Chris B

For Airplane Makers, The Sky Is Falling

Good point oldman. Will people be flying in airplanes 5, 10, or 15 years from now? Yes. Is air travel still increasing in Latin America, Asia, and the Middle East? Yes. Does lack of financing mean a lack of market demand? No, it just creates a backlog.

The risk is that one or several of these companies will go under in the short term due to cancelled orders or bankrupt customers. There's also the risk that they will all emerge from this financially crippled and the new Chinese aviation companies will be the only ones with capital.


On Mar 19 10:31 AM oldman wrote:

> this is a short term issue and an opportunity.

Let's Just Say It: Print More Money

Deflation is, in theory, easy to get out of: the government can just increase money supply faster than it is destroyed (an expansionary policy). However, democratic societies such as the US and Japan have political difficulties in restoring money supply and velocity.

Savers don't like the idea of the government reducing the value or yield of their hard-saved money, while reducing the burden on those who got into debt. It just seems unfair.

Thus when a vast amount of money vanishes, as it did during the great depression, the end of Japan's real estate bubble, and the end of the US real estate / commodities bubble, most economists recommend that government step in to stabilize the money supply with an expansionary policy before a deflationary spiral ensues. However, the owners of cash and debt securities always step in to block this action, as deflation seems to be in their short-term interests (plus, their wealth and influence relative to everyone else has increased greatly by being in cash/bonds through the crash).

The political wrangling inevitably reduces the size of expansionary efforts to less than the size of the contraction in the money supply, which results in failure to stop deflation. Efforts to stop the great depression were too little and too late resulting in a decade of hardship. Japan's zero-percent interest rates were also too-little, too-late resulting in two decades of deflation and economic stagnation. The verdict is still out on who will win this time.

The Five Most Important Energy Forecasts of 2008

Andy,
If it's economic numbers that need crunched, solar, wind, geothermal, and hydroelectric plants are already profitably producing electricity. Perhaps the question we should be asking is how much will it cost us to continue paying for billions of dollars worth of oil, coal, and natural gas. Most alt energy infrastructure costs more to build upfront but then produces almost free energy once paid off, as opposed to paying for millions of dollars in coal/gas/oil every day to keep a coal/gas plant running.

In terms of national security, it's hard to say what that's worth, but it's billions at the least. Europe is building windmills as fast as they can to escape Russian control of natural gas and oil, as they should.

For baseload power, check out some of the advances in geothermal tech, particularly binary systems that can harness energy from low temp areas. Again, this is already being profitably done on a commercial scale. Waste methane, and hydroelectric are other storable base load options.


On Dec 10 08:53 AM Andy1234 wrote:

> I agree with the hand's comment above.
>
> I am also an engineer.....and people talk like alternative energy
> is the answer.......I think some of these economists and others need
> to sit down and start crunching numbers....figuring out how much
> energy can be provided using these technologies....what kind of baseload
> power is required....what kind of plants need to be running in case
> the wind or sun isn't shining or blowing......What are the costs
> to transfer to these power sources? Are there any material constraints
> if we massively switched to a certain storage source? etc etc etc.
>
>
> The scope of such a change is enormous......and we would be moving
> from an era of extracting energy that is already stored......to an
> era of harnessing/transmittin... and storing then transmitting and
> storing again.
>

The ARJ-21 and China's Long, Slow Climb to the Skies

Excellent article that illustrates the long-term attitude of the Chinese and how it has benefited them. In the US, you can't hardly formulate a business strategy if it doesn't pay off in two quarters.

That more or less explains the recent divergence in the two economies. China invests in the future and reaps exponential returns. The US is focused on putting out short term economic fires and bailing out failed business models. In turn, we're cutting spending on education, manufacturing, and infrastructure.

Let's just hope that we learn to accept our new role as a minor world power, rather than repeating Britain's mistakes of the 18th and 19th centuries as their empire violently wound down at a cost of millions of their lives. If our nationalists ever pick a fight with China, head for Mexico and then keep running.

Boeing: Intrinsically Undervalued

Commercial air travel: worldwide contraction
Military: Iraq war ends in ~3yrs, Democratic president, govt. broke
Competition: Chinese makes and ERJ
Disadvantages: union infested, just like F and GM
Can Customers Finance Purchases?: not easily

Cyclical Argument Now Invalid for Equities

Don't forget Bush's socialism in the US. How many industries were nationalized with borrowed money during his tenure?

Airport security
Investment banking
Insurance
Mortgage industry
Automakers (coming soon)

Sounds like Hugo Chavez in slow motion. The "ownership society" apparently means redistribution of wealth to the government. The question of which despot is more authoritarian is debatable.

Someone once told me that right wing and left wing politics eventually converge, and that ideology is a circle rather than a line. How true it seems to be.

The Economic Cost of the Military Industrial Complex

In the guns vs. butter debate, the folks advocating putting more of our resources into the military always raise the possibility of some foreign enemy damaging our country. Yet, nobody is pointing out the other possibility - that our currency, economy, and government could collapse under the weight of military overspending.

Has anyone seen the last month's inflation numbers? Almost 10% annualized. Did you know that a quarter of your federal income taxes go to pay INTEREST on the debt?

Did anyone notice that the Soviet Union collapsed, not from invasion, but from within, when its economy could no longer support its military expenses? They went from superpower to a 3rd world "developing" country in about 20 years because they were persuaded to devote more and more resources to non-productive military expenses. Why not worry about this kind of damage occurring to us? Collapse from within is the most likely situation that could END the US. Impoverished religious nuts from the Mid East with box cutters - not so much.

The Economic Cost of the Military Industrial Complex

The lesson of this decade is that terrorism works. The goal of terrorism is to confuse the thinking of your enemy and persuade them to take counterproductive or self-destructive actions. Al Quaeda's simple exploitation of lax US airport security rules which allowed knives on planes and unlocked cockpit doors has confused us to the point that we did the following:

a) Invaded the only secular government in the Middle East, which was ideologically opposed to Al Quaeda and had been crushing them for years. The resulting chaos 1) exposed the inability of the US to translate trillions in military funding into results on the ground, and 2) provided a new safe haven with new supporters for Al Quaeda and allied groups.

b) Overthrew the Taliban, which only resulted in elections that continued the Islamist agenda and expanded sharia law. Turns out, that's the ideology of Afgans. Accomplished zilch.

c) Destabilized Pakistan by paying off the government there. As a result, an Islamist coup or revolution is now imminent there, which will put nukes in the hands of Al Quaeda sympathizers.

d) Borrowed heavily to fund all these trillions in expenses, resulting in the dollar crashing in value. As in Zimbabwe and Argentina, this will result in lowered living standards for Americans as our paychecks buy less and less each month.

e) Expanded the national debt to an unsustainable percentage of GDP, which will eventually lead to further currency devaluation and inflation. Future generations will never get out of the debt hole we've dug which might mean that the US empire is doomed long-term.

f) Caused geopolitical uncertainty which drove the price of oil up five-fold. Much of these funds went to the Russians, Iranians, Saudi Wahibists and other enemies. We're indirectly financing the Iranian nuclear program, madrassas in Saudi Arabia/Yemen, and the war on Georgia. Very counterproductive.

g) Squandered the perceived moral superiority of the US that was the predominant attitude in the world before govt. lies about Iraq and Gitmo torture.

All this was accomplished with 20 men and $500k dollars. The result may well be the long-term decline of the American empire. No attack in history has resulted in so much damage to an enemy at so little cost - not even the Trojan horse. In addition, we're not even close to emerging from the mental haze that this event shrouded us with. We're still hurting ourselves.

Buy defense stocks, foreign currencies, a passport, and language classes. Keep your real estate holdings low and your money portable. Be prepared to move, as your ancestors did, to a country that recognizes that national strength comes from within.