Does conventional wisdom make economic sense? In many cases, it doesn't. This blog will question the economic efficiency and market viability of popular "solutions" to today's problems. Copyright 2011.
In the wake of the disaster in Haiti, Vonage is doing its part. From their site:
Vonage is committed to helping during difficult times. In the wake of the recent devastating earthquake in Haiti, Vonage is currently offering free international dialing to Haiti for all U.S. callers. Dial 800-809-2503 and follow the instructions to place a free 10-min call. We encourage you to pass this Vonage toll-free number along to non-Vonage customers who want to call Haiti.
Remember, calls to Haiti are free only if you use this toll-free number to place the call. If you dial from your home phone without using the 800 number, you’ll incur standard long-distance charges. Please note that due to infrastructure limitations in Haiti, you may experience difficulty reaching your party successfully. This free calling service to Haiti may be discontinued at any time.
Please remember the people of Haiti in your prayers and consider a donation through groups such as the Red Cross and Catholic Relief Services (CRS).
As I have written about the 2008-09 financial crisis (here and here), bailouts appeared to be the only solution at the time. Serious people opposed to bailouts in general, because of their potential to create a moral hazard where there is no dis-incentive to engaging in risky behavior.
It transforms all financial companies with limited liability, including insurance corporations, into pass-through mutual fund companies. Limited purpose banks would process securities and sell them to mutual funds. They would not be permitted to borrow to invest. Hence, they would never face a run and never fail. Risk-taking would be done by us, the people, via our purchase of more or less risky mutual funds.
They further state this would be done under the watchful eye of a single regulator. From the article:
Under LPB all mutual fund investments would be fully and instantly disclosed on the web by the system's single regulator - the Federal Financial Authority (FFA). The FFA would verify the credit histories, income statements and third-party custody of all fund securities. It would also hire non-conflicted companies to rate the securities and value their collateral. This does not preclude private rating, but it provides the public with independent assessment.
Although the FFA would provide for instant disclosure and reduced bureaucracy, the authors don't explain what, if anything, the FFA would replace. If it could replace and reduce existing agencies, fantastic! However, if it is another layer of bureaucracy, it should be reexamined.
While world financial markets and firms have been shaken, most economies are returning to some sense of stability. In the US, unemployment remains at 10%+, but credit is becoming easier. Is now the time to establish a new agency? Is now the time to return to previous regulation? The proposition put forth by Ferguson and Kotlikoff should be discussed. Far better to take their advice than that of the current US Congress!
Will the flywheel overtake the battery in the hybrid of tomorrow? Quite possibly!
If you have ever ridden a bicycle or watched a potter's wheel, you have seen a flywheel in action. When you pedal a bike, the wheels continue to spin even when you are not pedaling because the pedal energy has been stored and then released through the wheel.
Although flywheels have been known since ancient time, only now has their automotive potential become apparent.
In an article by Gizmag.com, Williams Formula 1 (F1) racing was looking for a solution to capture, store and use brake force energy (Kinetic Energy Recovery System KERS). While they had considered the typical battery solution, but found that a flywheel was lighter and more efficient. Were that the whole story, it would be great, but wait, there's more!
Williams created a separate company, Torotrak, to apply the flywheel KERS system to automobiles and found, surprisingly, that buses behave in a manner similar to F1 race cars. The similarity is found in the stop-start nature of buses and time between energy capture and release in F1 cars.
Here is a video explaining the flywheel's use in F1 racing.
What makes this concept economically efficient, and could possibly spell the end to the battery hybrid is that it can be retrofitted to existing transmissions and is more efficient. From the article:
“Our solution offers a much shorter pay back time on investment and does not reduce the number of passengers that can be carried,” explains Chris Brockbank of Torotrak. “It is also a fundamentally more efficient approach as energy remains in the mechanical state; with electrical regeneration there is an efficiency loss at each state change from mechanical to electrical to chemical and back again.”
Consider the economic benefits of a flywheel system versus a chemical battery. The flywheel is lighter, generally made of recyclable materials, and uses less hazardous materials than batteries. Additionally, they can be easily (relatively speaking) retrofitted onto existing transmissions. Finally, there are fewer components. Although I am huge fan of the hydraulic hybrid, the need for a direct drive transmission is slowing its development. However, if the flywheel technology proves itself, the need for hydraulic hybrids may no longer exist.
In the examination of hybrids, like any other capital investment, one has to consider if the money spent will provide larger returns. When considering a technology that can possibly deliver a 30% improvement in fuel economy and can reasonably be retrofitted to existing automobiles, it may make sense. I look forward to seeing the results of the continued studies and will report back with any updates.
In case you weren't sure, Al-Qaeda is now officially a bunch of A-holes. CBS News reports that the recent attempt on the life of Saudi counter-terrorism chief, Prince Mohammed Bin Nayef, used a technique from drug smugglers, though novel to homicide bombers.
"Taking a trick from the narcotics trade - which has long smuggled drugs in body cavities - Asieri had a pound of high explosives, plus a detonator inserted in his rectum. This was a meticulously planned operation with al Qaeda once again producing something new: this time, the Trojan bomber."
Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com
Although this is a humorous take on a very serious subject, notice that the enemy is changing his tactics. While Al-Qaeda continues to be a bunch of cowards, they now reduce themselves to the level of drug smugglers to commit murder.
Should you be concerned? Damn straight! Unless and until the world community crushes this heinie-stuffing goon squad, more bloodshed will occur. Call on your political leaders to use not just force, but overwhelming force to crush this enemy now.
President Teleprompter, listen to your theater-area commanders and send the necessary troops to finish the job.
In case you didn't know it, "The American public…just like your teenage kids, aren’t acting in a way that they should act." Thank you for the insult and condescension Secretary Chu!
Dr. Steven Chu, Secretary of the Department of Energy, made the statement above, quoted in the Wall Street Journal, at a Smart Grid conference. His remarks mirror the Democrat party line which is that government knows best, and citizens should just sit down and shut up.
What has this to do with economics? Simply, everything! From the moment you wake until the moment you sleep, you make economic decisions. Whether it is turning the light on in the middle of the night when going to the bathroom, or having a midnight snack, those decisions have economic consequences.
Would you be willing to let a bureaucrat mandate no lights may be turned on between 10:00pm and 6:00am? Would you be willing to pay a tax for opening your refrigerator after 1:00am? Of course not! As an adult, you reserve the right to make your own decisions. However, the current ruling party in the US believes you lack the intellect and knowledge to make the "right" decisions.
Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com
While I generally support energy conservation through proper insulation, caulking, and other low-dollar, high-return solutions, I don't believe anybody has the right to force me to do it. Economic common sense and simple arithmetic demonstrated I should put in higher efficiency HVAC units when I remodeled my house, as well as Energy Star doors. I didn't put up solar panels, nor did I install a windmill, because they didn't make economic sense.
When government thinks it is smarter than its citizens, it is doomed to make poor decisions with horrific consequences. Consider Sen. Max Baucus's "health care" plan. Buy insurance or we will tax you $3800. Were I a 23 year old male, with excellent health, I may not want to buy health insurance and the government has no business telling me I must. In short, all citizens must have the freedom to make their own economic decisions.
I will leave you with a quotation to help distill in your mind what the current Congress and President are thinking:
Was that: (A) Joseph Stalin, (B) Ronald Reagan, (C) V.I Lenin, or (D) Hillary Clinton?
If you want to be secure in papers, property, and person, it is incumbent upon you to speak up! Contact your representatives in Congress and remind them of your right as an adult to make up your own mind, and that includes whom you vote for in the 2010 elections. If you like bureaucrats making decisions for you, stick with President Teleprompter and his gang. If you like making up your own mind, consider an alternative.
Another 216,000 jobs lost, but the employment picture is brighter? Only Joe Biden thinks the recession is over with 15 million people out of work!
In the United States, current unemployment, as reported by the Department of Labor, stands at 9.7% (ending August, 2009), the highest unemployment rate in 26 years, and expected to rise to 10%.
Approximately 15,000,000 people are out of work, yet we hear from many politicians that the economy is picking up, or that the employment situation is settling down.
I have a different point of view. What the unemployment numbers tell us is companies continue to shed jobs, maybe at a slower rate, but they not hiring folks in any great numbers. Factory inventories are about empty and order rates for goods and services are seriously down, thus no demand for increased production. Further, the likelihood of a major market correction becomes more likely as unemployment continues to rise.
Try RingCentral Fax FREE for 30 days The American consumer is aware of the untenable amount of leverage they have taken on, and are adjusting to lifestyle of diminished spending. Further, great concerns about a dramatic increase in taxes, both from Cap and Trade, as well as the end of the "Bush Tax Cuts", and the potential destructive force of Obamacare are crushing consumer optimism and a willingness to invest in capital goods.
What this means, is that until a period of reasonable certainty and stability returns, we are in for a very long ride. While credit markets may be easing, US home prices are still far below their highs, which is actually a good thing. Additionally, with decreased overall demand for goods and services, companies are in no hurry to hire. Without a marked increase in employment, don't count on the American consumer to go back to its spending habits.
The only bright spot in this dismal period of unemployment is the potential for entrepreneurial growth. Usually, periods of high unemployment lead to smart, out of work people getting together to come up with goods and services adjusted for the new economic reality. While I hope this is the case, I think the fear around major tax increases are somewhat depressing interest in "going it alone." The lesson to take from all of this is the lesson of history. Left wing parties, regardless of country, always bring in high taxes and anti-business agendas. Productive capacity is taken from the private sector and put in the hands of inefficient governments. Forget power to the people, it becomes domination by the state.
How much does playing phone tag cost your business? More than you think! You can get your costs under control with some simple tools.
For my quant friends, how do you measure the cost of phone tag? It is really quite simple. Assume your estimated hourly rate is $50. Each day you spend one hour on the phone, and only 50% of the calls were conversations. The cost of non-productive calls is $25 a day. 260 days times $25 equals $6500 per year, per employee! Ouch!
Special Sign Up Bonus: FREE rollover minutes. Order Today!
Fortunately, RingCentral and now Google (to a limited extent), have products that help keep you connected and receiving calls, whether you are on your cell phone, home phone, or vacation home phone.
Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com
RingCentral utilizes your internet connection to handle the call hand offs. It allows you to keep a central number, including area code, and then forwards the call to one of a set of numbers you provide. Additionally, RingCentral also provides similar products for fax solutions.
Not to be out done, Google is soon to offer a service called Google Voice. Although it is only available by invite only (?), it is said to offer call forwarding, screening, voice mail, etc. It appears this will be a "free" service, but I don't have anything definitive as of 01 September 2009.
From Google:
Google Voice is a service that gives you one number for all your phones, voicemail that is easy as email, and many enhanced calling features like call blocking and screening, voicemail transcripts, call conferencing, international calls, and more.
Clearly, missed phone calls are costing companies thousands of dollars a year, as well as lost productivity, lost business opportunities, and general frustration. Fortunately, with products from RingCentral and Google, businesses can better manage these costs.
If the government runs health care, it will ration it. Bureaucrats will set the quantity and price of care, limiting what can be consumed. This is also known as a command economy.
For those of you not familiar with command economies, they currently exist in Cuba, China, and North Korea. Command economies for health care exist in most of Western Europe, Japan, many other states.
If much of the developed world relies on a system of government-owned and operated health insurance/delivery, why shouldn't the US?
Simply stated, the US is the most demand-driven economy in the world. The understanding of liberty and personal freedom in the US means citizens spend their money on the goods and services they demand, in the quantities they demand, with the government butting out. While this statement isn't 100% accurate, it is pretty close.
In 2009, most US citizens have health insurance, and most are satisfied with it. There is a dispute about how many residents don't have health insurance, yet US law requires equal treatment of all patients, regardless of the ability to pay.
Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com
Americans recoil, rightly, when they read about rationed care in Canada, namely this story out of the Vancouver Sun:
Vancouver Coastal — which oversees the budget for Vancouver General and St. Paul’s hospitals, among other health-care facilities — is looking to close nearly a quarter of its operating rooms starting in September and to cut 6,250 surgeries, including 24 per cent of cases scheduled from September to March and 10 per cent of all medically necessary elective procedures this fiscal year.
So, if you were one of the 6,250 cases to have waited for surgery between September '09 and March '10, well, sorry about that. Perhaps you should get in your car and drive to Seattle and get the surgery you need tomorrow. While I am not going to relate every horror story from socialized medicine, such as the case of the women delivering on a sidewalk due to no ambulance, or the case of Oregon paying for assisted suicide, but not cancer treatment, rather, it is to highlight the loss of liberty in socialized medicine.
As I have stated above, in socialized medicine, the government, who delivers the service, also sets the quantity to be consumed, and must pay for it. Government will set the budget based on political constraints, and not on the medical needs of individuals. Government also becomes free to regulate other elements of people's lives in the name of "health care." In short, socialized medicine is overwhelming regulation of human behavior and destruction of personal liberty.
To help you better understand this point of view, let late President Ronald Reagan explain it to you. This speech, given in 1961, is critical to understanding what is at stake in today's socialized medicine debate.
The Communists may be gone, but the Trinamool Congress Party isn't much better! West Bengal is struggling and all Trinamool has to show is running out Tata and good jobs, but that's not the story out of BusinessWeek.
Mehul Srivastava writes, wrongly:
With its Communist leadership out, the former Calcutta is poised for quick growth
It would appear that Mr. Srivastava hasn't read any of the articles written about the poverty pimps of the Trinamool Congress Party, particularly the Premier of Poverty, Mamata Banerjee.
For review, here are the articles I have written on the subject (here, here, here, and here). Clearly, you will find that Trinamool and Banerjee are not friends of business, nor are they true friends of the poor. Rather, they are true friends of power and themselves! Great fares to Europe and beyond on Air France!
It is quite a laugh to read Banerjee's statement:
Unless [the Communists] are ousted from power, no development is possible in West Bengal.
While there may be some truth in that statement, it has more to do with Banerjee and her cronies finding a way to line their pockets than it does with the Communists. Let's be clear, communism has never delivered on any of its promises, except for tyranny. West Bengal is proof of that, particularly, as BusinessWeek gets right, "Corruption, electricity shortages, and a rejection of foreign capital have left the city in rough shape."
However, BW gets it wrong when they claim the Communists "seized" land. The farmers were to be paid for their land, and Tata was going to provide new, better paying jobs for the regrettably poor subsistence farmers. At least until Banerjee organized a violent mob.
While there is no evidence that either she or her party were involved in a plant manager's murder, Banerjee was behind the agitation directed at Tata Motors in Singur.
Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com
For now, the problem of good government isn't solely the realm of West Bengal. Rather, it is a great shame that so many suffer at the hands of petty politicians. People are living in grueling poverty, subsistence farming, dirty water and limited educational opportunities. Perhaps Trinamool can stand up to encourage a positive business climate that will create a tide of prosperity. Sadly, they won't, as a struggling underclass provides them what they love most, power.
In the wake of the disaster in Haiti, Vonage is doing its part. From their site:
and can reasonably be retrofitted to existing automobiles, it may make sense. I look forward to seeing the results of the continued studies and will report back with any updates.
conference. His remarks mirror the Democrat party line which is that government knows best, and citizens should just sit down and shut up.
, nor did I install a windmill, because they didn't make economic sense.
