Money Grows on Trees

Or at least that's what graduates of journalism school seem to think. The Economist, a London based weekly newsmag, castigates "European leaders" (without naming them) for failing to raise the EU bailout fund to 1 trillion Euros to bail out Italy.
Sounds good, but not a word about where those Euros will come from. Italy's government is spending more than it takes in by way of taxes. They have been skating by and borrowing the money. The sucker banks are wising up and refusing to lend to Italy except at 6 percent interest, and going higher real soon now. When the loans dry up the Italians will be unable to roll their debt over and bond holders will loose money, perhaps all their money. This is a bad thing, but who wants to spend their good money to bail the Italians out?
The J-school grads who write for The Economist don't even recognize raising money as a difficulty. Brussels bureaucrats can wave their hands and the money will appear.
The real long term fix is to balance the Italian budget, so that taxes pay for spending. This may take both time and a big hammer. Like not being able to borrow any more money. J school grads don't write about this either.
We should pay attention because this will happen to us, unless we cut the big money sinks, medicare, medicaid, and social security.

Other shoe dropped. S & P drops US to AA+

They have been threatening to do this for months now. The shoe dropped last night after the market closed, and it was all over NPR this morning. Fox has talked about little else all day.
There are two angles to this, financial and political. Financial means effect on saleability of US treasury bonds and the interest rate there of. We won't know much until the markets open on Monday. Political means its effect upon Obama's re election campaign. That's already started, and we can expect Republicans to make a big deal of this thruout the 2012 elections. At a guess, the financial effects will be small, especially compared to the stock market fall Thursday and Friday.

Out in California they may be broke, but the cops still have time for to do SWAT team raids on raw milk producers.

The evolution of the common TV set

The standard analog TV with a big CRT picture tube, which used to be the only type out there, still has a lot of market share. The flat screen digital TV's are coming on, it's the only type on sale at Walmart, and it offers wide screen and an number of digital goodies such as displaying the name of the program on screen to aid channel surfers. When you surf onto a commercial, (the usual case) you can see what program will come on, after the commercials.
The cable companies haven't figured out what type of TV to broadcast too. Some channels like Fox News broadcast in "Widescreen" mode, essentially the NTSC standard def format but they leave the top and bottom of the screen black. This looks poorly on a standard analog TV, but on a new digital TV you can push a button and stretch the picture both horizontally and vertically to fill the screen. It's a little fuzzy compared to real high def, but not bad. Clearly Fox is favoring viewers with the new widescreen TV's.
Then some channels don't bother to broadcast the program name fields. Since this helps the viewers with digital TV's and doesn't degrade the signal for analog TV's, failure to broadcast it means the suits at HQ are brain dead. The program name display is sure fire bait to attract channel surfers and raise their ratings. You would think even the most brain dead suits would catch on sooner or later.

Boeing to do something

In this week's Aviation Week it was announced that Boeing would do a re-engined 737. That is the ordinary jetliner that most of us fly in, a single aisle jet in the jargon of the airlines. It is the highest production plane Boeing has, and competes head to head with Airbus A320 and A330.
Airbus announced the A330NEO (New Engine Option) a few months ago. The A330 would be equipped with new highly efficient engines, the Pratt and Whitney Geared Turbofan if memory serves, and gain an 8 to 10 percent improvement in fuel burn. This sounded so good that Airbus garnered 400-500 orders, even thought the NEO won't be available for 3-4 years.
Boeing, loaded down with the 787 (all plastic mini-jumbo jet) which was supposed to deliver 3 years ago and is still awaiting FAA type certification, did not want to jump into yet another new aircraft project until the 787 was out of the woods and into production and bringing in money. But, with customers flocking to the competition, Boeing had to do something. So they announced a re engined 737 is in the works and will give 8 to 10 percent better fuel burn than current production 737's.
Aviation Week ran an editorial bewailing the loss of Boeing's New Small Aircraft concept, a single aisle jet redesigned from a clean sheet of paper. They feel that a total redesign would be far far superior to a plain jane engine swap. Perhaps. I just finished reading a photographic coffee table book on the DC-3, which went into production in the 1930's, flew revenue flights in the US for 50 years, and is still flying out in the boondocks. Could it be that the 737 is just as good a design, and just wants better engines to compete for another 25 years?

The Dow plunges 400 points

There has got to be a connection with the debt limit hassle earlier this week, but what is it?

Now that the debt limit is done,what is next?

How do we fix the economy?
First we have to understand the problem. Consumer spending (cars, houses, clothes, appliances, entertainment, sporting goods, and everything else) is down. Seventy percent of the US economy was consumer spending. When consumer spending goes down, farms, factories, and everything else has fewer sales, leading to layoffs. If sales go away, no company can retain all it's workers.
This feeds on itself. When people are laid off they start saving all the money they can. When one person is laid off, twenty people hear about it and begin to fear for their jobs too. People fearing for their jobs react much the same way as people who are actually laid off, they start saving as much as they can.
So how to fix?
One fix is to stimulate demand. That is best done by introducing new "must have" products that every one goes out and buys. Apple is one of the few companies still inventing new stuff. We need more people like Steve Jobs.
Another way of stimulating demand is to make stuff cheaper. We could scrap an ocean of cost enhancing laws. Corporate Average Fuel Economy (CAFE) raises the price of new cars. EPA's tighter ozone regulations raise the price of electricity. EPA's encouragement of boutique gasoline blends raises the price of gasoline. Real estate "closing costs" jack up the price of houses. The endangered species act makes projects more expensive. Building codes demanding handicapped access and sprinklers in new houses raise the cost of housing. Liability and lawyers raise the cost of everything.
Then we can lift some costs off companies. Repeal Sarbanes Oxley, repeal Dodd Frank, repeal Obamacare, shut down the SEC because it is ineffective, and simplify the corporate income tax.