Thursday, July 24, 2008

Bush's TSA Police State

It’s not enough that 1 million people have wound up on Bush’s terrorist watch list, including 7 year old John Anderson of Minneapolis. Now, the media is finally picking up on the abuses of Americans by power drunk TSA agents.

Watch the video on how a man with a prosthetic leg was abused at Chicago’s O’Hare airport, being forced to take his pants down in public. When he asked to see a supervisor, one TSA agent starting yelling: “I have power, I have power, I power”. Yes indeed, she does have power and that’s the problem.


Sunday, July 20, 2008

George Bush’s Homeland Security Incompetence

Are there really 1 million terrorists poised to attack America if the Department of Homeland Security lets down its guard? That’s the implication, given that 1 million people have now wound up on the government’s terrorist watch list.

The list contains some truly frightening characters. Let’s take a look at a few of them:

John Anderson of Minneapolis, who turned 7 on July 4, is among them. He wound up on the terrorist watch list last year. Repeated appeals by his mother to have him removed have fallen on deaf ears in Washington. Watch out for that box cutter under his blanky.

11 term Congressman John Lewis of Atlanta was put on the terrorist watch list 5 years ago. He is still subjected to repeated airport searches and required to present multiple forms of identification when he tries to travel.

Assistant US Attorney General Jim Robinson, who holds a government security clearance, is also on the list. Every time he tries to fly, he is harassed by TSA employees who are seemingly incapable of distinguishing between a high-ranking government official and a Muslim terrorist.

Drew Griffin, who is a CNN reporter, "coincidentally" found himself being addded to the terrorist watch list last May after he began a series of investigative reports that were critical of the TSA.

More than 2,000 Americans file to get their names removed from the list each month. Few, if any have succeeded. We all know that once government puts somethings in place, it’s almost impossible to change. So, these unfortunate people are likely doomed to spend the rest of their lives being harassed by government morons every time they try to board an airplane.

This should cause the most ardent Bush / McCain supporter to pause and reflect on whether or not this level of incompetence is making us more or less secure. Unfortunately, government incompetence has proven to be the rule, not the exception. So, regardless of who is elected in January, the situation is not likely to get better unless the government turns the business of protecting the airlines over to the airlines.

Saturday, July 19, 2008

The Electric Car to the Rescue?

Tesla Motors has begun production of a 100% plug-in electric car. The Tesla Roadster is not what most people think of when they hear the term “electric car”. The Roadster goes from 0 to 60 in under 4 seconds. Its peak torque begins at 0 rpm and stays strong at 13,000 rpm, which is very different from gasoline engines that have little torque at a low rpm. It has a top speed of 125 mph. It can travel about 220 miles per battery charge. Charging the battery takes about 3.5 hours. Useful battery life is estimated to be about 100,000 miles.

The Tesla Roadster costs about $100,000, which puts it out of reach for all but a select few. However, the company is expected to introduce a 4 door, 5 passenger sports sedan in 2010 with a price tag around $60,000, making it competitive with high-end Mercedes and BMWs. Tesla believes that over time the technology will improve to the point where a car like the sedan could be sold for as little as $30,000.

Tesla Motors isn’t the only company introducing plug-in electric cars. Mitsubishi said that is will launch its MiEV plug-in electric in Japan next year. The compact car has a top speed of about 80 mph and can travel about 100 miles on a single charge. The price is expected to be about $30,000.

General Motors is gearing up to introduce a plug-in hybrid – the Chevy Volt, which can travel up to 40 miles on a single charge. The Volt will also come with a small gasoline engine that engages to charge the battery when it runs down. Since 80% percent of American commuters drive less than 40 miles each day, a Volt driver might need only to fill up his tank with gasoline a few times a year.

Plug-in electrics might be one of the long-term solutions to our transportation needs, or they might just be a transitory technology on the road to fuel-cell electrics, which are powered by hydrogen and can be refueled like gasoline cars to support traveling long distances. Regardless, it’s great to see the market responding so vigorously to the problems we are facing with rising oil prices.

Thursday, July 17, 2008

Al Gore’s Numbers on Alternative Energy Don't Add Up

Yesterday, Al Gore challenged Obama and McCain to sign onto a program to produce all of America’s electricity from clean, renewable sources within 10 years. Gore estimates that it will cost between $1.5 trillion and $3 trillion dollars to do so.

It’s clear to me that we need to move aggressively in this direction. World demand for oil is only going to grow stronger as 2.5 billion people in China, India, Southeast Asia and Eastern Europe continue to join the global economy. That means higher prices. Also, our enormous dependence on foreign oil puts our country at risk, especially given the rather unpleasant characters that control most of the world’s oil.

However, Al Gore’s numbers on what it will cost to make the shift just don’t add up.

T. Boone Pickens recently announced an initiative to generate 20% of electricity in the U.S. using wind turbines. Pickens estimates that it would cost more than $1.2 trillion over the next 10 years to do this. Even if his plan succeeds, we’d still be generating over half of our electricity from fossil fuels in the form of coal and natural gas in addition to continuing to get over 20% of our electricity from nuclear power. Moving to plug-in electric or hydrogen-electric cars would require the production of a lot more electricity than we produce today.

I’m encouraged that T. Boone Pickens is investing his own money to build the largest wind farm in the U.S. I’m optimistic that the hundreds of millions of dollars of venture capital being poured into Silicon Valley solar energy startups will pay huge dividends. Honda’s limited release of a hydrogen fuel cell car is also very exciting.

However, we need to be realistic on the timetable and costs for moving the country to a new energy environment. Gore's numbers won't get us there.

Tuesday, July 15, 2008

Bush Inflation: So where is your 9% raise???

The Labor Department reported that wholesale prices rose 9.2% in the last 12 months – the worst inflation in 27 years. Did you get a 9% raise this year to keep pace?

Meanwhile, U.S. banking regulators seized mortgage lender IndyMac on Friday and closed the doors after withdrawals by panicked depositors led to the third-largest banking failure in U.S. history. This is the fifth bank that’s failed this year. There are at least 150 additional banks that are at risk of failing.

The Federal Reserve also announced steps to create more inflation to shore up failing mortgage giants Fannie Mae and Freddie Mac, whose shares have plunged as their losses threatened their financial survival. Freddie Mac owed $5.2 billion more than its assets were worth, making it insolvent under fair value accounting rules. One estimate shows that bailing them out will cost each of us $16,000. Of course, the government won’t directly charge you for this. They’ll indirectly charge you by further inflating the money supply. If you think 9% inflation is bad, just wait until this happens.

The dollar fell to a record low against the Euro.

The Bank failures and inflation are the result of the same failed policies of the Federal Reserve System. Over the last couple decades, the Federal Reserve board kept interest rates artificially low. This lead to irresponsible behavior on the part of lenders and borrowers alike. Now the bill is coming due. We are going to pay for it, one way or another.

So, what’s the answer?

Freddie Mac and Fannie Mae need to be allowed to fail and the market needs to deal with the correction. Both companies were created by the government. Fannie Mae was created by Franklin Roosevelt in 1938. It was privatized in 1968. The government created Freddie Mac at the same time to provide some competition to Fannie Mae. U.S. taxpayers shouldn't be punished to bailout these government created companies.

The Federal Reserve System also needs to be replaced. How do we replace it? The late Nobel Laureate Milton Friedman advocated replacing the Fed with a computer that would be increase the money supply by 4% a year. Ron Paul advocates replacing the Fed with a gold standard, which is constitutionally mandated. Both of these approaches would work a lot better than the arbitrary system we have now.

However, long-term the right answer is to get the government completely out of the money business altogether by moving to a system of competing currencies, which was advocated by another great Nobel Laureate – Friedrich Hayek.

Regardless of where we go from here, it should be clear to everyone that the Federal Reserve System has been a miserable failure and needs to be changed. Don’t hold your breath.

Thursday, July 10, 2008

Barack Obama : The Good, Bad and Ugly

I like Barack Obama. I really do. I honestly believe that he is sincere in his desire to create a new politics that makes a sharp break with the past. However, events this week demonstrate that while he is making progress in some areas, he is still a captive of both the stale ideas of the past and the power hungry Washington establishment. Three actions demonstrate this:

The Good

This week, Jesse Jackson said that he wanted to cut off Obama’s cajones for “talking down to black people”. I suspect that the Reverend Jackson was actually angry because he is finally coming to the realization that his own time has and come and gone. Barack Obama has indeed made a sharp break with the leadership of Jackson / Sharpton era. Obama is more inclusive and pragmatic than those who profited politically and economically from dividing the country. This is a good thing for our future.

The Bad

Barack Obama also dredged up the tired old idea of creating a national service program. Americans are already the most generous people on earth. We donate a lot of our free time to volunteer in our schools, churches and charitable organizations. In addition, many school boards have already mandated that students perform volunteer work as a requirement for graduation. So, why in God’s name do we need a federal program? When is this kind of nonsense ever going to end???

And the Ugly

Sadly, Barack Obama also demonstrated conclusively this week that there isn’t a dime’s worth of difference between him and Bush / McCain when it comes to civil liberties. He showed this by voting for the horrifying Foreign Intelligence Surveillance Act (FISA), which allows the administration to spy on Americans’ electronic communications without cause and judicial oversight.

My guess is that Obama will lose a bunch of support to Bob Barr and Ralph Nader over the FISA vote alone, as well as he should.

Tuesday, July 8, 2008

T. Boone Pickens: An Oilman turns to the Wind

Oil magnate T. Boone Pickens has announced a rather intriguing plan for reducing America’s dependence on foreign oil by nearly 40% within 10 years.

Many people don’t realize that America’s oil imports increased from 24% of our needs in 1970 to over 70% of our needs today. We send more than $700 billion a year overseas to some rather unsavory characters to support our oil appetite. What’s really scary is that world oil production peaked in 2005 and has fallen over the last three years. Unfortunately, demand for oil is rapidly escalating because the world is adding 2.5 billion people in India, China, Eastern Europe, and Southeast Asia to the global economy. So, demand for oil is only going to get stronger.

Right now, 22% of America’s electricity needs are generated using natural gas. However, natural gas makes for a better transportation fuel than oil, because it pollutes less, (30% less greenhouse gas emissions than gasoline), costs less, and we have more of it at home. There are already 7 million natural gas vehicles in the world and no technological breakthroughs are required to make this a viable option. If we could divert the natural gas being used to generate electricity to fueling our cars, we could reduce consumption of foreign oil by 38%, and keep $250 billion a year at home to support our own economy.

How do we do this? Pickens’ answer is to replace natural gas with wind power.

Studies have shown that the Great Plains states are home to the greatest wind energy potential in the world. Building wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20% of the electricity for the United States, allowing the natural gas that is currently used for electricity to be diverted to transportation. We’re already generating about 1% of our electricity using wind and more capacity is coming on-line. Pickens’ himself is building a 4,000 megawatt wind farm in Texas, which is the equivalent of four large coal plants, but without the pollution.

Wind power can also help revitalize rural America, as has already happened in Sweetwater, Texas after a large wind farm was built outside of town.

So, what’s the problem? Yep, you guessed it -- special interests. In this case, coal companies who are working with state legislatures in places like Kansas to muddy the waters. There is also huge potential to generate electricity from wind power off of our Atlanta Coast. Unfortunately, wealthy Americans who fear their views of the sea will be spoiled have colluded with the coal companies to stall many of these efforts.

Although it’s not part of Pickens’ plan, the southwestern part of the U.S. has huge potential for generating power using the sun. Venture capital firms are investing huge sums of money in solar energy technologies. As a result, factories are being built in Silicon Valley for the first time in decades and utilities are building large solar farms in places like California, Arizona, and Nevada.

What’s missing is real political leadership. It’s time to get rid of the politicians who are more interested in protecting the special interests rather than doing what’s right for the future of the country. Otherwise, our future may be one of looking back and reminiscing about “the good old days" when gas was only $4 a gallon.

George Bush and his Big Spending Republicans

I’m frequently asked if I worry that voting for Bob Barr will put Barack Obama in the White House. It’s a reasonable question. The answer is no. Here's why: I’m an old adage kind of guy. Regardless of the situation, I believe that there is probably an old adage that is relevant and instructive. One of my favorites is: “Actions speak louder than words”. In spite of their blather about being for limited government, George Bush and his Republican Congress have been far bigger spenders than Barack Obama could ever hope to be.

According to the conservative Heritage Foundation, federal spending has increased 60% under Bush, after adjusting for inflation. That’s twice the rate of growth under Bill Clinton. The majority of spending increases were not for national security or domestic law enforcement.

Discretionary spending rose a whopping 75% under Bush. Discretionary spending fell throughout the Clinton years. George Bush doubled farm subsidies. He dramatically increased education spending, with failed programs like No Child Left Behind. He passed the most expensive pork-barrel highway bill in history. Welfare programs like Medicaid and Food Stamps grew 56% under Bush.

Entitlement spending has also ballooned under Bush, in part because of Bush’s new Medicare drug entitlement, which will cost $783 billion over the next decade and trillions in the following decades.

Waste, fraud and abuse are now at record levels. Bush has presided over the largest increase in pork barrel earmarks in history. Bush spends $60 billion a year on corporate welfare. Half of all farm subsidies go to wealthy corporations who don’t need it. Medicare fraud is estimated to cost upwards of $25 billion annually. The government’s own auditors believe that programs totaling $123 billion in annual spending fail to show any positive impact on the populations they serve.

There’s more: $55 billion in federal overpayments; 1,200 "lost" computers in the Commerce Department; Home Land Security employees buying plasma televisions and iPods; the Defense Department wasting $100 million on airline tickets that were never used; Air Force personnel spending your tax dollars on gambling, cruises, and strip clubs...

Even the debit cards given to Hurricane Katrina victims were used to pay for things like Caribbean vacations, NFL tickets, Dom Perignon champagne, “Girls Gone Wild” videos, and at least one sex change operation!

The result? George Bush and his Republican Congress added trillions to the national debt by turning Clinton’s last annual $155 billion surplus into the current annual $500 billion deficit.

So, back to the question: Am I worried that voting for Bob Barr will put Obama in the White House? Nope. George Bush and his GOP Congress have proven to be worse than their Democratic predecessors, so what else could I possibly be worried about???

Monday, July 7, 2008

General Motors: Farwell and Adieu?

The news that General Motors stock hit a 54 year low last week shouldn’t be too much of a surprise to anyone who has been following the company for a while. GM is hemorrhaging money so fast that it will need to raise $15 billion to cover their operating expenses over the next two years. They are now facing the very real possibility of bankruptcy. As a result, GM is now considering laying off thousands of white collar workers and selling off some of their brands.

GM’s problems aren’t new and are only partially related to the current high price of gasoline. Their problems go back several decades, when they started to let their dominance of the U.S. auto market slip away to the Japanese and then the Koreans. GM has lost over half of its market share over the last four decades. It’s now at 20%.

General Motors has had some of the most brain-dead management in the industry, starting with Roger Smith who fostered the worst labor relationships in Detroit. At one point their relationship with labor was so bad that GM's UAW leadership were indistinguishable from suicide terrorists, determined to punish the company even if it meant killing themselves in the process.

GM also suffered from three decades of poor, uninspiring design, where for a while most of their cars pretty much looked like a wedge of cheese.

Like all U.S. auto companies, it took GM too long to figure out that producing qualitiy cars actually cost less, not more, and results in higher customer satisfaction and stronger brand loyalty.

They were also completely clueless on how to compete in international markets. For example, they used to constantly whine about how Japan was unfairly closed to them. When I went to Japan for the first time in 1998, I noticed three things: A.) The Japanese drive on the left side of the road, like the British, B.) there were a lot of German cars on the road, and C.) there were very few American cars. The problem was that the U.S. auto companies took forever to sell cars that were suitable for the Japanese market (i.e., with the steering wheel on the right side). The complete misunderstanding of the market, along with their chronic quality problems doomed GM, Ford, and Chrysler in Japan.

They also have a maddening plethora of largely indistinguishable brands including Chevrolet, GMC, Pontiac, Saturn, Cadillac, and Buick. Let’s not forget about Oldsmobile, which GM shut down a few years ago. Yes, they also have Saab and Hummer, but these are niche brands which are also not doing well.

Finally, years of overly generous pension arrangements have spun GM’s costs out of control. The cost of supporting GM retirees is more than $1,600 per car.

Shutting down a brand is a costly proposition, in part due to state franchise laws. In 2001, GM spent $1 billion to buy out Olds dealers and close some plants. Litigation with dealers dragged on for years and the final cost of shutting downs Olds is estimated to be $2 billion.

Throttling back on production isn’t an easy answer either, given GM’s union agreements which stipulate that they can’t close a plant or lay off workers without stiff penalties no matter how bad the losses become. Plants must run at 80% capacity or more whether they make money or not. Even if it stops its assembly lines, GM must still pay laid-off workers and also foot their extraordinarily generous health-care and pension costs.

So, what’s the answer? I for one can’t think of any reason why General Motors as a single entity makes sense any longer, because they just don't seem to be able to get out from under their own history. They have proven to be too big, old, and stodgy to undertake any serious reform. The only real answer may be to break the company up and let the market reallocate the resources to more productive uses.

Tuesday, July 1, 2008

McCain’s Military Service not a qualification for the Presidency

On Sunday, retired General Wesley Clark said that: “I don't think riding in a fighter plane and getting shot down is a qualification to be president.” He’s exactly right. In fact, McCain’s 54 years of government “service” make him very unqualified to be President.

McCain grew up in a military family. His father and Grandfather were both career military officers. McCain started working for the government in 1954 when he entered the U.S. Naval Academy. He graduated in 1958 and then went to flight school in Pensacola, Florida and become a Naval aviator in 1960. He received a combat assignment in 1966, where he participated in a bombing campaign of Vietnam. In 1967, while on his 23rd bombing mission, he was shot down over Hanoi. He was imprisoned for 5 ½ years, suffering lengthy solitary confinement and torture.

McCain left the Navy in 1981. He briefly worked for his father-in-law’s beer distributorship, as VP of Public Relations, while he was running for Congress. In 1982 he was elected to the House. In 1986, he won a seat in the Senate, where he has remained for 20 years.

McCain has virtually no experience in the private sector. He’s never led an organization, built a business, met a payroll, balanced a budget, or had to serve customers in a competitive market to survive. He admits that the economy is not his strong suit because from the time he grew up as a military brat until today, he’s lived in a world of edicts and mandates rather than one of competition. Accordingly, he has demonstrated a propensity for supporting unworkable government solutions, for example with his advocacy for the Eurocrat cap-and-trade system for carbon emissions.

With $4 a gallon gas, the worst housing market in 70 years, a collapsed dollar, and rising unemployment, private sector experience is an essential qualification for the next President. McCain's private sector experience is virtually non-existent.

I have nothing but respect for people who volunteer to serve in the U.S. military. I am a 4 year veteran of the U.S. Air Force. However, Wesley Clark is right -- military service alone doesn’t qualify one to be President of the United States.