Monday, October 31, 2005

Excessive Spending - Nothing Is As Simple As It First Seems

... but some things are not as complex as they might first appear.

In a recent note to executives at Ford, I pointed out that certain things stand in the way of most large companies attempting to change quickly:

  1. Teamwork means "my team"... not the company. When times are rough and people become insecure, people will do what it takes to "protect" themselves rather than take risks for the company. Risk and failure are much less desirable than inaction and deflection.
  2. Economies of scale may work for production, but they have the opposite effect on management. Size forces management to use processes and procedures rather than active communication. "Nimble" is not a word usually associated with large corporations.
  3. The best and the brightest become discourage because instead of letting them "create, fix, and adapt" the company and its products in response to the competitive environment, they are forced into positions or processes where they "consider and review and discuss".
I suggested that if they did not know the history of the A-12/SR-71, they might consider that as a model for a large company that wants to achieve successes quickly: take the best of what is available and give it to the best people available and let them do what is necessary to make something much better in the shortest possible time with the fewest resources needed. You might find the history of this project interesting as well because of the way a small team of the very best people in their fields were able to design and produce a plane that should have been impossible in the time they had (5 years from contract to completion) which was less than it took to develop a new car model back then.

I don't believe one could argue that an airplane that was the fastest, highest flying, longest range craft for nearly 3 decades was less complex than a 1967 Ford. Well, you could, but then you might also be one of those people who believes that "team" means "my team." For them, everything is more complex than anyone can imagine.

Friday, October 28, 2005

Education Failure - Where Are The Jobs?

Maybe it's not fair to use the newspapers as an indication of the job market anymore. After all, with and all of the rest of the online job placement services, newspapers have lost a lot of their clout. But I found it curious that in today's classified section, only 3 partial columns... about the equivalent of 2 full columns... or about 20% of 1 page... were for companies seeking workers.

That compares with about 2-1/2 columns dedicated to "pets" for sale.

What are some of those listed jobs?

  • 5 for auto technicians
  • A couple for drivers
  • 3 for medical personnel
  • 4 for sales jobs
  • and about a dozen for various jobs like roofers and housekeepers
Hopefully, Sunday's paper will have more than that.

So what does this tell those young people who decide that 2 years or even 4 years of high school is enough? Three things:
  • What you see (in a newspaper) may not be all you can get
  • You need to learn how to find a job online
  • You might need to consider college... except that...
College students, educators rue unpreparedness ... oops!
And what is a major concern for many students and their parents? Homework is difficult... oops!!!

Wednesday, October 26, 2005

Delphi offer: $9 an hour

Ailing supplier lowers bid to UAW; workers asked to pay up to $5,000 yearly for health care.

Thursday, October 27, 2005

Excessive Litigation - A Pig in a Poke? - Verse 2

On October 4, I questioned the wisdom of "buying" the nomination of Harriet Miers:

You get my point. While there is nothing in her background that indicates she may be a bad judge, there is no record to base her selection to the Supreme Court. She may actually have the potential to be a very good Justice. But for now, it looks like Congress could be buying a "pig in a poke."
Apparently, our senators and congressmen from both parties didn't like what they saw after they looked... and now "the cat is out of the bag."

The other day, my sons and I were tossing around the reasons why President Bush might have nominated her. I pointed out that it might be nothing more than a tactic to get someone he really wants on the court to be more acceptable to Congress. After all, almost anyone might be seen as "well qualified" in comparison with Ms. Miers.

In other words, the "pig" in the poke and the "cat" out of the bag was really a sacrificial "lamb."

Excessive Spending - Snow vs. Bernanke?

"U.S. Treasury Secretary John Snow on Wednesday urged Congress to extend expiring tax cuts and control spending to promote economic growth and create jobs." (Reuters)


"Ben Bernanke, a plain-speaking former economics professor, was chosen Monday by President Bush to be the next chairman of the Federal Reserve, the most influential economic policy job in the world.

If approved by the Senate, Bernanke would succeed Alan Greenspan, who has spent 18 years at the helm and is expected to step down Jan. 31. Bush called Greenspan a "legend," and Bernanke promised to continue the chairman's policies." By JEANNINE AVERSA, AP Economics Writer

So, let's get this straight... the U.S. Treasury Secretary has concerns about the economy faltering and wants to extend tax credits to keep the economy strong and growing. Meanwhile, the Federal Reserve, now headed by Ben Bernanke, is concerned about the economy being too strong and inflation being a big problem.

Meanwhile, again...
And finally...
So, do you need an interpreter?

By the way, today's Detroit Free Press commented on the excessive spending in the U.S. Okay, that's only a month after...

Sunday, September 25, 2005

Excessive Spending - If You Don't Have It; Flaunt It

Wednesday, October 26, 2005

Ethnic Divisiveness - Irony

Today I wrote a short note to The Detroit News:

Perhaps you didn't notice the irony of your two headlines on October 25:
  • Rosa Parks - Civil rights legend dies at age 92
  • Police sued; race bias alleged - Detroit commanders says he was passed over for promotions and was demoted because he is white
Last October, I wrote a piece about the "herd mentality" in Detroit (and everyplace else, too). I invite you to read it. If... if the police officer's account of the situation is factual, it is just another example of the "herd mentality" in action. Rosa Parks became a symbol of blacks rising up against the white "herd mentality." Now, as Detroit celebrates the life of Rosa Parks, the very blacks that benefitted from her actions may have instituted their own version of that mentality.


Tuesday, October 25, 2005

Autumn - View From The Window

The picture says it all. Posted by Picasa

Monday, October 24, 2005

Ethnic Divisiveness - Taken To Its Illogical Conclusion

Extremism is nothing more than reasonable thought that has been extended to an unreasonable conclusion.

  • If two aspirin reduce pain, 50 aspirin will eliminate it forever (well, yes, this may be true)
  • If cutting back calories is good, eating nothing is best
  • If rain is good for crops, floods are best
Part of the problem in dealing with extremists is their inability to understand that context in which a statement is rational. Another part of the problem is falsely equating one condition as a logical extension of another (more = better).

Another part of the problem is semantics: "The message of Islam and Muslims is modesty, fairness, security, stability, sympathy, harmony and kindness," said Dr Shaikh Abdul Rahman Al Sudais, the veteran Quran reader and imam of the Holy Mosque in Makkah. (cited from Jihad Watch)

This sounds pretty reasonable except that the extremist interprets that to apply only to Muslims:
The exiled radical Islamist cleric Omar Bakri Mohammad is continuing to reach his followers in Britain through websites and internet chatrooms.... In one session a man calling himself Mizaan, who spoke with an English accent, said: “We should all of us glorify terrorism and we should incite religious hatred.... Speaking animatedly, Mizaan stated that the world was divided into two camps — Islam and kuffar (non-believer) — which would always be at war. He repeatedly urged his listeners to take part in that war... (The Times)
It is not difficult to follow the "logical" progression: Islam is good; that which resists good is evil; non-believers are resisting Islam; non-believers are resisting good; non-believers are evil; we must struggle (Jihad) against evil; we will always be at war with non-believers.

i.e.; more = better

Thanks, Wiley.

Sunday, October 23, 2005

Excessive Spending - Globalization and Our Wallets

Forbes had an online artile that interested me: Book Review - Globalization's End.

Globalization is one of those buzzwords that everyone uses and, as far as I can tell, few agree what it really means. To the business executive, it means trying to reduce costs in order to not lose any more profits to overseas competitors. To the worker on the assembly line, it means losing my job to some guy willing to work for next to nothing. To the consumer, it means getting things more cheaply. To the communities hit by plant closings, it means loss of tax revenues and more strain on community services.

To me, globalization is a process of economic dislocation. It is about making choices that have long term impact for short term reasons... and hoping that everything will work out just fine.

John R. Saul is the author of The Collapse of Globalism

At the heart of The Collapse of Globalism is a question that's fundamental to economics but often not asked explicitly: Are political decisions meant to be made in deference to the economy and markets, or can we use our political institutions to shield us from some of the harsher effects that markets can dish out?
The argument is that "globalization" isn't a homogeneous process, but is economic interaction that can be... and is... affected by political policies.
In short, in what's meant to be a "world without borders," it's been impossible for people to ignore just how much local economic conditions really matter. In response, some participants in the global economy have begun to realize and exercise some of their local power.

Saul points to countries like New Zealand, Argentina and Brazil as examples of governments and people who have broken the rules of globalization when the results haven't suited them. The reason, as Saul describes it, is that globalization didn't keep its promises.
The Forbes article concludes:
Globalization was supposed to deliver a world without borders and its adherents have often said that the power of governments would wane against the more fluid powers of commerce. Saul says that it just isn't so. Governments can make choices, and people aren't required to simply follow what the market dictates, even if it hurts them.

This is the start of a new debate: We made this economy, shouldn't it serve our interests?
If you are interested, also see the Australian Financial Review article for a more in-depth articulation.
One comic sign of the coming era was the creation, in 1971, in a Swiss mountain village called Davos, of a club for European corporate leaders. There they could examine civilisation through the prism of business. Soon businessmen were coming from around the world. Then government leaders and academics flooded in, looking for investors. Business leaders, politicians and academics alike seemed to accept without question the core tenet of Davos: that the public good should be treated as a secondary outcome of trade and competition and self-interest.

Let's look at sports to better understand what Saul is saying. During the cold war, the Soviets and East Germans attained dominance in women's swimming in global competition. Everyone understood the rules; the Soviets and East Germans just decided it wasn't in their best interests to follow them. Through the use of steroids, they created female swimmers that were bigger and stronger than Hulk Hogan. After awhile, the rest of the world wised up and enforced the rules through a governing body.

The problem with globalization is that there is no governing body to really enforce the rules. So, Saul is arguing that if some countries are modifiying globalization to serve their local situation, ultimately all countries must do the same or suffer economic problems.

This sounds like the old days of trade policies, tariffs and barriers... as opposed to NAFTA and CAFTA and "free trade with China". But in reality, Saul is arguing for a saner approach to trade: don't destroy your home base for a short term "good deal." A lot of economists will argue that the markets will take care of themselves and good policy is no policy. That sounds like advice that a lot of globalization "winners" are not following.

Yesterday, I made one of those short term decisions, but followed my "local policy." I had a choice between some pliers made in China and some made in the U.S.A. I chose the latter even though they were a few bucks more. It seems to me that there should be more to our economic decisions than "the bottom line"... especially since that is too often only one of several economic dimensions to consider. Think not? Remember the Chevy... er, Cadillac Cimmeron? That was a product of "bottom line" thinking.

Does that mean I support "overpaying" U.S. workers? No, it means I don't support underpaying Chinese workers.

Saturday, October 22, 2005

Education Failure - Facing Facts... Or Not

People want government to be accountable and rational; people don't like it when government is accountable and rational.

Recently, Livonia, Michigan, announced that it was scaling back the number of schools to reflect declining student population and increased operating costs; a wholly rational and logical decision. Reaction was disappointment, but surprisingly supportive; for example:

Rayleen Morgan, who has two children in the district, said the district is making the best of a difficult situation.

"This is a proactive way to deal with this," Morgan said.

The cost of educating our children has increase while the general ability of our communities to pay for these costs has diminished. This has little to do with teachers' salaries. It has a lot to do with onerous administrative and facility costs.

What is superfluous? After all, haven't schools cut their costs to the bone? Consider this:
  • Schools have accepted the responsibility to transport students to and from the schools. That used to be the responsibility of the parents. Transportation costs are an increasing portion of the schools' expenses.
  • Sports facilities have become too important. Yes, I played football, baseball and wrestled. But high schools in my hometown shared facilities such as stadiums. After all, half of the teams play "away" games each week. Football and track teams used a simple practice field and baseball teams played at public parks. But recently, despite enormous pressures on Detroit schools to cut back, a new $2.5 million stadium was built (and couldn't be opened because of safety issues). It's nice to have those neat facilities, but not central to education... especially when schools have to be closed.
We want our government to be accountable and rational, but that doesn't mean we want to be accountable and rational... especially if it means we are inconvenienced.

Thursday, October 20, 2005

Excessive Spending - No, That's Bad News, Too

Oil prices went up and that led to accelerated inflation... you know, things cost more. That's bad news.

Well, now oil prices have dropped a little so oil companies won't earn as much money from you and me. No, that's bad news because the stock market likes higher earnings and is reacting negatively so your investments are tanking (no pun?).

Of course, that means gas prices and other prices should come down because oil prices are coming down. No, that's bad news because oil prices went up before and the Federal Reserve is looking at that as it ponders raising interest rates even higher which will offset any cost reductions from lower oil prices.

That doesn't make sense! Yes, that's also bad news.

Wednesday, October 19, 2005

Excessive Spending - Road to Nowhere?

GM in trouble
Delphi in trouble
Ford in trouble
Northwest Airlines in trouble

Major players in Michigan struggling. Employees laid off or fired. Major wage and benefit reductions.

Fuel costs increasing for vehicles, homes and commercial buildings.

Building materials getting increasingly expensive due to hurricane damages.

Okay, so things are a little tight right now. But our government is working hard to help. Here's a good example. Back on September 11, I began a series of articles about how the state, county and local governments were exacerbating the cost of transportation by not addressing poorly sequenced traffic signals. Part of what I stated was:

The State of Michigan charges almost 20 cents per gallon of gasoline as a flat tax plus 6% sales tax on the price per gallon. This is an incentive for the state to promote fuel inefficiency! Am I the only one who gets really PO'd about this situation?
Fast forward to yesterday's The Detroit News.
LANSING -- Higher fuel taxes, local tax increases, toll lanes, beefed-up mass transit and per-mile charges are among the solutions being bandied about as Michigan scrambles for cash to repair local and state roads and reduce congestion on urban highways.
Maybe the reason the freeways are so congested is that traffic elsewhere is so poorly managed. Drivers can't use major surface roads to get anyplace because the signal progression is so poor that everyone floods the expressways which become crawlways.

Well, we do need to fix the roads and bridges... no real choice. So where is the money going to come from? Not from places represented by strong lobbies.

Expect to keep seeing those 11-axle monsters jackhammering the highways. They are the single greatest cause of damage to our roads and bridges, but Michigan "needs" them. Right, I "need" a 50-room mansion, too. The argument for keeping them is that those monsters would have to be replaced by more trucks causing more congestion. Well, if the roads were not damaged so much, they wouldn't have to be repaired so often. Overall congestion might well decrease and those lanes that were not under constant repair could handle the extra, lighter-weight trucks.

And, we might not have to keep trying to tax and spend more. Nah, that part will continue.

Monday, October 17, 2005

Excessive Spending - Seems Fair... Not!

Delphi executives announced with great fanfare that they will be taking base salary reductions of 10-20% (nothing was mentioned about other compensation). The CEO, Robert Miller, will work for $1 until restructuring is completed.

Just one thought: if labor is expected to take a 63% wage cut, why isn't that appropriate for executives who make the decisions leading to profits or losses? Even then, an executive making $1 million per year base salary could probably get by on $370,000 in a pinch. Compare that to a worker who gets $52,000 and takes a cut of over $32,000. A little harder to get by on $20,000, eh?

Oh, and one other thing: the cuts that the executives want the workers to take are permanent; the cuts that the executives are offering for themselves are temporary. Seems fair... not!

Friday, October 14, 2005

Education Failure - Who Needs Science?

Apparently most Americans seem to get by just fine without a basic knowledge of science according to The Detroit News.

Political scientist finds about 75% of adults 'don't have a clue' about basic science concepts.

By Cornelia Dean / New York Times

CHICAGO -- When Jon D. Miller looks out across America, which he can almost do from his 18th-floor office at Northwestern University Medical School in Chicago, he sees a landscape of haves and have-nots -- in terms not of money, but of knowledge.

Miller, 63, a political scientist who directs the Center for Biomedical Communications at the medical school, studies how much Americans know about science and what they think about it. His findings are not encouraging.

While scientific literacy has doubled over the past two decades, only 20 percent to 25 percent of Americans are "scientifically savvy and alert," he said in an interview. Most of the rest "don't have a clue."

... Miller's data reveal some yawning gaps in basic knowledge. American adults in general do not understand what molecules are (other than that they are really small). Fewer than a third can identify DNA as a key to heredity. Only about 10 percent know what radiation is. One adult American in five thinks the sun revolves around the Earth, an idea science had abandoned by the 17th century.
I always thought the sun revolved around me!

Nevertheless, some people proudly display their "alternative scientific" opinions:
What about monkeys?

Something to ponder: If the human being evolved from monkeys, why are there still monkeys? Are the ones existing not good enough to make it to Homo sapiens status? Were there quotas?

Hallie Robertson

Dearborn Heights
Fortunately, it appears that 25% of the population still constitutes a "critical mass" for continued growth in knowledge.

Now, about those high tech job requirements to replace manufacturing jobs going to China....

Thursday, October 13, 2005

Excessive Spending - The Next Recession

I'm going out on a limb now, but I think the 4th Quarter of 2005 will be viewed, retrospectively, as the beginning of a new recession in the U.S.

For those of you who did not read my post of September 16, check it out.

Here are some economic stories from Reuters:

The Fed is getting ready to pounce on the economy. Why? Well, apparently it sees that the economy is running out of energy (pun intended), so it is time to put on the economic brakes by raising interests rates further. For those of you with short-term memory loss, go back to 2000 when the Fed raised the prime to 8.5% for our own good. Alan G. did admit to a slight error in judgment on that action. Unfortunately, the Fed seems to have a short-term memory loss, but the logic is still consistent: when the economy is hit with natural disasters, energy market aberrations, job losses and currency manipulation by competitors, then it is time to cripple the economy by tightening the money supply and raising interest rates.

Econ 10000000000000000001

Wednesday, October 12, 2005

Excessive Spending - I Got Mine 2

Laura Berman of The Detroit News said it well:

We CEOs are often misunderstood: We work tirelessly for success. When we fail, we believe ourselves to be entitled to extra benefits because we know you don't want us to go.

This CEO expects to see bonuses paid and a full severance package -- the Delphi team gets 18 months -- even if we fail.

Sure, bankruptcy once carried a stigma. But Chapter 11 right now is more like a not-too-extreme corporate makeover: It hurts until the bandages come off, but then you're transformed.

Those pesky pension obligations? Those expensive people you agreed to pay too much?

Well, yes, gone from the company. But now additional weight for the house of cards to bear. Henry Ford understood that for his company to be successful, the people who built the products had to be able to afford those products. Apparently, U.S. companies have a long-term strategy to sell to those that build their products... the Chinese. The rest of us can buy the hamburgers we are flipping.

Tuesday, October 11, 2005

Excessive Litigation - Rules of the Game

The federal case against the former KMart executives who oversaw the bankruptcy of that company has been dropped according to The Detroit News.

That will be seen as good news by the executives of Delphi and, perhaps, many more corporations. The fact that the executives of KMart got quite wealthy during the time the company was failing and stockholders were losing their investments apparently has no legal connection. Moral, perhaps. Legal, apparently not.

Just doing their job and getting well paid for it, thank you.

Hey, where was the board of directors. Well, they only "approved" of the executives. They didn't actually oversee anything those guys did... until it was just a little too late. The chaiman of the KMart board, Edward Lambert, also the majority stockholder, formed a new KMart Holding company and bought Sears. They are doing well, thank you.

As for the rest of you KMart stockholders, serve up those securities in a ketchup sauce and call it the "blue plate special." The sauce is considered nutritious by the government.

Small comfort.

Sunday, October 09, 2005

Excessive Spending - I got mine

The following are self explanatory:

Delphi demands 63% pay cut from UAW

October 7, 2005


Delphi Corp. has demanded such drastic cuts in wages and benefits for workers that, according to one UAW local , its members would no longer be able to afford the cars they help build.

Delphi has threatened to declare bankruptcy unless it gets concessions from the UAW and aid from former parent General Motors Corp. The demands, according to newsletters sent to UAW locals, include:

•Reducing pay by as much as 63% to $10 to $12 an hour and total wages and benefits by as much as 77% to $16 to $18 an hour. Delphi currently pays its union workers from $25 to $27 an hour and total wages and benefits of $65 to $70 an hour, making its employees among the best-paid industrial workers in America.

•The right to close, sell or consolidate most of its U.S. plants over the next three years.

•Ending all cost-of-living pay increases.

•Eliminating pay during the Independence week shutdown in July.

•Eliminating the jobs bank, under which Delphi guarantees the pay and benefits for unnecessary workers.

•Reducing holidays to 10 to 12 days per year, down from about 16.

•Reducing vacation to a maximum of four weeks per year.

•Increasing employee contributions for health care to match the salaried plan by increasing doctor and prescription co-pays and other measures. Delphi hourly employees pay about 7% of their health care costs, compared with the 27% paid by salaried workers.

•Changing pensions to reflect the lower wage rates by cutting them to less than $1,500 a month instead of the current rate of about $3,000.

According to a flyer sent to at least two UAW locals Thursday, the company is asking for wage cuts of as much as 63%, to $10 an hour, and for workers to pay 27% of their health care costs versus 7% currently
Delphi execs get severance boost

October 8, 2005


With reports circulating that Delphi Corp. could file for bankruptcy as early as today, the company promised about 21 of its top executives Friday that they'd get more money if they are fired or laid off.

THE WORKERS: Take a 63% cut in pay? First reaction is anger
The Troy-based maker of almost every part you'll find on a car, from brakes to satellite radio receivers, wants to encourage those leaders to stick with the company, even if it files for bankruptcy. Delphi is the nation's largest auto supplier and the fourth-largest company in Michigan.

But the richer benefits for top executives were just another insult to many of the company's blue-collar workers, who found out Thursday that the company wants to cut their pay as much as 63% and reduce health care and retirement benefits.

Wednesday, October 05, 2005

Excessive Spending - Wasting Fuel - 6th Verse

"Tweak clears intersection jams" reports The Detroit News.

This might seem amazing to some, but a community actually addressed a real traffic problem by simply correctly timing a traffic signal.

Congratulations, Center Line.

Now about Bloomfield Township and Troy....

Tuesday, October 04, 2005

Excessive Litigation - A Pig in a Poke?

President Bush has selected Harriet Miers as his second choice to the Supreme Court.

According to sketchy reports in the news, the President has had a long-term working relationship with Ms. Miers and has a great deal of admiration for her capabilities as a lawyer and legal counsel.

I'm going to go out on a limb here and say that she probably is a heck of a lawyer. Since she is the president of the Texas Bar Association, that should give some credence to that position. There is no doubt that she understands the law... from a lawyer's perspective. Nevertheless, I think that the fact that someone is an excellent physicist and researcher does not necessarily make that person a great physics teacher. The fact that someone has exceptional expertise in anatomy does not make that person a great surgeon. The fact that someone builds exceptionally fast cars does not qualify that person to race at Daytona. The fact that someone has studied Plato and Aristotle does not qualify them as a Greek philospher (even if they are Greek).

You get my point. While there is nothing in her background that indicates she may be a bad judge, there is no record to base her selection to the Supreme Court. She may actually have the potential to be a very good Justice. But for now, it looks like Congress could be buying a "pig in a poke."

Monday, October 03, 2005

Education Failure - Longer Summers

Michigan recently announced plans to extend "summer vacation" for schools to Labor Day. Part of the rationale was that the present practice of starting schools the last week of August hurt the tourism industry. Well, that's probably true. But a lot of students go back to school early in one way or another for things like sports practices or band camps or knitting circles. The new schedule simply moves vacation from other parts of the year back into summer the way it was when I was a kid in the agrarian society.

I find it kind of refreshing that our politicians are so concerned with the quality of education that they give our kids some extra time in the summer to soak up more sunshine to sustain them through the dark days of winter.

Interestingly, the U.S. does not appear in a list of nations that have 33 weeks or more per year of elementary education. However, when you look at the list, you have to wonder if there is a relationship between time in classroom and economic success. I suspect that the nature of education in many of these countries is different from the U.S. Sure, readin', writin', and 'rithmetic are taught, but perhaps with religion thrown in for some countries or more social studies in others. Just speculating. Russia has the 3rd longest school year and Mexico the 5th longest. I'm not sure that their countries have been particularly successful as a result.

And that may be just the point: education failure or success is not achieved in an educational vacuum. Without a social and political fabric to provide opportunities to use educational training to its fullest, the amount of time spent in a classroom might just be irrelevant. Certainly, the more time one spends reading and receiving instruction, the more information can be absorbed. But information without the freedom of application is trivia.

So should summer vacation be extended to a more traditional Labor Day? I don't believe the week or so extension (and subsequent reduction during the rest of the year) makes any difference at all. Is 26 weeks of classroom versus an average of 40 weeks for the longest 36 school years important? That depends on the opportunity to use the extra training.

India is an example of where those extra weeks are eventually turning into a lot of extra Ph.Ds. At least for a segment of its population. European countries make up many of those top 36. Some of those nations have prospered and some not so much. So the ultimate question is: should education focus on improving a nation's wealth or its intellectual quality? The anwser is yes.

Sunday, October 02, 2005

Excessive Spending - Wasting Fuel - Deaf Ears and Blind Eyes

I've received some comments that indicate an either/or mentality about traffic signal progression. It doesn't have to be that way. As one example, Lone Pine Road intersects Telegraph Road between two major intersections: Maple Road and Long Lake Road. Lone Pine Road has nothing that distinguishes it as a high priority route; no great volume of traffic and no commerce (except for some community buildings). Yet the signals at this location will stop traffic from both north and southbound Telegraph (at the posted speed) for at least part of the various signal cycles used on Telegraph Road.

Therefore, one can only conclude that Bloomfield Hills is not paying attention. Hey, Bloomfield Hills, Telegraph Road gets priority on the signals!

In today's Detroit Free Press, another reader echoed my sentiments published in The Detroit News:

"To save gasoline, have the traffic engineers in different municipalities get together and set traffic signals so that a driver can have green signals if he or she drives at a given speed down main streets.

Now, on many streets - Big Beaver in Troy for example - you go from green light to red light. Wait, then go from green light to red light again."

Deane B. MacMillan
Bloomfield Hills
Exactly, Deane. And besides wasting gasoline and time, it makes the entire area more dangerous to navigate. Part of the problem is that traffic engineers are attempting to regulate traffic with too many traffic signals instead of "intelligent design".

Too much traffic is an excuse. Well, excuse me, but drivers emerging from several hours of shopping at high-end malls should not be an excuse for snarling traffic on a main thoroughfare. Perhaps subtle adjustments like NO EXITS FROM THE MALL TO THE MAIN THOROUGHFARE might be one solution. Another might be exclusive exit and entry lanes which are blocked by road dividers and allow merging half a block away. Okay, it snarls traffic from the mall, but so what?

Actually, it doesn't snarl any traffic.

The problem is that virtually none of our elected or appointed officials really has much interest in this problem. MDOT doesn't even respond to correspondence. Maybe they just can't hear us... or see the problem.

They are, evidently, more interested in their budgets than yours.

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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
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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)