Friday, June 11, 2010

No Cap And Trade But It Makes Sense


From The New York Times:

Energy, Climate Change — but No Cap and Trade
The latest proposal to deal with energy and global warming came Wednesday from Senator Richard Lugar, a moderate Republican from Indiana, whose plan seeks to cut energy usage and greenhouse gas emissions without creating a new market in carbon credits or taking a big bite out of the economy.
The proposal – dubbed the Lugar Practical Energy and Climate Plan – has little chance of passage in the Democratic-dominated Senate. But Mr. Lugar’s more incremental approach is designed to appeal to moderate Republicans and a group of Midwestern Democrats who are nervous about the impact of broad climate change legislation on jobs in states that are heavily dependent on coal and manufacturing.
There are a very large number of people who would be satisfied with an approach to energy that rewards efficiency and conservation... but does not penalize everyone in the process.  Mr. Lugar's bill tends toward that approach, but still relies on the stick more than the carrot.

Instead of subsidizing inefficient alternatives to the energy needs of the U.S., let the marketplace reward efficiency.  How? By the lower operating costs for the products.

But wait, what about legislation?  You don't need legislation to accomplish that.  Let the government cut all subsidies [paid by taxpayers, of course] to all energy producers.  Let the cost of energy settle where it may through the marketplace.  Then let consumers decide if they want to pay more for a high energy efficient product or pay more for the cost of the energy to run that product.

But that doesn't fix anything!  It fixes all of the taxpayer paid subsidizing of overly-expensive, politically-correct solutions that don't solve anything.

But what about energy independence?  Perhaps the government should pass legislation that says the government should stay out of the energy business business.  Rather than hamstringing the energy producers, let them produce.

But what about pollution?  Pollution can still be regulated and penalized.

But what about CO2?  That becomes a pollutant as soon as plants can live without it.  Why not ask, "What about food?"

On a personal note, we are building our retirement home.  It will have:
  • R49 roof insulation; R19 wall insulation
  • low e-glass
  • fiberglass doors with insulation
  • wrapped exterior walls
  • Energy Star appliances
  • 96% + efficiency heating and cooling
We believe in conservation through efficiency as long as it makes economic and health/safety sense.  We won't buy a motorcycle-sized car to save a few gallons of gas each month while endangering our safety in traffic.  The government feels it knows what is best.  Yet, the government would make choices for us that are precisely the opposite of those we are making.  What we consider mandatory [good economic decisions based on conservation] and poor economic decisions [foregoing safety for the very high mileage of a small car], the government would reverse.  So, we opt for no energy legislation and no energy subsidies.

Let the marketplace offer.  Let consumers decide.  Let technology provide.  But when the Democratic Party commits suicide by passing Cap and Trade or whatever they want to call the Cost Americans An Arm And A Leg Act, we'll just watch them get voted out of office by Americans who have poorly insulated homes with older appliances and utility bills they can't pay.



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CO2 Cap and Trade

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

Tracking Interest Rates

Tracking Interest Rates


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

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

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

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

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

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

About Me

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