I stayed up to watch the VP debate. With both presidential candidates in, or near their seventies, and a world full of crazies, there is a distinct chance of the VP succeeding to the presidency. So do either of these two guys, Republican Mike Pence, and Democrat Tim Kaine look like they could cut it as president? Both of them are unknown to me. Governors of states so far away from NH that I never heard a word about them before.
Of the two, Republican Mike Pence made a much better impression on me. He seemed steadier, talked more of substance rather than just dishing up insults, which is all Democrat Tim Kaine did. I feel the country would be in good hands with Mike Pence should something happen to Trump. Not so much Tim Kaine, Hillary won't be much good as president and Kaine will be worse.
Kaine spent the night repeating every distasteful thing Trump has ever said or whining about Trump's personal taxes. Not very interesting, I have heard most of 'em, from Trump on live TV, or on instant replay with the morning TV pundits. Pence talked about his successes as governor, they sounded pretty good, lowered taxes, lowered unemployment, created a $2 billion surplus in the state government. Pence also talked about Republican plans to revive the national economy.\
The moderator, a lady from somewhere in the MSM, I don't know her, used each question to pet the democrats and slam the republicans. And the questions were light weight, just invitations for another flood of politician talk, feel good, commit to nothing speech or the kind that Obama is so good at.
Wednesday, October 5, 2016
Tuesday, October 4, 2016
How should Boeing do its books?
What companies make, and report as income, depends on how they do their books. For Boeing, the problem is accounting for the fantastic expenses of new product development. Take the 787 program. Originally planned to cost $5 billion to develop, it went ten times that, $50 billion in outgo (expenses) before a single 787 could be sold. If Boeing had just reported the expenses in the year they were incurred, Boeing would have shown massive losses for five years in a row. Which would have done awful things to its stock value, its credit, and its image.
Boeing used "program accounting" instead. The horrible expenses of 787 development were held somewhere, off the books, until the 787 started to sell. Now these massive expenses are divvied up on each 787 sale, after sales begin. Which makes Boeing's books look a helova lot better during the development time. The Wall St Journal didn't explain a few crucial details, like how long Boeing can take to write down the 787 expenses. Clearly forecasting a production run of 50 years drops the expense per aircraft a lot compared to a production run of 10 years. Boeing could argue that since the old 747 stayed in production for 50 years, the newer and more fuel efficient 787 might last as long. And just where the expenses are recorded, (on the books, off the books, in the cloud, somewhere) is not mentioned. The Journal does say that "program accounting" is legal.
Spending $50 billion on new product development is clearly a good thing. Without the 787 Airbus would take over the market. We need a way for companies to make super expensive investments in plant, equipment, and new product development.
I'm not an accountant. In my simplistic view of the world, you do the books every year. You list expenses, and income, and report the profit or loss every year. But looking at the Boeing case, maybe we need "program accounting".
Boeing used "program accounting" instead. The horrible expenses of 787 development were held somewhere, off the books, until the 787 started to sell. Now these massive expenses are divvied up on each 787 sale, after sales begin. Which makes Boeing's books look a helova lot better during the development time. The Wall St Journal didn't explain a few crucial details, like how long Boeing can take to write down the 787 expenses. Clearly forecasting a production run of 50 years drops the expense per aircraft a lot compared to a production run of 10 years. Boeing could argue that since the old 747 stayed in production for 50 years, the newer and more fuel efficient 787 might last as long. And just where the expenses are recorded, (on the books, off the books, in the cloud, somewhere) is not mentioned. The Journal does say that "program accounting" is legal.
Spending $50 billion on new product development is clearly a good thing. Without the 787 Airbus would take over the market. We need a way for companies to make super expensive investments in plant, equipment, and new product development.
I'm not an accountant. In my simplistic view of the world, you do the books every year. You list expenses, and income, and report the profit or loss every year. But looking at the Boeing case, maybe we need "program accounting".
We ought to watch the VP debate tonight.
With both presidential candidates in their seventies or almost seventy, there is a distinct chance of a VP becoming president. I know little to nothing about either of the VP candidates. Watching 'em debate ought to tell me something.
Cooler weather slows the flies.
Makes 'em easier to hand swat. In the heat of summer I have to use bug bomb to kill 'em.
Monday, October 3, 2016
Sucking up all the Oxygen
The New York Slimes claims to have three pages of a Donald Trump income tax return from twenty years ago. They say that Trump took a loss of nearly $1 billion dollars that year. Wow. Not discussed, is how anyone, even The Donald, can stay in business after loosing a real $1 billion dollars in cash. Clever tax men, and The Donald hires the cleverest, can gin up paper losses as required. No discussion of this.
And, why are we discussing twenty year old tax returns? Especially twenty year old tax returns that passed IRS audit. And the IRS is auditing this year's tax return, and they won't do The Donald any favors. I'd sorta like to see The Donald's returns for 2015, but I can wait, the IRS can do The Donald more damage than the MSM can. And the IRS would enjoy doing the damage.
The tax loss carry forward provision has been in the tax code for a long time. I'm an amateur tax preparer (I do my own taxes) and I know about tax loss carry forward. When you loose money, you can deduct losses from previous years against this year's tax. I've never lost enough money to take advantage of it. And if you have $1 billion in allowed losses, you can carry it forward for quite a few years, especially if you haven't made much money in the succeeding years.
Tax loss carry forward is a loophole that ought to be closed. All it does is reward failure.
I'm with Carly Fiorina. Close every loophole, lower every rate.
And, why are we discussing twenty year old tax returns? Especially twenty year old tax returns that passed IRS audit. And the IRS is auditing this year's tax return, and they won't do The Donald any favors. I'd sorta like to see The Donald's returns for 2015, but I can wait, the IRS can do The Donald more damage than the MSM can. And the IRS would enjoy doing the damage.
The tax loss carry forward provision has been in the tax code for a long time. I'm an amateur tax preparer (I do my own taxes) and I know about tax loss carry forward. When you loose money, you can deduct losses from previous years against this year's tax. I've never lost enough money to take advantage of it. And if you have $1 billion in allowed losses, you can carry it forward for quite a few years, especially if you haven't made much money in the succeeding years.
Tax loss carry forward is a loophole that ought to be closed. All it does is reward failure.
I'm with Carly Fiorina. Close every loophole, lower every rate.
Sunday, October 2, 2016
Discipline for Wall St
Want to shape up Wall St? Put some risk in the game. Right now, they can play risky games, and when they loose, the tax payers bail them out. FDIC and all that. Since the risky games are high yield (except for when they become high loss) they keep on playing them. Step one, make it perfectly clear to everyone, that the next Wall St operation to go broke will stay broke, no bailout, anyone who gave them loans will loose, and the broke outfit's executives will be prosecuted for fraud.
Make a list of risky games, credit default swaps, mortgage backed securities, commodities trading, and the like. Either tax the bejesus out of them or make them illegal.
Forbid banks playing the stock market. Glass Steagall had it right.
Discourage banks from lending to each other. The purpose of a bank is to make loans for economic development. Lending money to another bank doesn't develop the economy. Loans should go to builders and businesses to build plant and equipment, buy inventory, or build houses. If the loan doesn't create anything that you can see, touch, or pack in a truck, it isn't developing the economy or creating jobs. Which means the bank should not be doing it. Discouragement can be taxes or worse.
Forbid banks selling mortgages. Mortgages are good investments, safe as houses they used to say. The borrower is highly motivated to make the payments on time, if for no other reason than to avoid the things his wife will say when they get foreclosed on. The collateral is fairly sound, and it's immobile, nobody can drive it out of state. Make a mortgage and the bank has to keep it, until the borrower pays it off, like when he sells the house. This way the banks won't make NINJA (No Income, No Job, No Assets) mortgages and, won't do balloon notes. And they won't crash the global economy with mortgage backed securities.
Make a list of risky games, credit default swaps, mortgage backed securities, commodities trading, and the like. Either tax the bejesus out of them or make them illegal.
Forbid banks playing the stock market. Glass Steagall had it right.
Discourage banks from lending to each other. The purpose of a bank is to make loans for economic development. Lending money to another bank doesn't develop the economy. Loans should go to builders and businesses to build plant and equipment, buy inventory, or build houses. If the loan doesn't create anything that you can see, touch, or pack in a truck, it isn't developing the economy or creating jobs. Which means the bank should not be doing it. Discouragement can be taxes or worse.
Forbid banks selling mortgages. Mortgages are good investments, safe as houses they used to say. The borrower is highly motivated to make the payments on time, if for no other reason than to avoid the things his wife will say when they get foreclosed on. The collateral is fairly sound, and it's immobile, nobody can drive it out of state. Make a mortgage and the bank has to keep it, until the borrower pays it off, like when he sells the house. This way the banks won't make NINJA (No Income, No Job, No Assets) mortgages and, won't do balloon notes. And they won't crash the global economy with mortgage backed securities.
Thursday, September 29, 2016
Military Budget, Military Procurement
We are beginning to hear calls for more spending one the military. The "sequester" ,a deal Congress set by law a couple of years ago, put a solid lid on military spending, and that lid is beginning to hurt. There are calls to scrap the "sequester" and give the armed forces a lot more taxpayer money.
Much of the military budget goes into "procurement" the purchase of food, uniforms, fuel, ammunition, spare parts, and new aircraft and armored fighting vehicles. Procurment is run by thousands of rear echelon m__therf___kers (REMF for short) at the Pentagon, and the big depots. They have created whole book selves of "procurement regulations" which must be consulted and argued over before even a roll of toilet paper can be purchased. Procurement regulations support and defend a number of scams against the taxpayer.
For instance, the JEDEC semiconductor scam. JEDEC semiconductors must be made on special production lines dedicated only to JEDEC work. To make JEDEC semiconductors on the regular commerical production lines is forbidden. Since the volume of JEDEC sales is low, the JEDEC lines only get fired up once a year or so, and are shut down as soon as the current order is filled. Whereas the commercial lines run 24/7. The people running the commercial lines get plenty of experience, and minor tuning of the process (time in this oven or that oven, concentration of dopant gases, cooling time, lotta stuff) makes the difference between a superior device (higher gain, lower noise, better voltage tolerance, buncha stuff) and junk. In real life the JEDEC semiconductors, which cost ten times what good commercial devices cost, are inferior in every measurable respect, and a lot of 'em come in dead on arrival.
The taxpayers would be well served by scrapping the whole JEDEC scam and building everything with good commercial devices from American silicon foundries.
Then there is the urge to gold plate everything. Can't just buy decent stuff off the shelf, everything has to be built special for the military. The KC-46 tanker should have taken a commercial airliner, pulled out the seats, and installed fuel tanks. Instead, the Air Force insisted that Boeing redo all the wiring on the airplane "to meet USAF specs", Boeing talked the Air Force into replacing the entire cockpit with the fancier all digital and touch screen cockpit from the 787. At government expense. Add in a rediculous amount of test flying, and the program is late and way over budget.
And everything takes too long. Every year a project is in the R and D mode, it sucks up money. In WWII we could design a new aircraft and get it into production inside of a year. The current F-35 has been aborning, and sucking up money for twenty years and it still isn't combat ready.
Bottom line. We need to straighten out procurement more than we need to pour mor money into it.
Much of the military budget goes into "procurement" the purchase of food, uniforms, fuel, ammunition, spare parts, and new aircraft and armored fighting vehicles. Procurment is run by thousands of rear echelon m__therf___kers (REMF for short) at the Pentagon, and the big depots. They have created whole book selves of "procurement regulations" which must be consulted and argued over before even a roll of toilet paper can be purchased. Procurement regulations support and defend a number of scams against the taxpayer.
For instance, the JEDEC semiconductor scam. JEDEC semiconductors must be made on special production lines dedicated only to JEDEC work. To make JEDEC semiconductors on the regular commerical production lines is forbidden. Since the volume of JEDEC sales is low, the JEDEC lines only get fired up once a year or so, and are shut down as soon as the current order is filled. Whereas the commercial lines run 24/7. The people running the commercial lines get plenty of experience, and minor tuning of the process (time in this oven or that oven, concentration of dopant gases, cooling time, lotta stuff) makes the difference between a superior device (higher gain, lower noise, better voltage tolerance, buncha stuff) and junk. In real life the JEDEC semiconductors, which cost ten times what good commercial devices cost, are inferior in every measurable respect, and a lot of 'em come in dead on arrival.
The taxpayers would be well served by scrapping the whole JEDEC scam and building everything with good commercial devices from American silicon foundries.
Then there is the urge to gold plate everything. Can't just buy decent stuff off the shelf, everything has to be built special for the military. The KC-46 tanker should have taken a commercial airliner, pulled out the seats, and installed fuel tanks. Instead, the Air Force insisted that Boeing redo all the wiring on the airplane "to meet USAF specs", Boeing talked the Air Force into replacing the entire cockpit with the fancier all digital and touch screen cockpit from the 787. At government expense. Add in a rediculous amount of test flying, and the program is late and way over budget.
And everything takes too long. Every year a project is in the R and D mode, it sucks up money. In WWII we could design a new aircraft and get it into production inside of a year. The current F-35 has been aborning, and sucking up money for twenty years and it still isn't combat ready.
Bottom line. We need to straighten out procurement more than we need to pour mor money into it.
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