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johnfreiburger

johnfreiburger
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  • U.S. Tax Competitiveness Stinks [View article]
    The US has no tax "system". We have local, state and national tax codes that are easily avoided, regressive and inadequate to fund infrastructure, education, health care or the normal operations of government.

    Cities and states bid against each other in income and property tax give aways. Congress will enact any exception or loophole a business is willing to pay for.

    We are tax competitive, if you have the money to buy total tax relief (GE et al.) on the national level and it is fairly easy to get tax relief locally. Just threaten to move.

    Like most Americans, businesses may have gotten used to the bad system, but no longer want to pay to play in it.
    Sep 16, 2014. 09:45 AM | 2 Likes Like |Link to Comment
  • Why It Still Doesn't Feel Like A Recovery For Most People [View article]
    Look deeper into the numbers and you'll see significant declines in income for the lower 60% of workers, almost no growth for 60-80% and great growth as we near the top.

    There is a reason Wal-Mart same store sales are flat: they are too expensive for the median wage earner! Look at dollar stores and food pantries and you see retail of the future.

    This is a result of taxation and political policies that see an increasing wealth divide as reasonable and good for the oligarchy, which is what we have. The pie is no longer growing very fast in the US so for the rich to get richer, the middle class and poor need to have a smaller slice.
    Sep 10, 2014. 09:19 AM | 8 Likes Like |Link to Comment
  • Utility Stocks And Rising Interest Rates [View article]
    The first chart contents to show the "impact" of rates on the utility averages. That simply is not true. If I chart the increased number of fast food franchises 1950 to 1980 and the rise in the crime rate, the graphs are more or less identical. Does that mean that fast food "impacts" or causes crime? Does McDonald cause murder? I don't think so. It's just two lines on a graph.

    If you use step-wise regression analysis you may be able to tease out some of correlation (not cause or impact) of interest rates on utility prices, but I suspect the confounder of earnings will produce an Rsq (explanation strength) that is very low or zero for interest rates as an independent variable.

    Other independent variables: generation efficiency, fuel costs, fuel delivery costs, customer delivery efficiencies, good management, political contributions, changes in regulatory agency, political ideology, changes in new plant costs, average age of infrastructure, infrastructure replacement rate, regulatory allowance for profit on replacement, tax credits and abatements, changes in EPA and local regulation, state action preempting local zoning, etc.

    Commentators need to take a basic statistics course so they understand that two similar lines on a graph may have zero explanatory meaning.
    Sep 6, 2014. 10:16 AM | 5 Likes Like |Link to Comment
  • 3 Utility Stocks To Consider Now [View article]
    WSJ
    It is a nightmare. The costs I've seen quoted for downtown Manhattan are $2,000 a foot or $10,000,000 a mile for gas pipe replacement.
    Aug 30, 2014. 12:14 PM | 1 Like Like |Link to Comment
  • What Happened To All The Profits? [View article]
    Don't confuse Reagonomics with Reagan. What Reagan did was spend much more, raise taxes and total federal income, borrow heavily and add a great deal of regulation. Reagan was a traditional liberal who used the state to achieve economic and political purposes while holding a somewhat bewildering and sentimental notion of personal and international relations. Reagonomics is like the Easter Bunny, nice idea, never existed. Just because many talk about something doe snot make it real.
    Aug 29, 2014. 10:21 AM | 4 Likes Like |Link to Comment
  • 3 Utility Stocks To Consider Now [View article]
    aitlarr,

    No surprise, Duke Energy has the lowest leak rate in the US. Their Cincinnati area office is spending $700m to replace 1200 miles just in one district. Dominion East, also in Ohio, is excellent as well. The Ohio regulators believe that rate payers should pay for infrastructure and allow utilities to bill for the cost.

    This insane idea, which once infected the entire US, that people should actually pay for the infrastructure they use, is still alive in a few areas! The other areas tend to have explosions.

    There is a federal pipeline safety office you can find on line plus many states have agencies. The NY commission says ED had 695 serious gas safety issues in the last three years.

    I invest millions in utilities and learned the hard way with the Alliant Brazilian generation debacle 25 years ago, to watch for liabilities lurking behind the corporate reports. ED has $10b in potential infrastructure liabilities, a tough environment in which to work and could have astronomical litigation costs due to a negligent pattern of non-repair of gas lines.
    Aug 29, 2014. 10:11 AM | 1 Like Like |Link to Comment
  • 3 Utility Stocks To Consider Now [View article]
    The main reason to avoid ED is a $10billion back-log in infrastructure replacement just for their gas distribution system. ED has 6302 miles of gas pipe with an average of .92 leaks per mile per year. The East Harlem explosion killed 6 people, three in Queens killed more. The local utility board has demanded that ED increase its gas pipe replacement from 50 to 70 miles per year starting in 2016. At that accelerated pace, the average age of gas pipe will still be increasing! Some of the pipe is cast iron and 108 years old.

    They cannot charge, but do pay for leaking gas and at some point the greenhouse effect of the leaking methane is another issue by itself.

    From the statistics I've seen, they have the leakiest major system in the US, even worse than Boston, with no real plans to fix the problem. To date, the utility is increasing its liabilities for death and destruction without working out a customer cost for infrastructure replacement.
    Aug 28, 2014. 09:48 AM | 4 Likes Like |Link to Comment
  • Duke Energy - Buy For Income And Income Growth, But Not For Value [View article]
    Good article. Only one small positive note to add:
    There is a significant difference in utilities that are actively engaged with regulators and politicians. I know of no utility that does that better than Duke. Their small contributions in NC (reportedly only $95K last year) has largely insulated them from the worst costs of the coal ash spill and remediation. Contrast that with ED where there is a multi-billion dollar backlog in gas pipe replacement, for which they probably cannot get rate relief. Gator points to Crystal River, another positive example of covering costs by ratepayers. When some investors panicked over the coal ash spill incident, I laughed and bought, knowing it was in NC.
    Aug 23, 2014. 09:55 AM | 2 Likes Like |Link to Comment
  • Why The U.S. Economy Is Not Doomed To A Japan-Style Deflation Or Stagnation [View article]
    The need for a safe harbor to park money is controlling bond prices for solid economies and safe payers (US, J, GR) and the search for some reasonable return is suppressing yields from the not so great (FR, IT), As S.I. says, supply and demand.

    Perhaps what is different now, is the concentration of wealth in many countries. We have always had the African and Arab oligarchy and kleptocracies. Now we have add the Russian thieves and the US and European super rich as well as the Chinese billionaires in their thousands. All chasing returns, all parking cash.

    If the whole world becomes Japan, it will be because of the drop in consumption, simply because those with no money can't buy. What growth there has been in the US in the last decade has largely gone to to the top .1%, with the middle class shrinking and the working class impoverished.

    Food stamps, section 8 housing, medicaid, free school lunch and breakfast, and subsidized child care do not produce a robust economy. We currently subsidize the poor because we want their labor but will not pay a living wage. Each year we subsidize more people and a larger percentage of the population. One in seven now regularly depend on food pantries, one in 6 on food stamps.

    As David notes, bubbles have distorted the appearance of the long decline, but that is what it is, the long decline in the wealth of the lower 95%, the maldistribution of wealth due to commoditized governance, the emergence of not a welfare state but a poverty perpetuation state.

    We'll be lucky is we end up like Japan. We could end up like Fergusson instead.
    Aug 18, 2014. 09:18 AM | 5 Likes Like |Link to Comment
  • Is Consolidated Edison A Good Stock To Buy? [View article]
    ED has a plan to replace all the old gas pipe in its system. The work may take 80 years at the current pace, meaning that even more 100 plus aged pipe will exist when the replacement is done. ED is far behind on infrastructure replacement and I'm not sure it can get the rate adjustments needed to do the work.

    This is true for most east coast utilities. Cast iron from the 1890s is still carrying gas and is leaking, in Boston, one major leak every 500 meters according to a recent engineering survey.

    One exploding building can be managed. A dozen cannot. If ED demanded rate increases to upgrade infrastructure, profits could actually be better. It could also force the agencies into taking responsibility for future deaths and explosions if rates were not increased. Goggle NYT articles for the last year and you'll find some interesting reading.

    Meanwhile, there is a reason for the stock price being where it is. Utility investors such as myself are avoiding ED and others with huge, poorly defined, infrastructure and liability risks.
    Aug 17, 2014. 10:34 AM | 1 Like Like |Link to Comment
  • Should You Invest In Farm Land? [View article]
    Few investments have the wild swings of ag land. There has been a cycle of farm bankruptcies since the late 1800s. Current "values" depend on the continued support of ethanol and high corn prices, a policy that make zero sense, plus the support and import protections offered for various crops. We also have significant climate change issues on the plains where the availability of water is in question. As the plains dry up, other land will become more valuable, but what if the REIT owns part of western Nebraska?

    Ag land is like Vegas. If you gamble you could come out ahead, but in the long run, the odds are against you.
    Jul 30, 2014. 09:22 AM | 1 Like Like |Link to Comment
  • Are You Doing The Jailhouse Rock With This 6%-Yielder? [View article]
    The "Right on Crime" movement, embraced by Rick Perry and others, suggests that conservative states may join liberal state in no longer confining most non-violent offender. Texas has closed either three or four prisons in the last four years. The cost of "corrections" in many states is now higher than support for college education and states, such as Texas and WI, that refuse to tax to any meaningful level, must cut prison costs.

    We have already seen states with empty prisons compete for out of state prisoners. I do not agree that the company is evil because it runs prisons, but prisons in the US are a resource used to confine the mentally ill and those who do not obey drug laws along with those who need to be separated from society. (Unfortunately, bankers are excepted) If those two things change, our prison population could drop significantly, along with Corrections Corps profits.

    Google Right on Crime and you'll find some interesting conservative reading.
    Jul 23, 2014. 09:45 AM | 2 Likes Like |Link to Comment
  • 3 Reasons Today's Environment Is Not Like The 1970s [View article]
    In the 70s we were building infrastructure. Now we are becoming a third world country as our airports, highways and transit and education systems crumble. Fly from China to LAX today and it is like flying from LAX to Burma in the 1970s.
    As we burn infrastructure, decrease the wealth and purchasing capacity of the working class, lose the middle class, we will look more and more like the 1970s third world.

    The question is, will a revolutionary mentality develop in the US as the masses look at examples of well run and fair economies in Asia and Europe? 82 people were shot in Chicago last weekend, mostly poor on poor violence. The masses have guns and may learn where to point them. So while you applaud the loss of labor's power today, you may regret that in the future.
    Jul 9, 2014. 08:41 AM | 8 Likes Like |Link to Comment
  • Thoughts On QE, The U.S. Economy And The Markets (Video) [View article]
    Moby,
    Cap and trade with an import carbon tax would be a start. We import manufactured goods from China, where the consumer does not pay the full price, as the cost of pollution is discounted. This can only be done if we tax US carbon. If you add in pollution costs, suddenly US and European manufacture becomes more competitive.

    We also need to look at methane releases. No, not farting cows, but high distribution losses in utility lines, burn offs at wells and other losses of captured natural gas. (See NY Time articles on leaks in NE utility systems and gas loss in N.D fields.)

    Building utility cost in the US are immense compared to Europe. We build about 1M homes per year but have over 90M that could be retrofitted (see ASHRAE journals for details). Germanys per person home utility cost is 30% of that in the US. A carbon tax will make energy more expensive and promote conservation, which can be further pushed by tax credits.
    Jun 26, 2014. 08:46 AM | Likes Like |Link to Comment
  • Thoughts On QE, The U.S. Economy And The Markets (Video) [View article]
    A thought on your Q1 comment:

    Yes, here in the Midwest we were buried in snow, frozen in doors and depressed by endless winter. While liquor sales to my household were way up, we didn't purchase much or even take a vacation; to busy watching for frozen pipes! We are just a small example of the statistic that suggests: weather does effect the economy.

    So what about global climate change? When the first huge hurricane combined with sea level rise inundates Miami and makes Andrew look like an April shower, how will that quarter look? As super storms flood all of Iowa (as in 2011) while the central valley has a dust bowl with 90% unemployment, how does that quarter look? We have seen the result of one un-nice winter, which was nothing compared to what climate change may bring us.

    We are beginning to see reactions in the insurance industry and in federal flood insurance, now $20 billion in the hole, as these cost affect actuarial forecasts. We look to have 40% of LA below sea level in 80 years and 5% of FL. What kind of economic losses will result as that property, population and infrastructure are destroyed or displaced? When will investors start taking climate change seriously and demand governmental action in the US and internationally to protect our economy?
    Jun 25, 2014. 10:07 AM | 2 Likes Like |Link to Comment
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