Howard_T

Obama's Fiscal Stimulus Has Saved Jobs

Here in southern NH is a great example of the way jobs were "saved". Construction was underway to create a new access road from the Everett Turnpike to the Manchester Airport when the stimulus bill was passed. Suddenly, the $300 dollar signs were put up around the construction site, and when the workers came back to work after the weekend, there jobs were magically "saved". I think there are examples like this in every state. Isn't it wonderful how a job that existed and wasn't about to disappear was saved.

The Unsustainable Lie of Inflation

First, I would remind Machiavelli999 of the graduated income tax in the US. While we earn a lot more than we did 30 years ago, the government takes a proportionately higher percentage of what we earn, thus putting us further down the curve.

I think most of us know why coins have milled edges. It is to prevent the dishonest person from shaving the edge of the coin to debase its value. When coins were really made of precious metals, this was a serious matter. Now the coinage is made of nothing more than nearly worthless metal. Just think of the dimes in your pocket as being a lot smaller than they used to be when they were really silver. Likewise, at one time you had a dollar bill that said it could be redeemed for a dollar's worth of silver which was referred to as "lawful currency". I guess that's all you have to know about what a Federal Reserve Note represents - Unlawful paper.

Senator Schumer Misses the Full Picture on A-Power's Joint Texas Wind Farm

How much of West Texas wind power do I get in the northeast US for my share of the cost? The answer is a big, fat zero, because you just can't transmit significant amounts of power that far. Here in New England, except in coastal areas, and even there not a 100% guarantee, the wind is unreliable. The same goes for solar, especially in the short days and long nights of winter when electricity usage is highest. In this part of the US we're stuck with burning fossil fuels until we get more nuclear power. I could go on and on about how the anti-nuke groups use unfounded fears to promote their agenda. I could go on and on about how Harry Reid ripped off the US for funding of the construction of the Yucca Mountain nuclear waste site, then when it was about to be put to use, he had it stopped. Those of you who promote the so-called green energy sources, please look at reality. If you want to reduce the burning of fossil fuels, please consider nuclear as a viable option. Do not crush a part of the US under the weight of subsidies for cheap power elsewhere while killing our businesses and citizens with the cost of cap-and-trade. Look at the big picture, and think everything through to its logical conclusion, including all of the unforeseen consequences in your analysis.

Is Too Big to Fail Now Too Big to Exist?

I say break them up into their constituent parts, banking, brokerage, etc. While you're at it, likewise break up the entire industry. I think this was once called "Glass-Steagle". This will force the largest of the banks to compete on a more even footing with the smaller regional banks, and should result in more money getting into the hands of businesses in the form of loans.

If the mega-banks are not broken up, remember this: Even Tyrannosaurus Rex was too big to fail, and we all know what happened to the dinosaurs.

Political Will for Reform and the Concept of Corporate Communism

In one of the Civil Engineering courses that we Electrical Engineers were forced to take in college, we were introduced to a table of various materials and the steepest angles at which they could be piled in order to make walls, fills, or the like. Naturally, thin, sandy soil was at the bottom of the list, and clay was near the top. I liken the financial industry to the clay. There is regulation (the compact nature of the clay itself or the planting of vegetation to help stabilize the pile) that allows things to be concentrated more than if there were no regulation at all (sand). The problem comes when the few try get more from the pile than it can support. You can't put more on top (regulation), so you try to spread it out a little further. This is like digging some of the dirt out of the bottom of a mound of clay. It will eventually collapse. Consider those who exploit loopholes in the regulations or take advantage of "sleeping watchdogs" to be those doing the digging at the bottom.

Recession Is Over; Depression Has Just Begun

Thank you, Mr. Harrison, for this excellent analysis. Until I read it, I would have been one screaming for an end to profligate federal spending that would only lead us on the road to rapid inflation. I am now convinced that government must spend in order to temporarily provide the means to get the economy moving forward once again.

More government spending comes with one huge stipulation: the spending must be targeted, intelligently planned, and diligently regulated. Any unnecessary spending must be curtailed. As a start, forget any ideas of health care reform or energy cap-and-trade taxes. These can be left for later, although immediate action to begin work toward reducing the cost of health care (that is, how much it costs to see the doctor, not how much you pay for insurance) can start immediately.

Targeting of spending means putting the money directly into the hands of those who can use it to develop the economy and create jobs. Propping up state and local governments, while not an entirely bad idea, does little to create jobs and can be left for later. In the meantime, the states should be allowed to operate at a deficit, issuing bonds to keep them going, and make up the debt with increased income and fiscal austerity once tax revenues have come back. The money needs to be placed in the hands of small and medium-size businesses, in the form of grants or low-interest loans, to allow these businesses to expand, innovate, develop new products, and put people to work. Bailing out an already sick industry is not the answer. We see now that Chrysler will not be able to introduce new models based on Fiat products for several years. We also see that GM has not been successful in selling the Saturn brand, and will now abandon it. Despite the bailouts, the ship continues to the bottom. Spending does not have to be in the form of cash or credit. One of the most effective things that could be done is to revise the federal tax code to ease the burden on business, stop penalizing the re-investment of profits, and make it more attractive to keep one's manufacturing operations in the US.

Regulation simply means forcing those who benefit from federal spending to give an honest and accurate accounting of where it goes. Here I'm looking directly at the financial industry. It's too late to stop the creation of the mega-banks that has happened over the last few decades, and was accelerated by the government-assisted mergers of the last 2 years. What can be done is to force these large institutions, and indeed all financial institutions, to separate their banking, financial services, and brokerage operations. Ownership of such operations can continue under the existing corporate heads, but tall and stout firewalls would need to be put in place to prevent abuses such as the the banking operation placing depositors money into questionable financial products sold by the brokerage arm. Restoration of Glass-Steagle, perhaps with some updates to account for technology, would be the obvious start.

I am not an economist, nor am I involved with the financial industry in any way other than as a customer. I am a retired engineer living on my wife's small income, a pension, social security, and savings. In the meantime, I'm putting a kid through college. My debt load is low; if I were forced into it, I could pay it off tomorrow without real hardship. What little I know about finance I learned from my father, who worked for many years at the Federal Reserve Bank of Boston. I write the above as one who thinks that common sense has been abandoned in the corridors of government, greed and insensitivity have become the watchwords of the financial elites, and despair is increasing among those of us who are at their mercy. So please, Mr. Harrison, keep your ideas flowing, but please temper them with common sense.

Electricity Is Not an Energy Source

I'm very much heartened to see someone finally point out what I have been trying to get people aware of for a long time. That is the limitation of the electrical grid in the transmission of power. Simply enough, without a lot more infrastructure in the way of power lines, towers, insulators, transformers, and the like, not to mention the necessity for more right-of-way and the maintenance thereof, you just can't transmit a lot of electricity over long distances. Those who insist that there is free electricity for the northeast in the form of solar conversion in the desert southwest or wind conversion in the central plains just don't understand the immutable laws of physics.

Mr. Evslin, you have done a very good job here of pointing out the economic facts of life and some effective ways of dealing with them. We who live next door to you here in NH also benefit from Hydro-Quebec, as well as the nuclear plant at Seabrook, NH. Unfortunately, our primary source of power is a coal-fired plant in Bow, NH, that the environmentalists have been trying to shut down for years. Should they succeed, or should the Obama energy tax plan become law, we in NH are in for some frighteningly high electricity costs. The Seabrook nuclear plant will need to be refueled and re-licensed before long, and if this is held up or denied, and Hydro-Quebec no longer is able or willing to supply energy from Canada, I may soon be heating with wood, lighting with oil lamps, and cooking on my propane grill.

Obama's Financial Reform - A Distraction from the Real Issues

Here's a sure-fire way of regulating the largest banks. Convince the underworld mobs that they must put all of their assets into securities issued by the large financial corporations. Tell them also that if they suffer loss due to fraud that certain retaliatory measures will not be thoroughly investigated. When the first Wall Street banker shows up at the bottom of the harbor wearing concrete overshoes, the problem will disappear.

Obviously, I jest with the above. Too big to fail equates to being too big to exist. Reinstate Glass-Steagall and force all banks, regardless of size to break themselves up into separate brokerage houses and banks. These may be held under the same parent company, but must have completely independent management and direction. Abolish companies that do nothing but lend money to consumers. If any sort of fraud does occur, then punish it with fines and jail time (and not in a country club prison).

Obama's near-daily address is designed for more than one purpose. That is to keep his image of the beloved leader always before the public and to continually distract us from the ever-increasing shadow government he is carefully putting into place. (Check out the number of "czars" who were not appointed through the constitutionally required process of advice and consent, but have full authority to make and enforce decisions within their departments.)

Social Security: Here's How to Extend the Fund's Life

I'm not sure what you mean by the "availability of $100,000 in taxable income". Does this mean having savings that will produce income, but only at the depletion of savings? That hardly sounds like an incentive to hard work and thrift. Placing a means test on Social Security is equivalent to theft, since the government forced us to hand over the payroll tax. Even in these bad times, voluntary privatization is possibly the best way to save the program. Those who are able to earn good salaries can opt out of the system and invest what would have been their payroll taxes. Those who are not in a position to accept that risk can continue on with SS as presently constructed. Of course, since Social Security (and Medicare, for that matter) were both devised when the average life expectancy was much shorter than it is now, perhaps we ought to place some sort of limit on the years an individual may collect. At the end of the limit, I'm sure the government will be glad to provide us with a nice pamphlet detailing how we can manage our end-of-life situation.

What's the U.S.'s Energy Policy?

Energy policy under the Obama administration:

1. Move to a 10-acre woodlot.
2. Build a windmill and hook it to a generator.
3. Put in a solar array and hook it to another generator.
4. On days when the sun isn't shining and the wind isn't blowing cut some of your wood, build a campfire, and huddle around it.
5. When the Carbon Police show up, pay the hefty fine with worthless dollars.

Chinese Demand Leads to Soaring Lead Prices

Hmmm....Is China's demand for lead indicative of an intended increase in small arms ammunition supplies? Nah....It's just that they need more lead to put into the paint on the toys they'll poison your kids with this Christmas.

Are Budget Deficits Inflationary?

Livingwithin, I haven't thought about underdamping since a circuit theory course in my sophomore year (and we EEs didn't know anything about money and banking). It is an apt analogy.

Mr. McTeer cites Prof. Waller as saying that in a deep recession, the printing of money will not be inflationary because it will be used to increase production, and thus employment. This might have been true in the '60s, but now there is a much reduced industrial base to produce those goods. Could it be automobiles? That would be a great stimulant to the economies of Japan, Germany, and South Korea. How about aircraft? In view of greatly reduced travel, and thus demand for new aircraft, that won't carry us. Also, look at how much of Boeing's 787 (and even some of their legacy aircraft) is being built overseas and merely taken to final assembly in Everett, WA. I don't believe that there is a manufacturing sector that has not been weakened, or even eliminated, by foreign competition. Simply enough, unless American workers are willing to settle for a lot less in their paychecks, or the government is willing to risk international retaliation and begin protecting our industries as our so-called trading partners do, the current monetary policies are sure to cause inflation.

Will we become a modern day Weimar Republic? I don't think it will go that far, but there will be pain among those of us who have worked and saved, only to have it taken away by the dual forces of taxation and inflation.

5 Things You Need to Know When Analyzing Corporate Debt

I can think of one more reason why companies take on debt, and it's especially prevalent in defense industries and others that do business with the government. A defense contractor doesn't get paid until it has performed on a contract. That doesn't mean the entire contract, but there are incremental stages that must be satisfied in order to earn partial payments. This means that the contractor has to pay his staff, keep the lights on, heat (or air condition) the buildings, buy the material necessary to build the product, and so on. In the meantime, the government hasn't given him a dime until he satisfies the necessary progress metrics. Thus, the contractor lives on borrowed money, paying it back with his returns from his customers.

When you look at R & D, the situation is worse. Now you haven't even got a contract, but you have to pay your engineers and scientists. The next time you want to scream about why the government has to pay so much for military hardware, consider "the cost of the money".

The Non-Stimulating Stimulus Bill

Today's news included an article about $2M in stimulus funds being used to buy 4 new coach style buses that are to be given (!) to the companies that provides bus service between southern NH and Boston. One will be used on the US Rte 3 corridor from Nashua, one on the I-93 corridor from Manchester, and the other 2 on the I-95 corridor from Portsmouth. Before I go off the deep end, I need to say that I have used this service, and it is an excellent way of getting to and from the city. Also, in fairness, I have to say that the buses don't actually belong to the companies involved, but belong to the NH Department of Transportation.

The addition of the buses will mean that the companies involved will be able to hire 4 or 5 new drivers. Let's think about that for a moment. 4 or 5 new jobs at the cost of $2M; that equates to $400K or $500K per job. It would seem to me that it would be a better idea to find 4 or 5 entrepreneurs, lend each of them the $400K or $500K at a low interest rate for a long term, let them each buy a reliable used bus, and go into the business. I would bet that it wouldn't be too long before their business had grown (in the absence of excessive government interference and taxation) to the point where each of them had been able to buy another bus or 2 and hire more drivers. That is what the stimulus should have been, but instead it winds up paying for increased bureaucracy and providing minimal benefit.

Much of the criticism of the stimulus plan is the few jobs that have been saved (not created) all seem to lie in the public sector at the state and local level (police, fire, teachers, etc.). While these are certainly necessary and beneficial, there is no real impact upon the economy. For those who decry the lack of job creation, the plan is designed to have its maximum impact in 2010. Gee, that's odd. There's an election in 2010. Am I the only one who sees a connection here?

'Experts' Claim 2M Jobs Created in August: I'm Skeptical

TeresaE, thanks for giving us the benefit of some real experience with the problems. I am retired from a large defense contracting firm. Whenever a new report or other piece of paper was required by the government on one of our projects, it frequently fell upon engineering to fill it out. Over the 40+ years I spent in the field, I noticed that I was spending ever more of my time making reports than I was solving engineering problems. When the government, be it via EEOC, OSHA, EPA, or any other alphabet agency, requires a report or certification from business, it is a burden. For the large corporations, it amounts to a drop in the bucket, but for the small businessman it is a significant investment in time and cost for which he (or she) is receiving no compensation. When you add in the punitive costs merely for being allowed to operate your business in some states, I don't wonder that small business is rapidly disappearing. Please continue to make your voice heard.

doubleguns, you may have stumbled upon a truly valid indicator of the state of the economy in the "undercover cash" sector of drugs, prostitution, and the like. It would be quite fascinating to be able to have enough data to form a valid metric here.