Danny L. Newton

http://uselessroads.org

34 Comments

    • Got Bubonic Plague? Get More Rats [view article]
      Why didn't the National Defense Scholarship loan program produce a similar problem? These loas were at about half of the going rate and payment was even deferred. I realize that the magniturde of the loans was below this housing situation and that assuming the recipient actually graduated, there was a good chance of eventually recovering the money. Maybe it was not poisonons enough to cause a problem but the government did step in and end the abuses. Sixty Minutes ran a special on how people took the money and ran. I suspect that the failure of this debacle created boldness for the bigger and similar home ownership push on easy creditWhy didn't the National Defense Scholarship loan program produce a similar problem? These loans were at about half of the going rate and payment was even deferred. I realize that the magnitude of the loans was below this housing situation and that assuming the recipient actually graduated, there was a good chance of eventually recovering the money. Maybe it was not poisonous enough to cause a problem but the government did step in and end the abuses. Sixty Minutes ran a special on how people took the money and ran. I suspect that the failure of this debacle created boldness for the bigger and similar home ownership push on easy credit. Oct 06 02:21 PM
    • Propping Up Home Prices Will Not Solve the Crisis [view article]
      How much of this problem is demographic? We are in a situation where two generations can be retired at the same time. Many people are leaving their home state and looking for cheaper housing in less aggressive, taxwise, states. Oct 06 11:27 AM
    • Jobs Contraction a Serious Story [view article]
      Lower employment can turn into more profits. So, as long as it is not your job on the line.... things could be getting lined up for a come back later. Manufacturing jobs dissappear at a rate of half of them every 23 to 25 years because of productivity gains. Oct 04 11:09 AM
    • Spain Approves Up to 500MW for Solar Projects in 2009 [view article]
      George Will made a similar observation Sunday when he suggested that all of the $700 Billion be converted to bridges to nowhere. I don't think Keynes really would propose spending money in a wasteful manner just to prime the economy. An accountant would calculate the Internal Rate of Return on an investment to try and optimize choices. The government has had in place since 1994 accounting rules that prevent the bureaucracy from implementing government programs that don't have a rate of return of at least 25%. Congress has no such limitation called OMB Circular 94. This, in my opinion, was the beginning of the earmark phenomenon since this would make a project possible from Congress that would be impossible to originate in a bureaucracy. Sep 30 09:52 AM
    • Taxing Trades: The Democrats' Bad Idea [view article]
      Would that make it harder for governments at the local level to peddle their bonds and notes? Or would they be among the many exemtion too? Sep 28 03:40 AM
    • A Magic Multiplier? [view article]

      I would really love it if my city, county and state government had a little less money to borrow. Is there any way to keep the good part of this "crisis?"       Sep 28 01:44 AM
    • A Magic Multiplier? [view article]
      You lost me at the point where holes were being dug and filled back in with no apparent purpose. I have a relative who thinks that unemployment could be eliminated by simply turning off the Social Security computers and letting the unemployed write the checks out by hand. I thought he was just a goof ball but now I know he is a Keynesian. I nor my wife have no genetic relation to this relative. But, my dad has lately gotten the idea of elimination Social Security all together by just waiting until the ratio of people on Social Security to paying into Social Security equals 1/2 and just have each of the people still paying in write a check to the one who is still living and eligible. Sep 28 01:42 AM
    • I'm Speechless: Palin on the Bailout [view article]
      No wonder that computer geek in Knoxville could not decrypt her e-mail and had to send it on the DNC for technical assistance.

      It was messy but I understood what she meant or should have said. The idea of tax reductions and reform being in such close proximity to health care probably caused a lot of cognitive dissidence in Katie Couric too. To liberals health care is abortion and free viagra. Tax reform is a more progressing income tax. Communication is bound to suffer when people do not even begin to agree on the definition of basic words.

      It reminds me of some artificial intelligence programs that take in human input and tries to compile a response that will fool the sender into thinking he is talking to a real person.       Sep 28 01:20 AM
    • An Open Letter to Congress on the $700B Paulson Bailout Plan [view article]
      Whoops should have been 304 Million, approxiamte population of the US. It is still about $2300 per capita. Sep 23 02:57 AM
    • An Open Letter to Congress on the $700B Paulson Bailout Plan [view article]
      $700 Billion divided by 340 million people equals $2302.63 per person. Sep 23 02:56 AM
    • Fannie, Freddie: Beyond the Balance Sheets [view article]
      I have never seen an example of using intangibles as a justification for the government losing money. In transportation, an attempt was made to use external benefits to justify policy decisions. The value of human life, accident costs and medical costs were in the mix for years but then the value of human life was raised at a rate that was six times the background inflation rate, some computer programs were developed to include air quality considerations. The whole system collapsed because everything and anything was suddenly justified by the overwhelming "benefits." External benefits and intangible benefits are an open invitation to abuse of taxpayer money. Government spending can be turned from productive to consumptive without policies that concentrate of internal benefits.

      Sewage treatment has enormous health benefits but even that can be run into the ground if treatment is designed to take water quality back to the Garden of Eden. Convention centers might be good or bad investments or even stadiums could be good ideas but, the real losses are in the calculation of the value of the intangibles.

      We have at least four counties here in Tennesseee that have their idle cash in Freddie Mac and Fannie Mae in spite of the fact that it is illegal according to the Comptroller Generals Office. It is OK to buy US bonds though.       Aug 24 02:16 PM
    • The Need For Risk Management and Its Implementation [view article]
      You don't need perfect vision to have success if you have a lot of experience and can see the pattern of failure. Insurance has been around for centuries and it worked in an environment with less information than we have now. Giving people credit that did not meet classic criteria was another noble experiment but it violated the concept of being more careful with other peoples money than your own. It is disturbing that so many seem shocked and suprised at the result. Dad always said that the "best lesson is a bought lesson," but I get the impression that we still have not learned the right thing yet. There are a few counties in Tennessee that are still investing in Freddie Mac and Fannie Mae for their cash reserves. The comptrollers office scolded them for doing so because they were not protected by the government. I guess the Comptroller was wrong... eventually. Aug 06 10:09 AM
    • Another Look at Fannie and Freddie's Mess [view article]
      Last year the Comptroller General of the state of Tennessee was still citing county governments for investing in Fannie Mae and Freddie Mac. Some counties sold off part of their positions after 2006 audits discovered the investment of idle funds in these institutions. Other counties invested in mutual funds which is also illegal in Tennessee. The laws have no teeth, you just get a nasty note from the Comptroller General. I have never heard of anyone getting fired or going to jail. Jul 30 10:22 PM
    • It's All a Matter of Incentives [view article]
      I think before you caould take that pacifier (FED) away, you would have to promise something more damaging. Jul 28 12:42 AM
    • It's All a Matter of Incentives [view article]
      About ten years ago, the congress ran away from pressure to put a lid on incentives that were being offered to retain industries like Daimler-Chrysler in Alabama. Nothing came of it and Tennessee recently has admitted to an incentive package of $500 million dollars to get a VW plant in Chattanooga. This is roughly equivalent to buying 20 percent of the first years production or maybe 28,000 vehicles. Legislative limits on incentives in Tennessee are set pretty high at not more than 10 percent of assessed property values. That would be four or five times the state and local budget for all but five or six of the counties with the most population. But the law only seems to pertain to borrowing money for incentives. Building up a war chest of tax dollars and using it for incremental real estate purchases and improvements is under the radar of the legislature. About $34 million per year is being socked away in these little county economic development war chests to be pulled out any time something industrial seems to threatened to go anywhere else.

      In 1956 the policy of incentives looked like it was working but in 1979, industrial employment started to fall and has been falling ever since because of productivity gains manufacturing. The high paying jobs also create an incentive to mechanize to get rid of that cost area. In the last ten yeas industrial jobs have been disappearing at the rate of 2.7 percent per year or dividing in half about every 25 years. According to output figures, US manufacturing is the same 21 to 22 percent of total world production in spite of all of the claims that the jobs are going overseas.

      According to the Bureau of Economic Development, the state and local taxes average, in 2007, 8.5% of all personal income. That would mean that the state and local government could expect to get that tax investment back by simply taxing the next $5.88 billion dollars of income. To get an equivalent stream of annual payments over 30 years at 4.5%, the average wage at the new VW plant would have to be about $87/hour.

      The state that does the best in this deal probably won't be in the US. Instead, it will be the state of Saxony in Germany that owns 20% of VW. Incentives always look good at the beginning but VW pulled out of Pennsylvania after about ten years and the 1999 Deal with Daimler-Chrysler in Alabama may not look so sweet if Chrysler finally folds its tent. Honda is also cutting back production in Alabama.

      Apparently, the state of Tennessee is betting on the spin-off jobs that are found in surrounding factories that make sub-assemblies. This job multiplier effect makes any irrational exuberance about incentives seem like a trifle. Fortunately for the proponents of incentives, the hard data developed at the Bureau of Economic Analysis won't come in until at least two years after the fact. This leaves the politicians plenty of time to take the credit and figure out the excuses...just in case.       Jul 27 10:55 AM
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