Newsie after newsie tells me that the US banking system would be OK if only those toxic assets would some how go away. Presumably they are talking about those securities backed by mortgages that are now in foreclosure, the underwater mortgages that will likely default in a few weeks, and the bond insurance ("credit default swaps") issued on the bonds of Lehman, Bear Stearns and other losers.
"Somehow go away" means Uncle Sam takes this dodgy paper and gives the banks some amount of cash for the privilege.
Why do the banks care so much? Probably 'cause of the "credit default swaps". These are legally enforceable contracts. In the event of some company (Citi? GE? GM? Plenty-of-Others) goes bankrupt, the proud owner of the "credit default swap" has to pay off the bond holder, the full face value of the defaulted bond. These deals looked really good a couple of years ago when the banks were stuck on stupid, and they look like instant bankruptcy bombs now. Some big outfit is going to go broke, and when that happens the "credit default swaps" will take down the holders. Where as if the banks could get good old Uncle Sam to take these things they are home free. When the big bankruptcy happens Uncle has the money to pay them off, or Uncle has good lawyers to weasel out of them, or Uncle runs the courts in which the creditors have to sue. One way or another, Uncle, using our tax money, can cope, whereas the tottering banks cannot. This is why bank stocks have dropped into in dollar a share (next thing to worthless) area.
Question for Obama. Is Uncle gonna take this loss, or is it cheaper to let the stupider banks take the fall?
Saturday, March 14, 2009
Friday, March 13, 2009
How to actually stimulate the economy
As opposed to just wasting taxpayers money. The economy is sliding down the chute because of a lack of demand. Nobody is buying anything, and so the producers, transporters, and support industries are out of work. The lack of demand is due to petrified consumers. 70% of US GNP was consumer spending, clothes, cars, consumer electronics, appliances, houses, and luxury goods. Great depression II has frightened the consumers with loss of their jobs, destruction of their stock market holdings and wiping out of the value of their homes. Being rational, consumers are saving money for the rainy day they see coming. They aren't going to buy anything except groceries until they feel safe (or at least safer). Giving them handouts (like Bush did last year) or tax breaks, or more unemployment benefits, or medicaid, or student loans isn't going to make the consumer spend. The consumers are battening down the hatches and getting ready for Armageddon. Nor are they going to borrow any money, once having made the decision not to buy, obviously they don't need the loans. It's the fear of unemployment, not lack of consumer credit, that's killing demand.
To stimulate this desperate economy, we need to give money to institutions that will turn around and spend the money on something else. For instance, let's buy some tankers for the Air Force. Uncle gives Boeing money for the plane. Boeing has to spend the money on parts to make the plane. For instance half the cost of an aircraft is in the engines. So a billion goes to Boeing, Boeing sends half a billion to Pratt & Whitney, plus a lot more to all the other parts suppliers. The money is multiplied by about 1.75 as the prime contractor pays the first level sub contractor who pays the third level sub contractors. This is real stimulation. The companies HAVE to spend the government money, they have no choice.
So, stimulus happens when Uncle buys goods and services. And buys them this year, not five years from now. And this is the problem with the porkulus bill. Of the $787 billion, only 11% is spent this year, and only a quarter of it is buying goods and services. The vast majority goes for unemployment compensation, medicaid, student loans, hiring government workers, and other unproductive uses. The democrats used the fear of great depression II to fund all their favorite give aways for the next five years, rather than stimulate the economy.
What Obama ought to do is repeal the porkulus bill and do another one spending the money on planes for the Air Force, rockets for NASA, off shore oil exploration, high speed rights of way for Amtrak, nuclear power plants, ships for the Navy, airports for the airlines, and tanks for the Army. Then spend more on research into fusion power, genetic engineered bacteria that turn garbage into gasoline or crops that grow in dry sand, cellulosic ethanol, and a cure for cancer. Even if the research doesn't pay off for many years, the researchers will spend most of the money on equipment.
Right now we are in a tight corner. $750 billion for TARP and $787 billion for the ineffective porkulus has expended the credit of the US government. We can't raise much more by selling T-bills. We shot our wad, and wasted it.
To stimulate this desperate economy, we need to give money to institutions that will turn around and spend the money on something else. For instance, let's buy some tankers for the Air Force. Uncle gives Boeing money for the plane. Boeing has to spend the money on parts to make the plane. For instance half the cost of an aircraft is in the engines. So a billion goes to Boeing, Boeing sends half a billion to Pratt & Whitney, plus a lot more to all the other parts suppliers. The money is multiplied by about 1.75 as the prime contractor pays the first level sub contractor who pays the third level sub contractors. This is real stimulation. The companies HAVE to spend the government money, they have no choice.
So, stimulus happens when Uncle buys goods and services. And buys them this year, not five years from now. And this is the problem with the porkulus bill. Of the $787 billion, only 11% is spent this year, and only a quarter of it is buying goods and services. The vast majority goes for unemployment compensation, medicaid, student loans, hiring government workers, and other unproductive uses. The democrats used the fear of great depression II to fund all their favorite give aways for the next five years, rather than stimulate the economy.
What Obama ought to do is repeal the porkulus bill and do another one spending the money on planes for the Air Force, rockets for NASA, off shore oil exploration, high speed rights of way for Amtrak, nuclear power plants, ships for the Navy, airports for the airlines, and tanks for the Army. Then spend more on research into fusion power, genetic engineered bacteria that turn garbage into gasoline or crops that grow in dry sand, cellulosic ethanol, and a cure for cancer. Even if the research doesn't pay off for many years, the researchers will spend most of the money on equipment.
Right now we are in a tight corner. $750 billion for TARP and $787 billion for the ineffective porkulus has expended the credit of the US government. We can't raise much more by selling T-bills. We shot our wad, and wasted it.
Budget Booze
Here is my list of good booze cheap. Not that I have anything against the Jack Daniels and Johnny Walkers of the world, but these brands taste good to me and cost less. I buy by the 1/2 gallon (actually 1.75 liters these days) so the prices are the 1/2 gallon prices at the NH state liquor store. All the whiskeys are good with club soda or just over ice.
Old Crow Bourbon. Smooth, flavorful, $13
Evan Williams bourbon About the same but $17
Ballentines Scotch Nice scotch tang, smooth $20
Clan MacGregor Scotch Surprizingly good. Blended & bottled in Scotland $13
Canadian Hunter A good Canadian whiskey. Canadian omits the sweetness of corn and the tang of Scotch, leaving a good smooth drink $11
Booth's Gin. 90 proof so it has a little more kick than Gordon's $13
Old Crow Bourbon. Smooth, flavorful, $13
Evan Williams bourbon About the same but $17
Ballentines Scotch Nice scotch tang, smooth $20
Clan MacGregor Scotch Surprizingly good. Blended & bottled in Scotland $13
Canadian Hunter A good Canadian whiskey. Canadian omits the sweetness of corn and the tang of Scotch, leaving a good smooth drink $11
Booth's Gin. 90 proof so it has a little more kick than Gordon's $13
Thursday, March 12, 2009
Adobe Reader vulnerable to malware
A posting on Slashdot alerted me to a vulnerability in Adobe Reader of the ultra bad sort, the sort that allows hackers to take over your computer. There is a patch from Adobe. If you have Adobe Reader 9, you can load the patch from within Adobe. Just open Adobe Reader, click on Help and then click on "Update" and the patch will download and install.
The Slashdot posting implied that patches only exist for Adobe Reader 9, and earlier versions are vulnerable and unpatchable. If you are running earlier Adobe Readers, it might be a good time to upgrade. The program is a free download.
Most computers have Adobe Reader on them, it's free and it's a standard. If you web surf, you will click on a .pdf file sooner or later and that will start Adobe Reader, so this one ought to be fixed even if you don't use Adobe. After applying the patch, my Adobe Reader now shows version 9.1.0 in the Help About box.
The Slashdot posting implied that patches only exist for Adobe Reader 9, and earlier versions are vulnerable and unpatchable. If you are running earlier Adobe Readers, it might be a good time to upgrade. The program is a free download.
Most computers have Adobe Reader on them, it's free and it's a standard. If you web surf, you will click on a .pdf file sooner or later and that will start Adobe Reader, so this one ought to be fixed even if you don't use Adobe. After applying the patch, my Adobe Reader now shows version 9.1.0 in the Help About box.
The New Hampshire Advantage
For those not in the know, that's a Republican slogan up here. Was watching NECN last night and they reported that NH has the lowest unemployment rate in New England, by a good deal. NH is 5.1% unemployment, as opposed to Rhode Island at 10 and a skosh percent.
Back when I was going to school the economists said 6% was the "normal" "frictional" unemployment rate. So by the old standard, NH isn't feeling Great Depression II at all, yet. Standards have changed a bit since then, but still, NH is doing better than the competition. Let's hear it for no state income tax and no state sales tax. Let's hope we can keep it that way despite the best efforts of the democrats down in Concord.
I used to worry about the strength of the NH economy. Too much dependence upon tourism and not enough manufacturing. Jobs so scarce that teenagers moved out of state to find work. Hmm, maybe it ain't as bad as I used to think.
Back when I was going to school the economists said 6% was the "normal" "frictional" unemployment rate. So by the old standard, NH isn't feeling Great Depression II at all, yet. Standards have changed a bit since then, but still, NH is doing better than the competition. Let's hear it for no state income tax and no state sales tax. Let's hope we can keep it that way despite the best efforts of the democrats down in Concord.
I used to worry about the strength of the NH economy. Too much dependence upon tourism and not enough manufacturing. Jobs so scarce that teenagers moved out of state to find work. Hmm, maybe it ain't as bad as I used to think.
Wednesday, March 11, 2009
Weather, changeable
Had one heluva storm last night. Wind howled around the house and we got 2-3 inches of new snow. In the morning the wind was hurling ice chips at the windows with attention getting bangs. By 10 AM the power went out.
I decided I might as well call PSNH to report the outage. Picked up the new Fairpoint telephone book. Looked under "P" for PSNH. Nothing. Looked in the yellow pages under "Electric", zilch. Finally dug out the old Verizon phone book. There it was, right under "P" with a 1/3 column display ad highlighted in yellow. So much for improved service from Fairpoint...
The robo phone at PSNH predicted the power would be back within two hours, and sure enough, the lights came back on right on schedule.
I decided I might as well call PSNH to report the outage. Picked up the new Fairpoint telephone book. Looked under "P" for PSNH. Nothing. Looked in the yellow pages under "Electric", zilch. Finally dug out the old Verizon phone book. There it was, right under "P" with a 1/3 column display ad highlighted in yellow. So much for improved service from Fairpoint...
The robo phone at PSNH predicted the power would be back within two hours, and sure enough, the lights came back on right on schedule.
Franconia Town Meeting
It ran long, long , long. Started at 7PM and we didn't get out til 11. Those cheapy folding chairs get hard and uncomfy after four hours. It was packed, Town Hall upstairs filled up, and the overflow was routed downstairs and could only hear from the loudspeakers. Someone from the building dept had posted a sign explaining that 114 people were the maximum safe for the upstairs. Next year they plan to move town meeting to the school gym.
Rich Mcleod was re-elected and John Lachapelle was elected to fill the remainder of Carl Belz's term. Carl's health has gone downhill and he had to resign before his term expired. Carleen Quinn is the third member of the board of selectmen.
There was an hour or more of discussion of the Franconia water project. An effort to place the entire cost of the project on the users water bills was defeated. About a quarter of the cost will go on the real estate tax, meaning that the large proportion of the town that is on wells will contribute to the water project. The final written vote was overwhelmingly in favor. The project will break ground this summer.
Next big discussion item was the emergency service. Right now the volunteer life squad ($50K plus $150K new truck last year) handles the 911 calls. Apparently they missed a call or two last year. There was a motion from the floor to let a $10K contract to Ross Ambulance for coverage. After a lot of discussion the motion was defeated, but I daresay the Life Squad is going to feel the pressure for the rest of the year.
It was 10PM when the budget (Article 3) passed, and we still had 20 more articles to go. Looking grim. Fortunately the rest of the articles were un controversial and we sailed thru them with little discussion. We appropriated $24K to pay off legal fees from the Christopher King suit, $94K for a new truck. I resisted the impulse to ask what the mileage on the old truck (a 2004 Ford) was. We voted to give a tax
break to solar electric/hot water systems, but voted against giving the same tax break to wood fired furnaces. Something like 20 out of 23 warrant articles were approved. Lesson learned, if the selectmen will put it on a warrant article it will most likely get approved at town meeting.
Rich Mcleod was re-elected and John Lachapelle was elected to fill the remainder of Carl Belz's term. Carl's health has gone downhill and he had to resign before his term expired. Carleen Quinn is the third member of the board of selectmen.
There was an hour or more of discussion of the Franconia water project. An effort to place the entire cost of the project on the users water bills was defeated. About a quarter of the cost will go on the real estate tax, meaning that the large proportion of the town that is on wells will contribute to the water project. The final written vote was overwhelmingly in favor. The project will break ground this summer.
Next big discussion item was the emergency service. Right now the volunteer life squad ($50K plus $150K new truck last year) handles the 911 calls. Apparently they missed a call or two last year. There was a motion from the floor to let a $10K contract to Ross Ambulance for coverage. After a lot of discussion the motion was defeated, but I daresay the Life Squad is going to feel the pressure for the rest of the year.
It was 10PM when the budget (Article 3) passed, and we still had 20 more articles to go. Looking grim. Fortunately the rest of the articles were un controversial and we sailed thru them with little discussion. We appropriated $24K to pay off legal fees from the Christopher King suit, $94K for a new truck. I resisted the impulse to ask what the mileage on the old truck (a 2004 Ford) was. We voted to give a tax
break to solar electric/hot water systems, but voted against giving the same tax break to wood fired furnaces. Something like 20 out of 23 warrant articles were approved. Lesson learned, if the selectmen will put it on a warrant article it will most likely get approved at town meeting.
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