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Thursday, December 06, 2007

Mega Freeze

SEARCH BLOG: CLIMATE CHANGE

While there has been a lot of anguish about earth warming up some, The History Channel has a program that may give you a different perspective... what might happen if temperatures dropped 1-2°.

The episode is called "Mega Freeze" and was first aired in 2006.

If you get a chance to see it, do so. You'll see what happened the last time the sunspot activity went into a protracted quiet period.

The one part of the show that was a bit controversial was the conjecture of what might happen if the Gulf Stream was disrupted by global warming... conjecture that has been pretty well discredited... to trigger a new ice age.


If you are queasy, you may need to avoid this show.

Life was a lot more like this...


Than this...


The interesting thing about this show was that it used actual history to show what would happen with a drop in temperatures, but used a great amount of conjecture about what would/might happen if temperatures increased a few degrees.
I guess that's expected because we haven't really had warmer temperatures for a few thousand years... so no one really knows what would happen... except that human population and range increased tremendously the last time earth was warmer.
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Wednesday, December 05, 2007

Future Mandate

SEARCH BLOG: MANDATE and WATER

Yesterday's post dealt with the Federal government's mandate for automotive fuel efficiency... CAFE. After posting that, I began to speculate on the next, great government mandate.

My guess is significant restriction of water usage.
Think about it. Periodic droughts south of 35° N and renewed talk about diverting water from the Great Lakes [wonder how Canada would react?]. Ground water drying up in the southwestern states. The Colorado River a constant source of concern and debate.

I see the following possible government-mandated water regulations circa 2020:
  • All consumer appliances using water must be restricted to 1/2 the 2008 standards, including; faucets, dishwashers, toilets, washing machines.
  • All lawn systems must have separate meters that will be limited to X gallons per month with mandatory shut-offs.
  • Irrigation from ground water is forbidden
  • All phosphate fertilizers [which could contaminate ground and lake water] are forbidden
  • All new buildings must be built with rainwater catch basins to supplement non-drinking water needs.
  • Bottled water from underground sources is forbidden
  • Bottled water-based products from underground sources are forbidden
  • All cities must ensure that underground distribution systems of water are certified leak-free.
  • All water purification must be done at solar or wind-powered facilities
  • Water, other than rain water, for any landscaping purpose is forbidden.
  • All watercraft must use only electric or manual propulsion systems to avoid water contamination.
  • All ships carrying any non-water liquids in U.S. territory must have double-hulls.
  • All land-based transport of non-water liquids must be in double-walled containers
  • and on and on....
Why not? None of these are beyond the realm of some well-intentioned senator from California working together with some negative-growth group.
Water is limited [ignore all of that water running back out to the oceans]; population is growing. It's time to act so that we don't run out of water before we die from global warming [neither is likely, but water quality is a concern in many places in the U.S.].
And the cost couldn't be too much, could it? Let's have a 1/10 penny-per-gallon tax on water to finance the administrative cost of enforcing this mandate. At 400 million gallons per day, that will raise $150 billion per year.
That should be enough for the needed enforcers. Of course there might be other costs.
Of course, there is the alternative of living where there is abundant water....

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Tuesday, December 04, 2007

Mandates

SEARCH BLOG: GOVERNMENT and FREE MARKETS

The latest government mandate is the 35 mpg CAFE standard that is percolating through Congress, but may face a veto because it doesn't contain enough alternative fuel mandates to satisfy the President.

The thing about government mandates is that they are pushed by special interests who have no funding liability. They mandate; we pay.
The thing about mandates is that they run counter to all marketplace dynamics. The incentive of mandates is to avoid punishment rather than gain reward.
When you look at all great advances in human commerce, science, and technology, you rarely... if ever... find the motive to be one of avoiding punishment.
Yet, the government approach is the source that doles out all sorts of money to special interest cronies while costing other businesses and consumers billions of dollars in needless expense. In this latest example, automobile manufacturers have to spend vast sums guessing which unproven technology strategy to pursue to avoid punishment... rather than responding to a marketplace that demands the optimum combination of low cost, high performance and greatest efficiency.
In this case, efficiency is the only factor mandated by the government... and done in a way that is certain to maximize cost and minimize performance.
In other news, the education mandate "No child left behind" continues to disrupt schools systems already achieving high standards and excellent results by measuring those systems with faulty, illogical metrics....

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Monday, December 03, 2007

Winter Is Early

SEARCH BLOG: WINTER

Yesterday, we attending the wedding and reception of our son's friend whom he has known since 5th grade.

The young couple are just the kind of people you hope will live in your community and bring children into the world. And we wish them the best.
Of course, planning a December wedding in Michigan has its risks. We were greeted at the end of the evening with an ice-covered vehicle and slushy-to-frozen roads. After some scraping, we were able to see out of the windows and make our way very carefully with the 4-wheel drive engaged.
Our neighbors in Canada seem intent on helping us avoid the dangers of global warming this winter. The last week was and this coming week is forecasted to be about 5 to 8 degrees below normal with several days of fairly brisk winds making it feel as if it were 10° F outside.
ICECAP tells us that this could be the start of quite a few cold winters... similar to 2 or 3 decades ago when snow piled high and furnaces stayed running.
Now about that natural gas to which the federal government won't allow access.
I know, we'll get that when the Great Lakes freeze over... which may be soon.





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Saturday, December 01, 2007

Michigan Service Tax Dead?

SEARCH BLOG: MICHIGAN SERVICE TAX

It appears that the governor and legislature have heard the objections to the service tax. The morning paper headlined that the service tax would be repealed and, in its place, a higher business tax... a 22% surcharge for the next 10 years. So, one onerous tax is replaced with another.

As I wrote on November 7,

Therefore, it is unlikely that the service tax will be repealed without a pound of flesh being taken elsewhere.
Now a difficult environment for businesses is made more difficult... in just another way.
By the way, take a look at your next pay stub in December. You'll see that some of your take home has now become take out.
Although businesses do it all of the time, when is the last time you saw a state or federal budget reduced from one year to the next... even when it is appropriate to do so?

Never....

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Friday, November 30, 2007

Michigan Service Tax Recap

SEARCH BLOG: MICHIGAN SERVICE TAX

It's December 1 and it's time to start collecting 6% of service revenues. Not sure if that applies to what you are doing as a businessman or the services for which you are paying as a customer?

Don't worry, the state government will get around to clarifying that. Trust them.
But, first, how about a recap of what has been posted here during the past year regarding the Michigan Service Tax. For those of you who are interested in the full versions, the links to the right are to previous posts [newest on top] about this shining example of Michigan government.

For those of you who would like the "Cliff Notes" version, here are some excerpts:
January 21 - Rather than creating a whole new tax structure with whole new administrative burdens for both businesses and the state (don't you think there will be a whole new department just to administer this new tax?), perhaps a simple way is this:
Implement a two-year special, non-renewable, 1% increase in both the sales tax and income taxes. The government would have two years to work out a new budget and structure based on significant reductions in revenue (if the economy doesn't recover).
January 24 - [after giving this more thought] It's time for the state to do the same with less or simply do less. Increasing taxes will only exacerbate a bad economic situation for residents and businesses. Options will vary depending on the expenditures. They include:
  1. reducing operating and staffing budgets
  2. eliminating operating and staffing budgets
  3. eliminating new projects
  4. extending timelines for existing projects (such as road construction)
  5. privatizing some functions where feasible
The usual response is "we can't" and the appropriate response is "you must."

February 9 - Besides ignoring the will of the voters with regard to taxes, the Governor has proposed a tax that is likely to be a source of a giant accounting and administrative mess. Are the taxes only applicable to retail transactions or also applicable to business-to-business services? Sales taxes can be audited through inventory records. How do you audit the number of lawns cut or heads of hair cut? The "proof of transaction" disappears in a few weeks.

This seems like a natural incentive to move toward a cash-transaction marketplace. Rather than be satisfied with taxes on the incomes of service providers, the Governor thinks that they ought to collect a fee for the service provider's privilege of earning that taxable income. More than likely, some part time service providers will "go out of business" as far as the state is concerned rather than deal with honestly reporting those extra-hours dollars.

September 21 - The philosophy of the governor and her friends that "all perceived needs of special interests must be met by the state regardless of consequences" is driving out businesses and people. This is pretty much the same approach used the Detroit's city government as the first million people left town. Now there is just fighting over scraps.

The governor and her friends have talked about revitalizing the state for the past 5 years... or was it the state government?
The inability of the governor and her friends to face the reality that business-as-usual left the state and government-as-usual must follow, leaves the state in pretty much a sad state.
September 30 - However, as reported by Nolan Finley of The Detroit News, not all government in Michigan feels the need to expand continually. An examination of the differences between the State's government and Oakland County's [biggest county government] comes up with these differences:

The state begins anew each year with a revenue estimate, budgets spending to consume every dime and then adjourns to watch everything fall apart in short order.

Oakland budgets two years at a time and works with five-year revenue projections. Right now, [Bob] Daddow [Oakland County] sees a $10 million deficit in 2010, so he's building in cuts over the next three years to wipe it out before it becomes a crisis.

... Why bother to plan ahead or take help when you can just take the taxpayers money?
The difference between a badly run business and Michigan state government is that the business goes out of existence.
October 2 - It's amazing that so many people... and government officials(?)... believe that just the state government must continue to expand while the economy of the state shrinks. By some strange accounting logic, a $2 billion increase in the budget offset by a $440 million cost reduction is considered good management... and a reduction in government.
What seems to be the case is that some believe a reduction in the rate of increase is a reduction. What taxpayers want is an absolute year-to-year reduction in government spending. Cut the damn budget by 5% and learn to live with it.
October 7 - The state's economy has badly affected the business climate and now our governor and legislators have enacted an onerous business service tax that has me seriously thinking about shutting our business down. After 25 years, it just doesn't seem worth the time or effort to be a Michigan business anymore.

October 12 - In today's Detroit Free Press website, Tom Walsh posted an article implying that people were over-reacting to the new service tax and taxes in general for Michigan.

One of those "over-reacting" readers wrote the following: see Michigan Service Tax Anger
October 17 - If you have someone help you on a project where their work is integrated into a product you are selling, then you pay a tax for the service and pass the cost on to the customer who is buying your product. Currently, if that customer is another business who will sell your product as a retail item, then he is exempt from the sales tax, but ends up paying it as a hidden service tax.
The state effectively revokes the sales tax exemption and makes the product cost 6% more from a Michigan retailer than a retailer in another state.
October 30 - Well, I'm going out on a limb here, but I'm predicting that 1) the Democrats will do everything they can to make sure the service tax sticks and 2) the service tax revenues will be far less than the Democrats predict which will bring them back to the trough for increases in other taxes. [It should be noted that the income tax is increasing, too]. The turnip is drying up and the Democrats are still trying to squeeze it.

November 1 - As I said earlier, the process was "Fire, ready, aim."

November 7 - The Michigan Senate voted to repeal the service tax before it begins reports The Detroit News. That may turn out to be only symbolic.
The Democrat party controls the House and governorship. Therefore, it is unlikely that the service tax will be repealed without a pound of flesh being taken elsewhere.
Although businesses do it all of the time, when is the last time you saw a state or federal budget reduced from one year to the next... even when it is appropriate to do so?
Sadly, it's just too easy to predict the way our Governor's gang operates.

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We're Not Communicating

SEARCH BLOG: COMMUNICATION

I've been married to this wonderful woman for 40 years and still crazy about her. She has this infectious laugh and brilliant smile that makes me happy.

I keep a picture of her taken just a couple of years after we were married as my desktop image on my computer. Drop dead gorgeous!


But she just has a way of surprising me by saying something I would never expect or just can't quite understand. Last night, we were eating dinner and she was talking about her favorite blog written by a woman who tells about her husband... a rugged, rancher type. My wife said that this woman was commenting about her ex-boyfriend (before she got married) who was described as "flaxen"... or so I thought I heard. I asked what she meant by flaxen... blonde? She corrected me... flaxid.
Now I was in that slight state of confusion that comes just before comprehension.
Then she went on to say that she didn't think the ex-boyfriend would find that flattering at all... just the opposite.
Oh! Flaccid!
A little later as we were cleaning up after dinner, she was vigorously rubbing the table with a small, white cloth. "I'm germanizing the table," she explained.
Another brief pause to catch my breath.
"And when you're done there won't be any Germans left on the table?"

Then I ducked.
But she kissed me anyway.
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Thursday, November 29, 2007

Oil Price Correction

SEARCH BLOG: OIL

Recently, I wrote that I thought oil prices were showing the classic "bubble" signs we saw for the "dotcoms" and housing prices... with a likelihood of a similar correction.

That was when prices were about $98 per barrel. Yesterday, prices were here:


That's not exactly the extent of the correction I had in mind. This is more like it.





Conditions still are not right for that
, but there is talk....

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Wednesday, November 28, 2007

We Outsource - They Insource

SEARCH BLOG: CHINA and ECONOMY

Which economy is producing the most new wealth, the most new jobs, and on the verge of becoming a leader in advanced technologies?

Is there a fundamental shift in thinking for the U.S. versus China? The U.S. seems to view growth as spending and debt growth; China seems to view growth as capability, resource, and wealth growth.
I wonder while approach is more viable in the long run?
Oh, that's too much to think about... let's just enjoy the being subsidized.

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Tuesday, November 27, 2007

Snow Crisis Or Not

SEARCH BLOG: CLIMATE

We all are tempted to use specific examples in support of generalities we believe. I'm as guilty as the next guy. However, specific examples are appropriate when there are enough of them over a long enough time to provide a sample of sufficient size to extrapolate to a generality.

When discussion turns to climate change, one must be careful to allow enough time to see the larger picture.

For example, has the arguable global warming [aka climate change] resulted in an increase in record high temperatures? Not in the 50 U.S.
Over in Europe, the global warming crisis is illustrated by the SNOW CRISIS.
[click on images for full stories]






Except that...
Locally, we have had some colder than average weather. Yesterday, I had the pleasure of pulling the dock out of the water at our lake cottage with the temperature about 10° below normal [there's a family procrastination story behind that].
There was snow on the dock which, while not a crisis, was certainly unpleasant. The waders were neoprene, but the gloves were not... so my hands each simulated five Popsicles on a cold hamburger by the time I got done.
I guess I'll have to wait until 2009 for some pleasant winter weather around here. Then we'll get that global warming... instead of this in November.



And it doesn't get much better for awhile....


But it's only a little below average... 0.6° C or so.
No, we won't have to worry about setting any record high temperatures.
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Monday, November 26, 2007

Dictating Markets

SEARCH BLOG: ECONOMY and STUPIDITY

I've mentioned it before: stupidity has its own rewards.

As state and federal governments [especially courts] become more proscriptive about what should be as opposed to what the markets are saying wants to be, more and more economic dislocations are occurring... and opportunities are moving to places that focus on the latter.

For example:

Here in Michigan, the governor says the state economy should be growing, so she plans to tax us as if it is.

Why do so many citizens believe that the government should be allowed to dictate what the marketplace should be?
They simply want the government to be their proxy so that they can tell you and me what we should be doing.
So are they being stupid for proscribing what should be or are we being stupid for allowing them to dictate what should be?
Yes. And we are all reaping the rewards.
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Saturday, November 24, 2007

Scientific Exaggeration

SEARCH BLOG: TRUTH

Most of us were taught that science was a rigorous method of seeking to understand the nature of our Universe... from the smallest particle to the farthest galaxy. From theory to verification, the scientist was the guardian of the truth by placing objectivity and candor above personal bias.

Maybe not.
Recently, there have been major revelations that scientist believe they had to "exaggerate" in order to get people to act on or support their positions... for example:
Need more examples? Try searching for "scientific exaggeration." How wide is the gray area between fact and fiction?
It appears that one word has been lost in today's scientific world: integrity.
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Friday, November 23, 2007

Ditching The Dollar

SEARCH BLOG: OIL

There has been speculation for years that the dollar would eventually be abandoned as the pricing unit for oil. CNN says... maybe not.

"The dollar is like the Microsoft Windows of the oil world," said Tertzakian. "It's just hard to switch out of it."

And even if OPEC did switch its oil pricing to another currency, some doubt whether the dollar would really take a hit.

The amount of oil OPEC sells on the world market is somewhere around $1.5 billion per day, said Jeffrey Currie, the head of commodity research at Goldman Sachs in London.

Compare that, he said, to the more than $3 trillion that change hands in currency markets every day.

"You're talking about a value that's just too small to show up on the radar screen," said Currie. "It isn't enough to materially change the currency markets."
Oil has risen 5 times higher in the period that the dollar has fallen 50% versus the Euro according to CNN. That's still a lot of price increase... even in Euros.
Nevertheless, becoming a larger consumer/debtor nation versus a producer/creditor nation seems to be having one obvious drawback.
Sure it's not just oil. Oil just reflects the results of trying to get a "free lunch" from certain trading partners... among other issues.

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Thursday, November 22, 2007

Thanksgiving

SEARCH BLOG: THANKSGIVING

We all can find reasons to be thankful whether we celebrate the holiday or not.



We count ourselves fortunate that our three grown sons can still come home to celebrate with us... and love it that wives [and a girl friend] give us reason to add another table.

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Wednesday, November 21, 2007

Foreclosures

SEARCH BLOG: ECONOMY



When one hears about the turmoil in the housing and financial markets, it really becomes clear when you receive a Sunday paper supplement that is larger than the rest of the paper.
The real estate section was much smaller.
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Tuesday, November 20, 2007

Examining The Presidential Candidates

SEARCH BLOG: POLITICS and CHINA

Yesterday, I wrote about the U.S.-China Economic and Security Review Commission Report and mentioned a couple of earlier posts about the interplay between the U.S. and China.

Then, I spent an hour on the phone with Bill, a gentlemen down South, who has been active in politics behind the scenes. As might be expected, the discussion wandered around considerably, but always came back to politics and the economy.

This was not one of those "It's the economy, stupid," discussions. Rather it was about economic direction and policy and whether there was anyone among the candidates who really had a grasp on the long-term implications facing the U.S.
I'll spare you many of the side routes, although those were interesting, too. One of those revolved around the concept that the Secretary of the Treasury was responsible for the U.S. economy.

The Secretary of the Treasury is the principal economic advisor to the President and plays a critical role in policy-making by bringing an economic and government financial policy perspective to issues facing the government. The Secretary is responsible for formulating and recommending domestic and international financial, economic, and tax policy, participating in the formulation of broad fiscal policies that have general significance for the economy, and managing the public debt. The Secretary oversees the activities of the Department in carrying out its major law enforcement responsibilities; in serving as the financial agent for the United States Government; and in manufacturing coins and currency.
[source]

The Secretary of Commerce does have a say in things, too. Bill, wanted the candidates to be able to say who their choices for Secretary of the Treasury would be as a litmus test for their understanding of what should be done regarding our economic future.
I believe that what should be done was what should have been done when W.J. Clinton was president, but got sidetrack with his propensity to cozy up to the Chinese in matters trade, technology, and his own political treasury. Bush apparently was too preoccupied with matters Middle East to recognize the economic 5th column by politicians who loved the copious campaign financing and U.S. businesses who believed that they had found a cheap way out of their need to be competitive.

So they were all too happy to enjoy the "free lunch" that China was offering. And Libertarian economists were all too happy to say that China was "subsidizing" us and that we should be happy about it. [I've never bought into the concept that the Chinese were just being altruistic toward us.]
Well, the dollar is crashing and China is wreaking havoc with the resource markets and suddenly the Fed says we have to worry about inflation. The U.S. is discovering there is a bill for the "free lunch."

Back to selecting a president.... While all of the headlines are about terror and war, the real concern should be where the U.S. is headed over the next 20 years, economically. The Democrats talk jobs, but they really mean more government spending. The Republicans talk about containing terror, but they really mean more government spending.
But neither party really seems interested in examining the underlying economic dynamics affecting the U.S. There is a presumption that we can shift costs elsewhere and reap benefits here. But the world is beginning to say that maybe the dollar isn't a good bet for the international currency. Think not? Look at the dollar vs. the Euro and the cost of oil in U.S. dollars.
Here's my take [it took me awhile]:
  • Clinton - as low on the integrity scale as possible to get... but politically astute and ruthless. Would accomplish many things; question is whether much would be good for this country. Most feared by taxpayers and business; would exacerbate present financial strains on the U.S.
  • Obama - simply not ready for prime time... his one unique qualification being his racial background.
  • Edwards - the second coming of George McGovern; a lightweight in every sense.
  • Guiliani - tough, but has a tendency to surround himself with those of questionable morals. Would accomplish many things; question is whether much would be good for this country. Most feared by al Qaeda, Iran, et al.
  • McCain - tough, responsible, ethical, and honorable; but has his age and health are significant questions. Most likely to fight than negotiate with those in Washington, but would not be reckless in his approach with our adversaries... wouldn't be timid either.
  • Thompson - who knows?
  • Romney - smart, articulate, effective, but is Mormon... and the "Mormon issues" are already circulating. Would probably be most effective on economic issues, but is an unknown regarding terrorism and military issues.
Bill seems to think that Mitt Romney is the best choice for President because he has a focus on things business and economic and would play a better hand for the U.S. Possibly.... I'm not sure if there can be a fundamental shift in Washington politics until it become painfully obvious that the U.S. is just another country out there when it comes to economics... when the U.S. sneezes, the rest of the world hands it a tissue.
The idea that we can simply produce ideas and fortunes will come our way is as fragile as the goodwill of countries like China to honor our intellectual property... not very likely.
It is more likely that the U.S. will gradually lose influence in Europe and Asia and even Australia while China becomes the predominant power in that part of the world. What's 100 years to the Chinese? Meanwhile, we can barely see an horizon 100 months out... and we lose interest in 100 weeks.
So, is Romney the best choice to lead this nation? I'm not sure Moses could lead this nation where it should be going... even with direction from on high. I'm pretty damn sure Hillary can't and wouldn't... and shouldn't.
Besides, carbon credits are the future... just like plastics used to be.

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Monday, November 19, 2007

US-China Economic and Security Review Commission Report

SEARCH BLOG: CHINA

Recently, I posted twice about China's strategy for the 21st century:

Here is further perspective. Excerpts below:

  • While speaking of subsidies and violations of free market
    principles, it is worth noting here that China is continuing
    to manipulate the value of its currency in order to gain an
    unfair export advantage. Meanwhile, China has not
    fulfilled its many promises to protect the intellectual
    property of foreign business software and entertainment
    companies from rampant piracy, just to cite two industries
    important to the U.S. economy. Nor has China reduced the
    many subsidies provided to exporting industries in China.
    As of this year, both of these issues are subjects of formal
    complaints before the World Trade Organization, a
    development that the Commission has advocated in the
    past.

  • The Commission also found that the pace of military
    modernization in China has exceeded official U.S.
    estimates. China’s defense industry is producing new
    generations of weapon systems with impressive speed and
    quality, in part because China has developed the capacity to
    integrate commercial technologies into military systems. In
    addition, industrial espionage has given Chinese companies
    an added source of new technologies.

  • The Commission found that the PLA is increasing its
    emphasis on asymmetric or disruptive warfare techniques,
    such as cyber and anti-satellite warfare. We note the
    increase in the number of computer hacking attacks
    targeting government offices in the United States and
    Europe. Also, the Chinese missile test that destroyed a
    satellite this year and laser attacks by China on U.S.
    satellites in 2006. Both of these technological efforts seem
    directed squarely at U.S. military capabilities, which rely
    on satellites and computers far more than do those of other
    nations.
Questions?

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Saturday, November 17, 2007

Separation of Powers is Unconstitutional

SEARCH BLOG: LAW

In a bold step designed to advance the absolute authority of the judicial system, the 9th Circuit Court of Appeals ruled that the concept of "separation of powers" is unconstitutional. The court summarized their decision by stating:

"The Founding Fathers fully intended the court system to correct all social, legal, and scientific problems, as the court perceives them to exist, that are facing this country. It is inconceivable that they actually intended the Legislative branch to do more than create draft versions of laws which were to be reviewed and revised by the court system as the courts see proper to do so. Had the Founding Fathers actually intended laws to be written and passed by the elected representatives of the people, they would not have given the court system such broadly ranging powers to address the content of legislation from the perspective of how the courts view the social impact of aforesaid legislation.

Henceforth, the Court reserves the right to dictate the content of all legislation and policy related to such legislation and so orders the Legislative branch, Congress, to approve all such legislation as written by the courts. Failure to approve Court prepared legislation will result in Contempt of Court citations for the Congress. Failure to sign such legislation by the Executive branch, the President, will result in Contempt of Court citations for the President."
Well, it's good to know that the courts are firmly in control of our future. As a first step in implementing this change to the legislative process,
"a three-judge panel of the U.S. Court of Appeals for the 9th Circuit in San Francisco ... rejects mileage standards that were to have gone into effect next year and would have raised required average fuel economy for light trucks from 21.6 miles per gallon to 23.5 by 2010. The light truck category -- sport-utility vehicles, pickup trucks and minivans -- makes up 50.2 percent of the U.S. automobile market, with passenger cars accounting for the rest.

The court ordered the National Highway Traffic Safety Administration to come up with new standards "as expeditiously as possible." Current standards for light trucks are likely to remain in effect until new ones can be formulated, officials said.

The ruling also questioned why the government persists in setting separate, lower standards for trucks. The mileage requirement for cars is 27.5 miles per gallon. The average fuel economy of each manufacturer's fleet of vehicles must meet the standard each year." [source]
Makers of large trucks and SUVs are looking at a breakthrough design that uses dramatically reduced horsepower resulting in significant reduction of gas. Well, some gas is produced, but not enough to be deemed harmful to the environment.


[source]

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Friday, November 16, 2007

War Funding

SEARCH BLOG: IRAQ

It appears that Harry Reid and Nancy Pelosi have come up with a new ploy... through which they hope to ensure defeat in Iraq in the face of recent success... that shows Reid and Pelosi to be the Neville Chamberlains [or Benedict Arnolds] of the 21st century... they will ensure that the military runs out of time and money so that it can't win.

The Pentagon says it will have to cut off civilian contractors in order to fund the war effort unless specific funding for the war is passed.
Fine start eliminating those contractors based in Nevada and California... and think about closing some military installations that take up valuable real estate or ocean front and employ a few people in those states. I'm sure that Harry and Nancy won't have a problem with that. For example:
Northrop Grumman of Los Angeles, CA; CEO: Ronald Sugar
Military contracts in 2005: $13.5 billion
Total contributions in 2004 election cycle: $1.77 million

Total CEO compensation for 2002-2006: $30,049,800
Products and services: B-2 stealth bomber, amphibious assault ships, training Iraqi army

[source]

How about $13 billions for the troops instead? Whaddaya think, Nancy? You certainly wouldn't want the money spent on some civilians in California now, would you?
Can't you hear the porkers squealing already?
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Thursday, November 15, 2007

The Ice Is Melting... The Ice Is

SEARCH BLOG: GLOBAL WARMING

Polar bears drowning... the Arctic ice cap gone... New York City will be flooded... all caused by man-made global warming... facts you can't deny.

No doubt about it, all of the empirical evidence is in. Global warming has melted the north pole.
So, after everyone agrees and the debate is over, why does NASA insist on publishing junk science about decadal changes in ocean circulation that supposedly caused the ice cap to shrink... and possibly to grow again in the future?
It's just not fair! We just got President Bush to buy into the inconvenient truth and now this stupid government agency, NASA, is trying to muck up the works. Why don't they just stick to outer space where they belong?
The great tragedy of Science - the slaying of a beautiful hypothesis by an ugly fact.
- [source] Thomas H. Huxley

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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)