For instance, what if the supply of Oil were suddenly restricted due to war or some cataclysmic event? Seems to me the production of food would suffer mightily … and that would have resounding effects aroundthe globe.

    << Thus the growth spurt in productivity from fewer people producing more, is incorporated into the recovery. >>

    May be, may be not. No one can say nothing was learned (such as technology which increases productivity) during a recession, but you certainly cannot say anything was learned or "unlearned" because of a recession. So it seems like there's nothing that can be said. Sorry to be so nihilistic.

    Productivity has been marching forward relentlessly, no?

    << Reading your reasoning, one might think that as people were hired back on during the recovery, productivity would fall back to its starting level before the recession, but it never does. >>

    Why would I ever say what you attribute to me? Putting words in my mouth is not being nice.

    << That is the key to understanding how productivity is released through a recession. >>

    Again, the wrong key in the wrong lock. You are presuming something good occurs (is released) because of a recession … why you believe such a thing is the question. Sure it could happen, but it's impossible to prove that it was "due to" or "because of" a recession.

    It's really difficult to put a positive spin on recessions unless you're a strict follower of Hayek.
    Oct 28, 2014. 12:27 AM | Likes Like |Link to Comment
  • Daimler Closes Tesla Hedge, Dumps Shares, Grabs Cash, Runs [View article]
    << Roads are crowded, and high petrol taxes keep their use down. >>

    The 60% gasoline tax hasn't already resolved the problem of crowded roads?

    Sounds to me like the UK should end the gasoline tax and institute a toll on the most crowded streets, a toll that gets higher as peak usage occurs.

    Also sounds like the UK would prefer EVs encouraged in the most crowded streets to reduce pollution. As well as avoiding growing reliance on a nonrenewable.

    It's a debate for the public to weigh in on.
    Oct 28, 2014. 12:13 AM | Likes Like |Link to Comment
  • Why Do Recessions Occur?... One Answer Points To Productivity [View article]
    To Salmo trutta

    << An expansion of CB time (savings) deposits is prima facie evidence of a leakage that collects in the form of unspent balances. >>

    How can an expansion of CB deposits be prima facia evidence of any kind of "leakage" when CB deposits can be expanded through Open Market Operations, or simple bank loans?

    And the "leakage" is in the form of unspent balances? What, do you think money magically disappears every time it's spent? No sir, money can be neither created nor destroyed by anyone, other than the Central Bank. Spent money just ends up in someone else's bank account, unlike unspent money, which goes nowhere.
    Oct 27, 2014. 07:13 PM | Likes Like |Link to Comment
  • Daimler Closes Tesla Hedge, Dumps Shares, Grabs Cash, Runs [View article]
    To Solucky

    When you say "a family of four" do you mean 4 average drivers? How did you arrive $65 billion, have a link?

    So, why would any government place such a high tax on gasoline? Most people know it's weather and heavy 18-wheel trucks that destroy roads, not motor cars. It would make more sense to put the cost of road repair with society at large, or the truckers, and not pretend that motorists destroy roads. Seems likely that the tax is instituted to protect the economy by steering it away from fossil fuels, which means conservation and alternative fuels.
    Just my guess from 4000 miles away in a different culture and language.
    Oct 27, 2014. 07:04 PM | Likes Like |Link to Comment
  • No Risk Of Inflation If Velocity Of Money Is Falling? [View article]
    To Mr. Hansen

    I concur with David de Los Angeles, above.

    I also point out that the quadrupling of the "MZM money supply per capita" occurred over a 34-year period, which translates to an average annual growth rate of merely 4.16% / capita / year.

    No big deal.

    ... hardly newsworthy, especially considering that that 4.16% does not
    "all" turn into inflation if productivity improved over the 34 year period, (which it did), because there's more money chasing more goods.

    And, I should note that although the Fed only recently announced a "Official Target of 2% Inflation" (in January 2012), the Fed has long been desirous of avoiding deflation (as it has little power to fight deflation) and favoring a little inflation (as an unofficial buffer from deflation) and I personally believe the Fed's fear of deflation is a meaningless "instinctive reaction", much like a knee jerk reaction ... and yet my criticism of the Fed's fear is my own knee jerk reaction, nothing more.

    It's quite possible that a little inflation is good for the economy for a wide variety of reasons.
    Oct 27, 2014. 04:23 PM | 1 Like Like |Link to Comment
  • Daimler Closes Tesla Hedge, Dumps Shares, Grabs Cash, Runs [View article]
    To Davemart

    << Ex tax (60% in the UK) fuel prices in Europe are around the same as in the US. Governments can't afford to do without that ... >>

    I wonder about your conclusion.

    Assuming the average annual miles driven by a UK motorist is 12,000 and the average fuel-mileage is 20 mpg and the average ex-tax price is about the same as in the US (say $4/gallon), then it seems like the average tax revenue generated is roughly $1400 per motorist per year (which is, yes, in dollars rather than pounds or euro's, but I'm sure you'd get a similar answer.)

    That doesn't seem like a lot for a government "to do without", especially if the real reason for the high tax on gasoline is to prevent the economy from becoming too dependant on a fuel that is not locally produced, and whose price is subject to political instablities, as well as finite resources.

    Of course, you could say much the same thing about electricity, but with less conclusiveness when solar panels and wind turbines are viable products.

    Some governments find great value in creating a stable economy. It seems to me that it's more relevant to ask if the taxpayers will object to letting the EV owners get a free ride, and if that free-ride is ended, then will the EV buyers walk away from the market.

    Seems to me that you've jumped to the conclusion that you've been pushing all along.
    Oct 27, 2014. 03:55 PM | 1 Like Like |Link to Comment
  • Why Do Recessions Occur?... One Answer Points To Productivity [View article]
    To The Angry Bear (Edward Lambert?)

    << You will see that productivity has a tendency to accelerate through the recessions. Productivity has a natural tendency to increase due to innovation. So why are recessions part of that process to higher productivity? >>

    As any typical recession begins, firms lay-off or fire workers faster than production is reduced. Yes, GDP is reduced, but the ratio of workers' hours-to-GDP is reduced as well. When fewer labor-hours are engaged to produce one "unit" of GDP, well, that's the improved productivity during the recession that you're wondering about. It's not entirely good, nor entirely bad.

    Why does an economy go into a recession? Those reasons are lumped into two broad categories: Demand Shocks, and Supply Shocks. But let me ignore those two issues because I'd rather say this:

    It seems too shocking to even suggest that the economy is simply an imperfect machine (or process) because it's run by fallible humans who make predictions of fickle humans (i.e., consumers) who buy the products of production.

    For example, when production (i.e., supply) is inadvertently higher than demand, that creates a build-up in inventories, which forces business leaders to either lower prices, or cut production, to liquidate inventories.

    The Classical Model says that if prices can be lowered, profits won't vanish because the costs of producition are also being reduced (by the forementioned lower prices). Thus the economy can avoid reduction in production and employment.

    But as Keynes pointed out long ago, roughly 70% of the cost of production is wages, and wages can't be reduced when workers have fixed commitments like mortgages, car payments, rent, credit cards and all the other trappings of a debt-based life.

    So, firms can't reduce wage rates (without risking lowering morale, or a labor-strike), so instead they lay-off or fire employees, and reduce production, which leads some of us to marvel at the obviously improved productivity during the course of a recession. Oh, and consumers consume less when they are trying to pay-down their credit cards, which means 'consumption' is a bit less predictable, and more volatile.

    Or, for example, sometimes the market is irrational. Sometimes stock and bond prices rise too high, and then rise no more, or fall. That too can have a chilling effect ... unless the Fed is committed to preventing that chilling effect by providing more liquidity. Now the big question is "Is an injection of more liquidity always a good idea if we're not facing a deep recession, or is there some point at which this idea is NOT so good?"
    Oct 27, 2014. 03:19 PM | 1 Like Like |Link to Comment
  • Market Greets Tesla Game Changer With Yawn [View article]
    to cparmerlee

    << Let's say we had the means to economically produce a liquid hydrocarbon fuel by using energy from solar panels and wind turbines, and let's say this process was carbon neutral. (i.e. we removed carbon from the atmosphere while synthesizing the fuel, and then returned the same amount of carbon when powering the vehicle. If we had that, would anybody seriously be thinking about EVs for other than the smallest vehicles? >>

    The answer is "YES, I would still be interested in an EV." And yes, that's admittedly just one individual's opinion, but that's all yours is, as well.

    And I have to ask why you bring up the idea of creating fuel by pulling CO2 out of the atmosphere, because although it sounds like a great idea, it is nowhere near plausible. The best that could be done in 2013 was to create a slightly more expensive liquid fuel in small batches ... and this required pulling a small amount of the CO2 out of a coal-fired plant's smokestack.

    << The point is there is nothing inherently bad or evil about ICEs. >>
    An opinion.

    << They are actually a very compact and reliable way to provide the speed and range people want. The only issue is the fuel cost and its carbon implications. >>
    Well, that's not the only implications in my book, thank your very much.

    << And today's reality is that the Tesla is far worse on economics than ICEs and not much better on carbon. This is an equation that simply doesn't make sense today. >>

    I have to disagree. How you or I value a product can be quite different, and yet neither of us be wrong.

    Look at item A's "market price": there will always be buyers who were willing to pay more than the market price (and are quite happy with their acquisition of product A), and there will always be others who did not buy product A, and are quite happy or even smug about having bought product B instead.

    But if you look at product B's "market price" there will always be buyers who were willing to pay more than the market price (and are quite happy with their acquisition of product B), and there will always be others who did not buy product B, and are quite happy or even smug about having bought product C instead.

    In other words, the world is not quite as simple as it seems to one individual.
    Oct 13, 2014. 05:31 PM | 1 Like Like |Link to Comment
  • Tesla: In The Face Of The 'D' Hype, We Stick To Our $210 Target [View article]
    I've owned a 911 and 2 Boxsters. I've experienced LTO countless times in each of the 3, but that's only because I coaxed the car into it as I wanted to see what it would take to get LTO and what was required to right it. Never wrecked my Porsches.

    Boxsters are very neutral, harder to get into a LTO situation, because they are indeed mid-engined as you state. I glossed that over.
    Oct 9, 2014. 07:25 PM | Likes Like |Link to Comment
  • Tesla: In The Face Of The 'D' Hype, We Stick To Our $210 Target [View article]
    To Skeptic

    If you'd kindly review my posts on this subject, you'll realize that I was talking about the 356, 911, 912 and Boxster which are ALL rear-engined.

    And they all suffer from lift throttle oversteer (LTO), albeit less so in more recent years, or those with smaller engines (912, and Boxster 2.7). And LTO occurs with a subtle change in torque on the rear wheels ... it's not going to create much of a weight transfer which is what causes the geometry of the suspension to adjust the toe.

    LTO is not about braking, it's about being in a tight turn, and the driver getting cautious and lifting up on the throttle. Unfortunately, inexperienced drivers are surprised that their cautiousness had resulted in something quite unpleasant: the rear end lifts up a bit when the acceleration ends, and breaks loose from the pavement and you're probably out of control because it happens very quickly, its unexpected, and a bit more than half the weight of the car is carried on the rear wheels.

    Experienced Porsche drivers know that smooth acceleration (through the same tight turn) will actually keep the car glued to the ground because the rear end "sits down" and all that weight of the engine gives the car a lower center of gravity.

    I mentioned downshifting because in a lower gear, LTO is increased. Sorry if you missed that.

    BTW, the "911 Carrera 4" was not originally created to improve traction as many believe, it was a safety feature which practically eliminated lift throttle oversteer as it added about 100 lbs to the front end and all four wheels expereinced negative torque at the same time (within 1/100 of second of so).
    Oct 9, 2014. 12:07 PM | Likes Like |Link to Comment
  • Tesla: In The Face Of The 'D' Hype, We Stick To Our $210 Target [View article]

    Sounds you think all the older Porsche suspensions are just like all the older Corvette suspensions.

    Sounds like you think lift throttle oversteer (LTO) was long ago resolved by the simple application of semi trailing arm rear suspensions due to the fact that LTO was not really caused by reduced tire load during weight transfer.

    Perhaps we should have started with the definition of LTO.
    Oct 8, 2014. 01:53 PM | Likes Like |Link to Comment
  • Bill Fleckenstein Does Misunderstand Monetary Policy [View article]
    To netbluesky

    << The facts are the facts, interest rates have been dropping, dropping, but the amount of loans has been going down, not up. (although recently that decay has stopped.) >>

    It's pretty well established that for most products and services, when the price drops, demand for the product or service increases. When the interest rate drops (ie the price of credit) one ought to be able to reasonable infer that the demand for credit ought to increase. Let's look again at your "beer" example:

    << I stand by my claim that more beer in the cooler does not induce people to drink more beer; unless it was beer they already bought >>

    I still disagree, because all you're saying is that in your world, the cost of a beer does not change no matter how much beer there is. Well, I'd say that when the world is awash in beer, every pub will have to lower the price of beer to sell all the beer. It's called the "Law of Demand". There are very few products that disobey that law. I think they are called Veblen goods or something like that. I'm pretty sure the demand for beer obeys that Law, and I'm wondering about whether or not the demand for credit obeys that same Law ... I think the answer may be that the Liquidity Trap prevents it from obeying.

    The Fed purchases bonds on the open market. they compete with the world. The volume of fed purchases can have a temporary effect on bond price and yield ... but that's it. >>

    Now you're contradicting yourself, and agreeing with me in the end.
    What else could I possibly have meant?

    << As for higher standards for loans; yes this is true especially after the ridiculous low standards that created the real estate bubble to begin with.
    I have heard that standards have returned to about normal. >>

    OK, sounds like we have little disagreement.
    Oct 8, 2014. 01:24 PM | 1 Like Like |Link to Comment
  • Bill Fleckenstein Does Misunderstand Monetary Policy [View article]
    To David de los Angeles

    << Right now, despite record low interest rates, business loans are at low point. Businesses borrow when they can invest the borrowed money and produce a profit. >>

    Businesses also borrow to replace loans at higher interest rates.
    Businesses also borrow before they need to borrow, because later when a business "needs" or "wants" to borrow, the funds may not be available (because of tightening) or the funds may be expensive.

    Successful businessmen are good at thinking ahead. Economists recognize such planning as due to rational expectations.

    But I suppose you're right, it doesn't have to happen.

    My original statement was that at low interest rates the market does not seem to clear because there's lots of people who want to borrow, if not for investment, then consumption ... but do not qualify for loans. Certainly there are a lot of people who have credit card debt at 15%-18% who would love to get a low interest rate loan.

    And I'm sure there are a number of people who have ideas for business investment, who cannot get funded by a bank, but would be funded when rates rise.
    Oct 8, 2014. 01:01 PM | 1 Like Like |Link to Comment
  • Tesla: In The Face Of The 'D' Hype, We Stick To Our $210 Target [View article]
    To Lensman

    << Even in-wheel motors will have efficiency loss from the tire/road interface. Tires flex when they roll; the flexing loses energy. >>

    And there will be another more subtle form of loss: the increase in unsprung weight means that more kinetic energy will be lost to vibration.

    To guage this loss, you analyze the loss of "forward" momentum. For instance, if you roll a spare tire at 10 mph and it hits a small rock, the wheel has (theoretically) lost no momentum at all ... but because it is now bouncing up and down (i.e., the bump translated some of the "forward moemnentum" into up/down momentum) the car now has less forward momentum. (The shocks absorb the up/down movement, as designed.)

    Momentum is a vector.

    Thus, a car riding on heavy wheels loses more "forward" momentum than does a car with light-weight wheels, the motor must replace the loss on foward momentum to maintain any given steady speed. The larger the loss of forward momentum, the larger the energy required from the motor.
    Oct 7, 2014. 07:15 PM | Likes Like |Link to Comment