Tuesday, November 27, 2007

CAFE or no CAFE?

Congress is getting ready to jack up the Corporate Average Fuel Economy standards. Currently new cars are supposed to get 27 mpg, and "light trucks" (SUV, minivan, pickup truck) are supposed to get 20 mpg. A Senate bill would wipe out the distinction between cars and light trucks and require all of them to meet the same standard.
Question: Since $3 gas happened, does not Detroit have all the incentive anyone needs to produce good gas mileage cars? Certainly sales of the big SUVs and pickups has nosedived, causing GM, Ford, and Chrysler to loose staggering amounts of money, while Toyota and Honda sales and profits are up?
Nother question: How real are CAFE standards actually? The Chrysler PT cruiser, which looks a lot like a car to me, is actually classed as a light truck. Chrysler did this to raise the average gas mileage on their light trucks. Each PT cruiser sold allowed the sale of a couple of Hemi powered Dodge Ram pickup trucks.
Last Question: If US citizens are willing to buy big vehicles for hauling flocks of kids, plywood from the lumber yard, furniture back from the yard sale, and trash to the dump, why not let them. It's a free country. Should we not be able to spend our hard earned dollars the way we like, as opposed to the way someone else thinks we ought to?

Light Duty Trucks or Light Trucks

Just watched a GM ad on Fox. Camera pans across a car showroom full of shiny pickups and SUV's. The voice over describes them as "Light Duty trucks". Not good. "Heavy duty" is good, "Light Duty" says the truck is gonna fall apart upon hitting its first deep chuckhole. The voice over should have called 'em "light trucks" which is good. Heavy trucks have 18 wheels and won't back into your garage which doesn't help sales appeal.
I can understand the ad writers making this goof, but how do it get by all the suits at GM?
Or are the GM suits as clueless as the admen?

Monday, November 26, 2007

Eliminate the sub prime middle man

Make it illegal to sell loans, mortgage or any other sort. The sub prime meltdown happened when the banks (or loan companies) who issue loans started selling the loans for cash. This freed the mortgage issuers from all risk and restocked their supplies of cash, so they could run out and do more mortgages. Which they did. The issuers make their money on the closing costs, so the more closings they do the more money they make.
Mortgages are creations of the law. We could pass a law saying that no one can sell a mortgage. The mortgage is a deal between a specific borrower and a specific lender and the deal is not an article of commerce that can be traded, sold, or given away. The legal rights to enforce the deal (foreclosure on the house) are only enjoyed by the original issuer, second hand mortgages loose their right of foreclosure.
The idea is to kill off the juggling of mortgages from one hand to another. You issue it, you own it forever. Issuer's will be much more careful who they loan to, and on what terms, if they have to live with the deal for 30 years. When the issuers can sell the loan, they don't care how sound it is, it just has to be sound enough to last long enough to sell it off. This accounts for the teaser mortgages, low payments for a couple of years, much higher ones later. The borrower probably won't default until his payments go up, by which time the issuer is home safe and some gullible investors get hurt. And the borrowers, and the entire economy too.
The issuers will cry and wail at this proposal. They will say they need to sell the mortgages to get the money to do more mortgages. Let me say this to them. Raise money the old fashioned way, pay decent interest on deposits. Sell certificates of deposit that pay 1% less than the going mortgage rate. With mortgages around 7% the CD's could pay 6%, and have FDIC protection too.

Sunday, November 25, 2007

How slick is this? (From Commentary)

A junket to China by some US reporters.

Chinese Olympic spokesman: "Thanks to a range of measures, two thirds of the days in Beijing now have good air quality"

Outside the glass walled conference room smog was so thick that nearby buildings were visible only in outline.

US reporter, waving toward the windows: "Is this a good air day?"

Chinese spokesman: "It takes an expert to determine that."

Crime, Drugs,Welfare, things ARE getting better

The December issue of Commentary magazine cover article proclaims that crime, drugs and welfare are getting better in the United States. They give real numbers (unusual among modern newsies who are largely innumerate).
Teenage drug use: Down 23% since the 1990's
Ecstasy, speed& LSD: Down 50%
Welfare cases: Down 60% since 1994
Abortion: Down 19% since 1990
SAT scores: Up 8 points since 1989
Teenage births: Down 35% since 1991

There is a good deal more, but the writer is convinced that things are rebounding after a dreadful low in the 80's and 90's. Still not as good as things might have been back in the good old days, but measurably better than ten years ago. This is good news for a change.
Just in time for Christmas too.
Too bad this webby thing doesn't understand tabs or columns...

Saturday, November 24, 2007

Patents on Tax Shelters

I knew the good old Patent Office was granting a lot of outrageous patents lately, but I never knew it was this bad. They are issuing patents for tax shelters, bits of legal fakery used to avoid paying income tax. Finally a few congressmen got up the backbone to attempt to outlaw this scam on the part of the patent office. They issued this press release just before Thanksgiving.
About time. While they are at it how about outlawing "business methods" patents, and patents on software? And requiring a working model before granting a patent. And outlawing patents on genes. And outlawing patents on obvious ideas and prior art?

Selling Jaguar and Land Rover to the Indians?

A meeting of 60 shop stewards at Jaguar and Land Rover moved to support a buy out (buy up?) by India's Tata Motors Ltd. Jag and Land Rover still employ 16000 workers in Merrie Old England. The union continues to oppose a sale at all (they want to continue as part of Ford) but if they have to be sold, they like Tata better than the other possibilities. They see Tata as "the only company among the final bidders with enough money, clout, and experience in our industry" to successfully manage the brands, according to a labor official who attended the meeting.
Ford acquired Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000. I wonder what Ford was thinking when they bought the British brands in the first place. I understand that after paying $2.5 billion for Jag, the proceeded to pour in a lot more money to improve the product. Jag has always had a sexy product, but a product with a well earned reputation for unreliability. I owned one once. For the last 40 years the unreliability rep has been so strong as to overwhelm the good styling, handling, and interior trim level. Eighteen years of Ford improvements hasn't been able to turn that around. You have to wonder if the time and money put into Jaguar would have been better spent on Lincoln, Thunderbird, Cougar and Mustang.