Monday, May 11, 2009

Automotive Lemonade Or Connecting Strangely Different Dots


It's all over the news, U.S. automotive manufacturers are going to force thousands of dealerships out of business. As this article states:

Dealer demise an economic tsunami for communities


ore than 3,000 Chrys­ler LLC and General Motors Corp. dealers could be forced to close or merge with competing showrooms in the next few months — triggering economic aftershocks in com­munities across the United States.

... What’s more, closed dealerships change the landscape of communities, leaving behind thousands of empty stores and sprawling parking lots in an already struggling real estate market.

Michigan governor Jennifer Granholm has been looking for something... anything... to hold up as a beacon of hope and change in this state. She has pinned her hopes on renewable energy as this states in her official site:
Granholm Says Windspire Manufacturing Facility is Creating Jobs as Part of Comprehensive Plan to Grow State's Renewable Energy Sector

Contact: Liz Boyd 517-335-6397

April 20, 2009
Mariah Power, MasTech Manufacturing to make revolutionary turbine in Manistee
LANSING - Governor Jennifer M. Granholm today said the $4 million Windspire manufacturing facility in Manistee that will create up to 140 jobs is in keeping with Michigan's plan to grow the renewable energy sector, create jobs and reduce the nation's dependence on foreign oil in the process. The partnership between Nevada-based Mariah Power and Michigan-based MasTech puts an underused auto plant to work as a factory for the Windspire, a wind-power system for homes and businesses.

"Michigan is proud to be the place where these two companies are partnering to create jobs making these easy-to-use turbines that can generate energy at a home or business," said Granholm during grand opening ceremonies at the facility. "Demand for wind-energy products will continue to grow as federal initiatives to reduce our nation's dependence on foreign oil advance. The Windspire, manufactured by Michigan workers using Michigan materials, will help Americans rely on energy made, literally, in our own backyards."
That's about 1/10%... more or less... of the automotive jobs exiting the state, but it's a little better than nothing.

But how is this for "out of the box" thinking? The governor has been advancing the plan to build "wind turbine farms" on expensive and fertile agricultural land along Lake Huron. Rather than that, why not convert some of those "empty stores and sprawling parking lots" into mini "wind farms" with two or three turbines connected to the local power grids? Or, if there simply is not enough wind in the area, how about mini "solar farms?"
Michigan has to have 10% of its electric power from alternative energy in about 5 years... and there is no way to do that unless the power is generated locally. Otherwise, an expensive and time-consuming effort will be required to create new transmission facilities from the "wind farms" to the electrical grid.

This could be accomplished by 1) quick action by local government to rezone these properties, 2) quick action by the state government to assist in the development of these facilities and connecting them to the local grid, and 3) accessing the federal funds available for alternative energy projects.
Or maybe the answer is simply not blowing in the wind.


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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

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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)