READ ABOUT DETROIT AND SOLUTIONS TO ITS PROBLEMS. CLICK HERE.

Friday, June 24, 2005

Excessive Spending: Federal Protection Agency aka Federal Reserve

  • Jobs lost to China because of currency manipulation
  • Economic distress because of oil price surges
  • Budget problems for states because of high unemployment

So the Federal Protection Agency aka Federal Reserve has a plan to raise interest rates until everything is fixed:
NEW YORK - The Federal Reserve has room to raise interest rates further but may be getting close to the end of its tightening cycle, Federal Reserve Bank of Dallas President Richard Fisher told CNBC TV Wednesday.

"We are not quite there yet. We are getting closer, and as to when we get there, stay tuned,” he said.
Fortunately for us, the government is a lot smarter than all of those people who can't see that unemployment, high oil prices, and state and local communities with budget problems are really all treatable by raising interest rates.

Thursday, June 23, 2005

Monday, June 13, 2005

Environmental Extremism - Global Warming

The latest buzz on Global Warming from USA Today:
The debate's over: Globe is warming

By Dan Vergano, USA TODAY Mon Jun 13, 6:56 AM ET

Don't look now, but the ground has shifted on global warming. After decades of debate over whether the planet is heating and, if so, whose fault it is, divergent groups are joining hands with little fanfare to deal with a problem they say people can no longer avoid.

General Electric is the latest big corporate convert; politicians at the state and national level are looking for solutions; and religious groups are taking philosophical and financial stands to slow the progression of climate change.

They agree that the problem is real. A recent study led by James Hansen of the NASA Goddard Institute for Space Studies confirms that, because of carbon dioxide emissions and other greenhouse gases, Earth is trapping more energy from the sun than it is releasing back into space.
Well, that settles it. USA Today has spoken.

An interesting side note. For awhile, I have stated that the only viable solution for both energy and environmental issues is the expansion of nuclear power. The same article above stated:
More people are advocating nuclear power. Greenpeace co-founder Patrick Moore told a congressional panel in April that "nuclear energy is the only non-greenhouse gas-emitting energy source that can effectively replace fossil fuels and satisfy global demand."
Wait a minute! Greenpeace co-founder agrees with me? Well, why was this buried near the end of this long article?

Whether or not the prognosticators are correct that Michigan will become the great Sahara of the north, there is hope when someone from Greenpeace can actually see issues clearly enough to make such a statement.

There is one other front that is still a "frontier"... the application of available technology on a commercial and personal level that can reduce energy consumption. And why is that lagging? Because there is no energy policy or strategy that encourages... no, incentivizes... the use of such technology as:
  • geothermal heating and cooling (effective as far north as Minnesota)
  • diesel/electric hybrid vehicles (requires cleaner diesel fuel)
  • new building codes for homes that take advantage of better insulation and lighting technologies
and the list goes on.

Just as the argument for building small, efficient natural gas power plants rather than investing in advanced nuclear power plants is spurious (it's cheaper, but the issue is a non-renewable resource that contributes to the dreaded "greenhouse" effect versus a reliable, non-polluting, non-greenhouse system)... so too is the "market driven" approach to energy conservation. Sometimes, better, more expensive technologies need to be PUSHED INTO USE.

Friday, June 10, 2005

Excessive Spending - Verbal Prestidigitation

Headline: Treasuries ease, trade gap narrower than expected

Another Headline: US trade gap widens less than expected in April

Good news, eh?

Read further:

Despite the monthly improvement, the deficit remained on track to surpass last year's record of $618 billion.

The gap for the first four months of the year was up 22 percent from the same period in 2004.

Okay, call me old fashioned, but that sounds a lot like "I'm feeling much better now; the doctor gives me three weeks to live instead of two."

Wednesday, June 08, 2005

Summertime Expectation

It's not official by the calendar, but the temperature says summer has arrived. Along with that comes the unreasonable expectations of summer: we will all have fun, fun, fun.

The cottage is about to be back in business; the boat is in the water, the power is back on, the carpets will be cleaned, the furniture will be moved back in a few days, and relatives will start arriving immediately thereafter. Then it's the trek back and forth from home, hauling food one way and trash the other.

Of course, this is in addition to running the business and taking care of the maintenance for two homes. It's constant motion from dawn to dusk... and that's a lot of hours this time of the year. The schedule is dictated by the season. Michigan sleeps during the winter and is sleep deprived in the summer.

It IS fun. But, by the end of August, we look forward to the slowdown. That's three months away. Now I have to go have some fun.

Monday, June 06, 2005

Education Failure - And why are you surprised?

I've been writing for awhile on the problems in education. Unlike many who feel that the issue is not enough money for education or not enough good teachers, I have stated that the responsibility falls back to the families and that, in some subcultures, there is no family support for education.

Now The Detroit News has come out with a series of articles about how not enough children are graduating from high school. The News report states that the most cited reason for dropping out is that the students "did not like school."

Gee, I'd rather cruise on a yacht than work, so I'll drop out of work.

Gee, I'd rather go to Las Vegas than pay my taxes, so I won't pay my taxes.

Gee, I'd rather be an idiot instead of preparing for my future, so I'll be an idiot.

Somehow I don't feel all that sorry for those people who make stupid life decisions. After all, stupidity does have its own rewards. Too bad those who don't complete high school or get a GED by the time they turn 19 can't be drafted into the Iraqi army. They might like school better.

Well, okay, that's a little severe. Children are not really adept at making life decisions. The problem is that many parents abdicate their responsibility to the school system... and the school system does not have the tools at its disposal to change the attitudes of parents who do not value an education for their children. The solution always has been and always will be with the family. Sure, there are those exceptional and lucky children who succeed at school dispite the best efforts of their progenitors to discourage them. But that's not the rule.

And then there are those children who are just plain stupid....

You can find other articles in this blog under the heading of "Education Failure".


Also, these were part of a look into the year 2020:

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Blog Archive

Cost of Gasoline - Enter Your Zipcode or Click on Map

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

FEDERAL RESERVE & HOUSING

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."
November 28, 2007 FED VICE CHAIRMAN DONALD KOHN
"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."
http://www.reuters.com/

December 11, 2007 Somehow the Fed misses the obvious.
fed_rate_moves_425_small.gif
[Image from: CNNMoney.com]
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 Economy.com. "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)