What, Exactly, Is The Federal Reserve Up To?

The Federal Reserve is injecting $ 600,000,000,000 into the economy, primarily in the hope that it will boost stock prices and, in turn, the economy. It might work, but if it doesn't the consequences could be severe.

Yesterday afternoon, the Federal Reserve announced its latest effort to try  to inject some life into what has been a fairly stagnant economy:

The Federal Reserve escalated its efforts to get the U.S. economic recovery back on track Wednesday, again entering the realm of risky and untested policy in response to the worst downturn in generations.

The plan to pump $600 billion into the financial system is designed to stimulate the economy in large part by lowering mortgage and other interest rates.

Although the approach carries significant risks for both the economy and the central bank’s credibility, the steps announced by Fed policymakers could represent the nation’s best hope for breaking free of sluggish growth, especially with bold initiatives unlikely from a newly divided Congress.

Fed officials concluded that growth is too slow to bring down the 9.6 percent unemployment rate and is at risk of staying that way for some time absent new action. They were also concerned that inflation has been running too low and were looking for a way to encourage modest price increases, which would give consumers and businesses more reason to spend money before its value declined and help energize the economy.

“The pace of recovery in output and employment continues to be slow,” the Fed’s policymaking panel, the Federal Open Market Committee, said in a statement. “Employers remain reluctant to add to payrolls. Housing starts continue to be depressed.”

The Fed usually manages the economy by adjusting short-term interest rates. With those rates already near zero, Fed officials had to dust off a strategy for boosting the economy that debuted during the darkest days of the financial crisis. The Fed plans to create money, essentially out of thin air, and then pump it into the economy by buying Treasury bonds on the open market. These purchases are to be finished by the end of June, the Fed said.

Using this technique, called “quantitative easing,” the Fed bought more than $1.7 trillion in securities during the financial crisis and in its immediate aftermath. The central bank’s holdings jumped to their current level of $2.3 trillion, and the figure will approach $3 trillion when the new purchases are complete. This new wave of bond buying is a dramatic turnabout for an institution that just six months ago, amid a false spring in the economy, was weighing how it would begin unloading all the securities it had purchased.

The Fed action, which is aimed in part at making it cheaper for Americans to take out mortgages and for businesses to borrow money to expand, influenced the market even before the steps were formally unveiled. Average mortgage rates had already fallen from 4.5 percent for a 30-year fixed-rate loan over the summer, when Fed officials first said they were considering new steps, to 4.2 percent last week.

Fed Chairman Ben Bernanke took to the Op-Ed pages of The Washington Post this morning to justify this decision:

Even absent such risks, low and falling inflation indicate that the economy has considerable spare capacity, implying that there is scope for monetary policy to support further gains in employment without risking economic overheating. The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates already about as low as they can go, the FOMC agreed to deliver that support by purchasing additional longer-term securities, as it did in 2008 and 2009. The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August.

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

Bernanke concludes, though, with this comment:

The Federal Reserve cannot solve all the economy’s problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector.

As Daniel Drezner points out, though, this last part has some very interesting political consequences:

If Congress and the administration can’t agree on anything, then the only public actors capable of taking concrete action on the economy are the central bank and the regulators.  These institutions are already ridiculously unpopular. Being forced to take imperfect actions because of elected branch paralysis won’t help matters (compared to fiscal and tax polcies, there’s only so much that quantitative easing can do to stimulate the economy).  If you think hostility to elected elites is high, wait until the focus switches to unelected elites.

Indeed, opposition to Federal Reserve secrecy, for example, is an issue that has united both right and left during the current Congress, and with Ron Paul likely to be handed the Chairmanship of the House’s Monetary Policy Subcommittee, one imagines it will be a bigger issue after January 3rd.

Beyond the politics, though, there’s the question of whether what the Federal Reserve is doing here is the right thing. Brad DeLong, for example, points out that the actual impact of the new policy amounts to about $7 billion in a $ 60 trillion economy. At the same time, though, the Fed’s action poses the risk of unleashing an inflationary spiral that would do more damage  than the stagnation we’re experiencing now:

For all intents and purposes that  $600 billion is being borrowed. As the government’s banker, the Fed can borrow money, and pay it back when it chooses to, by selling off the bonds that it will be purchasing. The effect of this kind of action is the same as if Congress was appropriating another “porkulus” it dumps cash into the economy by increasing our federal debt. This move is essentially ignoring the message the voters sent to the government yesterday, even worse, it is economic suicide.

Here’s the problem, by “printing” all of this extra cash our government is trying to create inflation and “spur the economy” with this move there is a real chance of creating hyperinflation. That’s exactly what Germany did in the late 1920’s.

The famous Economist, John Maynard Keynes described this situation in The Economic Consequences of the Peace: “The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The various belligerent Governments, unable, or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance.

And now our Keynesian President, is allowing the Fed to go against Keynes’ advice.

Federal Reserve critics have been warning about the dangers of inflation for some time now, and the fact that it hasn’t manifested itself so far has been taken by some as a sign that it isn’t a problem that we need to worry about right now. That’s the thing about inflation, though; by the time it becomes a problem worth noticing it’s often too late to do anything about it. In fact, there may already be signs that inflation1 is having an impact on prices:

In normal times, a Fed spending spree on government bonds would be highly inflationary, because it would flood the economy with money and raise worries about too much government spending. The mere worry of too much inflation in financial markets could drive long-term interest rates higher and cause the Fed’s program to backfire.

Michael Pence, a top Republican in the House of Representatives, said the Fed was taking an “incalculable risk.”

Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, who described the move before the meeting as a “bargain with the devil,” was the lone dissenter in a 10-1 vote of the Fed’s policy committee. He said the risks of additional government bond purchases outweighed the benefits.

The Fed is taking the gamble that the economic is so stagnant at the moment that it can absorb the increase in the monetary base without creating price inflation. If they’re wrong, however, we could be paying the price for this decision for years to come.

More broadly, though, Bernanke’s Op-Ed reveals a strategy that, at heart, is aimed at creating another asset bubble even if that’s not being explicitly acknowledged. The Fed is essentially creating $ 600,000,000,000 of “new money” in the hopes that it will push stock prices up, which it in turn hopes will stimulate consumer spending, which in turn it hopes increases business investment and hiring. It’s a very Rube Goldberg-ian vision of how to stimulate the economy, and it seems to me to be exactly the wrong thing to do at this point. It isn’t the job of the Federal Reserve to push up stock prices, or at least it shouldn’t be, and an economic recovery that is based primarily upon increased financial speculation strikes me as very fragile indeed, and basically amounts to repeating the same mistakes that got us into the mess we’re trying to get out of.

1

This is a good opportunity to point out that inflation is not increased prices. Inflation in the context of economics was traditionally defined as an increased in the money supply. Price increases are the consequence of that inflation. In popular usage, however, inflation has come to mean an increase in the general price level. This confuses the issues of what causes that increase, however.

FILED UNDER: Economics and Business, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. john personna says:

    Take some responsibility.

    The truth is that Americans want government to do something, but have been convinced that fiscal policy is not the answer. Well, what’s left?

    (It’s simply insane to fight stimulus for a few years and then be shocked, shocked, that the Fed is left to bail harder with monetary policy.)

  2. PD Shaw says:

    “Bernanke’s Op-Ed reveals a strategy that, at heart, is aimed at creating another asset bubble even if that’s not being explicitly acknowledged”

    Yes, the description of the policy sounds exactly like what Greenspan was accused of doing in retrospect.

  3. john personna says:

    Well PD, continuing on the “responsibility” theme: what is the alternative?

    Should the government say to people “it will be a long slog, but we may have to accept low growth and high unemployment for a year or two, maybe more?”

  4. Patrick T. McGuire says:

    “The Fed is taking the gamble that the economic is so stagnant at the moment that it can absorb the increase in the monetary base without creating price inflation. ”

    I am sure that the Weimar Republic had the same idea.

  5. grichens says:

    Should the government say to people “it will be a long slog, but we may have to accept low growth and high unemployment for a year or two, maybe more?”

    The currency markets are betting today that they won’t.

  6. john personna says:

    I have zero confidence in daily moves to predict the future, and only trust long term moving averages to be half right.

    That said, the effect on currency is both interesting and central. In other news today, with QE2, the Fed may replace China as the number one holder of US debt.

    It’s quite likely they are trying for several benefits at once. They wish to devalue the currency, as part of the current global devaluation competition, even as they pump the general economy. I’m not sure what there geopolitical thinking is on reducing Chinese holdings … but it’s interesting. If QE2 displaces China, then net-net this new money must flow to China.

  7. Ric Locke says:

    “When all you have is a hammer…”

    The impenetrable thicket of regulations from EPA, OSHA, and the rest of the alphabet soup and use of “tax code” to mean “encryption”, plus the fact that no one including the regulators has any idea what all that will be like tomorrow, let alone next week, plus it being clear that the housing-market financial disasters will not under any circumstances be permitted to re-order themselves, add up to a sponge that can and will soak up any stimulus, whether it’s cash payments from the Congress, tax “breaks”, or “quantitative easing”. Bernanke and the lame-duck Congress could shove $6 trillion apiece into the mess, and the only result would be a fatter and sassier regulatory apparatus, because there is literally no productive use to make of the money that would be permitted in the present environment.

  8. john personna says:

    BTW, for clarity, my question to PD was about the do-nothing approach, in which to do neither fiscal nor monetary stimulus. What then would you tell those American’s wanting the President to “do something!”?

  9. grichens says:

    “They were also concerned that inflation has been running too low and were looking for a way to encourage modest price increases, which would give consumers and businesses more reason to spend money before its value declined and help energize the economy.”

    It seems to escape the Fed that there is more than one way to unload USD than just to blow it on plasma TVs and Caribbean cruises. It also seems to escape the Fed that the vast majority of financial assets in the U.S. are now held by VERY mobile investors; to whom the United States America is steadily becoming less attractive and who are finding better deals elsewhere.

  10. john personna says:

    Rich, those regs are not out of line with other developed market democracies. Yes, China can be more nimble, as long as they put white paint (melamine) in their milk and etc., but I don’t think the developed countries are really ready to go (back) there. We did that, and decided we didn’t like it.

  11. john personna says:

    Sorry, not Rich, Ric

  12. john personna says:

    BTW, I was kind of surprised that California’s greenhouse gas regulation survived the reverse-proposition this week. I’d thought that in this economic environment more people would blow off “the right thing” for economic growth.

    I really considered voting yes myself. It isn’t that I disbelieve global warming, it’s just that I have near-zero confidence in a global response. Without that any “good” player is just punishing themselves.

    In the I decided that I could afford to do the right thing, and if enough California voters felt the same way, so be it.

    This relates to China of course because they really don’t give a crap, and they are now the #1 greenhouse gas emitter, followed by us, and then India.

  13. Steve W from Ford says:

    After years of kicking the can down the road through one stimulus after another the distortions to the US and world economy are so great that the pain of their correction will be deep and prolonged. Those who ask for the President or Congress or the Fed to “do something” ask only that the can be kicked a little farther down the dead end we have been on rather than enduring the pain of fixing the real problems.
    Bernanke will likely be “successful” in goosing the markets but the long term consequences are likely not to be good.
    For the sake of the middle class “savers” let us all hope this is wrong for if things go wrong, they will be destroyed.

  14. john personna says:

    Those who ask for the President or Congress or the Fed to “do something” ask only that the can be kicked a little farther down the dead end we have been on rather than enduring the pain of fixing the real problems.

    Possibly, but I don’t think the public understands it that way. I think most people hear the surface questions of politicians (“how will you fix the economy?”) and take them at that level.

  15. Countrylawyer says:

    Two words: Weimar. Republic. Yes, it’s only some billions in an economy measured in the trillions, but let’s bear in mind that every Atlantic hurricane starts as a rain squall off the west coast of Africa. Since we really have no way of knowing which of those little rain squalls will end up being Hugo, Andrew, or Katrina, we’re left with responsive measures only. But QE2 sounds to me an awful like we’re seeding the cloud and betting that it doesn’t become a hurricane. Once started inflation builds on itself; is it really terribly prudent to keep betting that this turn on the printing presses won’t turn out to be the point of no return, either? Having been old enough to remember the last time we had to wring significant inflation out of the economy, I can’t say that I’ve any ambition to repeat the experience. What’s the Fed up to? I’ll tell you: It’s playing with matches in the powder magazine.

  16. wr says:

    Ric — So let’s eliminate OSHA? How many of your own workers would you like to see crippled or killed in your quest for ideological purity?

    And please, let’s not pretend that if we did away with OSHA businessmen would all voluntarily implement good safety procedures because they’re all good people. Do a little research and see what life was like for workers before regulation. Or look at certain mine operators in West Virginia, who have managed to run unsafe mines and kill people despite regulations.

    And by the way, if you don’t care about your own workers, how would you feel about your son or daughter or wife working in a post-OSHA factory?

  17. john personna says:

    Two words: Weimar. Republic.

    I think Japan is a better model:

    http://curiouscapitalist.blogs.time.com/2010/11/04/does-qe-work-ask-japan/

  18. These problems have ttheir root one common cause: spending money we do not have. The solution to that problem is rather simple.

    Everything else isn’t commentary, it is obfuscation and deceit.

  19. Gerry W. says:

    Maybe it is a Japan scenario first, and Weimer Republic later.

    In any case, the fed will print money in the hope to “create” jobs, the republicans will want more tax cuts to “create” jobs, but our jobs keep going overseas. We are doing everything to destroy our country as the political parties and the fed is doing all the wrong things. Again, as I have said so many times before, you need to invest in the country, in the people, and in the future. So far, it’s the same old clueless talk in Washington.

  20. Texas Mike says:

    Here are some ideas on how to stimulate the economy:

    Extend the Bush tax cuts indefinitely. If my taxes are going up in January, that means I’ll be bringing home less money. That makes me want to spend less now to blunt the impact of effectively lower wages.

    Kill cap and trade. Kill it dead. Obama should announce that this is off the table for his administration. Uncertainty makes business and people scared, and scared people don’t spend money. They save for that rainy day they see on the horizon.

    Get rid of Obamacare. If Obama needs something like it to stroke his ego, maybe he can figure out how to do useful reform, like Tort reform, or allow interstate insurance commerce to increase competition in places with few choices. Obamacare is hugely expensive, and whether he wants to admit it or not it has made everyone’s insurance rates go up. You cannot add additional levels of beaurocracy without increasing costs.

    Finally, cut the federal budget to something sustainable. Nothing causes fear and uncertainty like the prospect of a Greece-like meltdown in the US. Lots of ways to do this. 5% across the board, no more earmarks, index the retirement age to something closer to life expectancy (remember, Social Security was supposed to be for those who outlived their savings, and the age of eligibility was based on the average life expectancy).

  21. Marty says:

    Bernanke lacks either the brains or the cojones to say, “I have used the tools available to me, I cannot do more without taking on unacceptable risks.”

    So, despite all evidence that this will not work and will likely worsen the long-term situation, it’s pedal to the metal and into the ditch.

  22. Steve Verdon says:

    Although the approach carries significant risks for both the economy and the central bank’s credibility, the steps announced by Fed policymakers could represent the nation’s best hope for breaking free of sluggish growth, especially with bold initiatives unlikely from a newly divided Congress.

    I think this is a silly thing to say. I think one of the primary factors in contributing to sluggish economic growth is regime uncertainty. Uncertainty over taxes, health care costs, and so forth. Now we are going to add another layer of uncertainty with this new move by the Fed and that will do the trick?

    Fed officials concluded that growth is too slow to bring down the 9.6 percent unemployment rate and is at risk of staying that way for some time absent new action. They were also concerned that inflation has been running too low and were looking for a way to encourage modest price increases, which would give consumers and businesses more reason to spend money before its value declined and help energize the economy.

    So let me see if I got this straight….they are hoping to drive up inflation in the hopes that people will spend their money before inflation eats away at its purchasing power? If it doesn’t work you’ll end up with stagflation….which we have had before. Definitely adding to the uncertainty in the economy.

    Here’s the problem, by “printing” all of this extra cash our government is trying to create inflation and “spur the economy” with this move there is a real chance of creating hyperinflation. That’s exactly what Germany did in the late 1920′s.

    The famous Economist, John Maynard Keynes described this situation in The Economic Consequences of the Peace: “The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The various belligerent Governments, unable, or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance.

    It has been years since I looked at this issue, but my understanding what Germany did was print money to deal with war reparations. It wasn’t a desire to spur economic growth. As such, the analogy is perhaps not the best. While there is a danger of inflation, the notion that we will end up with inflation well into the double digits (25% to 30% and beyond) is unlikely. Seeing inflation jump up to say 12% and unemployment staying stuck at say 9.x% is possible and absolutely would not be good. No need to invoke the hyperinflation of Germany.

    More broadly, though, Bernanke’s Op-Ed reveals a strategy that, at heart, is aimed at creating another asset bubble even if that’s not being explicitly acknowledged. The Fed is essentially creating $ 600,000,000,000 of “new money” in the hopes that it will push stock prices up, which it in turn hopes will stimulate consumer spending, which in turn it hopes increases business investment and hiring.

    Not quite. The hope is it will stimulate consumer spending. Granted, consumers could just take the money they get from selling treasuries and dump it in the stock market, but they might just as easily turn around and put it in the bank or go buy consumer durables or purchase more services. The other effect is to lower long term interest rates. Lower interest rates makes borrowing for investing look better. This in turn would lead to more economic growth in the future. Of course, one reason we had a housing bubble was that interest rates were kept extremely low. And since one of the aims is to try and promote more home buying….

    Still I doubt it will lead to a new bubble (all by itself). However, what it might do is in effect create a subsidy for housing. This strikes me as precisely the wrong thing to do. This was the approach used during the Great Depression in several industries: prop up prices. What actually needed to be done was let prices drop so that the market clears. Keeping prices artificially high just prolongs the pain.

  23. Steve Verdon says:

    Ric — So let’s eliminate OSHA? How many of your own workers would you like to see crippled or killed in your quest for ideological purity?

    And please, let’s not pretend that if we did away with OSHA businessmen would all voluntarily implement good safety procedures because they’re all good people.

    I find this view utterly amazing. Businessmen are not good people…who are drawn from the population at large. But we’ll give government bureaucrats and politicians awesome and even terrifying power….people who are drawn from the population at large. Maybe it is the magic of voting that will keep government from abusing its powers.

  24. Drew says:

    Steve V and Texas Mike have got it right.

    At the core, its a message for government to get the hell out of the way and reduce uncertainty. And at the core, that’s what the election results said.

    Its interesting to see commentary about how government must double down. Why is this a given? Only because it fits an ideological narrative.

    Yes, 1) extend the tax cuts, 2) revoke ObamaCare, 3) stop talking about how “only the rich will be hurt” because every small businessman/woman looks at that and says “that bastard is talking about ME!; I’m hunkering down. 4) wean yourselves off the notion that more stimulus is needed – it didn’t work; not because it was too small but because like just about every government effort, it was mismanaged, especially just sending benefit to favored political allies.

    Ben Bernanke is scared shirtless about a double dip right now, because he knows that will put the still fragile banking industry back into play with loan losses. He knows the stimulus was a failure, and he’s now hoping to thread the needle with a little inflation and weaker dollar……but not calamity. It would be nice if we didn’t let Paul Krugman and his sycophants ruin the whole show.

  25. Gerry W. says:

    Texas Mike.

    The fed is printing money and the republicans say more tax cuts to “create” jobs. While you brought up issues to deal with, globalization has taken our jobs. Depending what figures you look at, some 4 million to 8 million middle class jobs are loss to other countries due to cheap labor. We have to make up those loss jobs and then some to move the country.

    Extending the Bush tax cuts which did not solve our problem of globalization is the same as what the fed is doing with printing more money. We still have to invest in our country, in our people, and in the future. We can’t keep ignoring globalization.

    Some comments & questions:

    1. The Bush tax cuts is spent money. It did not create the jobs and prosperity that it was supposed to do.

    2. You cannot create jobs, if jobs are going overseas. And if you send private sector jobs overseas, then the government steps in.

    3. The government can set the conditions for creating jobs and wealth. So far, neither party knows how to do that.

    4. Our biggest problem is globalization and 2 billion potential cheap laborers. It means less in jobs or pay and a diminishing middle class.

    5. What widgets can be made here and not some other country?

    6. How can you support small business in small communities with factories closed?

    7. If you put the money in the hands of the consumer, over half the products on the shelves are foreign made. How does this help our economy and employ more people?

    8. The tax cuts was for the here and now. What did it for our future?

    9. The fed is printing money and the republicans want more tax cuts to create jobs. However, a lot of our jobs went overseas. So what good is printing more money or having more in tax cuts if they don’t work?

    10. The only way to move our country forward is to invest in our country, in our people, and in the future. This will take 10 to 20 years.

    11. Bush said “stay the course” on the economy and on two wars. They were all ran into the ground. And on the economy to get unemployment down to the 5% level will take some 10 to 20 years.

    12. You cannot keep having tax cuts for the wealthy and ignore the middle class.

    13. You need upward movement for the poor and the middle class. With jobs gone, there is no upward movement. New products being made by Apple, as an example, are made in China. What jobs do you intend to create in the future, without them going overseas?

    14. You cannot run the country on an ideology. We saw eight years of that. Come up with some pragmatic answers.

  26. Gerry W. — are you a parody?

  27. John Personna says:

    Beware cargo cult economics. That is when you do ritual and then expect growth. The left does it when they demand unspecified green jobs. The right does it when they cite unspecified regulation.

    Demand from them the specifics.

    (neither of these cult groups have sensible plans for actial jobs, especially not in the year or two time frame)

  28. Gerry W. says:

    Charles,

    It is what I see.

  29. John Personna says:

    Heh, even more base than cargo cult Econ is personal hit list Econ. Here are the things I like (or don’t like) – do them and you’ll get jobs – “I promise.”

  30. John Personna says:

    Btw, as Gerry might tell us, we’ve heard some of the promises before.

  31. grichens says:

    “The only way to move our country forward is to invest in our country, in our people, and in the future. This will take 10 to 20 years.”

    True. But how do you encourage capital to stay around and do so? The 20% of taxpayers who control 90% of the financial assets in the U.S. have something American voters and pols completely disregard – choices.

    Emotional appeals while squandering taxpayer funds will only send more capital offshore. Trade barriers? Foreign exchange controls? How about not p*ssing away taxpayer goodwill with every $billion poured into Fannie or Freddie or GS?

  32. PhilR says:

    Prior to QE2, the Fed has done about as much as it could with monetary policy, and it hasn’t worked. QE2 won’t work either. There’s plenty of liquidity currently sitting on the sidelines awaiting a boost of confidence.

    What needs to change – and fast – is fiscal/tax policy. Extend the Bush tax cuts at least 2 years. Suspend implementation of healthcare law indefinitely. Aggressively correct the foreclosure mess.

    These changes might increase confidence in consumers and business owners to start spending again, which in turn should boost GDP. 2% GDP at this point of a recovery will NOT improve the unemployment rate.

  33. Drew says:

    That’s pretty vapid, JP.

  34. Gerry W. says:

    grichens,

    Very tough to do. Things are not easy as we left things get out of hand. I would say to try to find jobs that have to be in our country. I marvel at the public transportation systems in Europe, those jobs stay there. I don’t know if that will work in areas of our country, but we have to think in what jobs that can stay here.

    In my town, the amount of tax cut money to individuals probably rack up to over 10 million dollars. It would have been better to use that money to fix the infrastructure of my town and fix the city center which has empty stores. At some point, we will have to fix the center of our cities. We struggle with social issues in the inner city, but urban sprawl is destroying cities also. You need activity downtown and that would create more small businesses. In Toledo, they abandoned an area with a lot of traffic and tore down a shopping mall, only to build a new mall out in a corn field several miles away. There must be some 20 to 50 empty buildings in the area when they tore down the mall. I don’t know why it all deteriorated, but building further out is not helping matters. PBS had a documentary on urban sprawl.

    But then, if I was libertarian, I would guess we have no problems.

    1. Invest in your country: That is energy independence for security and jobs. Also a new air traffic control system that will save 12% on fuel. The savings to the airlines can go to build new aircraft. A high speed internet system. Perhaps high speed rail.

    2. Invest in your people: That is mandatory vocational training. We live in a globalized world and you can no longer rely on factories. We have to be an educated society.

    3. Invest in the future: Federal research grants to be given to universities and business to bring out new technologies. Today there are no new jobs to go to for those unemployed. You need new areas of growth. No playing games with embryonic stem cell research.

    4. Fix the antitrust laws that Reagan relaxed. Monopolies and consolidations destroyed jobs.

    5. Consider an “American job elimination tax” on companies that move out of the country. These companies do not pay middle class wages, healthcare, pensions, social security, or city and state taxes.

    6. Get away from failed ideology. We saw it for 8 years. Tax cuts was used as an ideology. It did not prevent recessions. And did not create prosperity. You still have to solve problems. Ideology does not solve problems.

    7. Supporting small business sounds nice and it is heard in Washington, but it does not work in my community as the big business left. That means you cannot have small business as people lost their jobs. Besides, small business will never pay what big business paid in wages.

    8. We are losing the middle class. We cannot compete with 2 billion cheap laborers in the world that want our jobs. There are not enough jobs to go around. Competition is good, but it can be harmful also. All we are doing in this country is build the same business environment so that we can knock the other guy out. A person loses his job and has no place to go to. And the reason is that we did not invest in our country, in our people, and in the future.

    9. Have commissions to cut government spending. It seems to be the only approach to doing this. Obviously, one side or the other will complain, but something has to be done now.

    10. Government appointed jobs and organizations need to be slimmed down. Every 50 to 60 years we need to go through this. There are too many secretaries, deputy-secretaries, under-secretaries, and under-under-secretaries. Information gets loss through the process and government becomes ineffective. The last time this was done was with the Hoover Commission in the late 40’s.

    11. Pour money into new drugs and preliminary medical science. Drugs are becoming less resistant to diseases. And potential super bugs are coming.

    12. Fix the infrastructure. It is the reflection of our country and to the rest of the world.

    13. And if we have not kept up with it, every school should have physical education. Also wash your hands when you come home to prevent viruses and less trips to the doctor. And as we see so often, stop throwing pop cans, etc. outside the car.

    14. We need to slow down urban sprawl. Inner cities are being abandoned. As people leave there is no money left to support the inner city. This maybe controversial to some, but at some point we will have to deal with the problem. Sprawl also takes away from farms and spreads cities out too far in a time when you have empty buildings. We cannot have cities in decay. And cities in decay cannot create jobs and small business.

    15. Create an hour period each school day for freshmen high school students to study any subject for a month (9 months-9 subjects) that they would have not normally have taken. It may be the hardest of subjects in which students would have been afraid in failing like algebra, geometry, calculus, languages, music, or any other subject including learning sports, like golf, football, baseball, or tennis as examples. There are many retired people who would like to teach what they learned in life. There could be a test at the end of the month, but this would only to see if the student learned anything in that subject and would not count against him in his grade average. The point is to have students learn as much as they can on different subjects and to see if they like a certain subject that they did not anticipate.

    16. And finally, I don’t think our electoral political system works anymore. Every candidate is bought off and it takes huge amounts of money to run a campaign. I would suggest a management team or a turn around specialist to be appointed as president for a couple of years or more. And there would be a board of directors who he answers to and for the middle class. The parties are riddled with failed ideologies. We can do better that what we have.

    17. One final point. I have tried to think of everything to preserve the middle class. I am afraid that the elites and the republicans and the economists will have their way, and their way to create jobs is to have you do away with the minimum wage and and all wages and pay people a dollar to five dollars an hour. The forces of a potential 2 billion cheap laborers is too powerful for any economic response on our part. Only then, according to them, will we have an equilibrium capable of producing jobs in our country. At the loss of the middle class.

  35. John Personna says:

    Well Drew, when someone gives you a diffuse argument you have a number of choices, but at the top level it’s about whether you follow them into the fog, or step back.

    It is certainly a foggy argument to attack “OSHA” rather that say to name some specific and unnecessary regulations.

    Btw, technically Bernanke asked for more stimulus than he was given. You are asking us to believe he lied.

  36. matt says:

    John : China is already investing heavily in green technologies in an attempt to become the dominate player while cleaning up the mess they have at home.. Hell just a quick search and you’ll find that our government is pissed off at the amount of money china is using to subsidize their fledgling green tech sector..

    Texas Mike : IF you’re from Texas then you should already be intimately familiar with the fact that extensive tort reform didn’t produce much in the way of positive results in Texas. On a national scale tort reform only has the potential to save a tiny tiny amount while having unpredictable results (such as seen in Texas). Insurance rates were going up well before the AFCA came into existence as a potential policy and from my perspective the only hope to decrease the rate of increase was to have a public option. As it is now we all pay for the uninsured when they show up at the emergency room and then don’t pay due to a lack of money. The real kicker is it’s much cheaper to take care of things before it gets to point of having an emergency room visit…

  37. Gerry W. — maybe you consider something other than the absolutist central planning that would be necessary to implement your seventeen step program.

    As to your final point, did it ever occur to you that the political system is working just fine? When there isn’t a significant ajority in agreement about the direction to take, perhaps pushing everyone in the direction 50% + 1 want to take isn’t calsuch a good idea.

  38. Gerry W. says:

    Charles,

    I am 100% sure our system is not working, but whatever catches your fancy.

  39. John Personna says:

    Matt, China does some genuine and sensible green tech. They require solar preheaters for hot water, for instance. They might also grandstand a bit about green, as they also build more coal plants than anyone else.

    Our problem is separating good projects from bad. People who argue all green jobs are bogus are wrong, but so are people who say they are all good.

    I was really into energy and environment issues for a while and learned a lot. My take-away is that too few looked at it on a project by project basis. That and there are no silver bullets.

  40. John Personna says:

    (Chances are most pols are at the cargo cult level, with no understanding that they even should be critical about which green jobs to support.)

  41. Drew says:

    OK, JP – Here’s a specific regulation with which I’m intimately familiar, and will be a job and capital formation killer: Dodd-Frank.

    Since their inception, both the buyout and venture arms of the private equity businesses have relied on the 1940 Investment Advisors Act exemption to SEC registration and scrutiny. The reasons are obvious: VC and buyouts are inherently specialized investment activities not appropiate for anyone but sophisticated (“qualified purchasers”) investors. These investments are illiquid, risky, and inherently devoid of some of the usual information availability and requirements required by the SEC for public investments.

    But our two illustrious Congressmen, no doubt attempting to bandaid over their responsibility for the financial meltdown, have decided to put PE under SEC registration requirements.

    Some implications:

    – You must register. A voluminous document (“ADV”) which our lawyers tell us will require about $150K to prepare, and $50K/yr to keep current.

    – You must now do FMV valuations each year. Let’s say you have a portfolio that on average has 4 – 12 companies in it. Even with a volume discount with your favorite investment banker, those are going to cost $60K per year. 8 companies: $480K per year.

    – You must have a Chief Compliance Officer. Even if you have someone on staff, a quick look at the activity required indicates you will need a new hire between $100 – $150K per year. – Email reporting – count on about $50K for record keeping and email documentation.

    – Random audits. Count on about $50K every three years on average when your friendly SEC compliance officer comes in on a random basis………no cause needed.

    – Liability. Don’t even get me started.

    I could go on.

    – Now consider, our current operating budget is $2MM. Think about it.

    The bottom line is that this cost exposure is going to drive small funds out of business. And this is classic government regulation. The big, influential firms, can absorb the costs, lobby the pols, and are the winners. The small and entrepreneurial are driven out of business. This is just a classic government regulation problem – which you deny.

    Our firm may be one of those driven out. We are debating it. I’ve often quipped that if “it gets to be too much I’ll just quit and work on my golf handicap.” I suspect that’s been viewed as an idle threat. But here we are. I don’t have to work another day in my life by a country mile. But I happen to like business and investment, and I’m very good at it. And I like the notion that we have a track record of incredible increases in our portfolio companies in sales, profits, (oh, yeah, taxes) and employment. But it could go away. Because of Barney Frank and Chris Dodd of all people, and people like you in denial about how regulation effects business.

    I live in a world of business owners, and they all have similar stories to mine. Its as real as a heart attack. But you sit there, in your detached faux intellectual posture citing books or articles you’ve read, but you have never, ever, ever, provided any sense that you are capable or willing to walk through the front door of a business every morning as the leader willing to take responsibility for the organization, the employees, and deal with the myriad real life issues entrepreneurs deal with every day as they try to make it happen. Just never. You: “well, I read an article by so and so author or professor,and they said ……..” Real life business owners would just laugh at you.

    So that’s my spleen venting. But JP, you really have nothing of substance to offer here on this issue until you come to grips with the reality of the stifling effect of the government on entrepreneurship and growth. In case you missed it, there was a tidal wave election two days ago saying same.

  42. John Personna says:

    You mis-guess my answer Drew. That bill was supposed to be about “too big to fail”. You agree that’s not you. You got roped in, probably because the real “too big” guys saw an opportunity to burden you.

    Your (considerable) venting on me doesn’t really address the “too big to fail problem,” does it?

    My answer is to do a “too big to fail” bill that is serious, and doesn’t load up on favors for crony capitalists.

  43. John Personna says:

    (Some might think you are asking for no regulation for the little guy OR the guys we end up bailing out. I’d hope that isn’t true. I’d also hope no one takes the “well next time we just won’t bail out” fantasy position. That is outside our control, and so we must be defensive)

  44. Steve Verdon says:

    JP,

    There was a recent survey by a small business organization that listed taxes, regulatory uncertainty, and lack of demand as the primary factors facing businesses as a for why things look so bleak. While lack of demand was the largest factor taxes and regulatory uncertainty combined was actually larger. I don’t deny the weak demand is a factor, but to pretend regulatory and taxes aren’t a factor is pretty vapid.

    As for changes in regulations: come back into Earth Orbit Col. Personna, you are venturing dangerously close to being out of comms range.

    How about health care reform? A huge set of question marks not only for businesses but for consumers/workers. If you work for a business that is small enough to avoid the penalties you could find your employer provided health benefits gone. Firms are busy looking at what the new requirements mean in terms of employee compensation. How much, when and what are all yet to be fully determined. Finance reform is yet another area that will likely result in new regulations. Both for the bad acting financial firms and the good ones. There have been new taxes as well as tax cuts and now we don’t know what is going to happen with the Bush tax cuts.

    You mis-guess my answer Drew. That bill was supposed to be about “too big to fail”. You agree that’s not you. You got roped in, probably because the real “too big” guys saw an opportunity to burden you.

    Your (considerable) venting on me doesn’t really address the “too big to fail problem,” does it?

    My answer is to do a “too big to fail” bill that is serious, and doesn’t load up on favors for crony capitalists.

    Nice dodge there John. Can you admit that Drew has answered your specifics and has shown how current legislation has increased regime uncertainty and probably hampered, not helped, economic growth.

    Standard disclaimer: regime uncertainty is not the only factor at work. But it was on that government does have a direct handle on, so why ratchet it up now? Oh we know that, Rahm gave us the answer back in late 2008,

    “Never let a crisis go to waste. It is an opportunity to do things you think you could not do before.”

  45. John Personna says:

    Did you even read what I wrote? While we need regs on “too big to fail” institutions, we don’t need them on small venture firms. I really doubt that regs on those smaller firms came from teh liberals, but they were then they were wrong. More likely though that some lobbyist for a big firm saw an opportunity. If the big firms had to do the docs, and they could push them on everybody, they had an opportunity to push some of the little guys out of the business. Big guys win.

    Now if you guys took a line against all regs I think you misplayed it. Fighting for the big guys, you missed it when they reversed to screw the smaller players.

  46. John Personna says:

    Really bizarre, blaming it on comms range. I say we don’t need those regs on small firms and you don’t even hear me.

    (though might be my low accuracy at phone pecking)

  47. PD Shaw says:

    That sucks, Drew.

    I’m almost curious about the economic assumptions that went in to the change. It’s not uncommon for economic impact statements to be produced as part of major legislation. I wonder if it shows that the net effect of this change is positive: plus for lawyers, bankers, accountants and large firms, negative for small firms. Plus, a multiplier effect from the positives. One could almost build an economy from regulation!

  48. PD Shaw says:

    BTW/ Steve V, i think with the Germans, it was the culmination of war debt. The Germans started printing money at the outset of the war to service debt to win the war. The perceived multiplier effect of the war somehow did not pan out. The reparations were merely icing on the cake to the disaster of reduced productivity (particularly enemy seizure of land, factories, trains and coal) and the expense of recovering from the war and converting to a peacetime economy.

    I feel it necessary to say this in the event we do try to get out of this recession through a major war. WE HAVE TO WIN.

  49. Drew says:

    Wrong, JP.

    The essence of my point is that Washington produces regulations with a) unintended consequences, and b) intended consequences for the benefit of Big Business. Hence, a worldview: limit government at all opportunity. I have no doubt that the camel will get its nose into the tent of legit govt responsibilities, but that camel will be sleeping – no – raping you in no time at all. But let’s at least resist what govt does poorly.

    If there is anyone here at OTB or Dave’s GE who doesn’t understand by now that I am squarely libertarian/small business/entrepreneurial in orientaton…….you are either illiterate or the dumbest mf on the face of the earth. And I’m pretty passionate about this. My business is taking small, mostly family owned businesses, through the transition to a professionally managed business, with opportunities, access to capital markets, better managerial competency and systems and controls etc………..We make them growth engines, and then, like a young bird in the hand, we set them off for the next generation of their growth. Its financing and managing the American Dream. It really is.

    Its not rocket science. Its really not; in fact its somewhat mechanical. But the details are truley art, and borne of experience. I defy anyone – anyone – on this forum to replicate it. An arrogant statement? Perhaps. But go take a swing, folks. Go take take a swing, and report back to me.

    So JP, I really don’t give a shit what you have to say about regulation and its affect on business. You have no clue. I accept on its face that you were/are a talented infotech professional.

    But a business exec? No clue.

    And to get wicked. I despise those who oppose this, or do not understand that the left is the total antithesis to this process.

  50. sam says:

    BTW, and correct if I’m wrong, and I know you will, but isn’t the Fed’s move Friedmanian, and not Keynesian? The Fed is seeking to boost the economy by increasing the money supply, that is, the Fed is engaging in an exercise in monetarism. And this is associated with the ideas of Milton Friedman.

  51. Drew says:

    PD –

    You may have greater insight than I, as a lawyer in the Sprignfield area. You know my view: Dodd and Frank have gallons of blood on their hands; they are prctically the architects of the mortgage meltdown. Now, to “take a bath” they need legislation to cleanse themselves.

    Some will buy it – the dupes. Others will see it for what it is – cover up and fraud.

    Do you think we have ever given one dollar to Barney, Chris, Schumer, Hillary……….

    Do you think Blackstone has given a (million) dollars to Barney, Chris, Schumer, Hillary etc………

    Lesson over………

  52. Drew says:

    sam –

    I’m tired. I need to go to bed. But MF is probably rolling in his grave, as they say, at what is going on.

    Save yourself from embarrassment. MF would NOT be happy.

  53. sam says:

    Drew, is this the part of the bill that affects you?

    Regulatory Impact of Dodd-Frank Bill on Investment Advisers and Fund Managers

    Impact on Existing Registered Investment Advisers

    Effective one year after Dodd-Frank’s passage, July 21, 2011, the dollar thresholds for determining whether an adviser is to register under federal or state law will change. Currently, advisers with assets under management of under $25 million must register with a state regulator, those with assets under management of between $25 million and $30 million may choose either state or federal regulation, and those with assets under management exceeding $30 million must register federally with the SEC. Under Dodd-Frank, generally all advisers with assets under management of under $100 million must register with state regulators and those with over $100 million under management must register with the SEC. Exceptions to this rule are advisers with assets of less than $25 million which do business in 30 or more states, or those with assets between $25 million and $200 million which do business in 15 or more states – they are permitted but not required to register with the SEC. So advisers now registered with the SEC but whose assets under management fall into the $25 million to $100 million category will be required to withdraw their SEC registration (by filing a Form ADV-W on the IARD system) and then refiling with one or more states. More guidance on appropriate procedures can be expected from the SEC and states prior to the July 21, 2011 deadline.

  54. John Personna says:

    So, rather than talk reasonably about how we deal with “too big to fail” firms, both Steve and Drew turn abusive.

    I actually thought they were smarter than that, and would be more aware of how it plays to the middle.

    Ah well, I’m sure they made each other happy.

  55. matt says:

    John : Spending several hundred billion dollars a year on improving their green tech is not grandstanding. I don’t understand why people think that investing in green tech suddenly means that coal power is no longer required (transisitions occur?). So yes they are building coal plants but they are integrating cutting edge pollution controls throughout the coal process…

  56. Drew says:

    sam –

    Yes, and there is considerable confusion about final provisons (imagine that?) but the current view is that assets of $150MM will fall under the SEC regs. I don’t know how much you know about the PE business, but we are condidered a “microfund” – and we were about $225MM. Think about it. What are $25MM, $50MM, $100MM funds going to do? Barney and Chris put them out of business.

    Barney and Chris should be put in front of a firing squad.

  57. Drew says:

    Nice try, JP.

    You are just an evasive loser.

    Good night.

  58. John Personna says:

    Matt, if you tell me “several hundred billion on green tech,” what can I get my arms around?

    We spent several hundred … million at least … on hydrogen cars. All of it pissed away. The tech was always 20 years away, but it developed such s political following that Presidents were cutting ribbons at hydrogen filling stations.

    Pols may find good green programs, but we definitely need to keep an eye on them.

  59. John Personna says:

    Lol Drew, you put those rants in the thread. They’re still there right now.

  60. TS Alfabet says:

    Gerry,

    are you sure you didn’t forget anything? Like, I don’t know, maybe moving Christmas to December 31st so we could save money by having Christmas and New Year’s at the same time?

    Your posts are mostly a wish list of things that you would like to see happen but who is going to do it? The federal government? They can’t figure out who we are war with let alone direct any significant investments in people or infrastructure.

  61. John Personna says:

    I guess I will put in some commentary for the casual reader.

    Drew shared some regulatory burdens on small venture firms.

    I agreed those were misdirected, and gave my opinion that “too big to fail” regulation should target those “too big” firms.

    I suggested that if Steve and Drew opposed regs on small and large firms both, they misplayed it.

    Isn’t that where it blew up, and rather than talk about where “too big” stops, they went off on me.

    They’ve got me as their “regulate everything” bogey man.

  62. TS Alfabet says:

    The point is worth repeating: cut spending, reduce the size of the federal government.

    One need not totally eliminate a federal agency to save costs. A reduction in force will do fine for starters.

    And why does it have to be the FEDERAL government that does all of the oversight and regulation? States are perfectly capable of protecting their own citizens from companies that overstep bounds of safety, health, etc…

    As for “globalization” and losing jobs overseas… Maybe someone should try interviewing a few of these companies that close down factories in the U.S. and build expensive, new factories overseas. Why are they doing that? Is it *only* the labor costs? Might it also be the environmental regulations, the zoning restrictions, the constant, harassing lawsuits, the tax code disincentives for operating in the U.S. ? And when it comes to labor, you don’t have to pay U.S. workers $2/hour in order to compete with foreign labor. A company could profitably pay a decent wage to U.S. workers that is more than overseas workers so long as the other, labor and non-labor related costs were eliminated. Maybe it is time to waive, even temporarily until the economy picks up, the myriad regulations that are choking U.S. manufacturing. What would it take to induce producers to keep that factory open in the U.S. rather than go overseas? No one seems to be asking these questions.

  63. John Personna says:

    A recent Planet Money episode tells how we subsidize cotton farmers, and to stop a trade war we pay off Brazilian cotton farmers too. $150 million of our tax dollars go to Brazilian cotton farmers each year.

  64. matt says:

    “We spent several hundred … million at least … on hydrogen cars. All of it pissed away. The tech was always 20 years away, but it developed such s political following that Presidents were cutting ribbons at hydrogen filling stations.”

    I don’t recall presidents cutting ribbons at hydrogen filling stations. Are you referring to presidents of corporations or there actual pictures of Bush and Clinton etc cutting ribbons at these refueling stations. Also where the hell are these things?

    Just look into the complaints from the steelworkers about China or the USA’s complaint to the WTO and you can easily find out where some of those hundreds of billions are going.. Mostly solar and wind technology but there are other fields the Chinese are pushing into..

  65. Gerry W. says:

    TS alfabet,

    I do understand that government doesn’t have a good track record. However, we used to do great things. Eisenhower had the intestates built and that increased commerce. Our country, buy laws and regulation had our communities wired for electricity and telephone. Our tax money put men on the moon and the government works with industry in discovering new drugs. These worked. But when you throw in various failed ideologies of today, and if you are going to have government appointed jobs in which people have given to campaign, then we are asking for failure. This election is more about failure and gridlock. While we need to cut spending, Boehner seems to be stuck that tax cuts is the only weapon to create jobs. The fed thinks it has a weapon to create jobs. And they are all missing what is going on in the world. It is globalization and cheap labor. Trump was just on FOX a few minutes ago, and he says he does not get it. He knows all the politicians and they are not addressing the jobs issue. We are producing jobs in China and not in our country.

    When I have said to invest in your country, in your people, and in the future, it is what we used to do. We as a country worked for a common goal. Now it is a fragmented society.

    I don’t think that states alone can have all the regulation. This all gets muddled as companies are more multi national. I am not an expert in this, but for example, 75% of the animal farm market is controlled by Monsanto, Smithfield, and the third name escaped right now. So I don’t know who would have the better policies-the states or the federal government.

    However, it is typical spin when we hear that the “states” can do it. Too me, the right wing just wants to dismantle the federal government and its roll. And they can cut here or there to have the tax cuts. We saw this under Reagan with the tax cuts, as meat inspectors were cut. There is so much in politics going on, that I am leery of any rhetoric.

    As far as companies going overseas, the main reason is for cheap labor. Again, regulation is spin from the right for the most part. Examples of cheap labor is that companies in China had moved to Vietnam and other countries for even cheap labor. Dell had operations in Ireland, and Ireland has been bragged about by republicans to be business friendly, and Dell moved to Poland.

    You have Carlos Guiterrez, former Bush Commerce Secretary, saying “dynamics have not changed.” Which I find funny.

    You have Veronique De Rugy, economist from George Mason Univ., on C-span saying that it was okay for our jobs to go to China and that we had Wal Mart jobs to go to.

    What we are seeing is the rape of the middle class. What we are seeing is an Oligarchy, and if the far right really wanted to, you would see a Theocracy. I think our political system has become a joke. I would much prefer a Donald Trump to be appointed president with a professional team, along with a board of directors for the middle class. It would not take long to fix our problems and see the upward movement for the middle class again.

    The right is on their high horse today. Take the jobs away, take the pay away, take the healthcare away, bash unions, and bash social security. And you have by now figured I have more disdain for republicans than democrats. The Bush years presented no progress in jobs or in wages. In 1980 CEO pay was 48 times the average worker, and in 2008 it was 319 times the average worker.

    What we are seeing today with China is that you are having state capitalism. While China is building their country, we are bogged down with ideology and losing the middle class. There are many areas to look at to see what we are doing wrong, but we don’t need the right political spin on everything to benefit the elite.

    We need to be more innovative. If state capitalism is working in China, maybe we can do a little of that. Of course, the problem we have is that we have lawyers running our country and they have engineers running theirs. And more robotic ideology of tax cuts, free market principles, the constitution, and God and country has lost its meaning in the age of globalization

  66. anjin-san says:

    > Obamacare is hugely expensive, and whether he wants to admit it or not it has made everyone’s insurance rates go up.

    Were you paying attention when health care insurance costs went up more than 100% during the Bush era? Apparently not.

  67. anjin-san says:

    > My business is taking small,

    And perhaps because you are a player in this space, you do not really understand the negative consequences of a loose or non-enforced requlatory environment in when major corporations are involved.

    You don’t have to look too hard, just examine the chain of events leading up to the recent disaster in the gulf. Or come a little closer to where I live and visit what was once a nice suburban neighborhood in San Bruno CA.

  68. matt says:

    “There’s class warfare, but it’s my class, the rich class, that’s making war, and we’re winning.”

    -Warren Buffet

  69. Gerry W. says:

    And Donald Trump was on FOX last night and does not get what is going on in Washington about our jobs. None of the politicians, he said, knows what is going on.

  70. john personna says:

    matt, a whole lot of pols got sucked into the hydrogen thing. Arnold Schwarzenegger here in California did, and I think his predecessor. If you google “bush hydrogen car” there are a number of photos, though not one of the station openning I’m remembering.

    Perhaps this would help:

    George Bush and the Hydrogen Car: A One-Act Play

    Apparently the bill for his portion of the hydrogen boondoggle was $1.2 billion

  71. john personna says:

    BTW, wind power has an interesting history in the US. We subsidized it too early and in the wrong way. The result was at least two generations of technology left to rot in the desert. Thousands of windmills were turned off as soon as the government checks stopped arriving.

    The problem was that we funded (via tax credit, iirc) production of wind energy. Whenever you fund production more than research you risk that get-rich-quick guys will take bad tech to the field, if they can make a profit with the subsidy. Take away the subsidy, they close up shop and go home.

    It is happening right now with corn ethanol distilleries. A lot of bad plants have been built (along with some good ones) because the subsidies are so high.

    For this reason, I support green research, but never green production. Go ahead, send a few tens of billions to state college engineering departments (that’s all it would take) but DON’T start signing checks to the slick folk who will engineer their production for the subsidy.

  72. john personna says:

    I must say in summary that we do see people attempting to paint both “green” and “regulation” with a broad brush. A reasonable person should understand that there are some good and bad in both.

    You’d have to be pretty unreasonable to think because this green project (or regulation) is bad, there for all green projects (or regulations) are bad.

  73. matt says:

    John : Thanks for the info and I’m embarrassed that I was too lazy to find the links myself 🙁

    Otherwise preach on brother!