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Sunday, March 30, 2008

Letter To My Senators

SEARCH BLOG: ENERGY POLICY

Recently, I wrote this email to the U.S. senators from Michigan:

Occasionally, I receive emails from your offices informing me of important legislation and events. One important action that has not surfaced yet from the senate is legislation opening up vast areas of oil and natural gas bearing deposits within U.S. territory and offshore. Given the Democrat control of Congress and the positioning of the Democrat party as the party of the common person, I would hope that stories such as this will be shortly a thing of the past:

'You're working for gas now'
The people of Camden, Ala. pay a bigger chunk of their income for fuel than anyone else in the country - meaning tough choices for the ever thinner family budget.

While environmental protection is important, there appears to be a larger risk of environmental contamination from shipping oil to the U.S. than from local drilling and storage. Given the downside of dependence on any Middle East oil [and South American?], the prudent course for the U.S. would be to have a Manhattan-style project to expand available oil and natural gas supplies from North America while concurrently rapidly deploying the latest generation of nuclear power plants to replace aging nuclear and coal-fired plants. Certainly, research should continue on making solar and wind power economically feasible, but our near-future should not be risked by hoping we can continue to obtain the necessary fuel to keep our economy running at a level where people do not have to spend one-fourth of their income on fuel.

One additional action might ensure that gasoline supplies keep up with demand, even if oil supplies are sufficient: offer a suspension of federal gasoline taxes in any state where a new refinery is built as an addition to existing refineries. Care would have to be taken to be sure that a company would not receive benefit for building a new refinery simply to shut down an existing one.

Regardless of what theoretical alternatives may be touted, such as hydrogen powered vehicles, the reality is that the U.S. has both the natural reserves and the current technology... clean, turbo-diesel engines... to be self-sufficient for many more decades if political obstacles are removed.

As senators from Michigan, you should have a strong interest in seeing that Michigan automotive manufacturers are not saddled with the responsibility and the blame for the U.S. inaction and inability to have a rational and effective energy policy.

Sincerely,

Bruce Hall
For those of you who don't believe that is the case, I invite you to read the following:
It will be interesting to:
  • see if they will respond with anything more than the standard "Your email has been received" and
  • learn if reason can have any impact on politics and special interests.
Maybe the U.S. could start here. Also, here. It would be nice if some of the oil actually stayed in the U.S. instead of going to ... China?
But as I said, big refineries are needed as well and states might be competing to get one if Federal gasoline taxes were eliminated for awhile as an incentive for the states where the refineries are built. It would also help drivers such as those in Camden, AL.
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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

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)