Timberlake loves the Pontiac GTO even though His Presidential Candidate wants to put us in Electric Cars and Hybrids

Posted by PITHOCRATES - October 6th, 2012

Week in Review

Justin Timberlake is an incredible talent.  One of the best hosts of Saturday Night Live ever.  He’s a true triple threat.  He can sing, dance and act.  And he’s funny.  He probably could go far on Dancing with the Stars.  And no doubt be a huge ratings getter for them.  His talent has made him super rich.  Which is okay.  He earned it.  The only thing to take issue with him is in his political endorsements.  He supports President Obama.  Despite his love for things the Obama administration and the Democrat Party want to take away from ordinary Americans (see Justin Timberlake falls for old Pontiac GTO by Bryan Alexander posted 10/5/2012 on USA Today).

Eastwood drives a classic Ford Mustang in the flick, while Timberlake drives a 1967 Pontiac GTO convertible. Their happy expressions inside the vehicles isn’t just acting. Timberlake loved his so much, that he just had to have it.

“I kept driving that car around, and driving it around and finally I just said, ‘yeaaaaahh,’ ” Timberlake tells USA TODAY.

Yeah, that’s a feeling a lot of Americans have had with their love of muscle cars.  But, alas, most Americans can no longer indulge in these passions.  First of all, the federal government has an all out war on cars with big engines.  And, secondly, they’re running up the price of gasoline so high that only rich people can enjoy these toys anymore.  Instead they push us into electric cars and hybrids that we don’t want.  While the super rich, like Timberlake, and other Democrat supporters in Hollywood and in the entertainment world and the mainstream media, can enjoy the cars they tell us not to drive.  Something isn’t right about that.

Americans should be able to enjoy cars like Justin Timberlake can without being as rich as he is.  Like our fathers did by working a job after high school so they could put gasoline into their beloved muscle cars.  That’s the America we want.  Not what the Left wants to impose on us.  We just want to enjoy the simple things.  Like Timberlake can.  Driving the open road with the top down.  With the noise of the engine playing sweeter music than any sound system has ever played.  But these sweet instruments are lucky to get 12 miles to the gallon.  Which makes it expensive to drive them when Democrat policies have raised gas prices up to $4 a gallon.  Or more.

The Democrats say they are for the working man.  But their policies definitely favor the super rich.

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GE Engine Failures on Boeing’s Newest Aircraft cause Rapid Response and Fix from GE

Posted by PITHOCRATES - October 6th, 2012

Week in Review

Airbus built the A380 to compete against the Boeing 747.  In fact, there is a great competition between Airbus and Boeing.  Each even claiming that the other’s government is unfairly subsidizing the other company.  Which is a big deal because Boeing is a large part of total US exports.  Airbus has taken a lot of their business, though.  So they are very protective of their remaining market share.  And will take aggressive action whenever a problem arises that can affect their market share or their profits (see NTSB Urges Action After Engine Failures in New Boeing 787, 747 Airliners by Jason Paur posted 9/17/2012 on Wired).

The National Transportation Safety Board is recommending inspections for all new Boeing 787 and 747-8 aircraft with General Electric engines. The NTSB made the recommendation to the Federal Aviation Administration after two of GE’s newest engines experienced failures in the past few months. Three separate incidents all point to a similar cause for the failures in the engines.

“The parties to our investigation – the FAA, GE and Boeing – have taken many important steps and additional efforts are in progress to ensure that the fleet is inspected properly,” NTSB Chairman Deborah A.P. Hersman said in a statement on Friday. “We are issuing this recommendation today because of the potential for multiple engine failures on a single aircraft and the urgent need for the FAA to act immediately…”

According to the NTSB, GE has developed an ultrasonic inspection method for the fan midshaft that can be used while the engine is still on the airplane. All of the GEnx-1B engines used on 787 Dreamliners as well as spare engines have been inspected. All of the GEnx-2B engines on passenger versions of the 747-8 have also been inspected. There are more than 40 General Electric engines on freighter versions of the new jumbo jet that still await engine inspections and are expected to be completed this week.

The engine maker believes it has found the cause of the cracks and has changed the way the shafts are coated during the manufacturing and assembly process…

Did GE respond like this just because of the NTSB?  No.  They have a vested interest in their engines not failing.  For if they have a reputation of providing bad engines their customers will go someplace else.  Or the flying public will refuse to get on any plane with GE engines.  That’s why GE scrambled to fix this problem.  Because hiding it would have been a bigger hit on profitability.  This is the free market in action.  The market demanded fuel efficient and reliable engines.  Which GE delivered.  And when there was a problem GE responded quickly.  To protect the bottom line.  And their biggest customer.  Who could take their business elsewhere if GE costs them any market share.  For they are not the only engine supplier out there.

Boeing’s new 787 Dreamliner can be ordered with either the General Electric or Rolls-Royce engines. Both of the new engines are responsible for a significant portion of the fuel efficiency improvements of the new airplane. And the Rolls-Royce engines haven’t been trouble free. Earlier in the summer the launch customer fo[r] the 787, All Nippon Airways, temporarily grounded its fleet of Dreamliners after premature corrosion was found in the gearboxes of the Rolls Royce Trent 1000 engines.

If this was a government manufacturer you would not have seen such quick action.  Why?  Because if there was a government monopoly for those engines where else could the aircraft manufacturers go?  The NTSB would have grounded all planes.  But there would not have been any urgency in resolving this problem.  As there was no potential for lost profits.  Which there was for GE.  Especially with a competitor in the wings just waiting to take their customers.

Government regulations don’t make aircraft safe.  The fear of losing profits on unsafe planes does.  Which is why people would much rather fly in a Boeing airplane rather than a plane produced under the command economy of the Soviet Union.  For back in the Seventies and Eighties the chances of a plane falling out of the sky were greater with a Soviet-built plane than with a private sector-built Boeing.  It’s the profits earned on safe airplanes that do the most to keep them from falling out of the sky.  Not bloated government bureaucracy.

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India wants to Burn U.S. Coal in their Coal-Fired Power Plants if the Americans are Foolish Enough not to Burn it in Theirs

Posted by PITHOCRATES - October 6th, 2012

Week in Review

India is one of the leaders in solar and wind power.  They have one of the world’s largest solar power plants.  Charanka Solar Park.  Adding about 200 megawatts to the electric grid.  When the sun shines.  India has about 15,000 megawatts worth of installed windmills.  When the wind blows they provide about 2% of India’s electric power.  India also has about 37,000 megawatts of hydroelectric power.  Which provides about 20% of their total electric power.  When the rains come.  So the Indians are serious when it comes to renewable energy.  Of course, they know that solar and wind power are more novelties than serious providers of electric power.  No, the big daddy of electric power in India?  Coal (see Tata Power scouts for overseas coal assets by Malini Menon posted 10/4/2012 on Reuters).

Tata Power (TTPW.NS) is looking for more overseas coal assets, a top executive said, joining the growing number of companies in the energy-hungry nation looking to secure supplies abroad amid a widening domestic shortfall.

“We are continuously looking at the other geographies and today, the options are the U.S., Colombia and Africa,” Managing Director Anil Sardana said, pointing to logistics, cost and sustainability of contracts…

Coal accounts for two-thirds of power production in India, which is struggling to meet the demands of a fast-growing economy and increasingly affluent population of around 1.2 billion people.

With all that investment in solar and wind power coal-fired power plants still provide about two-thirds of all electric power.  Which means coal and hydro provide close to 90% of all their power.  And solar and wind account for less than 10% of their electric power generation.  When the sun shines and the wind blows.

So the Indians want to buy U.S coal.  As do the Chinese.  You know who doesn’t want to buy U.S. coal?  The U.S. government.  They don’t want any Americans buying American coal.  And are aggressively trying to shutter coal-fired power plants.  Because of global warming.  Even though in all likelihood someone will burn that coal.  It just won’t be Americans.  So instead of China and India suffering rolling blackouts it will be the US.  Because of an energy policy dominated by environmental alarmists.

The Indians know they need coal-fired power plants.  The Chinese know they need coal-fired power plants.  But for some reason the Obama administration and his political base don’t understand that we need coal-fired power plants.  Perhaps they will when those power hungry server centers suffer rolling blackouts and shut off their online activities.  Perhaps they will only appreciate reliable coal after they lose all the comforts of life they take for granted.  Pity they aren’t as smart as the Indians and the Chinese.

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Ben Bernanke defends QE3 before Congress even while Admitting it won’t Create any New Jobs

Posted by PITHOCRATES - October 6th, 2012

Week in Review

Ben Bernanke, Federal Reserve Chairman, is a student of the Great Depression.  And of Milton Friedman.  Who he cited often to support his policies when speaking before Congress.  Insisting that their expansionary monetary policy will only stimulate growth.  Not inflation.  Of course, he has already tried quantitative easing one and two and they failed.  As demonstrated by the need of QE3.  Yet these Keynesians always go back to the tried and failed Keynesian policies.  Increase the money supply to lower interest rates.  To encourage people to build and sell new housing while the market is still flooded with homes left over when the housing bubble burst back in 2008.

Economics is not like trying to cure a hangover.  A little hair of the dog (drinking more alcohol to mitigate the effects of a hangover) doesn’t work in economics.  More bad monetary policy does not cure previous bad monetary policy.  At least, it hasn’t yet.  Nor does it appear that it ever will (see Bernanke presses Congress to support US economy by AFP posted 10/2/2012 on Channel News Asia).

Federal Reserve Chairman Ben Bernanke said on Monday he is confident the US economy will continue to expand, but he urged the US Congress and the White House to act to support stronger growth…

However, he said the economy is growing at a weak 1.5-2 percent rate, not fast enough to lower the employment rate, and that the Fed’s stimulus efforts need to be backed up by action from the rest of the government…

“Many other steps could be taken to strengthen our economy over time, such as putting the federal budget on a sustainable path, reforming the tax code, improving our educational system, supporting technological innovation, and expanding international trade,” Bernanke said.

“In particular, the Congress and the administration will soon have to address the so-called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year.

“According to the Congressional Budget Office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession,” he warned.

Bernanke is on to something here.  He acknowledges that the new taxes of the fiscal cliff could throw the economy back into recession.  So if more taxes will prolong or deepen the recession what can we infer from this?  Would not fewer taxes have the opposite effect?

This is the frustrating thing about all of these students of the Great Depression.  They only look at what the Fed did when they were contracting the money supply.  And nothing else.  They don’t talk about a massive increase in tariffs (the Smoot-Hawley Tariff Act of 1930) in Congressional committee during 1929.  Before the Stock Market Crash of 1929.  Nor do they discuss the progressive policies of Republican Herbert Hoover.  And his interference into market forces.  Trying to raise prices everywhere to help farmers earn more and allow employers to pay their employees more.  And the near doubling of federal income tax rates.  Talk about your economic cold shower.

This was a 180-degree turn from the pro-business polices of the Warren Harding and Calvin Coolidge administrations.  That let the Twenties roar with solid economic growth.  Yes, there were some inflationary monetary policies.  The Fed was no angel.  But the growth was strong even after the effects of inflation were factored in.  It was all those tax and tariff increases that turned a recession into a depression.  And then the bad Fed policy destroyed the banking industry on top of it.  Unfortunately, that’s the only part that any Keynesian ever sees.  What the Fed did.  Not the solid economic growth generated by low tax rates and a business-friendly environment.

The Fed’s artificially low interest rates pushed house prices into the stratosphere.  And because they were so high in 2008 they had a very long way to fall.  Which is why the Great Recession has been so painful and so prolonged.  Now they’re trying to stimulate the housing market again.  The very thing that got us into this mess in the first place.  Here’s another lesson the Keynesians need to learn.  Their expansionary policies make recessions longer and more painful.  And there is more to the economy than low interest rates.  For no matter how low they are if the environment is too business-unfriendly they won’t stimulate economic activity.  Lower tax rates and deregulation will.  But not lower interest rates.  That’s what Warren Harding/Calvin Coolidge did.  What JFK did.  What Ronald Reagan did.  What George W. Bush did.  Who all had much faster recoveries following bad recessions than President Obama is having under his Keynesian policies.

If only we could learn the objective lessons of history.  For as George Santayana (1905) said, “Those who cannot remember the past are condemned to fulfill it.”

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The Official Unemployment Rate falls to 7.8% but the U6 Unemployment Rate Holds Steady at 14.7%

Posted by PITHOCRATES - October 6th, 2012

Week in Review

The jobs report is out.  And the Left is trumpeting the great fall in the unemployment rate from 8.1% in August to 7.8% in September (see Table A-15. Alternative measures of labor underutilization posted 10/5/2012 on Bureau of Labor Statistics).  This is the official U3 unemployment rate.  That only counts people looking for full-time employment.  It doesn’t include those working part-time because they can’t find full-time work.  And it doesn’t include the people who just gave up looking for full-time work because there just isn’t any out there.  Which throws a little cold water on this 7.8% number.  For it doesn’t reflect a gain in new jobs.  It just reflects that they are counting fewer unemployed people.

A more accurate picture of the current employment climate is the U6 unemployment rate.  This number counts everyone who can’t find a full-time job for whatever reason.  Some have given up their search.  Some have retired early.  Some are living off of government benefits.  Some are working part-time jobs.  Some are working a couple of part-time jobs to make ends meet.  Interestingly, although the U3 rate fell 3 points the U6 rate held steady at 14.7%.  Which is puzzling.  For everyone included in the U3 rate is included in the U6 rate.  So if U3 fell U6 should have fallen, too.  For U3 and U6 generally rise and fall with each other.  As they have done in the past.  Such as in the years from 2006 to 2012 (pulled from the same Bureau of Labor Statistics website).

During the 2006 mid-term elections the Democrats were saying the economy was just terrible.  They hammered the economic numbers saying it was one of the worst economies ever.  Of course, the numbers say otherwise.  Whether you’re looking at the U3 rate or the U6 rate.  The economic numbers were very strong right until that sustained Keynesian monetary expansion forcing interest rates below market values and the government pressure on mortgage lenders to lend to people who could not afford a conventional mortgage blew up in their faces.  Beginning with President Clinton’s Policy Statement on Discrimination in Lending.  Which is why these lenders turned to the subprime mortgage.  Approving so many people for mortgages that housing prices soared.  Creating a huge housing bubble just waiting to be pricked by a rise in interest rates.  Which had to come.  As expansionary monetary policy eventually creates inflation.  And the only way to stop that is by raising interest rates.  Which was the time bomb ticking buried deep within those adjustable rate subprime mortgages.

Facilitated by the federal government and their GSEs Fannie Mae and Freddie Mac (who guaranteed and bought these toxic mortgages from the lenders they were pressuring to approve more toxic loans), subprime lending expanded.  As the GSEs sold these toxic mortgages to unsuspecting investors.  Which all blew up in the final months of 2008.  Creating the subprime mortgage crisis.  And the Great Recession.  The U3 rate rose as high as 10% in the fallout from this bad Keynesian expansionary monetary policy.  While the U6 rate soared as high as 17%.  Great Depression unemployment levels.  And neither has fallen much since these highs.  As the current numbers are closer to their highs than their previous lows.

Worse, the spread between U3 and U6 is far greater under President Obama then it was under George W. Bush.  Which tells us how poorly the U3 rate describes the current employment picture.  The greater the spread the more meaningless U3 is.  As it is simply not counting all the unemployed people in the economy.  The Left trumpets the 3 point fall in September but that only brings the U3 rate down to what the U6 rate was under Bush.  And the Left was calling the even lower U3 numbers under Bush some of the worst job numbers of all time.  So by their own standards President Obama is a far greater disaster to the economy than George W. Bush was.  For if it was horrible under Bush anything worse than Bush’s numbers must be more horrible.

When they passed the stimulus bill they promised they would have 5% unemployment by 2012.  Even the president said he would be a one-term president if this didn’t happen.  Despite all of their spending these numbers haven’t fallen much.  Despite their Summer Recovery pronouncements of 2010.  Their economic policies have all failed.  And there is a simple explanation for that.  Their policies were Keynesian policies.  And Keynesian policies have never worked.  Nor will they ever work.

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