Monday, December 17, 2007

Dear Rep. Markey


The Boston Globe

Representative Edward J. Markey, the Massachusetts Democrat who has led a seven-year, sometimes-lonely push in Congress to raise fuel-economy standards, said yesterday that the bill sets America on the right course.

"It is revolutionary in its impact," he said, noting it mandates the first fuel economy standards increases since 1975.

Markey was deeply involved in the most recent negotiations over the energy bill, which lost significant proposals in the Senate - including measures that would have increased taxes on America's five largest oil companies and called for utilities to create at least 15 percent of their power output from renewable sources. The legislation does increase efficiency standards for light bulbs, household appliances, and commercial buildings.
I wrote this to Rep. Markey:
You've been a strong advocate of an energy policy that creates a new direction for the U.S.

I'm curious now that the present energy bill [automobile mileage] is moving toward signing, what your position is regarding the deletion of the requirement for 15% of electric power to be generated from renewable resources. Obviously, this would have impacted Massachusetts which previously rejected wind turbines off the coast of Cape Code... a perfect location.

I'm also curious about the requirement for a 600% increase in ethanol production which provides a fuel with only 2/3 the energy content of gasoline and increased smog levels. How do you see this consistent with the requirement for increased mileage for vehicles while reducing emissions?

I'm also curious about the lack of expanded drilling permit approvals for natural gas which would be the source of fuel for hydrogen fuel cell vehicles now being developed by nearly every automobile manufacturer. Will that be the next crisis?

I don't see any requirements that all construction by 2020 use geothermal heating and cooling. That is the most inexpensive, efficient, and effective way to save both electricity and reduce carbon output. Why not? Simply because it has no political backers?

I don't see any requirement to start building more nuclear power plants to replace coal and natural gas fired plants. 3rd and planned 4th generation nuclear plants are not only safe, but provide far more reliable electricity production than either solar or wind. I live within 30 miles of the Fermi plant that has been working for decades without problems and catch walleyes and perch within a mile of the plant in water that is clean and safe.

This energy bill is simply a Fire, Ready, Aim approach that relies on a miracle to happen at the end. It's a joke and a farce.
Rep. Markey's automated email sent this:
Thank you for sharing your views with my office. I appreciate your taking the time to write. Due to the high volume of email messages my office receives, we are unable to respond to messages from outside the 7th district of Massachusetts.
But Rep. Markey, your legislative efforts were designed primarily to affect Michigan manufacturers, so you should be more than willing to respond to questions and comments from Michigan residents.


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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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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)