Danny L. Newton

http://uselessroads.org
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    • Tue Sep 23rd 02:57 AM | Rating: 0 0
      Commented on:
      An Open Letter to Congress on the $700B Paulson Bailout Plan
      Whoops should have been 304 Million, approxiamte population of the US. It is still about $2300 per capita.
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    • Tue Sep 23rd 02:56 AM | Rating: 0 0
      Commented on:
      An Open Letter to Congress on the $700B Paulson Bailout Plan
      $700 Billion divided by 340 million people equals $2302.63 per person.
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    • Sun Aug 24th 14:16 PM | Rating: 0 0
      Commented on:
      Fannie, Freddie: Beyond the Balance Sheets
      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.
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    • Wed Aug 6th 10:09 AM | Rating: 0 0
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      The Need For Risk Management and Its Implementation
      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.
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    • Wed Jul 30th 22:22 PM | Rating: 0 0
      Commented on:
      Another Look at Fannie and Freddie's Mess
      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.
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    • Mon Jul 28th 00:42 AM | Rating: 0 0
      Commented on:
      It's All a Matter of Incentives
      I think before you caould take that pacifier (FED) away, you would have to promise something more damaging.
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    • Sun Jul 27th 10:55 AM | Rating: 0 0
      Commented on:
      It's All a Matter of Incentives
      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.
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    • Tue Jul 8th 11:56 AM | Rating: 0 0
      Commented on:
      Government's Inflation Statistics Not Fooling Everyone
      At least back to the Carter Administration, the federal government has taken the position that the CPI is overstating inflation because it assumes that major purchases like housing take place every year. Pay raises for federal employees thus tend to be 50% to 75 % of the CPI.

      State Highway Departments claim that their costs are rising at nearly 7% per year. The Federal Highway Administration has been maintaining an index of historical costs to compile their indexes while the traditional and typical discount rate for 25 year estimates is usually only 3%.
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    • Tue Jul 1st 14:53 PM | Rating: 0 0
      Commented on:
      The Next Phase Of The Financial Crisis
      If the government was is allowed to attack wicked windfall profits with even more taxes or carbon taxes, I don't see how any kind of recovery is in the near future.
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    • Sun Jun 29th 15:52 PM | Rating: 0 0
      Commented on:
      Endless Winter for New Home Sales
      Does anybody think that there is a demographic component to the housing slump? It seems like the number of people that need to chase jobs to new communities is going down because the baby boom demographis is starting to have an effect. Does anybody think that there is a demographic component to the housing slump? It seems like the number of people that need to chase jobs to new communities is going down because the baby boom demographic is starting to have an effect.
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    • Fri Jun 20th 15:28 PM | Rating: 0 0
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      Election 2008: Obamanomics and Its Achilles' Heel
      I would like to see more spending on public infrastructure but not if it is for the wrong reasons. It is presumed that "investments"... in roads always generates a cornucopia of benefits. This mantra has been chanted so often at Chamber of Commerce Meetings that it is unassailable with any statistic or dose of reality. In the past fifteen years, the government has been collecting and generating data to prove the negative impact on the economy of delays. This is a corollary to the idea that roads always produce benefits.

      The problem, as I see, it is that there is no way that will discriminate between consumptive and productive infrastructure "investments.&quo... The will to bow to an objective system of project selection is just not there. Since at least the 60's there have been in place mechanisms that assign value to human life and the cost of accidents and property damage in order to discriminate between a bad project and a worse project but the input has been cynically manipulated by invented, intangible or external benefits that makes any action look good. The value of human life has gone up about 6 times the rate of inflation in the last 40 years and once you do the carbon foot print analysis and the asthma death calculation, it seems like every project has a moral imperative.

      According to the General Accounting Office, a government program should have a benefit equal to 125% of the cost. That has been on the books since the Clinton Administration. The only thing that it has deterred is the Federal Highway Administration from launching a program to help state highway departments build roads for the purpose of generating economic development.

      Accountants or engineers with accounting skills have been marginalized in most highway departments least they protest silly infrastructure expenditures that are earmarked by congress. Other infrastructure work such as levees and dams are quite controversial and not likely to be built except after a disaster proves their worth. Water infrastructure is also in a state of neglect. The glitzy solution of desalinization has proven more expensive than the lab models actually predicted. Traditional methods of supplying water are no longer thought to be environmentally friendly. Train and Light Rail investments are pushed even though they account for less than 1 percent of all passenger miles traveled. Even in New York, most passenger miles are consummed by bus. Some seats on these trains cost $60,000 each and their survival depends upon the gasoline taxes produced by the private automobile. The length of pipeline transport infrastructure is actually shrinking every year since the sixties by About 0.4 percent per year of pipeline length is lost every year. Some gas lines have been ordered to lower pressure because of their age and corrosion. Airport congestion can only be improved with new runways. The entire Interstate needs to be upgraded to a six lane minimum east of the Mississippi.
      The phenomenon of toll roads proves that there is value it road infrastructure but it is not easily exploited. People will pay to go where they want to go but they do not want to pay so someone else can go somewhere in a bus, train or personal auto in a donee state. Accountants can easily prove a toll road is a good and sustainable investment by applying strict rules that have served the capital markets well for years. They do this however by ignoring external, theoretical and questionable benefits and just focus on the fundamentals of the Internal Rate of Return.
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    • Tue Jun 17th 00:09 AM | Rating: 0 0
      Commented on:
      A Closer Look at the Impact of Higher Gasoline Prices on Driving
      After the next election, there is likely to be an even bigger increase in gas prices to fund the next transportation bill. The House and the Senate. After the next election, there is likely to be an even bigger increase in gas prices to fund the next transportation bill. The House and the Senate have separate versions but neither can be funded with the existing pay-go rules. That means a rather large tax increase. Once the feds raise the taxes, the states will have to raise taxes to match the new money created.

      In 1980 there were 28.6 people per lane mile of road in the United States. In 2004 there were 35.1 people per lane mile. The infrastructure is shrinking with respect to the population increase. This shrinkage is more profound in urban areas but some rural areas are now experiencing congestion. The percentage of trucks on the road is at a level that was never predicted 35 years ago. This policy is a threat to productivity.

      The inflation adjusted price of a new car is actually down from 1990 to 2005 in spite of government edicts on safety and fuel economy. That trend can not however compensate for the increase in gas prices and deferred construction and maintenance of the road infrastructure. The cost of transportation has to go up and the area that people may roam looking for and commuting to a job is shrinking. States with large dependency on sales taxes are going to be wanting to invent new ways to pay for their activities. The consumption of this national asset has helped the economy restructure itself but can not continue indefinitely.
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    • Fri Jun 6th 21:05 PM | Rating: 0 0
      Commented on:
      State Cutbacks Will Deepen Recession
      The local governments where I live have a chronic problem with the retirement system. The average salary must grow 4.75 per cent per year to maintain stability. This causes them to always be looking for some other human depravity to fix. The damage to the economy by less government spending will be according to the items they quit doing. Not everything that the government does is helpful, wanted or promotes the productivity of others.

      The transportation sector has been spending less every year because the gain in fuel revenues is way behind the costs of construction and maintenance. Even if the taxes rose to the CPI Index level, they would still have a problem. Not all states will hit the wall at the same time but the warning signs will be that there is no money for routing maintenance and plenty of money for highway beautification, museums, bike trails, road kill prevention and other low quality investments in transportation.
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    • Sun May 25th 16:12 PM | Rating: 0 0
      Commented on:
      Recession: The Forgotten Indicia
      The federal government has rules about contracts that try to push activity toward areas of underemployment or "labor surplus areas." There area also economic criteria for the government to qualify counties as economically under-performing. This designation has expanded the help given to real Appalachian areas to states all over the south. Unfortumately, the number of qualifying counties seems to expand no matter how good the times are. Instead of being proof that the program is not working, it seems to some to be proof that more redistribution needs to be done. The federal government has rules about contracts that try to push activity toward areas of underemployment or "labor surplus areas." There area also economic criteria for the government to qualify counties as economically under-performing. This designation has expanded the help given to real Appalachian areas to states all over the south. Unfortunately, the number of qualifying counties seems to expand no matter how good the times are. Instead of being proof that the program is not working, it seems to some to be proof that more redistribution needs to be done.
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    • Sun May 25th 10:37 AM | Rating: 0 0
      Commented on:
      Blowing the Bubble Bigger
      I don't see anything that a government can or is likely to do to mitigate a bubble. The definition of a bubble here, if applied to education, might be vaid. You might still be having a bubble effect in the case of declining investment if investments were in the wrong things. This might apply to transportation in cases where money was spent on ineffective modes of travel like public transit and economic efficiencies were measured in cost per passenger mile.
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