Friday, November 30, 2007

Michigan Service Tax Recap


It's December 1 and it's time to start collecting 6% of service revenues. Not sure if that applies to what you are doing as a businessman or the services for which you are paying as a customer?

Don't worry, the state government will get around to clarifying that. Trust them.
But, first, how about a recap of what has been posted here during the past year regarding the Michigan Service Tax. For those of you who are interested in the full versions, the links to the right are to previous posts [newest on top] about this shining example of Michigan government.

For those of you who would like the "Cliff Notes" version, here are some excerpts:
January 21 - Rather than creating a whole new tax structure with whole new administrative burdens for both businesses and the state (don't you think there will be a whole new department just to administer this new tax?), perhaps a simple way is this:
Implement a two-year special, non-renewable, 1% increase in both the sales tax and income taxes. The government would have two years to work out a new budget and structure based on significant reductions in revenue (if the economy doesn't recover).
January 24 - [after giving this more thought] It's time for the state to do the same with less or simply do less. Increasing taxes will only exacerbate a bad economic situation for residents and businesses. Options will vary depending on the expenditures. They include:
  1. reducing operating and staffing budgets
  2. eliminating operating and staffing budgets
  3. eliminating new projects
  4. extending timelines for existing projects (such as road construction)
  5. privatizing some functions where feasible
The usual response is "we can't" and the appropriate response is "you must."

February 9 - Besides ignoring the will of the voters with regard to taxes, the Governor has proposed a tax that is likely to be a source of a giant accounting and administrative mess. Are the taxes only applicable to retail transactions or also applicable to business-to-business services? Sales taxes can be audited through inventory records. How do you audit the number of lawns cut or heads of hair cut? The "proof of transaction" disappears in a few weeks.

This seems like a natural incentive to move toward a cash-transaction marketplace. Rather than be satisfied with taxes on the incomes of service providers, the Governor thinks that they ought to collect a fee for the service provider's privilege of earning that taxable income. More than likely, some part time service providers will "go out of business" as far as the state is concerned rather than deal with honestly reporting those extra-hours dollars.

September 21 - The philosophy of the governor and her friends that "all perceived needs of special interests must be met by the state regardless of consequences" is driving out businesses and people. This is pretty much the same approach used the Detroit's city government as the first million people left town. Now there is just fighting over scraps.

The governor and her friends have talked about revitalizing the state for the past 5 years... or was it the state government?
The inability of the governor and her friends to face the reality that business-as-usual left the state and government-as-usual must follow, leaves the state in pretty much a sad state.
September 30 - However, as reported by Nolan Finley of The Detroit News, not all government in Michigan feels the need to expand continually. An examination of the differences between the State's government and Oakland County's [biggest county government] comes up with these differences:

The state begins anew each year with a revenue estimate, budgets spending to consume every dime and then adjourns to watch everything fall apart in short order.

Oakland budgets two years at a time and works with five-year revenue projections. Right now, [Bob] Daddow [Oakland County] sees a $10 million deficit in 2010, so he's building in cuts over the next three years to wipe it out before it becomes a crisis.

... Why bother to plan ahead or take help when you can just take the taxpayers money?
The difference between a badly run business and Michigan state government is that the business goes out of existence.
October 2 - It's amazing that so many people... and government officials(?)... believe that just the state government must continue to expand while the economy of the state shrinks. By some strange accounting logic, a $2 billion increase in the budget offset by a $440 million cost reduction is considered good management... and a reduction in government.
What seems to be the case is that some believe a reduction in the rate of increase is a reduction. What taxpayers want is an absolute year-to-year reduction in government spending. Cut the damn budget by 5% and learn to live with it.
October 7 - The state's economy has badly affected the business climate and now our governor and legislators have enacted an onerous business service tax that has me seriously thinking about shutting our business down. After 25 years, it just doesn't seem worth the time or effort to be a Michigan business anymore.

October 12 - In today's Detroit Free Press website, Tom Walsh posted an article implying that people were over-reacting to the new service tax and taxes in general for Michigan.

One of those "over-reacting" readers wrote the following: see Michigan Service Tax Anger
October 17 - If you have someone help you on a project where their work is integrated into a product you are selling, then you pay a tax for the service and pass the cost on to the customer who is buying your product. Currently, if that customer is another business who will sell your product as a retail item, then he is exempt from the sales tax, but ends up paying it as a hidden service tax.
The state effectively revokes the sales tax exemption and makes the product cost 6% more from a Michigan retailer than a retailer in another state.
October 30 - Well, I'm going out on a limb here, but I'm predicting that 1) the Democrats will do everything they can to make sure the service tax sticks and 2) the service tax revenues will be far less than the Democrats predict which will bring them back to the trough for increases in other taxes. [It should be noted that the income tax is increasing, too]. The turnip is drying up and the Democrats are still trying to squeeze it.

November 1 - As I said earlier, the process was "Fire, ready, aim."

November 7 - The Michigan Senate voted to repeal the service tax before it begins reports The Detroit News. That may turn out to be only symbolic.
The Democrat party controls the House and governorship. Therefore, it is unlikely that the service tax will be repealed without a pound of flesh being taken elsewhere.
Although businesses do it all of the time, when is the last time you saw a state or federal budget reduced from one year to the next... even when it is appropriate to do so?
Sadly, it's just too easy to predict the way our Governor's gang operates.


We're Not Communicating


I've been married to this wonderful woman for 40 years and still crazy about her. She has this infectious laugh and brilliant smile that makes me happy.

I keep a picture of her taken just a couple of years after we were married as my desktop image on my computer. Drop dead gorgeous!

But she just has a way of surprising me by saying something I would never expect or just can't quite understand. Last night, we were eating dinner and she was talking about her favorite blog written by a woman who tells about her husband... a rugged, rancher type. My wife said that this woman was commenting about her ex-boyfriend (before she got married) who was described as "flaxen"... or so I thought I heard. I asked what she meant by flaxen... blonde? She corrected me... flaxid.
Now I was in that slight state of confusion that comes just before comprehension.
Then she went on to say that she didn't think the ex-boyfriend would find that flattering at all... just the opposite.
Oh! Flaccid!
A little later as we were cleaning up after dinner, she was vigorously rubbing the table with a small, white cloth. "I'm germanizing the table," she explained.
Another brief pause to catch my breath.
"And when you're done there won't be any Germans left on the table?"

Then I ducked.
But she kissed me anyway.

Thursday, November 29, 2007

Oil Price Correction


Recently, I wrote that I thought oil prices were showing the classic "bubble" signs we saw for the "dotcoms" and housing prices... with a likelihood of a similar correction.

That was when prices were about $98 per barrel. Yesterday, prices were here:

That's not exactly the extent of the correction I had in mind. This is more like it.

Conditions still are not right for that
, but there is talk....


Wednesday, November 28, 2007

We Outsource - They Insource


Which economy is producing the most new wealth, the most new jobs, and on the verge of becoming a leader in advanced technologies?

Is there a fundamental shift in thinking for the U.S. versus China? The U.S. seems to view growth as spending and debt growth; China seems to view growth as capability, resource, and wealth growth.
I wonder while approach is more viable in the long run?
Oh, that's too much to think about... let's just enjoy the being subsidized.


Tuesday, November 27, 2007

Snow Crisis Or Not


We all are tempted to use specific examples in support of generalities we believe. I'm as guilty as the next guy. However, specific examples are appropriate when there are enough of them over a long enough time to provide a sample of sufficient size to extrapolate to a generality.

When discussion turns to climate change, one must be careful to allow enough time to see the larger picture.

For example, has the arguable global warming [aka climate change] resulted in an increase in record high temperatures? Not in the 50 U.S.
Over in Europe, the global warming crisis is illustrated by the SNOW CRISIS.
[click on images for full stories]

Except that...
Locally, we have had some colder than average weather. Yesterday, I had the pleasure of pulling the dock out of the water at our lake cottage with the temperature about 10° below normal [there's a family procrastination story behind that].
There was snow on the dock which, while not a crisis, was certainly unpleasant. The waders were neoprene, but the gloves were not... so my hands each simulated five Popsicles on a cold hamburger by the time I got done.
I guess I'll have to wait until 2009 for some pleasant winter weather around here. Then we'll get that global warming... instead of this in November.

And it doesn't get much better for awhile....

But it's only a little below average... 0.6° C or so.
No, we won't have to worry about setting any record high temperatures.

Monday, November 26, 2007

Dictating Markets


I've mentioned it before: stupidity has its own rewards.

As state and federal governments [especially courts] become more proscriptive about what should be as opposed to what the markets are saying wants to be, more and more economic dislocations are occurring... and opportunities are moving to places that focus on the latter.

For example:

Here in Michigan, the governor says the state economy should be growing, so she plans to tax us as if it is.

Why do so many citizens believe that the government should be allowed to dictate what the marketplace should be?
They simply want the government to be their proxy so that they can tell you and me what we should be doing.
So are they being stupid for proscribing what should be or are we being stupid for allowing them to dictate what should be?
Yes. And we are all reaping the rewards.

Saturday, November 24, 2007

Scientific Exaggeration


Most of us were taught that science was a rigorous method of seeking to understand the nature of our Universe... from the smallest particle to the farthest galaxy. From theory to verification, the scientist was the guardian of the truth by placing objectivity and candor above personal bias.

Maybe not.
Recently, there have been major revelations that scientist believe they had to "exaggerate" in order to get people to act on or support their positions... for example:
Need more examples? Try searching for "scientific exaggeration." How wide is the gray area between fact and fiction?
It appears that one word has been lost in today's scientific world: integrity.

Friday, November 23, 2007

Ditching The Dollar


There has been speculation for years that the dollar would eventually be abandoned as the pricing unit for oil. CNN says... maybe not.

"The dollar is like the Microsoft Windows of the oil world," said Tertzakian. "It's just hard to switch out of it."

And even if OPEC did switch its oil pricing to another currency, some doubt whether the dollar would really take a hit.

The amount of oil OPEC sells on the world market is somewhere around $1.5 billion per day, said Jeffrey Currie, the head of commodity research at Goldman Sachs in London.

Compare that, he said, to the more than $3 trillion that change hands in currency markets every day.

"You're talking about a value that's just too small to show up on the radar screen," said Currie. "It isn't enough to materially change the currency markets."
Oil has risen 5 times higher in the period that the dollar has fallen 50% versus the Euro according to CNN. That's still a lot of price increase... even in Euros.
Nevertheless, becoming a larger consumer/debtor nation versus a producer/creditor nation seems to be having one obvious drawback.
Sure it's not just oil. Oil just reflects the results of trying to get a "free lunch" from certain trading partners... among other issues.


Thursday, November 22, 2007



We all can find reasons to be thankful whether we celebrate the holiday or not.

We count ourselves fortunate that our three grown sons can still come home to celebrate with us... and love it that wives [and a girl friend] give us reason to add another table.


Wednesday, November 21, 2007



When one hears about the turmoil in the housing and financial markets, it really becomes clear when you receive a Sunday paper supplement that is larger than the rest of the paper.
The real estate section was much smaller.

Tuesday, November 20, 2007

Examining The Presidential Candidates


Yesterday, I wrote about the U.S.-China Economic and Security Review Commission Report and mentioned a couple of earlier posts about the interplay between the U.S. and China.

Then, I spent an hour on the phone with Bill, a gentlemen down South, who has been active in politics behind the scenes. As might be expected, the discussion wandered around considerably, but always came back to politics and the economy.

This was not one of those "It's the economy, stupid," discussions. Rather it was about economic direction and policy and whether there was anyone among the candidates who really had a grasp on the long-term implications facing the U.S.
I'll spare you many of the side routes, although those were interesting, too. One of those revolved around the concept that the Secretary of the Treasury was responsible for the U.S. economy.

The Secretary of the Treasury is the principal economic advisor to the President and plays a critical role in policy-making by bringing an economic and government financial policy perspective to issues facing the government. The Secretary is responsible for formulating and recommending domestic and international financial, economic, and tax policy, participating in the formulation of broad fiscal policies that have general significance for the economy, and managing the public debt. The Secretary oversees the activities of the Department in carrying out its major law enforcement responsibilities; in serving as the financial agent for the United States Government; and in manufacturing coins and currency.

The Secretary of Commerce does have a say in things, too. Bill, wanted the candidates to be able to say who their choices for Secretary of the Treasury would be as a litmus test for their understanding of what should be done regarding our economic future.
I believe that what should be done was what should have been done when W.J. Clinton was president, but got sidetrack with his propensity to cozy up to the Chinese in matters trade, technology, and his own political treasury. Bush apparently was too preoccupied with matters Middle East to recognize the economic 5th column by politicians who loved the copious campaign financing and U.S. businesses who believed that they had found a cheap way out of their need to be competitive.

So they were all too happy to enjoy the "free lunch" that China was offering. And Libertarian economists were all too happy to say that China was "subsidizing" us and that we should be happy about it. [I've never bought into the concept that the Chinese were just being altruistic toward us.]
Well, the dollar is crashing and China is wreaking havoc with the resource markets and suddenly the Fed says we have to worry about inflation. The U.S. is discovering there is a bill for the "free lunch."

Back to selecting a president.... While all of the headlines are about terror and war, the real concern should be where the U.S. is headed over the next 20 years, economically. The Democrats talk jobs, but they really mean more government spending. The Republicans talk about containing terror, but they really mean more government spending.
But neither party really seems interested in examining the underlying economic dynamics affecting the U.S. There is a presumption that we can shift costs elsewhere and reap benefits here. But the world is beginning to say that maybe the dollar isn't a good bet for the international currency. Think not? Look at the dollar vs. the Euro and the cost of oil in U.S. dollars.
Here's my take [it took me awhile]:
  • Clinton - as low on the integrity scale as possible to get... but politically astute and ruthless. Would accomplish many things; question is whether much would be good for this country. Most feared by taxpayers and business; would exacerbate present financial strains on the U.S.
  • Obama - simply not ready for prime time... his one unique qualification being his racial background.
  • Edwards - the second coming of George McGovern; a lightweight in every sense.
  • Guiliani - tough, but has a tendency to surround himself with those of questionable morals. Would accomplish many things; question is whether much would be good for this country. Most feared by al Qaeda, Iran, et al.
  • McCain - tough, responsible, ethical, and honorable; but has his age and health are significant questions. Most likely to fight than negotiate with those in Washington, but would not be reckless in his approach with our adversaries... wouldn't be timid either.
  • Thompson - who knows?
  • Romney - smart, articulate, effective, but is Mormon... and the "Mormon issues" are already circulating. Would probably be most effective on economic issues, but is an unknown regarding terrorism and military issues.
Bill seems to think that Mitt Romney is the best choice for President because he has a focus on things business and economic and would play a better hand for the U.S. Possibly.... I'm not sure if there can be a fundamental shift in Washington politics until it become painfully obvious that the U.S. is just another country out there when it comes to economics... when the U.S. sneezes, the rest of the world hands it a tissue.
The idea that we can simply produce ideas and fortunes will come our way is as fragile as the goodwill of countries like China to honor our intellectual property... not very likely.
It is more likely that the U.S. will gradually lose influence in Europe and Asia and even Australia while China becomes the predominant power in that part of the world. What's 100 years to the Chinese? Meanwhile, we can barely see an horizon 100 months out... and we lose interest in 100 weeks.
So, is Romney the best choice to lead this nation? I'm not sure Moses could lead this nation where it should be going... even with direction from on high. I'm pretty damn sure Hillary can't and wouldn't... and shouldn't.
Besides, carbon credits are the future... just like plastics used to be.


Monday, November 19, 2007

US-China Economic and Security Review Commission Report


Recently, I posted twice about China's strategy for the 21st century:

Here is further perspective. Excerpts below:

  • While speaking of subsidies and violations of free market
    principles, it is worth noting here that China is continuing
    to manipulate the value of its currency in order to gain an
    unfair export advantage. Meanwhile, China has not
    fulfilled its many promises to protect the intellectual
    property of foreign business software and entertainment
    companies from rampant piracy, just to cite two industries
    important to the U.S. economy. Nor has China reduced the
    many subsidies provided to exporting industries in China.
    As of this year, both of these issues are subjects of formal
    complaints before the World Trade Organization, a
    development that the Commission has advocated in the

  • The Commission also found that the pace of military
    modernization in China has exceeded official U.S.
    estimates. China’s defense industry is producing new
    generations of weapon systems with impressive speed and
    quality, in part because China has developed the capacity to
    integrate commercial technologies into military systems. In
    addition, industrial espionage has given Chinese companies
    an added source of new technologies.

  • The Commission found that the PLA is increasing its
    emphasis on asymmetric or disruptive warfare techniques,
    such as cyber and anti-satellite warfare. We note the
    increase in the number of computer hacking attacks
    targeting government offices in the United States and
    Europe. Also, the Chinese missile test that destroyed a
    satellite this year and laser attacks by China on U.S.
    satellites in 2006. Both of these technological efforts seem
    directed squarely at U.S. military capabilities, which rely
    on satellites and computers far more than do those of other


Saturday, November 17, 2007

Separation of Powers is Unconstitutional


In a bold step designed to advance the absolute authority of the judicial system, the 9th Circuit Court of Appeals ruled that the concept of "separation of powers" is unconstitutional. The court summarized their decision by stating:

"The Founding Fathers fully intended the court system to correct all social, legal, and scientific problems, as the court perceives them to exist, that are facing this country. It is inconceivable that they actually intended the Legislative branch to do more than create draft versions of laws which were to be reviewed and revised by the court system as the courts see proper to do so. Had the Founding Fathers actually intended laws to be written and passed by the elected representatives of the people, they would not have given the court system such broadly ranging powers to address the content of legislation from the perspective of how the courts view the social impact of aforesaid legislation.

Henceforth, the Court reserves the right to dictate the content of all legislation and policy related to such legislation and so orders the Legislative branch, Congress, to approve all such legislation as written by the courts. Failure to approve Court prepared legislation will result in Contempt of Court citations for the Congress. Failure to sign such legislation by the Executive branch, the President, will result in Contempt of Court citations for the President."
Well, it's good to know that the courts are firmly in control of our future. As a first step in implementing this change to the legislative process,
"a three-judge panel of the U.S. Court of Appeals for the 9th Circuit in San Francisco ... rejects mileage standards that were to have gone into effect next year and would have raised required average fuel economy for light trucks from 21.6 miles per gallon to 23.5 by 2010. The light truck category -- sport-utility vehicles, pickup trucks and minivans -- makes up 50.2 percent of the U.S. automobile market, with passenger cars accounting for the rest.

The court ordered the National Highway Traffic Safety Administration to come up with new standards "as expeditiously as possible." Current standards for light trucks are likely to remain in effect until new ones can be formulated, officials said.

The ruling also questioned why the government persists in setting separate, lower standards for trucks. The mileage requirement for cars is 27.5 miles per gallon. The average fuel economy of each manufacturer's fleet of vehicles must meet the standard each year." [source]
Makers of large trucks and SUVs are looking at a breakthrough design that uses dramatically reduced horsepower resulting in significant reduction of gas. Well, some gas is produced, but not enough to be deemed harmful to the environment.



Friday, November 16, 2007

War Funding


It appears that Harry Reid and Nancy Pelosi have come up with a new ploy... through which they hope to ensure defeat in Iraq in the face of recent success... that shows Reid and Pelosi to be the Neville Chamberlains [or Benedict Arnolds] of the 21st century... they will ensure that the military runs out of time and money so that it can't win.

The Pentagon says it will have to cut off civilian contractors in order to fund the war effort unless specific funding for the war is passed.
Fine start eliminating those contractors based in Nevada and California... and think about closing some military installations that take up valuable real estate or ocean front and employ a few people in those states. I'm sure that Harry and Nancy won't have a problem with that. For example:
Northrop Grumman of Los Angeles, CA; CEO: Ronald Sugar
Military contracts in 2005: $13.5 billion
Total contributions in 2004 election cycle: $1.77 million

Total CEO compensation for 2002-2006: $30,049,800
Products and services: B-2 stealth bomber, amphibious assault ships, training Iraqi army


How about $13 billions for the troops instead? Whaddaya think, Nancy? You certainly wouldn't want the money spent on some civilians in California now, would you?
Can't you hear the porkers squealing already?

Thursday, November 15, 2007

The Ice Is Melting... The Ice Is


Polar bears drowning... the Arctic ice cap gone... New York City will be flooded... all caused by man-made global warming... facts you can't deny.

No doubt about it, all of the empirical evidence is in. Global warming has melted the north pole.
So, after everyone agrees and the debate is over, why does NASA insist on publishing junk science about decadal changes in ocean circulation that supposedly caused the ice cap to shrink... and possibly to grow again in the future?
It's just not fair! We just got President Bush to buy into the inconvenient truth and now this stupid government agency, NASA, is trying to muck up the works. Why don't they just stick to outer space where they belong?
The great tragedy of Science - the slaying of a beautiful hypothesis by an ugly fact.
- [source] Thomas H. Huxley


Predicting Climate Change


Those who warn about global warming want us to look at the big picture... 100 years... statistically [or otherwise] modified weather histories... polar bears on ice floes.

I suspect that is because the big picture hides the reality of how much chaos there is in what makes up our weather and how earth's weather/climate systems are really not understood.
As a local example, yesterday I looked at the weather forecast for a little more than a week from two well-know sources: The Weather Channel and
See the problem when you can't even get agreement on a 9-day trend?

All right, I'll grant you that it is a forecast for Michigan in November, so a variance of 15° in forecasts for a week ahead is probably within acceptable parameters.

But when a lot of money is riding on being able to tell what's going to happen in the future, 15° is really outside of acceptable limits... especially when people are arguing about 0.6° climate change over the course of a century.
Well, it may be hard to tell where you are going when you don't have good information about where you are.

[photo of weather station in Arizona located on an asphalt parking lot]


Wednesday, November 14, 2007

Does The Federal Reserve Cause Inflation


I received an email that cited several sources [for example]regarding an exchange between Dr. Ron Paul and Ben Bernanke, Chairman of the Federal Reserve. The question on the table was whether the Federal Reserve caused inflation. I responded:

"The Fed doesn't cause inflation or deflation, but the Fed certainly mucks up the economy from time to time; e.g., lowering Fed rates to 1% which got everyone on the borrowing bandwagon and many into ARMs that were unrealistic... and then rapidly increasing Fed rates to 5.0%+ which, on a relative basis, put the costs of borrowing much higher than people could afford given their commitments at lower rates... all in the name of protecting the nation against inflation when it simply made a mess out of the financial and housing markets."
I went on to say:
"But to the point of inflation:
  • underlying problem is price of oil/energy due to congress [primarily Democrats] restricting U.S. exploration of oil and oil companies failing to build refineries while at the same time not addressing the need for more electric power generated by nuclear power or clean coal... not the Fed changing interest rates
  • underlying problem is U.S. business dealing with unions and foreign competitors at the same time which has moved production/sourcing overseas and created massive negative imbalances in the current account leading to a weaker dollar... not the Fed actions... while reducing the better paying jobs in the lower-middle class
  • underlying problem is an expensive war that has created significant Federal debt/borrowing lowering the value of the dollar... not the Fed.
The Fed has created problems... just not the ones that RP is chasing."
Does raising interest rates exacerbate inflation caused by other factors? To a certain extent, yes, by adding to the cost of goods and services. Does raising interest rates fight inflation? Beyond a certain level, raising interest rates creates huge economic problems by crushing the marketplace under untenable costs which then precipitates a "fire sale" situation.
I guess that could be called "fighting inflation", but the reality is that it is simply creating major economic losses for many businesses and individuals. It is the equivalent of treating skin cancer with plutonium dust.
Furthermore, with the emergence of China as a major driver of the world economy, the ability of the Fed is lessening to affect worldwide inflation by dampening economic activity around the world.
Consequently, when the Fed raises its lending rates, U.S. businesses and individuals increasingly bear the brunt of that action while the rest of the world merrily goes on its own way.
Perhaps it is time for a change in the mission and methods of the Federal Reserve.


Monday, November 12, 2007

Climate Video - Defining Normal


Coyote Blog/Climate-Skeptic author, Warren Meyer has done an exceptional job explaining the understanding... and misunderstanding... surrounding climate science, climate change, and the politics of global warming in a series of 6 YouTube videos [also available as a DVD, book, or larger video files].

The first video is below:

This is an excellent series which addresses many misconceptions about climate change and the concerns that have been propelling political panic prior to proper perspective.


Reducing the Cost of Government's Environment


Here's an idea: beginning in 2008, all new government construction... local, state, federal... should be required to use geothermal heating and cooling systems. [info] [also] No more heating with oil or natural gas or coal unless UN permission is granted and large amounts of taxpayer dollars are used to buy carbon indulgences... credits, I mean.

Optional: needed electrical power to be supplied by solar and/or wind [in the absence of new nuclear power plants, which are CO2 friendly]
Time for government to put our money where their mouth is.
Nancy, are you listening? Only trying to work with you on this one. Save California; save the world!
And while we're at it, Nancy, here is the solution for your California mileage and emission standards.

You really ought to get one for your personal and official government transportation. Set the example here, Nancy.
Sure, the car is French, but you can still have California wines.


Sunday, November 11, 2007

Remembering Veterans


I remember the first time I saw this scene. It was 1965. I was traveling with a buddy of mine to Florida by way of New York. We decided to see the monuments of Washington D.C. and came across the changing of the guards at the Tomb of the Unknown Soldier. As I recall [which may be faulty], as the ceremony was about to begin, the audience was asked to remove their hats. One person ignored that request. The guard making that request, looked directly at the man who ignored it and repeated the request in a firm, controlled manner. Everyone looked at the offender who then complied.
I took away two things: 1) the dignity of the young military man leading the ceremony and 2) the ignorance and disrespect that some people have regarding our military.
A year later, my buddy enlisted in the Air Force. Two years later, I completed college and then joined.

Military service has always been an honorable and often dangerous duty. My father was a sergeant in the Red Ball Express, a supply group that landed in France a few days after the Normandy Invasion.
They were the favorite targets of the Nazi pilots. He rarely talked about it and then only when he remembered something amusing like the shower being bombed before anyone could use it.
Today, we have brave young people in our military serving all over the world.
We all know someone who has a son or daughter who serves or served in Iraq. A few have died there. We all know their courage and are grateful. I'll sadly take my hat off to them.

Saturday, November 10, 2007

Oil Boom or Bust?


Take a look at the graphic along the right side of this page that shows the price of crude oil. [source]

If you point your cursor to the timeline for 1m 1q 1y 5y, you will see that crude oil prices have roughly quadrupled in 5 years... corresponding in time roughly to the war in Iraq.
You can argue all you want about peak oil, insurgencies, and global warming. The price of crude oil is showing the same pattern of increase that other boom/busts have displayed.

For example, housing prices:

We know where those have gone....

Dot coms


I don't have the price chart from the Dutch tulip bulb price crash in the 17th century, but it worked on the same principle. Whenever the price of one product/resource/commodity escalates too quickly, there will be a subsequent correction.
You can argue that oil is different because there are no alternatives. I point you to the 1980s. This sure looks a lot like 1979-80.

I know, it's different this time. It's always different each time a market gets manipulated and out of kilter.

There are always alternatives... and at the current price of crude oil, they are cheaper.

Of course, Nancy will do her best to see that only her agenda of a government-controlled alternative happens. Carbon credits anyone? Command economy anyone?


Friday, November 09, 2007

What Happened To Market Economy?


A market economy (also called a free market economy or a free enterprise economy) is an economic system in which the production and distribution of goods and services take place through the mechanism of free markets guided by a free price system. In a market economy, businesses and consumers decide of their own volition what they will purchase and produce. Technically this means that the producer gets to decide what to produce, how much to produce, what to charge customers for those goods, what to pay employees, etc., and not the government. These decisions in a free-market economy are influenced by the pressures of competition, supply, and demand. This is often contrasted with a planned economy, in which a central government decides what will be produced and in what quantities.
In a recent email exchange, this appeared:
Oil ShockWave Underscores Dangers of U.S. Oil Dependence

Doug Mills/The New York Times

Last Thursday, Securing America's Future Energy (SAFE) conducted Oil ShockWave, a multimedia 'war game' designed to explore how the U.S. cabinet might react to a major interruption of the world's oil supply.

In the simulation, unrest in Azerbaijan and Nigeria and souring relations with Iran combined to eliminate approximately 1% of world oil production, causing prices to top $160 per barrel. Designed by finance, energy, and national security experts, the scenario illuminated the fragility of the global oil market. With spare supply capacity almost non-existent and global demand continuing to surge, relatively small disturbances can inflict tremendous damage upon oil consumers.

This critical finding comes as Congress is debating whether to enact legislation that meaningfully reduces U.S. oil dependence.

The consequences of the oil-market disruptions in the simulation included gas prices in excess of $5.00 per gallon, two quarters of negative economic growth, double-digit inflation, and dramatically slower job growth. As the participants grappled with the crises, these economic outcomes severely constrained U.S. foreign policy options.
Another part of the email linked to a page which linked to this bit of brilliance:
"The Commission proposes that the nation
devote the resources generated by the sale of
greenhouse gas emissions permits to enhance the
development and deployment of improved energy
technologies. The approximately $36 billion that
Commission analysis indicates will be generated over ten
years by the proposed greenhouse gas tradeable-permits
program — most of which will come from auctioning a
small portion of the overall permit pool — will offset the
specific additional public investments summarized below."

My reaction and email response was:
I was immediately distressed that the red herring of global warming (now referred to as climate change) was so prominently featured. But this is a political document, so I'll attribute the wasted ink to that.

I concur that coal is the most maligned and ignored resource in the energy equation for the future and have posted many times on the subject.

Nuclear power is a must, but because France generates 80% of their electricity from nuclear power, we must abstain. Besides all of France is a nuclear waste dead zone, just as Greenpeace or Envirofart or whatever would like us to believe will happen here.

Expanding our natural gas supply is not only important, but doable. See my post : link

Renewable energy means different things to different regions. I like to think of hydroelectric power as indefinitely renewable and another target of envirofarts. Waste wood is being used in very clean burning wood furnaces wherever trees are abundant and lumber processing is common. Wind power is great off Cape Cod, but the Kennedys have blocked that.

But this makes me want to puke:

"The Commission proposes that the nation
devote the resources generated by the sale of
greenhouse gas emissions permits...."


Think of all the past and famous scams and that tops all of them.

I'm sorry, but we have manipulators in government and business who are lining up to create one crisis after another by restricting resource development on one hand and taxing the hell out of those resources on the other. Whatever happened to the good old marketplace of supply and demand? Hillary, bless her heart, wants to save us all by mandating we ride pedal-powered cars. Let the marketplace dictate what's going to work and what's going to be purchased. Oh, I'm sorry, I reverted back to capitalism and free market philosophy again. Why the hell does Hillary think that people are switching from trucks and heavy SUVs to smaller cars and lighter weight crossovers and hybrids? Because she is mandating it?

It's the government and envirofarts that have prevented us from developing our resources [not enough oil?... read this] and that has manufactured an "energy crisis." Now they want to solve the "crisis" by penalizing everyone. Karl would be very happy. The ironic thing is that big business is lining up their bandwagons to get on the envirogravytrain. BP is developing alternative energy sources. Ethanol's 30% less energy per gallon will improve fleet mpg to 40 by 2020... and make a mess out of the food market.

How is all of this shit making things better? Oh, and then the UN's Stern wants the U.S. and Europe to pay China and India's carbon fees. [HT: Benny Peiser] I'm going nuclear!
Market economy? No, Command economy!

P.S. I got this response to my tirade:

Is there a real crude oil crisis? Probably so, based solely on increasing global demand at some point. I've give them that much. As for the rest, well...they'll have to prove it first. That hasn't happened. Not once. Throw in global politics and conflicts, and the facts get lost in the shuffle.

The biggest problem may be the continuing decline in the U.S. Dollar. Once crude oil hits $120-150bbl, we should see a quick runup in interest rates as global investors dump their U.S. federal securities and wait for higher interest bearing payouts. At that point, we should begin to feel the first wave of hyperinflation in the USA. I have no doubt now that crude will cruise up to $120bbl no later than Spring 2008...maybe Summer 2008. If the Dollar pricing continues on above that level, we're probably in big trouble. My thoughts, anyway.

There is no question that the bulk of the crude oil problem is hype and young broker investors pushing up the price per barrel. Supply isn't an immediate problem. Yet, I find it interesting that non-OPEC production appears to have declined. Where did it go? Were the yields that small?

... "bulk of the crude oil problem" ??? Good pun!


Thursday, November 08, 2007

October 2007 High Temperature Records In U.S.


I pulled some data from NOAA on high temperature records for October 2007.

# U.S. Monthly Highest Max Temperature Records set in October 2007
# NOTE: These records are based on the historical daily observations archived in NCDC's
# Cooperative Summary of the Day data set and preliminary reports from Cooperative
# Observers and First Order National Weather Service stations, and as such are subject to change.
# When the 6-digit COOP ID does not exist for a station the WBAN ID (5 digits) is used.
# All stations displayed have at least 30 years of data with a minimum of 50% completeness.
# Units are °F.
# # Total Number of Records for October 2007 # New: 134 + Tied: 125 = Total: 259
After downloading all of the details into Excel and using the subtotal and max functions to locate the highest record for any location on any day in October for each state, I compared it to the all-time high temperature records for October for each state [click on image for larger view]:

According to NOAA data, there were locations within 26 states that experienced record highs, but when you compare those to the state records for the month of October [1880-2006] you find that zero states had new high temperature records.
This is despite land use changes, including the spread of the urban heat island effect cities, that raise recorded temperatures in many locations.
So, when you hear that 259 high temperature records were either set or tied in October... take it with a grain of salt.
Then look at the image above and see when the records were really set.

Global Terrorism


[click on image for updated information]

It's a relatively peaceful world except for the ... well, just look at the map. Okay, it's not a relatively peaceful world.
It is a world where ideas in the heads of really stupid* people (who may be quite intelligent) cause a lot of pain and suffering.

* marked by or resulting from unreasoned thinking or acting : [senseless: a stupid decision]
Now, you can decide, from your perspective, wherein lies the stupidity.


Wednesday, November 07, 2007

GM, Toyota, and Michigan Gov. Granholm


The Detroit Free Press reports:

Toyota reports record income
Toyota Motor Corp. reported early this morning record net income for the first half of its fiscal year of 942.4 billion yen, or $8 billion, up 21.3% from the same period last year. | StoryChat 36 Comments

* • GM takes loss of $39 billion
A question for Gov. Granholm:
What are the Japanese tax policies that affect/assist Toyota versus Michigan tax policies that affect/hurt General Motors [before/after your beloved service tax takes effect]?
Then consider the Japanese practice of currency manipulation to favor their industries.

Can it be that Gov. Granholm just doesn't understand?


Michigan Service Tax - Gone... Not Really


The Michigan Senate voted to repeal the service tax before it begins reports The Detroit News. That may turn out to be only symbolic.

The Democrat party controls the House and governorship. Therefore, it is unlikely that the service tax will be repealed without a pound of flesh being taken elsewhere.
Although businesses do it all of the time, when is the last time you saw a state or federal budget reduced from one year to the next... even when it is appropriate to do so?


Tuesday, November 06, 2007

Hillary Clinton Wants More Efficiency


From today's The Detroit News:

"Democratic presidential candidate Hillary Rodham Clinton upped the ante Monday in the ... economy debate, calling for a 60 percent increase in efficiency standards by 2020."
I've been arguing all along that government needs to get more efficient, especially here in Michigan where the economy has been contracting while government is growing.
While Sen. Clinton seeks a 60% efficiency improvement by 2020, I'm only looking for a 5% reduction of the state's budget baseline so that the Democratic governor will quit looking for additional service tax revenues from a state where the automotive industry is cutting way back and the housing construction and real estate markets are all but non-existent.
It is obvious to me that Sen. Clinton and Gov. Granholm do not see eye-to-eye regarding efficiency improvements.
It is a simple process of the government mandating greater efficiency and it happens in a way that everyone benefits with virtually no cost to anyone.
How can Gov. Granholm, who seeks bigger and more intrusive government, support Sen. Clinton who is an advocate for significantly greater efficiency and savings for taxpayers everywhere?

What's that... fuel? Yes, this is certainly fuel for discussion.


Monday, November 05, 2007

H20 2GO


Weather patterns have conspired against the southeast U.S. this year.

Global warming hurricanes simply did not materialize and the rains that come with a typical hurricane season were so much vaporware.
I wrote back in April that water was a much bigger issue to civilization than carbon dioxide. This year turned out to be a prime example in the southeast.
As nations around the world, with the help of some alchemists at the U.N., embark on an economically and environmentally disastrous war on global warming, the basic issue of water management is all but ignored.
These are the issues that threaten us, not a 5° C rise in average temperature [HT to Benny Peiser]:
  • Population growth is draining aquifers
  • Flood control and fresh water management is ignored
  • Invasive species are ruining whole aquatic ecosystems
  • Massive changes in land use are changing local and regional climates, often causing warmer, drier conditions
Sure, there will be random droughts and flooding that recur as they have throughout billions of years.
But misguided attempts to manage the weather based on Chicken Little politics are pure waste of time and money... and bad science.

Sunday, November 04, 2007

Michigan and Autumn Glory


I never got around to posting yesterday because... well the pictures explain.

The day started out cold and clear... officially 28°. The air was still and everything was quiet. The coffee was hot with a hint of chocolate... my wife buys this Pinon blend from Trader Joe's, mixes it with non-flavored coffee to tone it down. I like to stand on our back porch and take in the morning. [click on images to enjoy a larger view]

The sky was crystal clear. A prototypical autumn day. 60° and breezy with no mosquitoes or flies or yellow jackets. It was the kind of day that forces one to go outside... take a walk... cut the grass... whatever gets one outside.

Of course, there is football. That's where a DVR [digital video recorder] comes in handy. As the late afternoon approached, we ate dinner [some fine tasting leftoever stew with fresh apple cider to wash it down] and then settled in to watch the state rivalry game.

I can't choose one team over the other because two of my sons attended UM and another MSU. But I would not have been disappointed to see MSU actually win after what seems a lifetime of losses to UM.
It was not to happen as UM came back with two late-game touchdowns to break the hearts of the MSU fans once again.


Friday, November 02, 2007

DVD Burn


There may be millions of them out there... hundreds of millions... just waiting to fade away. I have a few dozen, so I'm taking steps to save them before they are gone. I'm talking about those old VHS tapes. My oldest is from 1983.

Back then I had a camera about the size of the professional packs you see on the sidelines of football games. It weighed about the same as a baby and was just as fussy. The pictures it took were impressive on a 19" TV then, but not much to speak of now.
I ordered a neat little device through Dell for about $80, including shipping and taxes, that converts the analog signals from the tape player [I still have one that works... though I discovered the other one wouldn't even turn on anymore].
Just play the tape with the output cable hooked to a box 3" x 5" and the output from that hooked up to the USB port on my computer. Start the software included with the device and record the videotape as a MPEG2 file ready for use in a DVD.
That's the easy part.

The device also included some software for creating DVDs with titles and effects and text and transitions and editing out uninteresting stuff.
I installed that and tried it with the first tape file I had converted. It was a bit slow loading the file and didn't seem to like switching from one editing feature to another... often simply causing "this program is not responding" messages from Windows Vista.

I uninstalled and reinstalled the program and after a ridiculous number of tries, finally got an edited "project" completed. At about 3 pm I gave it the command to "produce" the DVD.

This morning at 8 am, I checked my computer for the new DVD, but there was just this little progress window that showed 0% complete. You'd think with a new dual core Intel 2 ghz processor and 2 gb of memory with lots of gb of hard drive space that this would be a snap to process... 0% complete.
I'm waiting to hear back from tech support, but it will probably be from India and a person with an accent so thick that you need a dozen audio filters to get a clear signal.

Meanwhile, I went back to the original tape and the recorded individual segments that I had tried to edit from the first file through the less-than-capable software. After creating the files, I renamed them so that I knew what the contents were [the conversion software assigns incomprehensible codes as names] and then loaded them into Windows DVD Maker. At this point, the burning process is about 43% complete... but at least it is working.
You can say a lot of things about Microsoft, but at least their products work. Maybe they don't offer all of the features that the software which doesn't work offers... but it works.
I guess I got what I paid for... an analog to digital device that cost $80 and works... and a DVD editing software for free that is worthless.


I could have saved myself some additional grief by running through the list of programs loaded on my computer.
I found that not only was the Windows DVD Maker software loaded, but its companion program, Windows Movie Maker, which from what I can see, pretty much does what the other software that either didn't work or didn't work well, only does it faster and better.

Thursday, November 01, 2007

Michigan Service Tax - Rethinking Is Better Late Than Never


From The Detroit News:

Thursday, November 1, 2007

Lansing may repeal service tax

Governor, lawmakers look for alternatives after business outcry.

Mark Hornbeck and Charlie Cain / Detroit News Lansing Bureau

LANSING -- The just-passed state budget had barely arrived on Gov. Jennifer Granholm's desk Wednesday when the governor and legislative leaders said they are open to repealing the widely unpopular new $725 million tax on services before it takes effect Dec. 1.

Granholm acknowledged that the hastily assembled service tax is likely to take on a different form in coming weeks. The tax was cobbled together under a veil of secrecy, and with no public input, during the mad scramble to raise enough money to avoid a government shutdown a month ago.

"Those discussions have got to begin now and any changes have to be made in the near future," Granholm said.

You think?
As I said earlier, the process was "Fire, ready, aim."
Now about that budget cut....


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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
... 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

My photo
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)