The 2011 Earthquake and Tsunami both Helped GM and Hurt the Economy

Posted by PITHOCRATES - August 5th, 2012

Week in Review

Sadly for President Obama and GM the Japanese have recovered from the 2011 earthquake and tsunami.  And GM has to face some formidable competition once again (see More Bad News for Obama: A Slump at GM by Rick Newman posted 8/2/2012 on U.S News & World Report).

The downshift seems to have scotched any notion of the government selling its stake in the company prior to the November elections, since that would amount to a taxpayer loss of roughly $17 billion, and a major embarrassment for Obama. The government can hold onto its shares as long as it likes, and sell when the price is high enough to get all its money back. But the stock would have to hit about $53 for Uncle Sam to break even—a threshold that seems a long way off…

One reason GM has lost market share this year has been the resurgence of Toyota, Honda and Nissan, after the 2011 earthquake and tsunami disrupted production and temporarily boosted the market share of Japan’s competitors…

Funny.  For the 2011 earthquake and tsunami was responsible for America’s lingering recession.  According to President Obama.  And here it was propping up GM and all the economic activity it generated.  Which was why the government bailed out GM.  To save jobs.  And all of that economic activity GM created.  So if the 2011 earthquake and tsunami was responsible for propping up GM why didn’t it prop up the rest of the economy?  Like Japan’s Lost Decade helped Bill Clinton’s economy during the Nineties?  Simple.  Because President Obama’s economic policies are just that bad.

GM will probably regain some momentum in 2013, when it rolls out its next generation of large SUVs, which are usually highly profitable. Meanwhile, Cadillac is on a roll, thanks to the new ATS compact, the XTS large sedan, and improving quality ratings. Chevrolet has three new models out or on the way—the Malibu and Impala sedans and the Spark subcompact—and a refreshed version of the popular Traverse crossover is coming next year as well…

Nobody would like to see the government sell its stake in GM more than GM. CEO Dan Akerson has complained about the company’s unhappy status as a political football, and the toll that takes on sales and morale. But he’s probably going to have to put up with it for a good while longer.

The car President Obama wanted Government Motors, I mean, General Motors to build is not even mentioned in this article.  The Chevy Volt hybrid.  Which is conspicuous by its absence.  Instead they mention the things his administration opposes.  SUVs.  And large sedans.  Vehicles the American people want to buy.  Perhaps encouraging GM to build something the American people didn’t want to buy also had something to do with GM’s falling stock price.

Perhaps it would be best for the government to sell its shares now.  Even at a loss.  So GM can run the car company.  And not politicians who don’t know the first thing about running a car company.  Ending his war on the stuff that makes these cars run, refined petroleum, would help, too.  A lot.  By bringing the cost of gasoline down.  Helping GM to sell more of the vehicles people want to buy.  Doing these things would help the economy more than 2011 earthquake and tsunami helped it.  Now that would be smart government.  Sadly, something we just don’t see much of these days.

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Britain’s Aging Population shrinks the Tax Base and forces Nurses to Care for up to 15 Patients

Posted by PITHOCRATES - August 5th, 2012

Week in Review

The National Health Service (NHS) of Britain is one of the best national health care system in the world.  But even it can’t withstand the effects of an aging population (see Nurses look after 15 patients at a time by Laura Donnelly posted 8/5/2012 on The Telegraph).

The findings show a sharp rise in their workload to levels which patients’ groups said compromised safety and left little time for compassion.

It follows growing public concern that hospital patients, especially the elderly, are being denied basic dignity and left thirsty and hungry.

A public inquiry into the Stafford Hospital scandal – where hundreds died amid “appalling” failings in care – is preparing to recommend changes to improve the quality of nursing…

The NHS has never set rules on nurse number, but in parts of the US and Australia, mandatory levels have been imposed – typically at around six patients per nurse…

Among the findings of the research were:

* On average, nurses were allocated 11 patients at night and eight by day;

* At some trusts, nurses were asked to care for 15 patients at night..;

The statistics disclose a sharp increase in nurses’ workloads. Five years ago, they were allocated an average of seven patients on day shifts and nine at night, previous research shows…

Although the health service has been given increases in its budget, just above inflation, it has been told to make £20 billion of efficiency savings by 2015 so services can meet the needs of an ageing population.

The Coalition had pledged to protect frontline jobs from any cuts. Last month, after official figures showed the number of nurses has fallen by 4,500 in two years, Andrew Lansley, the Health Secretary, conceded that the number of posts has fallen. He said decisions were taken by trust boards, not the Government…

The research, led by the National Nursing Research Unit at Kings College London, found that older patients received the least care and attention. More than three-quarters [76 %] of nurses polled by researchers said there were not enough staff to get the work done.

Anne Milton, health minister, said the NHS had 10,000 more nurses than it did five years ago, and that the review of nursing had been asked to find ways to free up staff so they could spend as much time as possible with patients.

This is what you get with an aging population.  And a falling tax base that aging population gives you. More patients.  Fewer nurses.  Rationing of services.  And poorer quality.  Or, in other words, welcome to Obamacare.

The NHS is one of the finest national health care systems in the world.  It’s not the fault of the people in the NHS.  It’s the fault of those who set up the NHS.  Who assumed a growing population growth rate would continue to grow.  But that was before the Sixties.  When the world changed.  Women were no longer getting married, staying home and raising a large family.  Birth control and abortion changed that.  And a more libertine sexual attitude.   The women of the Sixties and the Seventies slammed the brakes on baby making.  Decimating the ranks of future taxpayers.  Turning a young population into an aging population.  Where more people left the workforce than entered it.  Who went on to overwhelm the health care system just as funding for it began to fall.  Which brings us to today.  Where they ask nurses to care for up to 15 patients.

The UK is no different than the US.  Except having only one fifth the population.  An aging population will do to Obamacare what it’s doing to the NHS.  Even making it worse.  As American nurses currently can care for no more than 6 patients.  Pretty much what it was in the NHS only 5 years ago.  So in 5 years there will be reports like this about Obamacare.  Which will quickly suffer the problems it took the NHS decades to suffer.  As the Americans will be starting with an aging population that will only age more in the next 2-3 decades.

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California finding it more Difficult to Pass On the High Cost of Union Contracts to the Taxpayers

Posted by PITHOCRATES - August 5th, 2012

Week in Review

Have the California taxpayers reached their limit in paying new taxes?  Perhaps (see Cash-strapped California cities back off asking voters to hike taxes by Ronald Grover posted 8/2/2012 on Reuters).

Over the past six months, city councils in at least seven municipalities invoked a state law which allows them to put tax hikes on the ballot much more quickly in the event of a “fiscal emergency.”

Burdened by expensive public employee contracts and the fall-out from the housing meltdown, the cities are struggling to avoid the fate Stockton and San Bernardino, both of which recently filed for bankruptcy protection.

But now some of those cities are thinking twice about the wisdom of seeking tax hikes…

The retreat reflects political realities in California, where tax increases often generate noisy and well-funded opposition from business groups and self-styled taxpayer advocates…

“Voters are getting very angry that their government keeps coming back and asking for more money,” said Darry Sragow, managing partner of the law firm SNR Denton in Los Angeles and a long-time Democratic campaign strategist. “The voter is saying, ‘I’m cutting back, you should be doing the same thing…'”

The city of El Monte, outside Los Angeles, opted for a different kind of approach. On July 24 it put a proposal on the November ballot to increase taxes on sugary drinks, a move it said would help it fight obesity among its children.

The proposal drew immediate opposition from industry groups who were fighting a similar tax proposed two months earlier by the city of Richmond, California.

“This tax is a sign of the times,” said Bob Achermann, executive director of the Californa/Nevada Soft Drink Association, said. “City governments are looking for revenue. We think this is a misguided approach.”

It is interesting that while it’s the cost of union contracts (salary and benefits, including pensions and health care) causing these crippling deficits they always threaten to lay off cops and firefighters if the voters don’t approve new taxes.  If it’s the union contracts that are causing the problem why are they not addressing the union contracts?  Instead of trying to tax cigarettes or sugary beverages?  While lying to us that this will pay for public health initiatives or make our children healthier?  When it will only go to pay for those union contracts that they can no longer afford?  Passing this cost onto the taxpayers who don’t have such generous pay and benefit packages?  Why?

Because there is a symbiotic relationship between government and unions.  Government gives them generous contracts.  And unions provide campaign cash and foot soldiers for elections.  While passing the high cost of this relationship on to the taxpayers.  Again, those people that don’t have such generous pay and benefit packages.  This is why governments will turn voters upside down and shake them for every last dollar they can get out of them.  So they and the unions can live very comfortable lives.  While the rest of us don’t.

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High Taxes and Regulatory Costs create Childcare Crisis in Australia

Posted by PITHOCRATES - August 5th, 2012

Week in Review

Parents can’t return to work quickly enough in West Australia after having their babies.  Because they can’t afford to be stay-at-home parents (see Working parents struggle to find carers for children by Rhianna King posted 8/1/2012 on The West Australian).

WA’s childcare sector is at breaking point, with critical shortages forcing parents to cut back their work hours or resort to hiring nannies…

Debbie Mashford, from Goodstart Early Learning in Edgewater, said the shortage was partly the result of more parents returning to work sooner…

The association is calling for a 30 per increase in the childcare benefit for parents of under-threes, which they claim would encourage more parents back to work and allow centres to fund more places…

Federal Minister for Early Childhood Kate Ellis said the Government wanted to remove the obstacles to longer opening hours at childcare centres.

“So many parents have the stress of having to ensure they rush out of work by ten past five to get through the traffic and collect their children by 6pm,” she said.

I never attended any childcare.  My dad worked.  And my mom worked longer hours at home raising the family.  The childcare issue is masking a much bigger problem.  Why can’t families survive these days on a single income?  And the answer to that is, of course, higher taxes.  And higher regulatory costs on businesses.  All of which have raised prices.  While shrinking take-home pay.

All of this results from increased government spending.  That’s the problem.  They add new bureaucracies to government.  Requiring more tax revenue to fund them.  New regulatory policies increase the cost of business reducing the number of employees they can hire.  Leaving more people dependent on government benefits.  Which is more government spending.  Paid for by higher taxes.  And then there’s the carbon tax.  The biggest boondoggle of them all.  Which just hammers power plants.  Increasing the cost of electricity.  Increasing everyone’s electric bill.  Both consumers and businesses.  Requiring further subsidies to those who can’t pay their electric bills.  And then there’s the carbon tax on the consumer’s utility bill.  It’s just all too much.  And the reason why West Australian families can’t make it on a single income.

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The Obama Deficits are Biggest since the 1940s and Taxing the Rich can’t Pay them Down

Posted by PITHOCRATES - August 5th, 2012

Week in Review

President Obama and Vice President Biden have both said the Obama administration did not increase government spending.  In fact all of their deficits were caused by some other guy.  George W. Bush.  It wasn’t their fault.  But they knew how to get rid of those George W. Bush deficits.  All they had to do was tax the rich just a little more.  So they paid their fair share.  Well, if you examine the numbers you can see they’re not exactly telling the truth (see Federal Deficit Highest Since 1940s by Elizabeth Flock posted 8/1/2012 on U.S. News & World Report).

The federal deficit is higher than it has been since the 1940s, in the years immediately after World War II.

A new visual from the “Face the Facts USA,” a non-partisan election project from George Washington University, shows the federal deficit has risen significantly under President Barack Obama, and that the government is increasingly spending money it doesn’t have…

An ad released by the Obama campaign Tuesday sought to stave off criticism about the president’s handling of the deficit. Titled “Worried,” the ad argues that Obama was the only candidate who had a plan to reduce the deficit, by having “millionaires pay a little more” in taxes.

Have millionaires pay a little more?  All right, for the sake of argument, let’s look at some tax return data.  In 2008, the total taxable income from all tax returns (see Table 1) for everyone taxed above 28% (including ALL capital gains income) was only $2.079 trillion.  That includes capital gains income taxed at 15%, 25% and 29%.  And income taxed at 33% and 35%.  The high-end earners.  Including a lot of small business owners who are not millionaires.  So, how much additional tax revenue will the government take in if they taxed these people an additional 2%?  About $42 billion.  An additional 5%?  About $104 billion.  An additional 10%?  About $208 billion.  These are all billions with a ‘b’.  So, no, a little more from the millionaires won’t even dent a trillion dollar deficit.

Class warfare may help win an election.  But when you check the numbers it’s downright nonsensical.  The ‘rich’ people, those in the 35% bracket in 2008 earned $1.1 trillion.  The budget deficit in 2011 was $1.3 trillion.  So even if you took ALL of their income there would still be a deficit.  The spending is just too great.  And there just aren’t enough rich people to tax.  The only way we can reduce our deficit is with spending cuts.  At least, mathematically.

So the Obama campaign isn’t telling the truth when they say President Obama had a plan to reduce the deficit by getting the millionaires to pay a little more in taxes.  For even if you took all of their income the deficit would still grow.  So if that’s not a true claim then perhaps their other claim isn’t true either.  And George W. Bush isn’t still spending money 3 and a half years out of office.

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India turns to Renewable Energy and Abandons Coal, causing one of the World’s Worst Power Outages

Posted by PITHOCRATES - August 5th, 2012

Week in Review

India suffered a massive power outage that left some 600 million Indians without power.  Stranding train travelers.  And trapping miners underground.  Not to mention leaving people to swelter in 100+ degree Fahrenheit temperatures.  In one of the most humid climates to ever grace our planet.  Some buildings had backup generators.  Including hospitals.  But these were few.   Most just suffered.  One wonders how this can happen in one of the biggest emerging economies.  India is, after all, one of the BRICS.  And being that the modern economy runs on energy it leaves one scratching their head.  If India has such a burgeoning economy where is their electricity production (see India: More than 600 million without power in biggest blackout ever by Rick Westhead posted 7/31/2012 on the Toronto Star)?

 While India has been aggressively trying to encourage investment in renewable energy sources such as solar and wind power, critics say it rarely upgrades its electrical grid. India has missed every annual target to add electricity production capacity since 1951, Bloomberg reported.

Oh.  They’ve been pouring millions into renewable energy to save the planet while they in essence have left their country plugged into the lamp post on the corner.  Here’s an interesting fact.  India just recently switched on the world’s largest solar photovoltaic power plant.  They are also a leader in wind power.  So they are working hard to remove their carbon footprint.  While their economy, and their people, starve for reliable electric power.  Let’s go to Bloomberg for more details (see Ambani, Tata ‘Islands’ Shrug Off Grid Collapse: Corporate India by Rajesh Kumar Singh and Rakteem Katakey posted 8/3/2012 on Bloomberg).

About 1.6 trillion rupees ($29 billion) spent by companies including Tata Motors and billionaire Mukesh Ambani-led Reliance Industries Ltd. (RIL), to quarantine their plants from the national grid is shielding India’s biggest users of electricity from disruptions. Sixty years of missed investment targets, transmission losses and theft is prompting factories to build their own plants boosting costs in a nation that suffers from the fastest pace of inflation among BRIC nations…

Five of India’s biggest electricity users generate 96 percent of their requirement, according to their annual reports.

India’s electric power is so unreliable that large consumers of electricity have to produce their own.  We call it captive power.    They generate it.  They keep it.  Which is only fair as they paid a fortune to generate it.  Which, of course, they pass on to their customers.  Via higher prices.  Which just adds to the inflation.

India has missed every capacity addition target since 1951, underscoring the urgency behind Singh’s effort to boost investment in power. As much as $300 billion, or 30 percent of the total spend planned on infrastructure, over the next five years is on the electricity sector, according to Planning Commission Member B.K. Chaturvedi.

The network in Asia’s third-largest economy loses 27 percent of the power it carries through dissipation from wires and theft, while peak supply falls short of demand by an average of 9 percent, according to India’s Central Electricity Authority. Some 300 million people in India, or one in every four, remain without links to the grid and the number will still be about 150 million by 2030, according to the Paris-based International Energy Agency.

The blackout engulfed as many as 19 of the South Asian country’s 28 states on July 31, with more than 100 intercity trains stranded on the second day…

They have been failing to meet demand since 1951?  Wow.  What a horrible track record.  Yet they can build the world’s largest solar photovoltaic power plant.  Even though their electric grid can’t transmit the insufficient power that they can produce.  And what’s astonishing is one in every four people doesn’t even have electricity.  This in one of the strongest emerging economies.  A country that is capable of doing so much better.  Full of people deserving so much better.  But they leave the electric grid to the elements.  While they spend a fortune to build the world’s largest solar photovoltaic power plant.  That can only “power a medium-sized city’s worth of homes.”  What a catastrophic misuse of investment capital.  No wonder large consumers of electricity are building their own generating capacity.

Companies plan to set up more than 33,000 megawatts of new captive power capacity and applications for approvals are pending with various state agencies, Rajiv Agrawal, New Delhi- based secretary of the power producers’ lobby said on Aug. 2. Some of these stations may not be set up because of a shortage of coal supplies, he said…

The pace of growth in generation has failed to keep up with demand because of a shortage in coal and natural gas supply, and deficient monsoon rains.

The world’s second-most populous nation suffers from frequent power outages that can last as long as 10 hours, amid summer temperatures of as high as 45 degrees Celsius (113 degrees Fahrenheit) in the capital, New Delhi. Power supply shortages shave about 1.2 percentage points off the nation’s annual growth, according to the Planning Commission…

This is what happens when you demonize one of the most energy-rich and reliable fuels.  Coal.  To reduce your carbon footprint.  Saving the planet may come at the cost of killing people.  Forcing people in an advanced society powered by electricity to go without electricity frequently.  Coal-fired power plants are the backbone of baseload power.  Those plants that run 24/7 to produce a steady stream of power to meet most of our needs.  These efficient heat engines can spin steam turbines forever as long as we feed them coal.  And a large coal-fired power plant can power everything in a region full of large cities.  Not just the homes in a medium city.

Subsidized electricity to farmers is also exacerbating electricity-supply bottlenecks, discouraging producers from adding capacity. India deliberately abandoned metering power supply for agricultural irrigation in the 1970s, as part of a strategy of switching to new high-yield crops, which required regular water supplies, Miriam Golden of the University of California and Brian Min of the University of Michigan said in a report published in April…

The Reserve Bank of India refrained from raising its benchmark interest rate on July 31 amid the slowest pace of growth in almost a decade and raised its inflation forecast to 7 percent from 6.5 percent, citing rising food prices and lack of roads, ports and power plants…

A dry monsoon season is a double whammy.  The lack of rain has lowered levels in the reservoirs at hydroelectric dams.  Reducing the amount of power they can produce.  On top of that the dry weather has forced farmers to irrigate their lands.  Using free electricity.  Which doesn’t discourage them in any way from sucking power off the grid.  Adding to the strain of the grid.  Doing their part in causing power outages.  Adding to inflationary pressures.  And loss in GDP.

This is a horrendous energy policy.  But you know who would approve of it?  President Obama.  For he is trying to do the same thing in America.  Shutter the coal industry and replace it with renewable energy.  He’s even cool on nuclear power.  Which is something the Indians are planning to expand to meet their exploding electrical demand.  Nuclear power.  So their horrendous energy policy is bad.  But it’s still a bit more sensible in one area.  They aren’t trying to shutter nuclear power, too.  Which happens to be one of the other most energy-rich and reliable fuels.  Joining coal to provide the backbone of baseload power.  Where a government will have it, that is.

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