FT146: “A Democrat promise to cut spending is as good as a promise from Lucy that she’ll let Charlie Brown kick that football.” —Old Pithy

Posted by PITHOCRATES - November 30th, 2012

Fundamental Truth

Tax and Spend Democrats have given us the Financial Crisis we call Taxmageddon or the Fiscal Cliff

Democrats like to spend money.  Earning the moniker tax and spend liberals/Democrats.  And what money they can’t tax away from the taxpayers they borrow.  And what they can’t borrow they print.  They beg, borrow, steal, tax and print as much money as they can.  Because they can never raise enough money to spend.

To help them in their insatiable appetite to spend they make spending promises that the state can never fulfill.  Creating one financial crisis after another.  Creating an urgency to raise taxes.  And debt limits.  Or else face bankruptcy.  And the inability for the U.S government to pay their debt obligations.  Lowering the U.S. sovereign debt rating.  Much like Standard and Poor’s did in 2011.  Something that we must avoid at all costs.  That is, something we must avoid from happening again at all costs.  And those costs are typically higher taxes and ever more debt.

Guess what?  We have another crisis.  It’s got a couple of names.  Taxmageddon.  And the fiscal cliff.  The expiration of the Bush tax cuts.  And massive spending cuts.  Because Democrats and Republicans couldn’t agree on a deal to reduce the deficit they agreed to sequestration.  Automatic spending cuts that will gut entitlements and defense spending.  All in a vain attempt to balance the budget.  Like politicians have been saying we must do for the last three decades or so.  But never do.  In fact our politicians have done the exact opposite.  They’ve increased spending.  So much so that we now are at a fiscal cliff.

Republicans are Hapless Sad Sacks when Negotiating a Spending Cut/New Tax Deal with Democrats

A recurring joke on the children’s cartoon Peanuts is how Lucy makes a fool of poor old Charlie Brown.  She continually promises to hold the football for him to kick.  Even though every other time she has promised this she pulled the ball away just before Charlie could kick it.  Sending him flying up into the air and falling flat on his back.  Making a fool of himself.  Bringing a big smile to Lucy’s face.  As it amuses her that Charlie is so foolish to fall for this trick time and again.  But she promises that this time he can trust her.  So she uses lies and manipulation to get Charlie to believe her.  And he goes running at that football.  Determined to finally kick it.  Only to have her pull the ball away again.  Sending him flying up into the air and falling flat on his back.  Again.

Sound familiar?  Kind of sounds like pretty much every spending cuts/tax deal ever brokered by the Democrats.  Who look at the Republicans with that ‘Lucy’ smile on their face.  Incredulous that they can get away by making the same old promises that they never keep.  Getting what they want, modest tax hikes now, in exchange for generous spending cuts later.  And just like that classic song in Stephen Sondheim’s A Little Night Music the Republicans keep asking when is later?  Just like poor Henrik.  Who epitomizes the Republicans when it comes to spending cut negotiations with Democrats.  Who are always told those spending cuts will come later.

Later…

When is later?

All you ever hear is “Later, Henrik, Henrik, later.”

Substitute ‘the Republicans’ for the sad sack ‘Henrik’ and this can be a song about Republicans.

How can I wait around for later?

I’ll be ninety on my deathbed

And the late, or, rather, later, Henrik Egerman.

Doesn’t anything begin?

Poor Henrik.  As hapless as Republicans in a spending cuts/new tax deal they negotiate with Democrats.

The Democrats look at the Republicans like they are all Charlie Brown

George Herbert Walker Bush made a deal with Democrats.  Even reneged on his famous ‘read my lips, no new taxes’ pledge.  He agreed to $1 in new taxes for every $2 in later spending cuts.  Those tax hikes were quick to go into law.  While we’re still waiting for those later spending cuts.  Ronald Reagan made even a grander deal with Democrats.  $3 in later spending cuts for every $1 in new taxes.  The Democrats were quick to enact those new taxes.  But we’re still waiting on those later spending cuts.  Reagan went to his deathbed at 93 still waiting for those later spending cuts.  He waited for later to come.  But later never came.  As promised later spending cuts never, ever, begin.

For when it comes to promised spending cuts Democrats are like Lucy.  With that snarky smile.  Making the same promises that they’ve made so many times before.  Promises they never keep.  And have no intention of ever to start keeping them.  Laughing to themselves that they can get Republicans time and again to believe their same empty promises.

They look at the Republicans like they are all Charlie Brown.  They have no respect for them.  They lie to them at will.  Say whatever it takes to get their way.  Making promises they have no intention of keeping.  Promising George H.W. Bush $2 in spending cuts for every $1 in new taxes.  Promising Ronald Reagan $3 in spending cuts for every $1 in new taxes.  Both lies.  And now President Obama is saying that any deal to avoid Taxmageddon or the fiscal cliff must include both spending cuts and new taxes.  As if they are not Lucy.  But we all know that they are Lucy.  For any deal including later spending cuts for new taxes will see the Republicans on their deathbed at 90 still waiting for the Democrats to deliver on those spending cuts.  And just when they think they will Lucy will pull that football away.  Again.  Making the Republicans look like fools once again.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , ,

Undecided Voters, Party Platforms, Capitalism, Socialism, Free Stuff, Taxes, Spending, Deficit and Balanced Budget

Posted by PITHOCRATES - November 29th, 2012

Politics 101

There are Stark Differences between Republicans and Democrats even though many are Equally Worthless

A lot of people listen to opposing candidates before making their voting decision.  The perennial undecided voters.  Who often don’t make up their mind until they enter the voting booth.  Who are swayed by the prevailing political winds.  Who are more susceptible to the lies and misinformation bombarding them during political campaigns.  For these are good people.  Kind people.  Trusting people.  Which is why the Left can lie to them so easily.

Anybody who has to listen to both parties’ candidate make their case before choosing who they will vote for does not follow politics.  Does not understand the platforms of the two major parties.  Does not have an understanding of rudimentary economics.  Or history.  For if they did they would be aligned with one party or the other.  Because all Democrats are basically the same.  And all Republicans are basically the same.

Democrats choose to be Democrats because they believe in and support the Democrat platform.  Republicans choose to be Republicans because they believe in and support the Republican platform.  Not in their entireties.  But pretty darn close.  Otherwise they would not identify themselves with their chosen party.  For there are stark differences between the parties believe it or not.  Even though many candidates from both parties are equally worthless and contemptible.

Republicans lean towards Free Market Capitalism while Democrats lean towards European Socialism

Republicans lean toward free market capitalism.  The Austrian school of economics.  Small government.  Low taxes.  Low government spending.  Sound noninflationary monetary policy.  A business-friendly environment that encourages entrepreneurialism.  And job creation.  They tend to be more socially conservative.  And would prefer to combat the rise in teenage pregnancy and teen sexually transmitted diseases by having teens doing more homework and having less sex.

Democrats lean toward European socialism.  What they call social democracy.  The Keynesian school of economics.  Big Government.  High taxes.  Lots of government spending.  Inflationary monetary policy so they can print the money that they can’t tax or borrow to pay for all that government spending.  They don’t believe that there can ever be too much business regulation (they may talk about creating good-paying jobs but their policies hinder job creation).  They tend to be more socially liberal.  And would prefer to address the issues of teenage pregnancy and teen sexually transmitted diseases by providing free birth control and abortion.  Because teens are going to have sex anyway.  And asking them to do more homework won’t change that.

These aren’t their official platforms.  And it’s not an all-inclusive description of their policy positions.  But it gives you a general idea of their differences.  And as you can see there are differences.  An undecided voter may struggle with their choice between Democrat and Republican.  But that’s a decision few Democrats or Republicans ever have.  Because they know the differences between their two parties.  And really don’t like each other.

Those who vote Straight Party Ticket will know how they’ll vote even before any Candidates Announce

When it comes to wooing the undecided voters both political parties tend to downplay their official platforms.  To keep from confusing the undecided with stuff they don’t understand.  Or, worse, to keep from scaring away the undecided in case they do understand this stuff.  So they make personal attacks.  And promise free stuff to voters who’ll vote for them.  Which Democrats can do a lot better.  As they always want to raise taxes and increase government spending.  Which comes in handy when giving away free stuff.  While Republicans want to govern responsibly.  Which isn’t very conducive to giving away free stuff.

Of course the Democrats don’t come out and say that they will tax people more so they can increase the size of government.  To administer that free stuff.  So they say things like they just want everyone to pay their fair share.  And that those who can afford to pay more (the 1%) should pay more in taxes.  For if only we were fairer we wouldn’t have these trillion dollar deficits.  The president would like to return to the Clinton era tax rates.  Raising the top marginal tax rate from 35% to 39.6%.  In 2010 the top 1% earned about $1.7 trillion.  So raising the top marginal tax rate 4.6 points would raise about $77.5 billion in additional tax revenue.  Sounds like a lot of money until you look at the average annual deficit of President Obama’s 4 years in office.  Which comes to about $1.3 trillion for each of his 4 years.  So the president’s proposal to balance the budget would only raise revenue equal to 5.86% of his average budget deficit.  Which won’t be anywhere near enough to balance the budget.  So we’ll have to do more.  And once we raise taxes on the rich that leaves the middle class.  Which we will have to tax punitively to balance the budget if we don’t cut spending.

Of course, the Democrats don’t tell us this.  This math.  Though they talked about math a lot during the 2012 campaign.  Instead, they just talk about being fair and having the rich pay more.  Which sounds like the decent thing to do.  Especially to the undecided who the Democrats haven’t exactly told the truth to.  Which is why those who understand this math tend to vote straight party tickets.  Either for their special interests and the math be damned.  Those who tend to vote Democrat.  Or those who seriously want to balance the budget before we end up like Greece.  Those who tend to vote Republican.  And unlike the undecided voters these people know who they will vote for even before they know who the candidates are.  Who will ignore whatever the candidates say during the campaign.  And, ironically, these people will probably be more informed than those undecided who study the candidates’ positions up until they enter the voting booth.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , ,

Static Friction, Kinetic Friction, Wheel, Axle, Roads, Steel Wheels, Steel Track, Coefficient of Friction and Intermodal Transportation

Posted by PITHOCRATES - November 28th, 2012

Technology 101

Friction Pushes Back against us when we try to Push Something

Have you ever done any landscaping?  Buy some decorative rocks to cover the ground around your flowers and shrubs?  If you go to a home improvement store with a garden center you probably bought your decorative rocks by the bag.  And those bags are pretty heavy.  Say you have a pickup truck.  And the good people at the garden center bring out a pallet of stone bags on a pallet jack.  Placing it down next to your truck.  Before loading it in your tuck do this experiment.

Don’t really do this.  Just imagine if you did.  Squat down behind the pallet.  Place your hands on the pallet.  And push with all of your might.  What do you think would happen?  Would you send that pallet sliding across the pavement?  Or would you fall on your face as your feet slipped out from underneath you?  You’d be kissing the pavement.  And possibly giving yourself a good hernia.  Now if they had put that pallet of stone into your pickup truck and you put the truck into neutral and tried pushing that what do you think would happen?  You may still get a hernia but that truck would probably move.

A pallet of stone may be too heavy to push.  But a pickup truck with a pallet of stone in it may not be too heavy to push.  How can that be?  In a word, friction.  It’s that thing that pushes back when we try to push something.  The heavier something is and the more surface area in contact with the ground the more friction there is.  Which is why that pallet is hard to push.  The force of friction is so great that we can’t overcome it.  But something that can be almost 10 times heavier sitting on 4 rubber tires bolted onto a greased axle?  That’s a different story.

The Two Basic Types of Friction are Static Friction and Kinetic Friction

There are two basic types of friction at play here.  Static friction.  Which prevents us from pushing that pallet of stone.  And kinetic friction.  Which we would have experienced with that pallet of stones if we were able to overcome the static friction.  Kinetic friction is what we encounter when sliding something across the ground.  Static friction is greater than kinetic friction.  As it takes more effort to get something moving than keeping something moving.

Now here’s why we are able to push a pickup truck easier than a pallet of stones.  With a pallet there is 48″X40″ of surface area in contact with the ground producing a large amount of static friction to overcome.  Whereas on the pickup truck the only thing that slides are the axles in highly greased bearings.  Which offer very little static friction.  The rubber tires offer some static friction due to the immense weight of the truck pushing down on them, flattening the bottom of the tires somewhat.  Once the resistance of the flattened tires is overcome the rubber tires offer kinetic friction in the direction of travel.  While offering static resistance perpendicular to the direction of travel.  Keeping the truck from sliding away from the direction of travel.  Which works most times on dry and wet pavement.  But not so good on snow and ice.  As snow and ice offer little friction.

The wheel and axle changed the world.  Allowing people to move greater loads.  People could grow wheat and other food crops in distant areas and load them onto carts to transport them to cities.  Which is what the Romans did.  Using their roads for their wheeled transportation.  Which increased the speed and ease they could pull these large loads.  Sections of Roman roads have survived to this day.  And in them you can see centuries old wheel ruts worn into them.

Intermodal Transportation combines the Low Cost of Rail and the Convenience of Trucking

The basic wooden-spoke wheel remained in use for centuries.  From Roman times and earlier.  To 19th century America.  While we were still using the wooden-spoke wheel we began using something else that offered even less friction.  Iron wheels on iron rails.  Allowing great loads to be transported over great distances. The friction of an iron wheel on an iron track was so low that the drive wheels would slip when starting to pull a heavy load.  Or going up any significant grade.  To prevent this slip trains carried sand and deposited it on the track in front of the drive wheels.  To increase the friction of the drive wheels for starting and travelling on inclined grades.   Iron wheels and iron track gave way to steel wheels and steel track.  Allowing trains to pull even greater loads.

There is no more cost-efficient way to move heavy freight over land than by train.  Thanks to exceptionally low coefficients of friction.  And the less friction there is the less fuel they need to pull those heavy loads.  Which is the reason why so many of our roads are pocked with potholes.  Roads are only so strong.  They can only carry so much weight before they break apart.  Which is why the heavier load a truck carries the more axles they must distribute that weight over.  Putting more tires on the pavement.  Increasing the friction to overcome.  Requiring greater fuel consumption.  Which is why a lot of truckers cheat.  And try to get by on fewer axles.  Increasing the weight per axle.  Which hammers potholes into the pavement.

The reason why we use trucks to transport so much freight is that there aren’t railroad tracks everywhere.  But we can still make use of the railroad tracks that are near our shipping points.  By combining rail and truck transportation.  We call it intermodal.  Using more than one means of conveyance.  Putting freight into containers.  Then putting the containers onto truck trailers.  Then driving them to an intermodal yard.  Where they take the containers from the truck trailers and put them onto rail cars.  Where they will travel great distances at low friction.  And low costs.  Then at another intermodal yard they’ll transfer the containers back to truck trailers for a short ride to their final destination.  Getting the best of both worlds.  The low-cost of rail transport thanks to the low friction of steel wheels on steel rail.  And the convenience of truck transportation that can go where the rails don’t.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , ,

Planters, Money, Factors, Risk, Interest, Discounting, Accounts Receivable and Accounts Receivable Factoring

Posted by PITHOCRATES - November 27th, 2012

History 101

When a Factor advanced their Money to a Planter it could take up to 9 Months or more to Get it Back

It takes money to make money.  And in the early days before big banks there were few places to get big amounts of money.  Which you needed in the New World to grow large crops like tobacco.  You needed big amounts of money because it took a long time from planting a crop to getting it to market in Europe.  Planters needed money to plant, grow, harvest, bale, ship to a seaport where it then shipped by sail to a European market.  Then money from the eventual sale of that tobacco would take a couple of months to make it back to the planter.

It could take up to 9 months or more before they actually got the proceeds from the crops they grew.  And there were no large banks to provide financing for the planters.  So what did they do?  Enter rich people.  And merchant banks.  Factors.  Who advanced planters money to plant, grow, harvest, bale and ship their crops to a European market.  And when they sold those crops and the money worked its way back across the ocean it went to the factors.

But why would rich people do this?  Why would they take a risk with their money?  When they advanced their money it could take up to 9 months or more before they got it back.  A lot could happen in 9 months.  A drought could have wiped out their crop.  Insect infestation could have eaten their crop.  Fire could have destroyed the crop as it made its way to an ocean going sailing ship.  And that sailing ship could have suffered damage in a storm and sank.  So there was a lot of risk these rich people took.  So why did they?

Factors bought a Future Crop at a Discount from what they Expected it would Sell For

Well, they could mitigate some of this risk by purchasing marine insurance.  To cover the cost of their cargo in the event it was lost at sea.  But insurance policies aren’t free.  They cost money, too.  Not to mention the shipping costs to get these crops to market.  Costs that had to come out of those crops.  So there are costs.  And some work.  Back then you didn’t buy insurance or pay for transportation electronically.  People went to places and negotiated these things with other people.  People who earned wages and didn’t work for free.

Today when someone borrows large sums of money they pay interest.  Which helps to offset any costs incurred.  And let’s people earn money by loaning money.  Which provides an incentive to loan money.  Which is the only way people can borrow money.  When people are willing to loan it.  And people only loan money when it’s worth their while.  People save their money in the bank to earn interest.  They don’t put it there so others can borrow it for free.  But before large banks they needed another way to get money to people who needed it.  Which brings us back to those factors.

Factors made their money by discounting.  Which is a way of earning interest without charging interest.  When you buy a Treasury bill you are acting like a factor.  You may pay $970 dollars for a Treasury bill with a face value of $1,000.  When you redeem this Treasury bill the government pays you $1,000.  Giving you a $30 financial gain.  Which works out to an effective interest rate of 3%.  People like buying treasury securities because they are backed by the full faith and credit of the United States.  So there is little risk.  Whereas factors took a huge risk.  So they didn’t do it on any promise to pay.  They got collateral.  They bought a future crop at a discount from what they expected it would sell for.  Which became theirs.  And when that crop sold they got all the proceeds from that sale.  Hopefully they got as much as they thought it would sell for.  Or more.  But, of course, they took the risk that it might have sold for less.

Accounts Receivable Factoring is a Quick and Easy Way for a Business Owner to Raise Cash

Many small businesses will struggle to grow if they don’t offer credit.  Allowing their customers to buy things on account.  And then paying for all of their monthly purchases at one time at the end of the month.  This convenience encourages repeat customers to buy more.  And it allows them to buy things that they can sell later.  Like a restaurant owner who buys food from a restaurant supplier.  After selling prepared meals in his or her restaurant customers pay them.  Which allows the restaurant owner to pay his or her restaurant supplier at the end of the month.  A system that works well.  And benefits both supplier and customer.  That is, as long as people are dining at that restaurant.

But sometimes people stop going to restaurants.  And stop buying from other businesses.  Making it difficult for these businesses to pay their bills.  So they start paying their bills slower.  Instead of paying them in full at the end of the month they may take an extra month.  Or two.  So businesses who sold things on account have a growing list of outstanding invoices.  Or accounts receivable (A/R).  They print out their A/R aging report and they slowly see their open invoices go from 30 days to 60 days to 90 days.  Leaving them short of cash to pay their own bills.  And if they already maxed out their credit line they may be unable to borrow money.  So what other option do they have?  Here’s a hint.  Most of their outstanding accounts receivable will eventually become cash.  In time.  All they need is a way to get someone else to wait for that time to pass.

What they need is a factor.  Someone to buy their accounts receivable.  Giving them the cash they need.  While the factor will then pursue the collection of those outstanding invoices.  Most of which the customers will pay.  And it’s these invoices a factor will buy at a discount.  The small business owner loses some profit but they make up for that by getting the cash they need to pay their bills.  Accounts receivable factoring is a quick and easy way for a business owner to raise cash.  For unlike a loan there is no review of a company’s assets and liabilities.  No collateral to pledge.  No financial statement analysis.  For the owner is selling an asset.  His or her accounts receivable.  Which is the only thing a factor looks at.  The quality of those receivables.  Which they converted into cash.  Giving business owners the money they need to get back to the business of making money.  Much like those planters did in colonial America.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , ,

Accounts Payable and Accounts Receivable

Posted by PITHOCRATES - November 26th, 2012

Economics 101

Someone’s Account Payable is Someone’s Account Receivable

Cash is king in small business.  Because without it you can’t make payroll or pay your payroll taxes.  As important as cash is, though, many business will never grow until they start offering credit.  Trade credit.  Selling things on account.  Because for those doing repeat business it is just too much of a pain to write a check for every purchase.  And it’s just dangerous carrying around that kind of cash.  So businesses offer credit to established customers.  Those with good credit.  And good reputations.

Customers open an account.  When they make a purchase they get an invoice generally payable in 30 days.  Or some number of days around that.  At the end of the month they will receive a statement from their vendor showing all of their open invoices.  Which they will compare with their accounting records.  By running their accounts payable report.  And they will compare the invoices they show outstanding with those on their vendor’s statement.   They will resolve any differences.  And then write a check for their outstanding invoices.

On the other end of the sale there is an account receivable.  For someone’s account payable is someone’s account receivable.  A sale that doesn’t bring cash into the business.  But a promise to pay cash within a short amount of time.  So a business can greatly increase sales by offering trade credit.  By being a mini-banker.  Their sales revenue will grow.  As will their net profit.  But not necessarily their cash in the bank.  For it will look good on paper.  But until they convert those accounts receivable into cash it will only be on paper.  And money on paper is just not as good as money in the bank.

When Invoices are Unpaid for 90 Days or More there’s a Good Chance they will Never be Paid

There is a certain euphoria small business owners feel when they see their sales grow.  Things are moving in the right direction.  All their hard work is paying off.  Finally.  Some even fantasize about spending some of that money.  Such as going out to lunch on Friday instead of brown-bagging it every day of the week.  Then some anxiety starts growing.  And it comes from their accounts receivables report.  When they see that 30 days after those sales come and go.  And a lot of those open invoices remain on the report.

The accounts receivable report small business owners review is called an aging report.  Because it shows what invoices are current, which are 30 days old, which are 60 days old and which are 90 days or more old.  And when invoices are unpaid for 90 days or more there’s a good chance they will never be paid.  In fact, once they pass 30 days the chances that their customers won’t pay them grow greater.  And this is the source of a small business owner’s anxiety.  When he or she sees those invoices move from 30 days to 60 days to 90 days.

Why do some customers pay slower than others?  Because they, too, have accounts receivable moving from 30 days to 60 days to 90 days.  And if they’re not collecting their money in a timely manner then can’t pay their bills in a timely manner.  When the economy slows down you will see a lot of businesses start to pay their bills slower.  And as they pay their bills slower businesses collect their money slower.  Which forces them to pay their bills slower.  Or, worse, borrow money to pay their bills until their customers pay theirs.

To encourage their Customers to Pay their Bills Timely many Businesses will offer Early Payment Discounts

Sales are great.  Everything that’s good follows from sales.  Sales are the first step in creating cash.  And cash is king.  But between cash and sales are accounts receivable.  Which can make or break any small business.  For you can’t often grow sales without extending credit.  But if you extend too much credit and/or your customers don’t pay their bills a business owner can lose everything he or she worked for.  Because when it comes down to it, sales are great but cash is king.

To encourage their customers to pay their bills timely many businesses will offer early payment discounts.  If the customer pays their invoice within 10 days, say, they will get a 2% discount on that invoice.  So if they have a $1000 invoice they only have to pay $980.  As an owner will trade $20 in profits to speed up their cash collections.  And if you look at some numbers you can see why.  If they have $150,000 in new sales in one month that 2% discount will cost them $3,000 in profits.  Now compare that to the cost of borrowing cash from an 11% credit line to replace the cash they can’t collect from their customers.  If they have receivables of $150,000 at 30 days, $300,000 at 60 days and $49,950 at 90+ days the interest cost to borrow money to replace these funds can add up to $3,322.46.

So an early payment discount can equal a business’ borrowing costs.  Making it a wash.  While offering a huge benefit.  Allowing a business to pay their bills.  Like payroll.  Payroll taxes.  And their vendors.  For in difficult economic times all businesses have cash problems.  And will do almost anything to improve their cash position.  And when it comes to paying their bills and they can’t pay them all guess which ones they’re going to pay first?  Those that help their cash position.  That is, those invoices that offer an early payment discount.  Because sales are great.  But cash is king.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , ,

Britain will have to add New Nuclear Power Plants to their Renewable Energy Mix to meet Demand

Posted by PITHOCRATES - November 25th, 2012

Week in Review

Coal-fired power plants produce reliable and inexpensive electric power.  But they pollute too much for those on the left.  So they want to replace them with renewable energy sources.  The leading two being solar power and wind power.  Which require a lot more infrastructure to produce the same amount of electric power.  Making these sources very, very expensive.  So no one builds these unless they are highly subsidized by the taxpayers.

But they have other problems besides their high costs.  The sun doesn’t always shine.  And the wind doesn’t always blow.  Which means you can’t replace all coal-fired power plants with these renewable sources.  You also need something that can produce electric power when the sun doesn’t shine.  And the wind doesn’t blow (see Britain to Encourage Both Nuclear and Wind Power by STANLEY REED posted 11/23/2012 on The New York Times).

The British government on Friday announced far-reaching changes in energy regulation designed to encourage development of renewable energy and nuclear power while ensuring the country could meet its electricity needs.

The changes will gradually quadruple the charges levied on consumers and businesses to help support electricity generation from low-carbon sources, to a total of about £9.8 billion, or $15.7 billion, in the 2020-21 fiscal year from £2.35 billion currently.

The government forecasts that the new price supports will add 7 percent, or about £95 a year, to the average household electricity bill. Currently, such charges add 2 percent to energy bills, or £20 a year…

Electricity generated from cleaner sources like nuclear and offshore wind is much more expensive than power generated by coal- or gas-fired plants. Companies will invest in clean energy only if given substantial incentives. The government hopes to attract £110 billion in energy investment through 2020…

Others said they were appalled by support for new nuclear installations. While nuclear plants are low carbon emitters, they bring risks of accidents as well as the unresolved problem of what to do with spent fuel.

Stephan Singer, head of energy policy in Brussels for the World Wildlife Fund, said his organization was “fundamentally opposed” to price supports for nuclear power…

Britain intends to reduce greenhouse gas emissions by 80 percent by 2050 compared with 1990 levels. Until now, wind power has been the main beneficiary of government intervention. Now the government has come to believe that while building more nuclear plants would be costly and controversial, they will be necessary to reach emission targets.

This is the price of going green.  Higher electric bills.  And more nuclear power plants.  For there are no renewable sources that we can build that can provide baseload power.  Power that is there 24/7 regardless of time of day or weather conditions.  Hydroelectric power could but pretty much all the good rivers have already been dammed.  Which lives only one emissions-free energy source.  Nuclear power.  With all the baggage it comes with.  Safety issues.  Spent fuel issues.  Terrorist issues.  Things you don’t have to worry about with a coal-fired power plant.  That’s why they provide the majority of our electric power.  There just isn’t anything else that can do it as well.

But because a coal-fired power plant may put into the atmosphere dangerous emissions over their operating lifetime equal to a volcanic eruption or two the environmentalists won’t have them.  No.  They’d rather you have higher electric bills.  And suffer more power outages.  Of course, they may change their tune once their Internet access becomes spotty due to those power interruptions.  But until then expect higher electric bills.  To fund those new windmills and nuclear power plants.  The costly renewable energy that will replace your beloved coal-fired power plants.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , ,

Hurricane Sandy Generates Economic Activity at the Expense of those who Lost Their Homes

Posted by PITHOCRATES - November 25th, 2012

Week in Review

Hurricane Sandy left a swathe of destruction in its path.  But it turns out there is a silver lining to this death and destruction.  It’s providing an economic stimulus.  A regular Keynesian stimulus bill.  Only without the messiness of having to get a majority vote in Congress.  Something the politicians can really get behind.  If only they could get a hurricane generating machine (see Sandy Seen Boosting U.S. With as Much as $240 Billion Rebuilding by Jeff Kearns, Susanna Pak and Noah Buhayar posted 11/23/2012 on Bloomberg).

John Cataneo is working his 20 employees overtime and still can’t keep up with demand from customers who need plumbing repaired after superstorm Sandy. He says he’s hired two new workers and may need more…

Cataneo’s experience shows how the storm is giving the U.S. Northeast — and the rest of the country — an economic boost that may eventually surpass the loss of business it caused. Reconstruction and related purchases and hiring may range from $140 billion to $240 billion and increase U.S. economic growth by 0.5 percentage point next year, assuming $50 billion in losses, according to Economic Outlook Group LLC, a Princeton, New Jersey-based forecasting firm.

Well, that’s good news, isn’t it?  Up to $240 billion in new economic activity.  Wow.  Guess hurricanes are good things.  A blessing.  Providing new jobs.  Injecting new money into the local economy.  Why, there hardly is a downside.  Except for this (see After Sandy damage, insurance adjusters may bring more bad news by Ben Berkowitz, Michelle Conlin and Jonathan Allen posted 11/23/2012 on Reuters).

After another day of pumping out their swampy, moldy houses, neighbors in Breezy Point in New York City huddled at the quaint generator-powered firehouse Wednesday night, stamping their feet to stay warm. Neighbors picked at food from tin cans and sipped soups from Styrofoam cups as they lamented the growing holes in a safety net they thought they had: homeowner’s insurance.

“They’re covering five shingles and a piece of gutter, and that’s it,” says Kathleen Valentine, a fire alarm dispatcher who spent the night of Superstorm Sandy working while her house filled with water and dead fish. Her insurance agent from Narragansett Bay Insurance Company said her policy would pay only for wind damage. She is still waiting for someone from the federal flood insurance program to show up…

The trouble is, many homeowners don’t read those policies closely enough to realize that most don’t cover flooding. They don’t always get both homeowner’s insurance, usually provided by a private company, and flood insurance provided through the U.S. government’s National Flood Insurance Program.

Only 14 percent of homeowners in the Northeast hold flood insurance policies, according to the Insurance Information Institute.

Federal law requires flood insurance to mortgage any home in a designated high-risk floodplain. But once the initial policy, usually for a year term, expires, no law says you have to renew it, and many people don’t because banks don’t make them.

In New Jersey, only 231,000 of the homes in the 20 coastal counties had flood insurance, according to FEMA.

There’s a reason why private insurance companies don’t sell flood insurance to people living in high-risk floodplains.  The cost of the policies would be so high to cover the losses in the event of a flood (pretty much rebuilding all houses in the area) that no one would buy the insurance.  So why bother?  Which is why the federal government provides flood insurance.  So they can spread the cost of flood claims to people who don’t live in high-risk floodplains.  Something insurance companies can’t do.  Because they don’t have the power to tax or print money.  But even the policies the government sells are too expensive for 86% of the people living in high-risk floodplains.  So they don’t buy them.  And suffer the consequences when the flood comes.

So that blessing of Keynesian-like economic stimulus?  The money to pay for it comes from in part insurance companies who can’t invest that money elsewhere.  In part from the federal government, further increasing the federal deficit which is ultimately paid by the taxpayers.  But mostly from the people who lost everything and have to pay out of pocket to rebuild their lives.  This is the blessing of that economic activity.  The destruction of lives so other people can prosper.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , ,

Mohamed Morsi takes Egypt One Step Closer to Radical Islamic Theocracy

Posted by PITHOCRATES - November 25th, 2012

Week in Review

Hosni Mubarak kept the Muslim Brotherhood out of power when he ruled Egypt.  Suppressing Iranian influence in Egypt.  He even jailed Mohamed Morsi.  A leading member of the Muslim Brotherhood.  When the Arab Spring came along President Obama stated that long-time US ally Mubarak had to go.  Even though the only organized opposition was the brotherhood.  With their Iranian ties.  And their ties to Hamas in the Gaza Strip.  That terrorist group and branch of the Muslim Brotherhood that likes to fire missiles into Israel.  Threatening regional stability.

So abandoning Mubarak was risky business.  For the likely power to fill the resulting power void in Egypt would not be friendly to Israel, the US or regional stability.  But the naysayers, and President Obama, brushed those concerns aside.  For this wasn’t their fathers’ Muslim Brotherhood.  This was a peace-loving brotherhood.  Who wanted only democracy.  Just like those Iranians who seized power in Iran after the 1979 Revolution.  And installed a radical Islamic theocracy.  But that wasn’t going to happen in Egypt.  No, the Arab Spring was making the Middle East and North Africa safe for democracy.  At least according to President Obama.  Of course, those on the ground in Egypt would beg to differ (see Egypt’s President Morsi faces judicial revolt over decree by Tom Perry, Reuters, posted 11/24/2012 on The Vancouver Sun).

Egyptian President Mohamed Morsi faced a rebellion from judges who accused him on Saturday of expanding his powers at their expense, deepening a crisis that has triggered violence in the street and exposed the country’s deep divisions.

The Judges’ Club, a body representing judges across Egypt, called for a strike during a meeting interrupted with chants demanding the “downfall of the regime” – the rallying cry in the uprising that toppled Hosni Mubarak last year.

Morsi’s political opponents and supporters, representing the divide between newly empowered Islamists and their critics, called for rival demonstrations on Tuesday over a decree that has triggered concern in the West.

Issued late on Thursday, it marks an effort by Morsi to consolidate his influence after he successfully sidelined Mubarak-era generals in August. The decree defends from judicial review decisions taken by Morsi until a new parliament is elected in a vote expected early next year.

It also shields the Islamist-dominated assembly writing Egypt’s new constitution from a raft of legal challenges that have threatened the body with dissolution, and offers the same protection to the Islamist-controlled upper house of parliament.

Guess it’s their fathers’ Muslim Brotherhood after all.  Boy, what a mistake it was throwing Hosni Mubarak under the bus.  We should have worked with other Arab states friendly with Egypt who oppose the Iranian threat in the region to find a better solution than giving Egypt to Iran.  For people may have complained about the restrictions of their freedoms under Mubarak but they haven’t seen anything yet.  Just ask the Iranians who lived through the 1979 Revolution now living under a radical Islamic theocracy.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , ,

Canada’s Supreme Court ends Pfizer’s Viagra Patent Rights Early

Posted by PITHOCRATES - November 25th, 2012

Week in Review

That little blue pill, Viagra, has been a great success.  Making a lot of men happy again.  And their wives.  Who are forever thankful that Pfizer created that little blue pill.  And were willing to pay anything for it.  To recapture the virility of their youth.  Even if it made Pfizer rich.  For the way these men looked at it Pfizer was doing God’s work.  Making the impossible possible.  And the thanks they get?  They lose their patent rights early (see Pfizer cuts Viagra price in Canada after court loss to generics 5 by Reuters posted 11/25/2012 on the Toronto Sun).

Pfizer Inc has cut the Canadian price of its Viagra erectile dysfunction drug after the Supreme Court of Canada opened the door to sales of generic versions of the drug, the company said on Thursday.

“We are lowering original Viagra’s price to be in line with generic versions because we are committed to ensuring that Viagra patients continue to have access to the original, made by Pfizer, and at a competitive price,” Scott Wilks from Pfizer’s Canadian subsidiary said in a statement.

The patent on Viagra had been due to expire in 2014 in Canada. The Supreme Court threw the door open to generics immediately on Nov. 8 when it ruled that Pfizer had not provided enough details when it filed its patent.

Why did Pfizer create Viagra?  Out of altruism?  Were they concerned that not enough men were having sex?  Did they want to make sure all husbands could satisfy their wives sexually?  No.  They did it for the money.  That’s why they spent a fortune to develop that pill.  And why they filed a patent to recover the money they poured into that pill.  To reap profits for all of their hard work.  That’s why Pfizer created Viagra.  And they wouldn’t have done it if they couldn’t have profited off of it.  Yes, the pills may have been expensive.  But if they weren’t allowed to charge those high prices after creating it they simply wouldn’t have created it.

This is how the pharmaceutical industry works.  There are no sure things when it comes to creating new drugs.  Only a lot of costly dead ends.  Which is why they have to profit greatly off of their successes.  To pay for those successes.  As well as to pay for all of those costly dead ends.

www.PITHOCRATES.com

Share

Tags: , , , , , , ,

Global Warming Fears wane as People buy Cars with Powerful Internal Combustion Engines

Posted by PITHOCRATES - November 25th, 2012

Week in Review

After the devastation of Hurricane/Super Storm Sandy those on the Left are asking with smug arrogance if we’re ready to address the issue of global warming seriously now.  Just as they did after Hurricane Katrina.  About 7 years earlier.  With relatively calm hurricane seasons between Katrina and Sandy.  Which wasn’t supposed to happen according to those on the left.  For they said there would be an increase in the number of Katrina-like events happening each hurricane season following the year of Hurricane Katrina.  Because of man-made global warming.  What they call a scientific fact.  Even though the facts appear to say otherwise.

So the majority of people ignore their warnings.  As they tired of these people crying wolf.  Proven by the type of cars we’re buying.  And the type of cars we want to buy (see 12 More New Cars Worth Waiting For by Michael Frank posted 11/25/2012 on Popular Mechanics).

Go back a few years and every new car shouted about mpg and economizing. This year, fuel efficiency is still important, but style is back for the new cars sporting 2013 and 2014 model years.

What do these new cars have in common?  An internal combustion engine.  That’s right, not a one of them is a hybrid or an electric car.

When the government bailed out General Motors and took an ownership position they pushed the Chevy Volt.  A hybrid that was going to help save the world from global warming.  There was only one problem.  Few people wanted to buy a Chevy Volt.  As people don’t want to pay more and get less in a car.

Based on the type of cars we’re buying it’s fair to say the masses aren’t wringing their hands over the warming they’re causing.  Because they don’t believe they are causing it.  For after being told that if we don’t do something right now it will be too late prevent the destructive damage of global warming for the last 20 years people start doubting them.  Besides, glaciers once covered the world.  They don’t now.  And it sure wasn’t man-made global warming that melted them away.

www.PITHOCRATES.com

Share

Tags: , , , , , , ,

« Previous Entries