The Australian Government avoids using ‘Carbon Tax’ in Television Ads

Posted by PITHOCRATES - May 27th, 2012

Week in Review

You know a tax is unpopular when you buy advertising to sell the subsidies you can get to avoid paying that tax.  Without mentioning that tax by name (see Tax focus groups don’t test the c-word by AAP posted 5/28/2012 on The Australian).

THE Gillard government did not test the term carbon tax in focus groups for a television advertisement promoting its household assistance package.

The government is spending $36 million over two years on print, radio and television ads to sell the package, which aims to cushion the financial impacts of the carbon tax.

Assistance payments already have begun to land in bank accounts even though the tax does not begin to operate until July 1…

The department’s deputy secretary, Felicity Hand, said the government decided the campaign should primarily focus on the payments.

“There had been a lot of public relations activity previously that had linked household assistance package to clean energy future and carbon pricing,” she said.

Contextual information about the carbon tax was available at a website and if people phoned the hotline number.

Focus group testing.  Imagine that.  The carbon tax is so toxic and unpopular that the government is desperately trying to cushion the financial impact of it.  With some pretty commercials.  I guess to make you feel like you’re making a difference while you’re sitting at home with less of your earnings to spend because of that new carbon tax.  But they dare not mention the c-word.  Because, apparently, the people don’t want anything to do with that environmental BS.  The Australians are a hearty breed.  And more than a few got their ass kicked by the outback.  And yet that environment is so fragile that watching television at night might kill it.  Unless they pay a carbon tax on their electric bill. 

Amazing how all of government’s solutions come down to this.  Taking away our earnings for our own good.  And, of course, lying to us.  For the focus group testing tells them that telling us the truth will make us reject them and their silly policies.

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The Majority of Scots wish to remain part of the United Kingdom

Posted by PITHOCRATES - May 27th, 2012

Week in Review

According to the polls the Scottish people want to remain part of Britain (see Just one in three Scots wants independence from Britain, poll shows by Simon Johnson posted 5/25/2012 on The Telegraph).

An opinion poll published by Alistair Darling, the former Chancellor, showed only 33 per cent of voters in Scotland want independence and 57 per cent are opposed…

Mr Salmond will be joined in Edinburgh this morning by celebrities and the leaders of minor left-wing parties to formally start his bid to end the 305-year-old Union between England and Scotland…

Mr Darling’s publication of the The YouGov poll, which also showed more people think a separate Scotland would be worse off financially, was timed to undermine their message…

Nearly half of respondents (47 per cent) said they thought Scotland would be financially worse off after separation compared to only 27 per cent who said it would be wealthier. Thirteen per cent said independence would make no difference.

The finances of an independent Scotland would depend on a couple of things.  First of all there’s Britain’s debt.  Trying to apportion Scotland’s share of that would be more an act of politics than accounting.  And what about the military?  Would the Scottish units in the British armed forces return to Scotland?  If so would Scotland pay to outfit replacement units in the British armed forces?  Or would Scotland just enter into an armed forces agreement with Britain to carry on as if they didn’t become an independent nation?  And what about the currency?  Would they still be part of the Bank of England?  Or would they join the Eurozone?  And be a part of it when it finally implodes?  Trade agreements?  How would this affect treaties negotiated by Britain for Scottish interests?  What about environmental regulations?  Would they exit the emissions trading scheme?  Would they exploit their coal and oil resources?  Or build more windmills?

Interesting questions but moot.  For based on a recent opinion poll it appears the Scottish are not in favor of altering 305 years of history.

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The Chinese Government invests in LED Chips poorly causing Over Expansion, Price Deflation and Factory Closures

Posted by PITHOCRATES - May 27th, 2012

Week in Review

China’s formula for success is to partner government with business.  Like they did in Japan during the Eighties.  Before Japan’s Lost Decade.  And their deflationary spiral.  China is using the same formula.  Having government invest in corporations to expand production to dominate the market.  And, of course, create some bubbles along the way (see Analysis: Falling prices to kill off half of Chinese LED chipmakers by Leonora Walet and Twinnie Siu posted 5/27/2012 on Reuters).

In China, surplus capacity and sliding prices are sounding the death knell for half of the companies making light emitting diode (LED) chips used in Samsung television panels and Sharp computer monitors, with only the large, state-backed players likely to pull through.

Sluggish global sales of TVs and computers may further cut LED chip prices by 20 percent this year, and consolidation or closure are the only options for China’s smaller LED players, analysts say.

By contrast, Sanan Optoelectronics Co Ltd, China’s top LED chipmaker with a market value of $2.8 billion, and Elec-Tech International Co Ltd will be among a handful of large companies that will survive as they continue to receive subsidies and incentives from the government, according to analysts…

For the majority of LED firms, the government is slowly rolling back incentives, including tax breaks, free land and more than $1.6 billion in cash to buy LED chip-making equipment, that had helped sustain the industry for more than three years.

Proview International, whose Shenzhen-based unit is battling Apple Inc over the iPad trademark in China, is grappling with slumping LED prices and fierce competition that have dragged down earnings for other LED companies including Hangzhou Silan Microelectronics Co and Foshan Nationstar Optoelectronics…

Many LED companies are operating their factories at 50 percent capacity in China, with up to half of the 700 or so chip-making machines purchased with government money during the boom years in 2009 and 2010 left idle, industry watchers say.

In the past year, overcapacity has shut hundreds of small Chinese makers of LED lighting, according to analysts.

“China’s financial policy is not giving enough support to mid-tier and smaller enterprises,” said Bao En Zhong, executive vice chairman of the semiconductor lighting association in Shenzhen, one of China’s largest production bases for LED lighting. “We may see more factory closures…”

So the secret to success in China is government incentives, tax breaks, free land and lots and lots of cash.  If you can get this from the government you, too, can flood the market with product.  Sending your prices into a tailspin.  Then all you have to do is be one of the lucky few the government bails out so you can flood the market with more of your product.  Sending your prices into a tailspin.  Again.

People say this type of dumping of low-priced products onto the market hurts consumers.  I never understood that.  Here the Chinese helped to bring the cost of televisions down by making the chips that make them work so dirt cheap that they shuttered hundreds of Chinese manufacturers.  And chip prices may fall by another 20%.  I just don’t see how the consumer loses here.  It looks like the losers are the hundreds of shuttered businesses.  And the Chinese government who invested so much into those businesses.

This is state-capitalism.  Where businesses make bad decisions because of the free government handouts.  If it weren’t for those free government handouts these businesses wouldn’t have produced so many chips that they put themselves out of business.  You add up all of this bad government investment throughout China and it says only one thing.  A day of reckoning is coming.  If the Chinese don’t believe it they can ask the Japanese.

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Japanese Chipmaker Slashing Payroll due to High Supply and Low Demand in Lingering Recession

Posted by PITHOCRATES - May 27th, 2012

Week in Review

You know the recession is bad when electronic chipmakers are slashing their payrolls.  When that happens it means we’re not buying televisions, phones, computers, etc.  Because we don’t have the disposable income.  And don’t expect to have it anytime soon (see Japan’s Renesas eyes 14,000 job cuts, chip plant sale: Nikkei by Maki Shiraki and Taiga Uranaka posted 5/26/2012 on Reuters).

Japanese chipmaker Renesas Electronics Corp plans to sell off loss-making operations and cut its payroll by at least 12,000, a source close to the matter told Reuters on Saturday, as the company battles high costs and nimbler foreign rivals…

Renesas has posted cumulative net losses of nearly $6 billion over the past seven years as it struggles to keep up with South Korea’s Samsung Electronics and others in an expensive race to build ever smaller and faster chips.

Hobbled by a strong yen and forced to close eight of its factories after natural disasters in Japan and Thailand last year, Renesas has said it would hammer out a restructuring scheme by July…

The plan would trim its payroll by more than a quarter.

The Tsuruoka plant, which makes system chips that combine processing and other functions on a single sliver of silicon and are used in a range of digital electronics, has been a major burden for Renesas as Japanese consumer electronics makers cut production of TVs and other products.

Japan Inc. dominated during the Eighties.  They were manufacturing everything.  America lost its TV business as it couldn’t compete with the powerhouse that was government partnering with business.  Those on the Left in America said that was the way capitalism should work.  Put the government in charge.  Let the brilliant bureaucrats guide the hapless corporation.  For capitalism was chaos.  While government brought order to that chaos.  Which is why Japan Inc. dominated in the Eighties.  And frightened Americans as they used their massive profits to buy up American landmarks.  People worried that America would end up as a wholly owned subsidiary of Japan Inc. 

Of course, that was then.  Before their Lost Decade.  And the deflationary spiral that continues to this day.  For the bureaucrats may be smart.  But they’re not smart like the corporation people.  Who understand that while you can control your domestic markets with state capitalism you can’t control international competition.  And if you build up too much capacity you may just end up expanding supply greater than demand.  Sending prices so low your companies can’t operate at a profit.  And send your nation into a deflationary spiral.

This is typically what happens when the government interferes with the free market.  They create bubbles that eventually pop.  Sending prices into a tailspin.  A recent example in the United States is the subprime mortgage crisis.  Government kept interest rates artificially low creating a housing bubble.  And when that bubble popped it sent housing prices in a tailspin. 

It happens all the time when government interferes.  Yet it never stops government from interfering.  Amazing how we just can’t seem to learn this lesson.

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Even Cutting 28,000 Jobs will not help the USPS Compete against the Internet

Posted by PITHOCRATES - May 27th, 2012

Week in Review

The United States Postal Service (USPS) hates the Internet.  Before the Internet they had a monopoly in the letter industry.  If you wanted to send Granny a letter you had to go through them.  There’s only one problem with a monopoly.  Because they have a captive audience they don’t have to innovate.  They don’t have to improve anything.  Just make a lot of money.  And give your employees generous wage and benefit packages.  Just like the railroads did.  Before trucks came around, that is.  The trucking industry nearly destroyed the railroad industry.  But the railroads learned how to compete.  They helped redefine the transportation industry that now includes trains, ships and trucks.  The railroads are back.  Stronger than ever.  And making money.  But is it too late for the USPS?

The Internet is the USPS’ trucking industry.  It has all but destroyed the snail mail industry.  To survive the USPS has to do what the railroads did.  Reinvent itself.  Reinvent the industry they participate in.  If they can.  And they better hurry.  Because their monopoly is gone.  Not from other people entering the snail mail business.  But by new technology that created a better alternative to the snail mail business.  The Internet.  And it’s tap-dancing all over the USPS (see U.S. Postal Service offers buyouts to 45,000 workers by Emily Stephenson posted 5/25/2012 on Reuters).

The mail agency, which lost $3.2 billion in the first three months of 2012, plans to begin this summer moving mail-processing activities away from smaller sites to reduce annual costs.

As part of that plan, the Postal Service will offer $15,000 in two installments to full-time mail handlers who take early retirement or leave the agency, USPS spokesman Mark Saunders said on Friday…

The Postal Service has been hit hard by tumbling mail volumes as more Americans communicate online and by massive payments for future retiree health benefits…

The agency needs to reduce its workforce by 150,000 people by 2015, Saunders said. Consolidating and closing processing facilities, which will continue through 2014, could eliminate up to 28,000 jobs and save $2.1 billion a year, the Postal Service has said.

Saunders said he could not speculate how many mail handlers would take buyouts this year, but added that the change “will not affect mail service.”

It’s not enough.  If you annualize that $3.2 billion quarterly loss that comes to a $12.8 billion loss for the year (4 X $3.2 billion).  Cutting only $2.1 billion per year will not solve their problems.  They’ll still have an operating deficit of approximately $9.6 billion.  And if the Internet doesn’t go out of business in the foreseeable future these numbers are only going to get worse.

It’s pretty interesting that a company can cut 28,000 jobs without affecting its business operations.  Why, it’s almost as if they never shrunk their labor force all these years that their business has shrunk.  It’s as if 28,000 people have just been sitting around waiting for the work to pick up again.  While collecting a paycheck.  And while the USPS pours billions into a pension plan for their future retirement.  Hmm.  I wonder if this could have anything to do with that $3.2 billion quarterly loss. 

The clock is ticking.  While the USPS is still struggling to compete with email texting is giving email a run for its money.  And it just may be that the USPS is not as nimble as the railroad industry in pulling up its tracks and laying them on the road to profitability.

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The Elderly suffer Insanitary Conditions and Inadequate Nutrition in Britain’s NHS

Posted by PITHOCRATES - May 27th, 2012

Week in Review

National health care is having problems in the UK.  Their biggest customers are suffering from poor treatment.  The elderly.  In part because the NHS does such a good job at keeping the elderly alive (see ‘Friends and family’ test for hospitals by James Kirkup posted 5/25/2012 on The Telegraph).

Ministers are trying to improve standards after warnings from watchdogs that too many patients, especially the elderly, experience poor standards of basic care, including insanitary conditions and inadequate nutrition.

NHS staff are already asked to take the “friends and family” test, but the Prime Minister will say that extending it to patients will bring benefits to the service…

The Care Quality Commission last year found that one in five hospitals failed to meet basic standards of care for elderly patients.

This is a problem.  For many patients in a hospital are elderly.  Almost half of the patients in the NHS are age 60 or over.  So they’re dropping the ball on about half of the 16 million or so patients in the hospitals of the NHS.  If this were baseball batting almost 500 would be pretty good.  But this isn’t baseball.  And it’s just a bit unsettling that of all the moms and dads getting admitted to an NHS hospital about half of them will suffer poor treatment.  Including insanitary conditions.  And inadequate nutrition.

Will this happen in the US under Obamacare?  Well, the US has about five times the population as the UK.  And the UK has been practicing national health care for a long time.  So we probably won’t be as good as the British are at national health care.  So less skilled with about five times the patients?  I think it’s fair to say that the elderly will suffer even more poor treatment in the Obamacare system than they do in the NHS.  Especially with our aging population.

And it’s this aging population that’s the big problem.  People are living longer.  And because they’re living longer they’re having more hospital stays.  Requiring greater health care expenditures.  But because the population is aging the young have to carry ever larger shares of these health care expenditures.  As in higher taxes.  For the group consuming these health care services is growing faster than the group paying for them.  So they raise tax rates where they can.  And ration services.  To make their limited resources cover more and more patients.  Including having nurses treat more patients.  Sort of in a production line mode.  Spend as little time with each patient as possible.  To increase the number of patients processed.  It’s at this point when patients begin to fall between the cracks.  And suffer poor treatment.

This is the direction Obamacare will take us.  For when it comes to national health care the NHS is one of the best.  But it still ranks below most private health care.  Even Medicare.  For Medicare still operates in the realm of the private sector.  The government reimburses health care providers after the fact.  After the patient received treatment in the private health care system.  But once Obamacare morphs into the full-blown national health care system those on the Left want Medicare will struggle to meet the quality level of the NHS.  It will struggle to only mistreat about half of their elderly patients.  Because Obamacare will have five times the elderly patients than the NHS has.  It’s just simple math.

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