Danny Newton

Charlie Munger: 'We've Screwed Up'

Why are the economists being singleef out for bad accounting? How about teachers that insist on social promotion? Isn't that dishonest accounting too? A system with no accounting is our transportation system. Only Toll roads are crafted so that income from the toll meets or exceeds the costs. Still, there are many toll roads that never inflation adjusted the tolls and eventually over their service life became wards of the gas tax as well as the toll tax.

The Coming Economic Collapse, Part 1

The Fantasy Economy is just getting a good start. You ain't seen nothing yet. My local county government is expanding and keeping taxes low by borrowing more money so the Parasitic Economy and the Fantasy Economy are joining forces against the Productive Economy.

As the Dollar Continues to Collapse, Where Will You Put Your Money?

Check the dollar against the Peso. It was 15 to one dollar in March and it is 13 to one dollar now.

Are Airlines Going Bankrupt Again?

Europe uses its rail for passengers mostly and the US uses rail mostly for freight. Freight does not complain and does not mind going an average of 15 MPH as long as the delay is coordinated. Both Europeans and Asians prefer to use their own cars in spite of taxes that discourage it. MAGLEV is too expensive. Making MAGLEV work technically is a lot easier than making it work financially. MAGLEV can travel on steep grades that steel on steel traction could never negotiate. You can build several miles of four-lane Interstate for the same cost as a single lane of MAGLEV The Interstate can carry many more passengers per day and even accomodate trucks. The Interstate is also open 24/7 every day of the week. Passenger Trains died long ago but we still have them on life support by socializing the costs. All it takes is one or two people in the right place to be honest about the viability of trains and they will be moved to Disneyworld and museums. Trains moving freight still have substantial value and are being made to carry heavier loads on better track. Further, they should be allowed to travel without crews, as robots controlled from a central point.

To compete with an Interstate, a MAGLEV would have to carry about 100,000 passengers per day per mile. Some kind of transit or secondary conveyance would be required at the beginning of and the end of the MAGLEV trip. The Japanese high speed train system is supported with an impressive train,bus and taxi system over land that is about 6 times more densly populated than anything in the US. All of these disadvantages will deter no one who is not interested in optimizing throughput or passengers past a fixed point. If the efficiency of leaving New Orleans via automobile before Katrina makes no impact on anyone versus the failure of bus and train to evacuate any substantial number of people I doubt that any appeal to rationality is going to be viable. I suspect that high speed trains will be hidden in substantial shelters in the event of hurricanes much as airplnes are ferried out of harm's way in bad weather.

Top U.S. Utilities Grow Solar Power Despite Recession

Making solar cells is a very energy intensive process. That could be why two companies have moved to Tennessee. About 30% of the power here is atomic energy, about 7% is hydro. There is also evil coal burning away to make those solar cells.

The per capita consumption of vehicle miles traveled in this state is around 12,000. Some states with high fractions of urban populations have a lot less per capita consumption. Range of the vehicle is still a factor in most of the country. I would not want to experiment with forcing people to lower their driving for fear of making the foraging distance to current or future jobs substantially less. Less choice usually means a poorer quality of possibilities for both employee and employer. There are still a lot of people driving 50 to 150 miles a day to go to work.

Making cars get better gas mileage has, in the past, only increased driving. Forcing less auto use could also depopulate the areas of the country where cost of living is lower. Commuting seems to be a benefit to large urban areas in that they can get cheaper labor without enduring the full force of the infrastructure costs to support the population on a 24/7 basis.

Social engineering always makes me nervous since the counterintuitive effects seems to be the rule rather than the exception. The fraction of income spent on transportation has been below 10 percent once and above 12 percent once in the last 40 years. If disposable income continues to decline through taxation, inflation or other factors, it is highly likely that there will be a response... I just don't know what it will be and I am not sure that after discovering the down side, we will have the will or smarts to change course.

How the Crash Will Reshape America

As long as labor is the biggest cost component in manufacturing, the cost of labor will be a target of innovation. The same thing has happened in the construction industry. I was trained by engineers that experienced construction as an effort that was 30% labor and 70% materials cost. These percentages are reversed. The same is true for manufacturing. The dollar amount of manufactured goods is still rising every year but is slightly and chronically below the inflation rate. In Tennessee the number of government workers will exceed, possibly this year, the number of industrial workers. The BEA revised the definition of manufacturing in 2000 to make it easier to qualify as a manufacturing worker. Comparisons with 1950 are only approximate.

I think the trend to lesser manufacturing employment will end when manufacturing wages are equal to working in retail or wholesale distribution. It may take high tech people to fix or install the new equipment but the trend is to make it simpler and simpler to operate. Some of it can be operated by a chimp already. Foreign labor from Mexico has proven there are plenty of jobs that a person can do with an eighth grade education in a foreign language plus a home country suffering from corruption and economic failure.

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What's the Real Cost of the Cap-and-Trade Program?

The transportation system used to subject itself to a loose set of rules tht configured a benefit to cost ratio process but it failed to live up to its assumptions. If every line item of cost and benefit were actually true, then why didn't car insurance over the decades of implementation get cheaper and the death toll on the highway dramatically drop? I think the problem came with monetizing intangibles like the value of human life. Over 50 years the value of human life kept going up at over 6 times the background inflation rate. The effect was that no project was not worth doing even if it was a worthless project. Air Quality parameters eventually crept into the mix and there was a connection to health issues in the cost-benefit analysis. The whole process became useless and I don't know any state that uses it anymore although some consultants working for lobbiest will use versions of it to prove to the governor or the legislature they are picking the wrong projects.

Also, there are too many examples of simple toll calculations being wrong and they only involve the risk of the interest rate, inflation rate and the risk of estimating the increase of vehicle miles traveled to go wrong. Cap and Trade Calculations are orders of magnitude beyond a simple toll income versus cost calculation. How people can rest easily with the high probability that mistakes won't cancel each other is amazing and shows how emotion driven the debate actually is.

What is the value of cooler and cooler air when people are already living longer and longer? At some point, the incremental increase in costs does not justify the incremental increase in benefit. If Global Warming turns into Global Cooling The credits will become worthless. Wouldn't this make Global Warming a worldwide Bubble ready to pop? Will we set fire to the rainforrest to run back to the perfect world temperature?

I find it interesting that there seems to be no sense of risk in this Cap and Trade Transaction for a lot of people. A few increases in efficiency in Fusion could collapse this whole house of cards. I think Cap and Trade is a Poison Pill of Assumptions and the winners will be those who just say "no."

Are Low Interest Rates Here to Stay?

It is going to take a lot to get me to trade my vehicle getting 20 mpg which I own for a new vehicle that might get 32 mpg and a monthly car payment plus all of the other costs that come with a very new car.
In my state the average per capita vehicle miles traveled is close to 12000, but I suspect when the new figures come out, that will have dropped. Even if gas goes back to $4 per gallon, The average person would take a hit of $900/year by keeping the old car. I think that would be less than buying a new one. Also carpooling, combining trips and just thinking ahead would be a lot cheaper than getting a new car. If you want a new car, just buy it because you want it.

Are Airlines Going Bankrupt Again?

The worst thing that can happen to the airlines, next to another 911 attack and increasing oil prices is the actual construction of high speed rail. High speed rail and air travel are natural and logical competitors. The airplane has an advantage over the train in that it can fly over obstacles and only needs pavement at the beginning and the end of the trip. The train on the otherhand needs a guideway for the entire distance. If the government supports trains against planes, some airlines will die.

The Coming Economic Collapse, Part 2

If life was fair we would all suffer terrible economic times but, probably, some weird circumstance will come along and save us like a break through in fusion power. At that point we would dismantel the solar cell technologies and the windmills. A break through in health could also extend our life expectancy so that we could continue to work well past one hundred just to pay for all of this stuff.

The car will be powered by a permanant power cell that will not require drilling. Planning on this development to happen is like buying lottery tickets for your retirement or planning on socialism to rescue us from our human propensity to over consume what ever is at hand.

The State and Local Government Crisis Looms Larger

The requirement for projects to be "shovel ready" assured that the stimulus spending would land on areas of the budget already supported by land purchases, environmental studies and zoning approvals. Enormous pressure will be placed on states to increase their gasoline taxes so that states can match the money available from the 18.4 cent federal tax on gasoline. Diesel taxes are even higher.

This seems counterintuitive since the feds have not raised the gas tax since 1997. Many states have already raised their taxes since then and should therefore be ahead of the curve. States that have wasted their money with goofball transit projects like the Big Dig were not blessed in any substantial way with the billions spent. Tolls and sales tax increases were raised to assist in paying the Big Dig off. Worst of all, looking at the BEA data on Per Capita Income or Personal Income, I can see nothing that indicates that the $14 Billion did a lot with respect to economic development. There should be some kind of spike in the numbers according to the expectations of the proponents.

Many local governments are guilty of thinking of credit as being income. Taxes have been kept at a doable rate of increse by borrowing. That will work only when the value of the infrastructure exceeds the cost plus finance cost. Some states are borrowing money to mow the grass or take pressure off of their retirement systems. This is a warning sign for most credit rating agencys.

TARP Mission Creep Watch, SBA Edition

The Bailout Binge has no exit strategy. I think this is the first evidence that economic stimulation is more addictive than Meth. When do you stop bailing and stimulating?

Has Obama Run Out of Maneuvering Room Already?

I think there is going to be a period of buyers remorse when ineffective spending fails to expand the wealth or reverse the GDP figures. The administration is trying to solve the toxic paper problem by issuing more toxic paper...hair of the dog that bit you?

The Cost of Capitalism, by Robert J. Barbera

The problem with genius is that it facilitates coming to the wrong conclusion faster.

Why the Stimulus Plan Won't Work

I just went over the list of infrastructure projects in my state and all it is seems to be the wrong list of priorities that they could not afford due to the gas tax crunch. Too many projects don't have anything to do with performance or productivity. You would think that we have a lack of imagination on what to do with out spare time. There are plenty of tourist related projects and museums.
I rarely spend a lot of time talking up Hitler but building the Autobahn did a lot more for Germany than 60% of the transportation projects that I see. The average distance between cars and the average distance between registered drivers is getting smaller and smaller every year when compared to the inventory of lane miles of road. The average speed is going down and no one can demonstrate any relief from congestion except by building more lanes.
I think more money is going to cause about the same as what would be expected if a drunk won the lottery and continued to follow the old habits with even more capability.