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Sunday, December 16, 2007

Future Transportation

SEARCH BLOG: AUTOMOBILES

As noted in The Detroit News editorial I posted yesterday, the new "energy bill" is essentially limited to:

  1. dictating mileage and emission standards [which may be allowed to conflict]
  2. dictating the increased production of ethanol [which will hinder the compliance with mileage and emission standards, if used]
There are essentially only two alternatives for automobile companies that want to produce a full range of vehicles that meet both mileage and emission requirements and neither are fully realized:
  1. battery powered vehicles
  2. hydrogen fuel cell vehicles [Honda is readying a small, test fleet of these vehicles for leasing at $600 per month. What isn't being said is that the real cost is over $1 million per vehicle]. Of course, when you combine batteries and hydrogen fuel cells, you do get one concern:
    Ford is still some way behind when it comes to fuel-cell vehicles. President and CEO Alan Mulally says the automaker is at least 10 years from offering a fuel-cell car, in part because Ford is concerned about the safety of the highly flammable lithium-ion batteries used in the vehicles. These batteries, also used in consumer electronics such as laptops, can ignite or explode when exposed to high temperatures.

    “We’re not there yet,” Mulally said Wednesday at the Los Angeles show, adding that the prospect of a vehicle that emits nothing but water is “one compelling vision.” [source]

Neither of these technologies is presently viable for widespread commercial application and both would be extraordinarily expensive for consumers.
The U.S. government, which is setting mileage and emission standards, is involved in both battery and fuel cell research through its Argonne National Laboratory efforts. With regard to batteries, it uses the following verbs:
  • conducting
  • addressing
  • developing
  • studying
Fuel cell research is a little more vague.
One other issue regarding fuel cells is that they require fuel... natural gas. As I pointed out in an earlier post, although there are large reserves of natural gas available to the U.S., the Nancy and Harry Show has prevented access to it. So, even if an infrastructure can be built for refueling vehicles with natural gas, guess what the next crisis will be when fuel cell vehicles become commonplace?
Meanwhile, I don't read anywhere on the Argonne site about producing. Well, it is a laboratory... but shouldn't something with immediate commercial application be coming out? How about ready for production?
After all, there are only 12 years to go before automotive fleets must be converted to new technologies... whatever they are.
What about gasoline/electric or diesel/electric hybrids? What about ethanol [E85] powered vehicles?
They may make sense for today in that the technology is available. However, if I were running an automobile company that was forced to deal with both future Federal and California mileage and emission regulations, I would not be placing a lot of bets on anything requiring combustion for the long term. Especially with the newly-found ability of states to arbitrarily set new standards based on any perceived unrelated issue.
What is certain is that over the next 12 years consumers will see some very different and much more expensive vehicles than are being sold now. We're talking about covering $100 billion plus in research and development costs that have to be paid by the consumers.
What is less certain is whether consumers will be better off as a result.
Fire, ready, aim.
We had the same political process recently in Michigan resulting in the Michigan Service Tax. Ouch!
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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

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)