Thursday, March 31, 2005

Economics 101: Territorial Imperative and Sub-Optimization

Back last October, I wrote some thoughts about "territorial imperative" and "sub-optimization" including:

One of my sons was a contract worker at a large corporation and found that the bureaucracy seemed to exist to protect its territory and often did so by sub-optimizing the performance of the rest of the organization.

Since then, he has formed his own company and now faces similar hurdles in dealing with clients. One area within the client company wants his services to improve their performance. Another area sees him as an intruder into their "domain" and tries to create barriers to prevent him from having access to critical information to complete the project.

This is why corporations get more difficult to manage as they get larger... and why size does not necessarily mean "economies of scale".

Tuesday, March 29, 2005

Excessive Litigation - Supreme Court Weighs in on File-Sharing

Age old question: is enough, enough? or is too much enough? or is enough too much?

When it comes to file sharing, the answer seems to be "maybe."

Is it "sharing" or "piracy" or ??? Stealing used to be pretty obvious when everything was tangible. Take the gold; you're a thief. Take the cattle; you're a thief. Transfer some electrons; you're ???

The internet has enabled 6 billion connections and all of the possible permutations and combinations thereof. When I make something available on the internet, I cannot know for certain how it will be used by the 6 billion possible users.

If I put my own creation on the internet, I do so with the expectation that it is now out of my control; Pandora's box is open. If I put someone else's copyrighted material on the internet; it seems as if I do the same thing. The issue is: will preventing the latter also prevent the former? Do I stop innovative technology's improper use and proper use?

Where's Solomon when you need him?

Monday, March 28, 2005

Excessive Spending - Multinationals and the Dollar

Trade deficit - new twist. Reuters reports that:

Economists surprised by the failure of the dollar's three-year slide to narrow the U.S. trade deficit are increasingly focusing on the growing presence of multinationals in global commerce.

Research by the McKinsey Global Institute suggests roughly one-third of the U.S. current account deficit results from trade with U.S.-owned subsidiaries abroad.

This is a major reason why the dollar's broad-based slide on global foreign exchanges over more than three years hasn't narrowed the U.S. trade deficit, as conventional economic theory suggests it should.

The dollar has lost around a third of its nominal value against a basket of its major counterparts since January 2002, which should have made U.S. exports nominally cheaper and imports more expensive.

Yet U.S. consumers' voracious appetite to consume has seen the trade deficit balloon to new record after record.

"In our view, significant dollar depreciation is required simply to prevent further deterioration in the current account deficit," wrote Deutsche Bank's New York-based currency startegy team in a recent research note.

Now we feel better.

Friday, March 25, 2005

Excessive Spending - Taxes and Shelters

From The Detroit News: IRS collects $3.2 billion in tax shelter crackdown

By Jim Abrams / Associated Press

WASHINGTON -- The IRS has collected more than $3.2 billion, mainly from wealthy people, in its most ambitious effort ever to crack down on improper tax shelters, the agency said Thursday.

From my March 7 post.
I think that a straight 18% tax rate on GROSS INCOME... forget all of the deductions... with a deduction for the first $20,000 (amount can be worked out). That really amounts to a graduated tax up to a couple hundred thousand and a flat tax afterward. A simple, fair approach to taxes that should be close to revenue-neutral. After all, there's a lot of nonsense that goes on with the very rich to avoid taxes. Let's just clean it up and make it simple.
Adjustment Amount Gross
Taxes Effective Tax Rate
20,000 20,000 - - 0.0%

25,000 5,000 900 3.6%

30,000 10,000 1,800 6.0%

35,000 15,000 2,700 7.7%

40,000 20,000 3,600 9.0%

45,000 25,000 4,500 10.0%

50,000 30,000 5,400 10.8%

75,000 55,000 9,900 13.2%

100,000 80,000 14,400 14.4%

150,000 130,000 23,400 15.6%

200,000 180,000 32,400 16.2%

250,000 230,000 41,400 16.6%

300,000 280,000 50,400 16.8%

1,000,000 980,000 176,400 17.6%

5,000,000 4,980,000 896,400 17.9%

8,000,000 7,980,000 1,436,400 18.0%

Thursday, March 24, 2005

Numb3rs - 2

Again... apologies to the TV show.

Michigan continues to struggle in the booming economy. The latest jobless (unemployment rate) numbers show the state at 7.5%.

So... that's good according to the Free Press article today.

Bruce Weaver, with the state Department of Labor and Economic Growth, said a lot of February's higher rate was due to a net increase of 22,000 job seekers returning to the market. Economists say that as an economy emerges from a weak jobs market into a stronger one, more people look for work and temporarily drive up the unemployment rate.
"It's darkest before the dawn" kind of thinking.

Well, let's hope so. Michigan appears to be an aberration... an economic model left over from the halcyon days of industrial USA... while the rest of the country appears to be doing fine selling intellectual property of some sort.

Meanwhile... I'm including this table from the U.S. Census Bureau showing 2004 trade... U.S. Exports versus U.S. Imports... numb3rs....

Total Trade (Goods)

    Rank Country Exports (Year-to-Date) Imports (Year-to-Date) Total, All Trade Percent of Total Trade
    --- Total, All Countries 819.0 1,471.0 2,289.6 100.0%
    --- Total, Top 15 Countries 614.2 1,107.1 1,721.3 75.2%
    1 Canada
    190.2 255.9


    2 Mexico 110.8 155.8


    3 China 34.7 196.7 231.4 10.1%
    4 Japan 54.4 129.6 184.0 8.0%
    5 Federal Republic of Germany 31.4 77.2 108.6 4.7%
    6 United Kingdom 36.0 46.4 82.4 3.6%
    7 Korea, South 26.3 46.2 72.5 3.2%
    8 Taiwan 21.7 34.6 56.3 2.5%
    9 France
    21.2 31.8 53.1 2.3%
    10 Malaysia 10.9 28.2 39.1 1.7%
    11 Italy 10.7 28.1 38.8 1.7%
    12 Netherlands 24.3 12.6 36.9 1.6%
    13 Ireland 8.2 27.4 35.6 1.6%
    14 Brazil 13.9 21.2 35.0 1.5%
    15 Singapore 19.6 15.3 34.9 1.5%

Wednesday, March 23, 2005

Excessive Spending - What goes around

I've gotten a number of emails about my post of March 18. My position was that certain types of trade are not necessarily beneficial to the U.S.... but the debate seemed to get sidetracked around Canadians mowing lawns versus countries 8,000 miles away.

One gentleman, Roland Patrick, suggested that there was no trade problem and that could be explained by a simple example: we buy from wine and cheese from France, they buy electronic products from Japan, and Japan buys apples and Jack Daniels from us... and we all get along fine and prosper.

My position is that it isn't quite working that way. The current account deficit of $0.6 trillion... or $600 billion... or $600,000 million... means that the product we seem to trade best to the world is currency... not manufactured goods or services or intellectual property. The government prints them and we spend them. And the world continues to accumulate them. Then what?

  1. they buy U.S. government backed notes and convert currency into U.S. debt which becomes a tax burden... or we simply increase our national debt to an even larger, staggering amount to continue spending more than we earn.
  2. they don't like U.S. government backed notes (maybe getting too risky), but find that U.S. land is a great bargain so they buy land and property... which is okay because now they are taxpayers... while driving up the cost of property so that U.S. citizens have a harder time owning property (talk to New Yorkers)... renting is good.
  3. they don't like the either U.S. government backed notes (too much national debt?) and they don't find the U.S. a great place to start a business (labor costs too high), so they try to exchange their dollars for Euros... driving down the value of the dollar... making U.S. products more attractive versus some imports... but still not competitive with the cheap-labor producers... and making heavily imported items such as oil more expensive resulting in higher inflation, higher interest rates by the Fed, and greater costs to businesses which must be covered by raising prices... keeping the U.S. products non-competitve... and U.S. citizens relatively worse off (fewer high paying jobs and increasing cost of goods... remember all of those U.S. industries that have gone under or are struggling to compete with the cheap labor countries).
Okay, the sky isn't falling... yet. The negative current account is still only 5% of the GNP. But the dollar has fallen quite a bit in the past 2 years. Oil has risen (and, yes, a lot of that has to do with China who is now becoming our chief competitor by undercutting domestic producers by refusing to let their currency float) and is spurring inflation (despite government insistence that it isn't) and is sure to affect the vast travel and tourist business segments negatively. And unemployment still remains way too high in traditional manufacturing areas... but is not too bad in the fast food sector with so many more available workers.

Oh, it's all supposed to work out. GM will be rich because of what they make in China. Maybe. But GM is not doing all that well financially despite dreams of glory in the Chinese marketplace. And then there is the Chery... go ahead and Google that one.

Tuesday, March 22, 2005

Excessive Spending - Cranking up the interest

Another 1/4%. Okay, put into perspective that is not a big deal. Something like $2.50 per $1,000. Even on $100,000 that's only $250 (simple interest). At today's gas prices, that's just a few tank fulls.

So, why all of the interest in interest rates? Right now, interest rates are still very low from an historical perspective. Given the booming economy, there is no reason why the market should be too concerned. Well, "booming" may be an overstatement. We have sort of made up lost ground over the past 3 years, but in some areas there is more bust than boom. So, another 1/4% is another small cut and another small amount of economic bloodshed. Trivial by itself, but...

  • Oil over $55 per barrel; gasoline around $2.15-2.20 per gallon across the U.S.... and climbing
  • Unemployment rate at 5.4% nationally... about the same for the last 6 months... well, it's not worse
  • Airlines continue to be in financial trouble
  • GM getting rid of 8,000 (more) white-collar workers
  • and the Fed warns about the return of inflation... ooops.
Is the Fed ever going to stop taking chances tinkering with the economy. That might have been a great baseball infield at one time, but adding cost to the cost of doing business in an effort to keep prices down has always been a little counter-intuitive. It worked so well in 2000 if you like to bring economic growth to a complete halt.

Monday, March 21, 2005

Environmental Extremism - Get the shorts on

Michigan glaciers retreat on the first day of Spring

Sunday, March 20, 2005

Excessive Litigation - BusinessWeek

The March 14 issue of BusinessWeek magazine is an interesting study concerning excessive litigation. Good reading for the non-lawyer.

What is clear when the U.S. system is compared with Europe is that the term "excessive litigation" could be replaced by "excessive penalties". I've said it before that I felt the tort system itself was a legitimate process that has simply been abused. It's time to take the abuse out while maintaining the process.

Of course, one must remember that the bias of these articles belongs to BusinessWeek. Nevertheless, there is fire behind this smoke.

Saturday, March 19, 2005

Feeding tube removed from brain-damaged woman - CNN

Terri Schiavo's Feeding Tube Removed Fox News

Schiavo's Feeding Tube Removed at Judge's Order New York Times

Schiavo's feeding tube removed Christian Science Monitor

Doctors removed Terri Schiavo's feeding tube despite a last-minute push by Republicans on Capitol Hill to keep the brain-damaged woman alive. It is expected to take one to two weeks for her to die, provided no one intercedes. 6:02 p.m. - Wall Street Journal

A lot of opinions about this one. Okay, here are mine.
  1. The woman was brain damaged, but no one knows for certain how much, if any, awareness she has of her surroundings. Given the uncertainty, one can clearly argue for continued care.
  2. The arguement was made that she is unable to care for herself. So are babies. So are quadraplegics. Score one for continued care.
  3. Her husband wanted to stop further care; her parents wanted to continue. As long as any relative was willing to accept responsibility for her care, care should continue.
  4. She might never recover. What about those who are terminally ill for certain? Not a valid point.
  5. It costs a lot to care for her and there is probably no likelihood that she will ever know the difference. Ah, the moral and ethical measure of society. The real deal breaker in the world of business.
  6. Stop feeding her and let her slip into a coma and die. What's the difference between that and a needle full of air into a vein... except that it's slower?
When the going gets tough... run away.

Friday, March 18, 2005

Excessive Spending - Buffett Wrong?

Dr. Don Boudreaux, who contributes to "Cafe Hayek", wrote on March 16:

But having re-read the part of Buffett’s letter dealing with the trade deficit (more accurately, the current-account deficit), I still believe that I’m right and he’s wrong. If my paying my Virginia neighbor $10 to mow my lawn creates neither debt nor other economic problems, how would my paying a Canadian $10US to mow my lawn create debt or other economic problems? What conceivable economic difference can the latitude or longitude of the seller’s residence make?

But is there even a whiff of relevant economic difference between this transaction when it takes place between two Americans and this transaction when it takes place between an American and a Canadian?

Perhaps there is a difference – a difference seen by Warren Buffett, David Ignatius, Paul Craig Roberts, Pat Buchanan, Lou Dobbs, and others, but missed by me. Please – and I’m not being facetious – if you detect an economically relevant difference between these two transactions, write to me and enlighten me.

But until I’m shown such a difference, or discover the difference on my own, I cannot but conclude that Buffett’s concerns about the trade deficit are misplaced.

Well, how about this:

The difference between paying a neighbor... or even a Canadian who happens to live close by for a service... and buying goods from a country 8,000 miles away is that... unless the equation is somewhat balanced by that country buying goods or services from the U.S.... there will ultimately be a negative economic impact as the U.S. economy loses it's ability to generate wealth internally.
    • The Canadian across the river is likely to use his newfound income to purchase goods or services from the area. The economy of the area is infused with income and spending that enriches the area.
    • The purchase of goods from an country 8,000 miles away that does not reciprocate, brings goods into the country while moving the wealth generated from production out of the country. Many of those who would normally infuse the economy by spending their income within the country and keeping the economic engine running, move to the sideline or, worse, become a drain on the economy (collect "benefits"). The economy of the country 8,000 miles away grows and prospers, but bad things tend to happen to the U.S. economy such as:
      • devaluation of the dollar
      • increased cost for goods (inflation)
      • higher unemployment
      • lower tax revenues
What about the lower cost of goods that are imported versus produced locally? Yeah, that is a benefit for awhile. But as the current-account deficit continues to grow to a significant portion of the GNP, the bad things start to show up.

$1 spent on imported goods enriches the exporting nation and the importing company. It may also enrich the retailer. But the negative side is that the U.S. supplier of raw materials loses, the U.S. manufacturer loses, the U.S. manufacturing employee loses, and maybe even the U.S. distributor. $1 at retail multiplies throughout the economy more when production is within the U.S. than when it is elsewhere. Ultimately... say at 5-10% of GNP... the current-account deficit begins to erode the purchasing power of the country as higher paying jobs are replaced with lower paying ones and the value of the dollar drops globally. In simple words: wealth moves elsewhere.

Oh, I know that there is faith that the lost jobs will be replaced by higher-paying, higher-skilled jobs... isn't happening. Faith isn't good enough. One need only look around to see the real dynamics in play.

Some topics I'd like to see at Cafe Hayek:
  • The advantages of protecting the home base while invading other economies (I can sell to you, but you can't sell to me)
  • Undermining the economy of your competitors by undercutting their means of production
  • "Win-lose" economics as a path to power (why use military force when you can drain the resouces of your enemy)
... but that's unlikely. After all, that would require a belief that there are non-economic agendas associated with economic policy.

Wednesday, March 16, 2005


My apologies to the popular new TV show. I'm really referring to how strangely numbers reflect reality.

A recent study by the Insurance Institute for Highway Safety came up with an interesting comparison: the driver's death rate for a Mercury Grand Marquis is about 57% higher than a Ford Crown Victoria. You auto buffs will immediately say, "that's b...s...!" Well, no, that's statistics. Virtually identical cars have wildly different risk rates for death. Must be the grilles... they're different.

Actually, the study doesn't really tell anyone how safe any vehicle is... it simply reports the death rates for the drivers (per million registered years... that's a neat metric). The problem is, the statistics infer that one vehicle is safer than another when countless other variables may come into play. Such as? Such as the driver demographics. Hot rodders and nearly blind old folks can turn perfectly acceptable and safe vehicles into death traps. But public perception is that one vehicle is less safe than the other... even if they are identical.

Kind of like reporting that murders increased by 100% in one town versus 1% in another. The first town is obviously the most dangerous... went from 1 to 2 murders... whereas the second town has crime under control... went from 1,000 to 1,010. Sometimes you just have to get behind the numb3ers.

Tuesday, March 15, 2005

Ethnic Divisiveness - "24"

Fox News was soliciting comments about whether the Fox network show "24" was unfairly portraying Muslims as terrorists. There is a lot of sensitivity about hurting the feelings of various "ethnic groups" so this particular question wasn't too surprising.

But let's be a little rational here. What particular religious/ethnic group is presently comprising those who are routinely using homicide bombers and other means of violence against unarmed, non-combatant civilians; i.e., who comprise those called "terrorists"? Asked and answered... many times.

Nevertheless, I believe the question about "24" should be answered, to wit:

"24" is an equal opportunity inflamer. Sure, Muslims get picked on. So do defense contractors. How about black women? 2 years in a row there are conniving black, females who try to undermine the noble "CTU" and place the nation at risk. Then there are CTU supervisors who have their own agendas and problems... mid-level government officials... who keep getting in the way of progress only to be shunted aside when the going really gets rough....Yup, an equal opportunity inflamer.
"24" is nothing more than a sign of the times. During WWII, it was the "Japs" and "Krauts". Fair? Ask those who were attacked. It's not rational to paint a nation or a religion with one brush... but it is understandable. Especially when there is so little said by members of the religion/ethnic group against those violent actions.

But it's just temporary... there will be another villainous group to take the place of the current villains.

Sunday, March 13, 2005

Ethnic Divisiveness - I'm Special

WEST BLOOMFIELD TOWNSHIP -- An Orthodox Jewish academy knocked out of the Michigan high school basketball playoffs in the first round is continuing with a lawsuit against the tournament organizer, claiming that scheduling games on its Sabbath is discriminatory. (see article)

Anti-discrimination this; anti-defamation that... I've made a choice to live a certain way, so all of you must adjust the way you live to accommodate me... I'm special. Also see this.

There is a difference between discrimination and not making special accommodations.

Urban Myth - A Farmer's Market?

Headline: Urban farming may well hold the key to the future of Detroit (see article written by Nolan Finley)

I've posted many articles about the wasteland called Detroit. But I have to admit that farming has never been one of the potential solutions to the mass exodus of citizens.

It may not be as strange as it seems. Until just recently, there was a tract of land owned by Ford Motor Company in Dearborn adjacent to Hubbard Ave. that was farmed. But that was not what made Dearborn a viable and vital community. A few of the things that Dearborn has that Detroit doesn't have include:

  • a government focus on meeting the needs of the community
  • a strong business presence and a good environment for businesses... both large and small
  • an infusion of new cultures without intimidation of the old
... to name a few.

Mr. Finley, this is what farming won't fix:
Detroit needs a complete restructuring including:
  • resizing
  • rezoning
  • rehabilitation
  • reclamation
There is no logical, structured, sequenced plan to do any of this. There are only haphazard, half-hearted efforts to "find something" to fix a truly broken city. Farming will only work if a large portion of the city is leveled. Hmmm... that might not be a bad idea, after all. Except the city taxes will drive any farmer out of business in a year.

Waiting for Michigan Warming

Saturday, March 12, 2005

Excessive Spending - Update

WASHINGTON, March 11 (Reuters) - The U.S. trade gap widened to a near-record $58.3 billion in January as the seemingly insatiable appetite of U.S. consumers pushed imports to an all-time high, a government report showed on Friday. (see article)

WASHINGTON, March 11 (Reuters) - The United States is concerned about rising imports of clothing from China and will consider imposing restrictions if there is evidence the U.S. market is being disrupted, U.S. officials said on Friday. (see article)

WASHINGTON (Reuters) - The United States posted a record $113.94 billion budget deficit in February, above most Wall Street forecasts, as higher government receipts were not enough to cover a spending increase. (see article)

What can one say? (see article) Again.

Friday, March 11, 2005

Education Failure - 60 Kids or an Ex-Con?


That's what the Detroit Free Press reports was spent by the Detroit Public Schools to hire the ex-convict brother of a school official for a public relations campaign that had dubious success.

That money is the equivalent to the revenue Detroit receives from ALL SOURCES to educate 60 students for a year.

60 kids... ex-convict brother of school official... hmmm. Rehabilitation is fine, but.... Well, the kids wouldn't have paid attention in class anyway, so what's the difference? Ya, sure.

This is just another symptom of the corruption and malaise that permeates Detroit. Any questions about why people are leaving?

Recent article about the Detroit malaise.

Wednesday, March 09, 2005

Environmental Extremism - NFL "Tackles" Pollution?

Okay, it's a good idea anyway.

That being said, the Detroit Free Press article about the NFL planting trees in Detroit to offset pollution caused by the Superbowl is stretching credulity.

Let's get the obvious out of the way (tip of the hat to Mandy Carlson)... most of the trees (all?) will be absolutely dormant... doing nothing... zilch, zip, nada... while all of the pollution from the extra 3,000 people in Detroit to see the Superbowl is going on.

So I guess we can consider the new trees as a long-term payback for the extra CO2 from the buses and cars... well, the cars anyway... that will be idling to find parking spaces that are not a mile away from the stadium.

God, I love political correctness... even if it only makes sense by accident.

Tuesday, March 08, 2005

Excessive Litigation - Stupidity

My son, the safety engineer, occasionally lets slip some interesting accounts of stupidity leading to lawsuits.

I happen to run across this article entitled "THE BASIC LAWS OF HUMAN STUPIDITY", which should be required reading for... well... the not-so-stupid... since it won't do any good for the stupid.

My sons have heard me say often enough that "stupidity has its own rewards." Unfortunately, the consequences of stupidity go beyond the stupid person. Perhaps there should be a stupidity test as part of all legal proceedings.

Monday, March 07, 2005

Excessive Spending - Death & Taxes

I spent the weekend working on taxes for 2004. After 40 years of paying them, I should be pretty good at preparing them. But there's always something new to be considered and some revised form that keeps me busy for an extra hour or two. But, ultimately, I get through the stack of forms. This weekend was dedicated just to the small business I own. It's just a flyspeck on the Federal radar... if even that. But I still get to consider all of the forms that larger businesses use. Then I get to pass the information on to my personal returns and spend another weekend working on that.

I'll owe a little this year because I took out some money from savings and I guess not enough was withheld. Not a problem. I spoke with my son who was doing the same thing in Chicago. Two incomes, renting an apartment... big time payers. Still, we do our best to follow the forms and pay what is owed.

It's tough that we all really need to be accountants to do this... or hire one. I can pretty much do it on my own with an occasional question to my brother or friend who are accountants... though I hate to bother them. Just follow what was done last year and look for changes in the instructions. I guess I would not be too upset if income taxes were replaced by a federal sales tax. Spend more, pay more. The problem with that is that it seems to be a regressive tax. A guy who makes a billion a year is not going to spend 100% of his income, but a guy making $100,000 will get a lot closer to 100%. And the guy making $10,000 spends it all. So that probably won't fly.

I think that a straight 18% tax rate on GROSS INCOME... forget all of the deductions... with a deduction for the first $20,000 (amount can be worked out). That really amounts to a graduated tax up to a couple hundred thousand and a flat tax afterward. A simple, fair approach to taxes that should be close to revenue-neutral. After all, there's a lot of nonsense that goes on with the very rich to avoid taxes. Let's just clean it up and make it simple.

And then I got to thinking about the budget deficit....

Saturday, March 05, 2005

Cold or Cancer?

Detroit's abandoned housing problem just won't go away. Of course, the housing problem is a symptom... like a cough is to lung cancer.

Now city and county officials are worried that "they need to kick-start efforts or risk embarrassment when the world's spotlight is on Detroit, which will happen even before the NFL championship game" according to The Detroit News. That's like saying Detroit needs to get stronger cough medicine. Sure, it will help... but it doesn't address the underlying problems.

Go back and read these.

Detroit's mayor is a caricature of what ails Detroit:
  • Large, but no real substance
  • Talks a great game, but can't deliver
  • Sense of community extends as far as his family (and their automotive needs)
Unfortunately, he is a living representation of what the city has been for a quarter of a century and more. Randomly demolishing a few houses is not a plan for the future. It is a photo-op for a newspaper story.

Tuesday, March 01, 2005

Justice Is Served - Anyone Else?

Last week, I attended the sentencing of an old friend in a Milwaukee court. He had embezzled (stolen) a serious amount of money over a long time. You'd never know it by his home, clothes or car. He probably never spent any of it on himself. The judge commented that people like him often have personalities that drive them to be generous givers in order to validate their self-image. Perhaps that's true. Regardless, he was sentenced to jail time for his crime. That's the way things run.

During the sentencing proceedings, I did make the point to another man who was there to speak on my friend's behalf that sometimes justice is served by putting a person in jail for a crime... but no one else. In my friend's case, he had lost his job of 30 years, his wife of 35 years, and basically all of his possessions. He was nearly penniless and abandoned. That's serious punishment, but the law does demand more. He had found a new, lower paying job and his new employer told the court that he trusted my friend despite what happened and felt that everyone deserved a second chance. He suggested to the court that a work-release arrangement might be in the best interest of all.

But the judge finally concluded that my friend must serve jail time. The judge did not rush to judgment. He considered all of the ramifications and concluded he had to order jail time for my friend. His sentence was not as harsh as it might have been. It was, no doubt, a very fair and compassionate sentence in light of the crime. Justice is served... the press can send out a message to deter other potential embezzlers. And now...

  • my friend loses his job and a chance to rebuild a shattered life
  • his new employer loses a person whose talents and knowledge could have greatly enhanced his business
  • the victims of his embezzlement lose a significant opportunity to obtain their money back
  • the state loses a significant amount of money to incarcerate him
There was no silver lining in that cloud.

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Use the SEARCH BLOG feature at the upper left. For example, try "Global Warming".

You can also use the "LABELS" below or at the end of each post to find related posts.

Blog Archive

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CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)