http://www.nytimes.com/2011/07/29/business/carmakers-back-strict-new-rules-for-gas-mileage.html?emc=eta1
***************
"You invest yourself in what you believe can succeed." (John C. Maxwell)
***************
President Obama is scheduled today to announce the largest increase in fuel economy rules since the government began regulating consumption of gasoline by cars in the 1970s. The CEOs of Detroit's Big Three are scheduled to be there with the President to show solidarity on the issue.
The increase is from the current 27 miles per gallon (fleet average) to 54.5 miles per gallon by 2025. Getting "agreement" from Detroit has been helped by some give and take from the government: the goals for pick-up trucks (and SUVs) are less restrictive. While the agreement calls for a 5% annual increase in fuel economy for cars from 2017 to 2025, the light-truck category calls for 3.5% per year thru 2021, and then 5% annually for the following 4 years.
Standards that were announced 4 years ago run thru 2016 (36 miles per gallon by then).
In addition, the car companies can earn "credits" for producing battery-powered vehicles, hybrids and alternative-fuel models. While "details" on that aren't available yet, we're going to assume that, if the car companies don't hit the goal of 54.5 mpg by 2025, these credits will help them get there.
As David Cole points out, "The really big part of this is the midpoint review. By then, everybody will have a better understanding of the cost of the technology, particularly the batteries."
All of this doesn't change the physics of auto safety. If I get in an accident, I'd rather be driving an Escalade than a VW Beetle. Especially, if it's those two that hit each other.
And, it's nice to have all the "rah, rah" about us being less foreign oil dependent. If we really care about that, lets develop more of the oil and gas available in North America. We can't even OK a second pipeline from Canada to transport more oil from their huge Alberta oil sands deposits to the U.S. We don't we all sit around the campfire and debate about that while China continues to buy into those same deposits?
Last, somebody get back to me when they can explain how I drive to California from here (Dallas) in a Nissan Leaf (all electric: best range - 100 miles, actual use - more like 80 miles).
Of course, I'm part of a generation that remembers filling up at the pump for 25 cents a gallon!
Friday, July 29, 2011
Monday, July 25, 2011
GE Moves A Division To China
http://online.wsj.com/article_email/SB10001424053111904772304576467873321597208-lMyQjAxMTAxMDIwNTEyNDUyWj.html
***************
"Big thinkers are specialists in creating positive forward-looking, optimistic pictures in their own minds and in the minds of others." (David J. Schwartz)
***************
So, Jeff Immelt is the CEO of GE and the Chairman of the President's Jobs Council. The "Jobs Council" was recently formed to figure out ways to create jobs here in the U.S.
Imagine my confusion upon reading that GE is moving its X-ray business headquarters to China. What a time for establishing GE's first business headquarters in China! GE says it doesn't expect the move to result in any job losses in the U.S. Somebody keep track of that statement.
This comes after GE's January announcement that it would inject much of its civilian avionics business into a 50-50 joint venture based in China.
Last year, GE invested a total of $2 billion in China, $500 million of which was allocated into "customer innovation centers."
Does anybody see an inconsistency between Jeff Immelt's role for the President and his role as CEO of GE?
Seriously.
***************
"Big thinkers are specialists in creating positive forward-looking, optimistic pictures in their own minds and in the minds of others." (David J. Schwartz)
***************
So, Jeff Immelt is the CEO of GE and the Chairman of the President's Jobs Council. The "Jobs Council" was recently formed to figure out ways to create jobs here in the U.S.
Imagine my confusion upon reading that GE is moving its X-ray business headquarters to China. What a time for establishing GE's first business headquarters in China! GE says it doesn't expect the move to result in any job losses in the U.S. Somebody keep track of that statement.
This comes after GE's January announcement that it would inject much of its civilian avionics business into a 50-50 joint venture based in China.
Last year, GE invested a total of $2 billion in China, $500 million of which was allocated into "customer innovation centers."
Does anybody see an inconsistency between Jeff Immelt's role for the President and his role as CEO of GE?
Seriously.
Friday, July 22, 2011
The Lesser Depression
http://www.nytimes.com/2011/07/22/opinion/22krugman.html?emc=eta1
***************
"Reflective thinking turns experience into insight." (John C. Maxwell)
***************
Paul Krugman came up with an exceptional insight in his Times post today: we're in a "Lesser Depression." That's a prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than 2 years after the recession supposedly ended.
People will want to "politicize" Krugman as a "left thinking liberal" but I don't think of him that way. He's a Nobel Prize winner for what he's done in economics and deservedly so. And additionally, he writes well about the issues of our times in a creative way using words we can all understand. Parenthetically, I respect the Nobel Prize in spite of the fact that it was awarded to Al Gore for attempting to scare all of us and President Obama for what he "might do."
In not addressing what will fix the real economic problems we are facing now, we instead are making the same mistakes that were made in either 1931 or 1937 (you'd think we would have learned something since then). If either current debt negotiation fails, we could be replaying 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, will be set to replay the great mistake of 1937: the premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last until World War II finally provided the boost the economy needed. And, let me add that both Krugman and Warren Buffet said at the outset of the Great Recession that the U.S. was NOT spending enough money on the economy to get us out of it. And now, we're debating "contraction" when unemployment is going up!
So, while the European Central Bank seems determined to raise interest rates (these are the same idiots that were bailed out by Ben Bernanke at the outset of the Great Recession when he sent a check for $250 billion to them because he thought they needed it), Krugman quotes an old saying on public policy: "You do not know, my son, with how little wisdom the world is governed."
Need I say more.
***************
"Reflective thinking turns experience into insight." (John C. Maxwell)
***************
Paul Krugman came up with an exceptional insight in his Times post today: we're in a "Lesser Depression." That's a prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than 2 years after the recession supposedly ended.
People will want to "politicize" Krugman as a "left thinking liberal" but I don't think of him that way. He's a Nobel Prize winner for what he's done in economics and deservedly so. And additionally, he writes well about the issues of our times in a creative way using words we can all understand. Parenthetically, I respect the Nobel Prize in spite of the fact that it was awarded to Al Gore for attempting to scare all of us and President Obama for what he "might do."
In not addressing what will fix the real economic problems we are facing now, we instead are making the same mistakes that were made in either 1931 or 1937 (you'd think we would have learned something since then). If either current debt negotiation fails, we could be replaying 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, will be set to replay the great mistake of 1937: the premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last until World War II finally provided the boost the economy needed. And, let me add that both Krugman and Warren Buffet said at the outset of the Great Recession that the U.S. was NOT spending enough money on the economy to get us out of it. And now, we're debating "contraction" when unemployment is going up!
So, while the European Central Bank seems determined to raise interest rates (these are the same idiots that were bailed out by Ben Bernanke at the outset of the Great Recession when he sent a check for $250 billion to them because he thought they needed it), Krugman quotes an old saying on public policy: "You do not know, my son, with how little wisdom the world is governed."
Need I say more.
Tuesday, July 19, 2011
Texas Tales
http://www.nytimes.com/roomfordebate/2011/07/17/the-texas-jobs-juggernaut
http://krugman.blogs.nytimes.com/2011/07/18/texas-tales/?emc=eta1
***************
"Talent wins games, but teamwork and intelligence wins championships." (Michael Jordan)
***************
Paul Krugman begins his Monday post ("Texas Tales") this week with a reference to the Times running a "Room for Debate" on the Texas "jobs juggernaut." I've attached the "Room for Debate" that he was referring to as well as his post. And, he references that Texas has been adding jobs faster than the rest of the U.S.
So, what's going on that makes Texas so special? Krugman offers three "informal models." Since Krugman is a Nobel Prize winning economist, and writes well, I read what he says.
Model 1 - Demographics
Here we assume the population of Texas ( and therefor its workforce) continues to rise: high birth rates among past immigrants, because of immigration from Mexico, etc. This will push wages down which creates employment growth but the driving force will be "supply" - more people looking for jobs, not demand.
Model 2 - Zoning
Here we assume that Texas loosens up land-use regulations so that housing becomes cheaper relative to a state like New York. In that case, workers will move to Texas, even if they receive somewhat lower wages than New York, because of the lower cost of living. So, what happens next is that the increased supply of labor pushes wages down, which leads to job growth - just as in the demographically driven case. In this case, however, it's a "benign" thing. BUT, it's about housing policy, not a pro-business environment in the general sense.
Model 3 - Supply-side Marvels (The Goodhair Doctrine)
Finally, suppose that Rick Perry's policies actually have led to a surge in business productivity. Then we'd expect to see the demand for labor rise; this would pull up wages and draw workers into Texas, leading to high job growth. So, what do we see?
According to Krugman, everything we know about Texas points to some combination of Models 1 & 2. Wages in Texas are low, and have probably fallen relative to those in slower-growth states. On the other hand, the cost of living is low thanks to cheap housing. WHAT WE DON'T SEE is either the productivity surge or the wage surge we would have expected if the "Goodhair Model" was at all right.
Within Krugman's post, you can click on Ryan Avent's article in "The Economist" which basically shows Texas real GDP per capita has actually grown very slowly.
Krugman's ending asks "... how should we think about Texan performance in the recession and weak recovery?" (What Recovery?) His answer is that we should measure that performance around the trend that reflects the forces that describe Models 1 & 2. Texas has faster job growth than the rest of the country but it always does. The question is whether relative to that trend the state has done remarkably well. And, as Krugman says, it has not: the unemployment rate in Texas is slightly higher than New York.
Once again, Krugman sheds some light.
http://krugman.blogs.nytimes.com/2011/07/18/texas-tales/?emc=eta1
***************
"Talent wins games, but teamwork and intelligence wins championships." (Michael Jordan)
***************
Paul Krugman begins his Monday post ("Texas Tales") this week with a reference to the Times running a "Room for Debate" on the Texas "jobs juggernaut." I've attached the "Room for Debate" that he was referring to as well as his post. And, he references that Texas has been adding jobs faster than the rest of the U.S.
So, what's going on that makes Texas so special? Krugman offers three "informal models." Since Krugman is a Nobel Prize winning economist, and writes well, I read what he says.
Model 1 - Demographics
Here we assume the population of Texas ( and therefor its workforce) continues to rise: high birth rates among past immigrants, because of immigration from Mexico, etc. This will push wages down which creates employment growth but the driving force will be "supply" - more people looking for jobs, not demand.
Model 2 - Zoning
Here we assume that Texas loosens up land-use regulations so that housing becomes cheaper relative to a state like New York. In that case, workers will move to Texas, even if they receive somewhat lower wages than New York, because of the lower cost of living. So, what happens next is that the increased supply of labor pushes wages down, which leads to job growth - just as in the demographically driven case. In this case, however, it's a "benign" thing. BUT, it's about housing policy, not a pro-business environment in the general sense.
Model 3 - Supply-side Marvels (The Goodhair Doctrine)
Finally, suppose that Rick Perry's policies actually have led to a surge in business productivity. Then we'd expect to see the demand for labor rise; this would pull up wages and draw workers into Texas, leading to high job growth. So, what do we see?
According to Krugman, everything we know about Texas points to some combination of Models 1 & 2. Wages in Texas are low, and have probably fallen relative to those in slower-growth states. On the other hand, the cost of living is low thanks to cheap housing. WHAT WE DON'T SEE is either the productivity surge or the wage surge we would have expected if the "Goodhair Model" was at all right.
Within Krugman's post, you can click on Ryan Avent's article in "The Economist" which basically shows Texas real GDP per capita has actually grown very slowly.
Krugman's ending asks "... how should we think about Texan performance in the recession and weak recovery?" (What Recovery?) His answer is that we should measure that performance around the trend that reflects the forces that describe Models 1 & 2. Texas has faster job growth than the rest of the country but it always does. The question is whether relative to that trend the state has done remarkably well. And, as Krugman says, it has not: the unemployment rate in Texas is slightly higher than New York.
Once again, Krugman sheds some light.
Wednesday, July 6, 2011
The Next Financial Crisis
http://www.marketwatch.com/story/the-next-worse-financial-crisis-2011-07-06
***************
"We can't win the future with a government of the past." (President Obama - State of the Union - 1/25/11)
***************
It's hard to keep track of what's been going on with correcting the faults in government regulation that allowed the worldwide financial crisis to occur but Bret Arends has a perspective that is hard to disagree with: the last financial crisis isn't over, but we might as well start getting ready for the next one.
Here are his 10 reasons why:
1. We're learning the wrong lessons from the last one.
Did Barney Frank, the Community Reinvestment Act, Fannie Mae and Freddy Mac, Bill Clinton and liberals in general cause what happened? If so, how do we explain Spain? Were they over there too?
2. No one has been punished.
Executives like Dick Fuld at Lehman Brothers and Angelo Mozilo at Countrywide cashed out hundreds of millions of dollars before things crashed: "Predatory lenders and crooked mortgage lenders walked away with millions in ill-gotten gains."
3. The incentives remain crooked.
Thanks to restricted stock, options, the bonus game, securitization, fee structures, insider stock sales, "too big to fail" and limited liability, "they (the top financial executives) are paid to behave recklessly."
4. The referees are corrupt.
Here we quote again: "The players (Wall Street) get to bribe the refs ... The banks and other industries lavish huge amounts of money on Congress ...They do it thru campaign contributions ...They do it thru $500,000 speaker fees ... And they do it by spending a fortune on lobbyists ... The finance industry spent $474 million on lobbying last year alone ..."
5. Stocks are skyrocketing again.
So, what's the problem? Business must be working, right? Well there's that little issue of capital spending domestically (here in the U.S.) and unemployment. Companies can only spend so much on inventory before consumer demand needs to take over.
6. The derivatives time bomb is bigger than ever - and ticking away.
And, we quote again: "Just before Lehman collapsed ... Wall Street firms were carrying risky financial derivatives on their books with a value of $183 trillion. That was 13 times the size of the U.S. economy ... That number has now INCREASED to $248 trillion!"
7. The ancient regime is still in the saddle.
I guess the qualification to save the economy and/or fix the "problem" is that you were a "Wall Streeter" or a participating economist/regulator because many of those people are (or were) still in place.
8. Ben Bernanke doesn't understand his job.
Here, I disagree. Bernanke's PhD was on the Great Depression and he's done everything possible with monetary policy to spend into a lackluster economy (avoiding the potential for "deflation" which was a real possibility). My theory is that the spending on the rest of the economy (which Bernanke doesn't control) was not enough. I'm talking about infrastructure spending, etc. I find myself in good company on that thought with Krugman and Buffet.
9. We're levering up like crazy.
U.S. corporations are in far more debt than most people realize. Again we quote: "U.S. non-financial corporations ... are in debt to the tune of $7.3 billion. That's a record level and up 24% in the past five years." All that's true but those same corporations are at an all time high in cash flow because this is, once again, a "JOBLESS RECOVERY." So, productivity has gone up dramatically because 7 million people have yet to be hired back - they have either been replaced by some of Larry Ellison's Oracle computer programs or the work has gone overseas. So, here Arends is wrong: more debt doesn't mean more leverage if there's cash to back it up.
10. The real economy remains in the tank.
About this, Arends and I agree. The leading indicator (often referred to by economists as a "lagging indicator") is JOBS. Where are we with that? The sure fire indicator of how bad things are is a "Presidential Commission." This one is led by Jeff Immelt, GE's CEO. I hope what they come up with helps.
So much for the ten reasons we are doomed to repeat 2008. To quote Arends again: "You know what George Santayana said about people who forget the past. But we're even dumber than that. We are doomed to repeat the past not because we have forgotten it but because we never learned the lessons to begin with."
So, we have Dodd-Frank and the rules that are being refined to support it. But, what was that "derivatives" number again? And, Elizabeth Warren, whose idea it was to create a consumer advocacy commission (which she is currently staffing even though there has been no formal appointment of her as Chairperson) is being "attacked" by politicians and lobbyists as the wrong person to run such an agency - I have no idea why, unless it has something to do with wanting to do the right thing by the consumer. Are there people who would be threatened by her? Must be. She's a Harvard law professor who is an expert at bankruptcy. She makes sense. Are we threatened by that?
Hopefully, we will avert the next financial crisis. I'd prefer to see life as a half full glass.
***************
"We can't win the future with a government of the past." (President Obama - State of the Union - 1/25/11)
***************
It's hard to keep track of what's been going on with correcting the faults in government regulation that allowed the worldwide financial crisis to occur but Bret Arends has a perspective that is hard to disagree with: the last financial crisis isn't over, but we might as well start getting ready for the next one.
Here are his 10 reasons why:
1. We're learning the wrong lessons from the last one.
Did Barney Frank, the Community Reinvestment Act, Fannie Mae and Freddy Mac, Bill Clinton and liberals in general cause what happened? If so, how do we explain Spain? Were they over there too?
2. No one has been punished.
Executives like Dick Fuld at Lehman Brothers and Angelo Mozilo at Countrywide cashed out hundreds of millions of dollars before things crashed: "Predatory lenders and crooked mortgage lenders walked away with millions in ill-gotten gains."
3. The incentives remain crooked.
Thanks to restricted stock, options, the bonus game, securitization, fee structures, insider stock sales, "too big to fail" and limited liability, "they (the top financial executives) are paid to behave recklessly."
4. The referees are corrupt.
Here we quote again: "The players (Wall Street) get to bribe the refs ... The banks and other industries lavish huge amounts of money on Congress ...They do it thru campaign contributions ...They do it thru $500,000 speaker fees ... And they do it by spending a fortune on lobbyists ... The finance industry spent $474 million on lobbying last year alone ..."
5. Stocks are skyrocketing again.
So, what's the problem? Business must be working, right? Well there's that little issue of capital spending domestically (here in the U.S.) and unemployment. Companies can only spend so much on inventory before consumer demand needs to take over.
6. The derivatives time bomb is bigger than ever - and ticking away.
And, we quote again: "Just before Lehman collapsed ... Wall Street firms were carrying risky financial derivatives on their books with a value of $183 trillion. That was 13 times the size of the U.S. economy ... That number has now INCREASED to $248 trillion!"
7. The ancient regime is still in the saddle.
I guess the qualification to save the economy and/or fix the "problem" is that you were a "Wall Streeter" or a participating economist/regulator because many of those people are (or were) still in place.
8. Ben Bernanke doesn't understand his job.
Here, I disagree. Bernanke's PhD was on the Great Depression and he's done everything possible with monetary policy to spend into a lackluster economy (avoiding the potential for "deflation" which was a real possibility). My theory is that the spending on the rest of the economy (which Bernanke doesn't control) was not enough. I'm talking about infrastructure spending, etc. I find myself in good company on that thought with Krugman and Buffet.
9. We're levering up like crazy.
U.S. corporations are in far more debt than most people realize. Again we quote: "U.S. non-financial corporations ... are in debt to the tune of $7.3 billion. That's a record level and up 24% in the past five years." All that's true but those same corporations are at an all time high in cash flow because this is, once again, a "JOBLESS RECOVERY." So, productivity has gone up dramatically because 7 million people have yet to be hired back - they have either been replaced by some of Larry Ellison's Oracle computer programs or the work has gone overseas. So, here Arends is wrong: more debt doesn't mean more leverage if there's cash to back it up.
10. The real economy remains in the tank.
About this, Arends and I agree. The leading indicator (often referred to by economists as a "lagging indicator") is JOBS. Where are we with that? The sure fire indicator of how bad things are is a "Presidential Commission." This one is led by Jeff Immelt, GE's CEO. I hope what they come up with helps.
So much for the ten reasons we are doomed to repeat 2008. To quote Arends again: "You know what George Santayana said about people who forget the past. But we're even dumber than that. We are doomed to repeat the past not because we have forgotten it but because we never learned the lessons to begin with."
So, we have Dodd-Frank and the rules that are being refined to support it. But, what was that "derivatives" number again? And, Elizabeth Warren, whose idea it was to create a consumer advocacy commission (which she is currently staffing even though there has been no formal appointment of her as Chairperson) is being "attacked" by politicians and lobbyists as the wrong person to run such an agency - I have no idea why, unless it has something to do with wanting to do the right thing by the consumer. Are there people who would be threatened by her? Must be. She's a Harvard law professor who is an expert at bankruptcy. She makes sense. Are we threatened by that?
Hopefully, we will avert the next financial crisis. I'd prefer to see life as a half full glass.
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