Monday, July 31, 2006

Where is the Reality?

Remember the old Commercial line: Where's the Beef? Republican Spin Doctors talk about reaching out to Minority groups, and Democratic Spin Doctors speak of empathy with the plight of the Poor. Legislation has grown in size and complexity with the years, today being nothing more than Add-Ons where every legislator and Senator gets to include his own bit of graft provision; nothing included in the bill over which any Special Interest could possibly object to, all of it bought and paid for with lobbyist money. The neighborhood Millionarie is as underrepresented as is Our Poor, Blue Collar Workers, College-Educated, Women, Children, and Dogs. Any suggestion otherwise flies in the face of Common Sense, and is an indication of lower Intelligence.

This Author has long supported Public Finance of all Political campaigns, once a Candidate has been nominated by his Party (any Party with sufficient levels of Voter regristation, I advocate 10% of average Voter Turnout). People tell me I am a fool, and state I do not know how much Campaigns cost. I reply with the Statement that Campaigns could be limited to Newspaper Ads and Political Debates of specific number on TV before the Election (herein depending on prohibitation of exterior Campaign funding). I continue to inquire 'What part of current Government spending is incurred by political promises for campaign funds?' does the Individual expect comes from the current system. I relate that probably $1 trillion is spent by the Federal Government, and a like amount is likely spent by State Legislatures; all simply to fulfill Campaign promises made by Politicians to Special Interests to gain Contributions.

Does these amounts seem too high? I doubt it, but even if it were half that, would it not be cheaper to give each Senatoral candidate a half-million dollars, each Representative candidate a quarter-million dollars, and every State legislator candidate $50,000 dollars each. We could give every Presidential candidate some $2 million, and every gubernatorial candidate a million dollars. No matter what it cost, it would still be cheaper than the present system; and the forbiddance of exterior funding would reenfranchise the American Voter. lgl

Sunday, July 30, 2006

Flow of the World

Mark Thoma has a good Post on a Project seminar of ordinary citizens, asking them how to fix the current debt levels of Government. They came up with higher taxes as the No. 1 choice; of course, they were not lobbyed. Read the Commentaries as well, as of equal interest. PGL at Angry Bear has a good Posting on the actual growth generated by the Bush Tax Cuts, nothing new, but good methodology for evaluation. Menzie Chinn highlights Administration fielding of Questions on the current climate; I also have read the Critten book, and wondered how much certain Parties paid to have it written (not slander, but simply research for my own personal advancement).

I, like dear Michael, am a Layperson; with even less scientific base than the esteemed author. Still, I must pontify of my Thoughts on Gobal Warming. My belief remains more down to earth than Greenhouse Gases. Work has been done on Heat Centers--places where Population density emits higher Heat levels, than do uninhabited areas. Heat Center interiors can be as much as 4 degrees higher in Temperatures. Climate is determined by Wind patterns more than anything else. Higher Heat Updrafts block and devert Wind patterns, as well as reduce their intensity. Human population expansion over the last Century, especially the last 50 years, have been placed within the natural Flow channels of Wind patterns. An appreciable amount of Wind pattern movement is being deflected back into ocean areas, from where it normally came ashore. Many areas of previously greater Rainfall are getting less Rain than was the average of a half-Century ago; most noteably Northern and Central Africa, and the American Midwest and Southwest.

The lack of Rainfall in the central-belt of the World creates greater absorption of Solar heat, and occular Wind patterns push this excess heat onto traditional Glacier formations with the abscence of normal Rain patterns. Did I sound as good as Michael Critten? Ah, I knew I wouldn't. lgl

Saturday, July 29, 2006

The Inheritance Tax and other things.

Angry Bear and the Economists View present a fairly accurate expression of the House passage of a bill promoting a Minimum Wage increase, along with about everything else; but espically further shaving of the Inheritance Tax and continuance of several Tax Cuts. PGL also provides and interesting post on the cost of Tax Cuts, they requiring future Tax levies when financed by Debt acquisition. Steve Verdon presents an article, The Impact of Medicare on Health-Care Spending, which is well worth reading; remembering this is a crowding in effect of health care Providers finding a Cash Cow--Patients must adopt all a Doctor's proscriptions and health demands, else they could lose their Coverage.
Republicans are rabid to eliminate Inheritance Taxes before they face a potentially diferent Political spectrum, one without control of both White House and Congress. They will attempt any methodology to accomplish their desired Goal, even emplacing Inheritance Tax reductions within a Minimum Wage bill. The Bill, passed by the House, is ridden by multiple provisions covering almost the entire range of Republican economic desires; Anyone else would be ashamed of a Minimum Wage bill which exceeded 900 pages--most of it for special provisions. This is set up so Republicans get what they want, whether the measure passes in law or not. It even purportedly (I have not read it) originates a new health care Insurance plan. No matter, this bill is an obtuse book which no one could read.

Why the drive to end the Inheritance Tax?

Almost no one pays it. This Author cannot remember the Exemption level, but less than 10% of Estates will ever be affected by it. Only the Millionaries' lobby could find real interest in it. What duress does it apply to Agriculture or Small Business? It would only insist the Inheritors face the same Mortgage debt to pay the Inheritance Tax on the Properties, as did their Benefactors to gain the Properties in the first place. Is this such a horrid Concept? lgl

Friday, July 28, 2006

Business Profits Tax

Someone just stated that if I was going to advocate a form of taxation, people could evaluate it better if I gave a general outline of the scheme. I thought about this for a moment, and decided there was a shred of truth to that statement. It made me organize my Thoughts, and herein follows my desired definition:

Business Profits Tax:

1) Taxation must be placed upon the total Dollar volume of Sales, not simply Business Profits, but those Profits should be taxed though not penalized.
2) Volume Sales should have an irreducible base tax of 7%, but should increase at a rate sustainable with success. Profits below a minimum base, Negative-5% Profit should endure a 7% tax on total Sales. The tax would increase 1 percentage point for every percentage point increase in Profits; with the Tax rate rounding to the next higher number. The total tax would maximize in most case at 19% of total Sales, for Profits of 14% and up.
3) Most would say this is a National Sales tax, but it is not; for the tax increases in rate with the increase in Profitability, and the next provisions will provide more impact.
4) The only deductions from the Tax will be justifiable Expense in the year in question. To this End, Business will be allowed to deduct as Expense only that Debt which is not self-financed; in other words, the Debt must be Publicly-held by an Organization independent of their own borrowing company, and only such Interest and payment of Capital made in the Tax year will be accepted as a deductible Expense. (My suggestion is Corporations put their excess funds in Capitalization ventures or in a Bank like Everyone else).
5) Profits above $100 million per year will have a 2% Surtax added to such Profits above their scheduled Tax rate. Profits above $1 billion per year will have an additional 4% Surtax added to their scheduled Tax rate. Profits above $10 billion per year will have a 6% Surtax added to their scheduled Tax rate.

Certain Base Facts must be known:
1) All Special taxations will still be withheld from Employees and Employers, such as Social Security, Unemployment Insurance, and possible mandatory minimum Health or other Care Insurance.
2) Capital Gains Taxation will probably be retained.
3) Income Tax would be repealed.
4) The taxes would be assessed solely of Business, tax rates will not show up at the Cash Registers.
5) The Tax rates will give automatic Tax relief to struggling Business operations with lower rates built in, with more profitable Business paying their fair share of the total Tax burden without excess burden. lgl

Thursday, July 27, 2006

Business Taxation

This author will first direct Readers to Calculated Risk which gives a fair interpretation of the current Beige book; there being some interested in the current stage of the Economy. The NYTimes, along with most other News media, say that the numbers and indicators are mixed. It reminds me more of a Breakpoint in a Tennis match.

A mild Recession at this time, no one could want for anything worse, would bring to the forefront dicussion of Taxes once more. Tax Cuts, the pride of the Republicans, will again be rightfully depreciated once more. The Cuts only generated a vast Government Debt load, without producing American Labor Employment or heavy recapitalization of American industry. Exports have never risen in the same magnitude as Imports, and the United States has become tied to foreign Imports on both the Manufacturing and Consumption levels. A major change of Economic policy will gain momentum if We are flung back into the Recession of 2000.

This Author relentlessly advocates an elimination of Income Taxes, a scarred Wasteland of old bombardments of specially legislated reliefs of every type and kind--some outrageously obsolete. My solution, though, does not call for a National Sales Tax, or any other form of Consumer tax rape. I advocate switch to complete Business taxation.

A graduated Profits Tax, based solely on Business Profits stands as the real answer to Growth promotion and realistic Economic policy. Business produces the real value of the Economy, providing the Income and Profits in total for the expenditures of Government, Consumers, and even Investors. This is the level at which Economic production should be taxed. Business already employs the Accounting procedures to meet Tax authority needs for rational taxation; they would face no greater Expense in Paperwork. All elements of the Production, Distribution, and Consumption cycle would develop the proper taxation based upon the real Cost of provision of the Goods and Services. Consumers would possess their Total Income upon which to decide their Buying decisions, while Business would finally treat Taxation as they should--a Production Cost. lgl

Wednesday, July 26, 2006

Backdating and Futuredating

Backdating Stock options is illegal, simply another form of Insider Trading. A NYTimes article today states Backdating Stock options cannot really be stopped. Pure trash! It is one of the simplest forms of Stock fraud to prevent, it only taking a realistic law to be introduced. What type of law? I can give a rough sketch:

Stock options can only be granted the following Year to any performance, and must be issued at the highest Price of said Stock the previous year of performance. No Stock option may be exercised by any Employee while he is employed, and must be exercised within 30 Workdays of his discontinuance of employment.

Employees granted Stock options will understand that longterm growth and Profitability must be maintained, for the Employee to benefit from Stock options. Fraud is automatically suspended, because the highest Price of the Stock in the performance Year is publicly known. Choice of Date of Retirement is still available to the Employee, but individual Stockholding is curtailed as he must finance acquisition of the Stock within a Set timeframe. The Corporation gets what it purportedly wants, performance, while Stockholders and Investors limit the excess of Executives granting themselves vast wealth without referral and deferment to Stockholders. lgl

Tuesday, July 25, 2006

Blue Tuesday

Oil is pegging above $75/barrel for Sweet Crude. Existing Home sales declined by 1.3%, and year over year House prices rose only 0.9%. The biege book is supposed to be released tomorrow, covering Production in the Midwest. Bad numbers here could mean a poor Third Quarter and miserable Christmas season. Are bad numbers expected? Economists say No, but they say it like they were sucking on a sour Pickle.

What do I say?

I have been to exercise and muscles are tired, the sky is overcast, and I am on a Diet. The Consumer Confidence numbers are up in spite of high Oil prices (Translation: the Soccer Moms are again out in force, mainly to keep the kids quiet), putting on a probable 75 miles per day on their Gas-guzzling SUVs. Credit Cards are tapped, and as a consequence of Consumer buying, Production Costs for Businesses are going up. Consumer Credit can be as inflationary as Government debt, and as addictive as Gambling. The Fed sounds like it is going to continue the insanity of raising Interest rates.

Interest rates hikes do not even touch the two basic causes of Inflation. Government spending will continue, Tax revenues or not, until Voters get the gumption to throw Legislators out of office, or reactionaries are convinced to start Sniper attacks against them (that was no call for Terrorism in an way, shape, or form). Credit companies respect the Demand/Supply curves and set their rates high, but in the service of high Sales, refuse to raise their Interest above their maximised Sales levels--totally indifferent to Fed impulses.

The Solution: We need those same Legislators to repeal the honored (totally undeserved) Tax Cuts granted since 2000, and force them to pass legislation granting the Fed the right to set Credit Interest rates over a legislated range--one spread enough to encourage or retard Consumer Credit expansion. lgl

Monday, July 24, 2006

Swing and the Herd

Arnold Kling and Tyler Cowan both have commented today on:
Willpower and the Optimal Control of Visceral Urges.
I should not comment on the Article, having read only the Abstract (too cheap to pay the $5 online fee for Download). The Abstract, at least, sounded very realistic and viable in its assumption: Willpower is a depleting resource. People simply tire of self-discipline, and when absent of exterior discipline, will soon lose enthusium with any denial program. I know I eat too much and too often.

I immediately translate knowledge of individual behavior unto group behavior. Alternately stated: What does this mean in the Political context? Conservative Republicans, Neocons, Libertarians, and fundamentalist Economists have attempted to place the American people on a Welfare diet for 6 years. Social programs starve for funds, and has been an ongoing condition since the first George W. Bush years. What they received for this starvation was initial meager Tax reductions replaced with State and Local taxation, and watching the boon award granted to Corporations and the Wealthy. Single Proprietors often watch Corporate competitors award Stock Options and Bonuses in excess to what they can pay their Employees in salary. Why? Infamous Corporate lobbying efforts grant injuries Tax concessions which are discriminatory. The rest of Us gaze on the Wealthy spending more and more money which used to be their share of the Tax Burden.

The next Administration will find heavy demand, I am afraid, for an expansion of Welfare measures; this occuring whether the Administration is Republican or Democratic, likewise for the Congress. Americans tire of seeing money leave their accounts bound elsewhere, be it to the Government, foreign Suppliers, or American Corporations shifting their assets to foreign shores. A NYTimes article today highlighted a facet of the current administration which angers the American people: the hypocritical passage of legislation into law to please Constituents, but refusal to enforce provisions of the law to please Special Interests or saite Bush desires. There is an ill wind blowing for the sitting Congress, even if George W. can head to Europe with his formalized graft. lgl

Sunday, July 23, 2006

Take Your Medicine

Peter W. Huber provides an excellent defense of the Drug Manufacturers (Source article obtained through Greg Mankiv). It makes the poor Drug companies seem picked upon. Let Us examine the Issue a little further before We make up our minds. We must first remember Pharma utilizes a Accounting methodology which comes straight from Santa Claus. Their average In-Year Costs rarely translate into an Expenditure of Development Cost greater than one-quarter of the amount claimed; there being in-house Profit-taking, Bonuses for Project segment completion, and Our old friend, Stock Options, for the Executives all-around. Second, any Drug developed is produced in vast quantity for it's Debut, sufficient to saturate the Market that their expenditure on advertising (much disguised as Research Cost) when the Drug is cleared for Sale by the FDA. The American Taxpayers and Government are expected to fund the Research by lack of taxation on the Profits actually generated; did I forget the high Price of Drugs to fund those Profits?

My Primery GP and his Confederates get a Free Lunch every Workday, granted daily by Representatives of Drug companies, obstentially to discuss new Drug capabilities. Do Doctors have to be reminded of what Drugs can do that often? Regardless, I am sure the Expenses for such Conferencing are deducted as either Advertising (unlikely), or as Research (such Expense may not be deductible as Advertising, if the Product is not yet on the Market). My Primary Question, though, is how many GPs are there in the Country, and how many Drug Representatives does it take to supply them all with Lunch five days a Week?

It is obvious Drug Company Representatives must have some level of education, like they can tell the difference between an Aspirin and a Suppository. It is also necessary they be in possession of a Vehicle and Fuel to go get the Take-Out food; another miserily Expense paid by either Expense account or Salary. I suggest most Doctors can attend a Seminar, all Expenses paid at their choice of Vacationing, about 4 times a Year if not monthly; oh yes, Someone does discuss the Drug use at the Seminar--if any actually make to the Conference floor.

We live in the Land of the Corporations, praise be to George W., Our current Corporate political leadership; who fires Tax Accountants who were looking into Estate and Gift Tax fraud Cases for the IRS. Some Economists mention rudely there remains a shortfall between Federal liabilities and Frederal revenues at current Tax rates of some $60 trillion over the longrun; but the Wealthy and Connected get a freebee past wasteful Tax provisions which might force them to pay Taxes. Is there something wrong with this Picture? lgl

Saturday, July 22, 2006


Dean Baker has a blog posting today which is fairly interesting. He provides a good rant about the adverse economic constriction of Patent protection, with the resultant high Cost of Drugs. Everything he states is relatively accurate, though he would call for Patent elimination as a restraint of Trade. I suggest the elimination is too radical, as it is a form of reward payment for innovators, where otherwise they might receive no compensation. Cancellation of an alternate form of Wage is never desirable.

The real culprit actually resides in federal Courts, specifically in their enforcement of the Patent provisions. What needs be altered is their decision that Patents remain the resident property of Companies who employ the Developers of a Patent. A more realistic (and much cheaper) decree would be the resident property of a Patent remains with the Developers throughout the extension of Patent life. Such a Patent determination decree would declare no non-human Entity can hold a Patent, due to relative inability of such to Organization to consciously design anything worth a Patent in the first place.

Patent rights would take their place besides Stock Options as incentives to do good work. Companies would have to negotiate with their own Employees to utilize Patent value, and Patent royalties will go down, as they express reluctance to overpay for Patent usage. The monopoly advantages of a Patent reduces in structure and content with being individualized, while Patent role as alternate means of Work payment continues. lgl

Friday, July 21, 2006

Bored or Resigned?

This Author has been checking the News today, and finds the most interesting article read was one on Fort Tilden in the NYTimes. Some economic indicators seem to be flat over last week, others saying it would be worse except that the Job market held up well. Maybe it is simply more active when the Temperature outside is hitting Record levels, unlike the Cooling today; high heat meaning a battle for survival.

I suppose I should advance a Question: Will the Markets sustain a deminishment of Consumer Demand brought on by high Fuel prices and a real potential declining Workweek?

The first part of the Question must again ask: Is Consumer Demand declining? Undoubtedly! High Fuel and Utility charges are eating into Household budgets, Consumers already possess high Consumer Debt profiles, Interest rates absorb undue amounts of normal Debt repayment schedules while the demand for Mortgages reduces. Index factors track these declines poorly, but the Intelligent can estimate We may see better than a 5% decline in Retail Sales over the next Year (remember this is an Author estimate, deniable by All, and they will). The Author will respond with childish vigor, stating: Tis so, and might even decline by 12%!!

A secondary problem emerges with a decline in Retail Sales. Stock Grants and Stock Options have been issued with profusion, and the Stock Market today has a far larger composition of Shares, than it did the last time there was a Retail Sales decline. Both Markets and Corporate structures stand shaky upon foundations more unsound, trying to spread Profits across an extended Share base. The Job market will not save Retail Sales, if Corporate executives attempt to grind additional Profits from cutting Employment rolls. My advise to Corporate leadership: Do not invest in capital overproduction facilities; invest in Stock Buybacks with the excess funds. lgl

Thursday, July 20, 2006

Turnstile Taxation

It seems much comment has been recently devoted to methods of Taxation. The trouble from the discussion remainss that it hinges around elimination of Income Taxes. Almost every Proposal seems destined to be a regressive tax, most advocates desireous of reducing their own personal Tax costs. This may be a laudable enterprise (this Author never overly concerned about Tax rates in the upper ranges of Income). The Carbon Tax proposal extends itself as a good regressive tax vehicle; the people most able to reduce Carbon taxation per Production unit being the most able to pay the Carbon Tax.

This Author has previously (somewhere in the garbage dump of my files) suggested complete switch to Turnstile fees. Mind, I speak not of just Turnpike stations! Entrances to all buildings (hopefully even Government, churches, and stadiums) will gain Us elimination of Income taxes. Everyone begins to enjoy the security of Gated Communities. Businesses can refund Employees for the Cost of gaining access to their Workplace. Shoppers will limit their trips to Retail outlets (vast relief to Husbands and Fathers), while Welfare recipients will be allowed to use Food Stamps to gain entrance to Groceries. All Peoples would reduce unnecessary trips to anywhere, and We can rig some type of Turnstile payment system to get Gas nozzles out of the Pumps. It will be a wonderous system with Everyone charged for exact use of Services.

One must think of the advantages involved: The Poor would have to stay home or get charged. The Homeless must find a home (I am trying to devise a Turnstile for walking down the Street). The beauty of the Tax is beyond compare: One has to be productive in order to earn sufficiently to move. The Carbon Tax is nothing but a waffling measure, which would hardly stop traffic congestion. lgl

Wednesday, July 19, 2006


Mike Sedlock (Mish) provides an interesting Post with several Links to other of his articles on Inflation and Deflation. The Good Reader should read The Kondratieff Cycle Revisited, not because the Kondratieff Cycle holds validity, but because it discusses the propellents of Inflation and Deflation; it listing a table of Deflation cause:

Here is the Deflation Case once again:
Rising productivity and rampant credit expansion led to massive overcapacity.
Global wage arbitrage is putting downward pressure on wages and benefits.
An enormous bubble in credit lending developed causing malinvestments and speculation.
Speculative credit lending fueled bubble prices in houses and other assets including the stock market
At some point housing prices will fall as the pool of stupid buyers exhausts itself. The housing sector will stall
A stalled housing sector will cause rising unemployment and lower demand for goods and services, appliances, eating out, etc, etc, etc.
Bankruptcies will rise.
Banks will not be willing to extend further credit on assets declining in value, especially to those out of work, or nearly underwater on their homes. In fact, appraisals get tighter at long last.
Credit lending plunges. We have already seen the second consecutive month of declining consumer credit. This is the first time since 1992. There is every reason to believe a reversal is underway. If not now then soon.
Bankruptcies and falling asset prices and people walking away from mortgage loans is a destruction of credit.
If credit counted as inflation on the way up, a destruction in credit MUST be counted as deflationary on the way down.
The destruction in credit, rising bankruptcies, an unwillingness of banks to lend, and a rising propensity for people to save will be greater than any monetary printing by the FED to stop it. That is what happened in Japan and that is what will happen here.

I do not intend to present a Case for Deflation here, though I will state some of the above listing is purely imaginery or wrong. What does concern me is the listed causes of Inflation located in the Postings, as they are the current belief of most Economists. My Studies of Inflation finds myself long proclaiming the worst cause of Inflation is Government Deficit Spending, followed by loose extension of Consumer Credit, and ending with overInvestment of Business Profits to escape Taxation. The real Source of Inflation, in final analysis, is overzealeous pursuit of Business profits, which leads to Overpricing of Products, evasion of Taxes, and incitement of Consumers to exceed their Spending capacities. Here is the crux of the problem! lgl

Tuesday, July 18, 2006


An old reprobate friend of mine asked me how Government regulation could affect the Energy supply and Fuel prices, as I implied yesterday. I thought I should provide an answer. Regulation could cut Oil consumption by prohibition of certain practices which are fuel-use excessive. Here I will give some Regulation proposals, and suggest their likely consequences (remember Murphy's law, and the fact the unintended often holds more reality than anything else).

1) Shutdown of all heavy freight on Highways and Interstate between Noon and 3 p.m. during the Summer, and between Midnight and 6 a.m. in the Winter. Both Periods require the greatest fuel consumption for heavy vehicles. Local loads with local licenses would be exempted from the prohibition (Manifest destinations less than 100 miles). This Prohibition cuts Coolings Costs in Summer with faster flow of traffic, and cuts Heating Costs during the Winter. Drivers would plan their Trips with their mandatory layovers durings these periods, along with their loading and unloading schedules. Fines would be sufficiently high with obvious ease of Ticketing.

2) Doubling by Federal law all Toll Road fees during the Periods of 6-9 a.m and 4-6p.m. This would impel Car-pooling, increase the flow of existent traffic, and reduce Traffic jams and slowdowns. A coincident act to serve the same purpose would close Interstate access routes during these periods to halve the number of access routes to any Interstate system confronted with traffic congestion during Rush hours.

3) Charge a Dollar Federal Tax per fillup at Service Stations during established Rush hours periods. This would help Drivers to understand the cost of individual driving to Work.

4) Closure of Downtown areas to individual traffic, forcing movement by Bus and Cab. This tells Consumers they will be forced to utilize Public transportation anyway, so they might as well adopt the cheapest forms of Transportation.

5) Charge a Federal Tax of $2 per access to Public Garage Parking for all Vehicles parked during the period of 6-9a.m. This increases the Cost of personal vehicle use to go to work.

These measures are all designed to reduce the excessive use of Energy by Individuals. Access and Cost are emphasized. Other measures can be enacted to foster fuel economy, say a Federal tax of $10 per mile of rating on any vehicle rated below 24mpg City, 27mgp Highway. The SUV craze might be curtailed; this Federal tax to be assessed every time the Vehicle is serviced. Lack of Servicing of vehicles will quickly reduce the value of Resale and longevity of the vehicle life. This is outright Government pressure to get such vehicles off the Road.

Regulations can be designed ad infinitum. Government regulation can sculpt Consumer desires without outright denial in most instances. This Curtailment, though, must be based upon sound Business practice, and rigidly enforced; the first sign of leniency destroyed not only the Intent of the regulation, but also capability of enforcement. lgl

Monday, July 17, 2006

Year over Year Readings

I wonder at the Readings We are getting now in the economy. Year over Year readings can be an expression of Inflation more defined than any other, if actual Volume Output remains relatively the same or reduces. Industrial Production is a Case in point: Vehicle Volume is down, Utilities usage has been relatively stable, and Business Inventories has been rising with a slight decline in ReOrders. The Year over Year reading increase of better than 4.5% for Industrial Production indicates real Inflation in the primary-base Sector. It does not help that Consumer Demand can be seen as faltering; Retailers raise base Prices during declining Sales, to be able to claim high Discount Sales. The BLS can still play with the numbers, but Inflation is present; Fed action will only further deterioate Business stability without eliminating any of the Inflationary pressures.

The G-8 leadership wants a 2-Week extension of the timeline for Talks, so they can avoid admission that the Doho round of Trade talks was a complete bust. None of the Conflicting Interests in the Talks can alter their basic positions, due to the fact any concessions would be overruled by the political process in their homelands. Most Economists would insist this reality is deplorable. I would not! The truth states all Participants would have to absorb real-loss Costs, while few Gains would be realized, and None in the Short-term. Failure of the Doho Round should be seen as a success.

This Author also disagrees with the general Economic disgust with the practice of Regulation. It would seriously save many of the current Economic costs of high Energy pricing, with real Government curtailment of Supply; remember, shortages of Energy supply propels Energy Conservation and technological innovation. Schedules to bring Energy Savings technology online can be cut to One-Third of current Planning, and artificial constraint on Energy implanted by Government could be multiple times the Inflation Fighter, as is already excessive Interest rates. There is a place for Regulation in the Economy. lgl

Sunday, July 16, 2006

Sculpted Agendas

The WTO will be a failure, as will Medicare and Medicaid. Why? It is because of Sculpted performance. Every nation in the WTO wants special consideration, and every Recipient of Medicare or Medicaid wants preferential treatment. Special concessions for nations defeat the overall agenda of the WTO, and exotic medial treatments paid for by Medicare and Medicaid absorb the funds and economic viability of the programs. The multilateral nature of the WTO was self-defeating from the first, as no nation was voluntarily going to surrender its own personal pet desires; no President or Congress will ever get sufficient Votes to cancel the level or content of agricultural subsidies given to farmers, to do so, realistically means a percentage rise of Consumer Income devoted to Food. Every nation has its own preferences, with commitant damage accuring with relinquishment of those preferences. The WTO will not survive national needs.

Medicare and Medicaid will not survive unless the switch is made to standardized medical care. What does this mean? This means set payments for clinic visits and standard daily hospitalization payments. This means a positive list for Drug payments, like South Korea has insisted upon, where Drugs must be on a established list to be paid for, the positive list based solely upon Medicare and Medicaid ability to pay. One-Shot medical treatment needs can be settled by a lifetime Drug account which cannot be exceeded for exotic drugs. These alterations are necessary to forestall health care and Drug Costs from exceeding the Public ability to pay.

Special Concessions work worst in the arena of Tax reductions. Granting of special Tax credits for any endeavor or activity impedes the ability of the Tax Rate system to function. It is possibly best to initiate a Constitutional amendment which would state: No Tax Concession may be granted of any type which does not affect all Tax Payers equally. Every Tax reduction past this point would be a direct and obvious reduction of Tax rates for all Taxpayers. It is actually the only way to save the Tax system, which is in its Death throes. lgl

Saturday, July 15, 2006

Pellet-Feed Carburators.

The NYTimes ran an article on making the U.S. economy independent of Imported Oil by 2030, through use of four different technologies: ethanol from waste product of agriculture, making Oil from shale, converting Coal, and whatever. It's major claim was independence was available because material source product was existent in almost all States. Am I the only one who understnads there must be a fundamental change in engines to produce this magnitude of altered fuel use?

They propose changing Solids into liquid fuel, simply to be utilized in a gaseous reaction based upon the introduction of heat in the form of electrical discharge. They intend a multiple level of chemical steps to produce a Product to be utilizable in a transformance reaction to produce power. Ethanol production is fairly simple, with just a multiple-distillation process to produce a fuel, but one that is extremely reactant to environmental intervention--it burns relatively as rapidly as Gasoline with the advent of a stray spark. Does Engineering insist We invest in a technology producing all the hazards of the product it replaces?

All of these Fuels require a basic grinding or cracking operation to alter these materials into some form of solid dust or uniform liquid, before any other more complex chemical operations can be conducted. Could not technology come up with a method to compact this very reactant dust and cover it with some form of celleose shell--i.e., making a pellet. The power of dust explosions can be catalogued by the history of grain elevator explosions in American history. The interesting fact of any Carbon product from any source, even human and animal sewage, it can be dryed by simple process and then ground to a fine dust of high volitity. Transport of such dust increases Safety factors immensely, if they are encased in small quantities surrounded by a protective coating of less flamible material--the Pellet.

The only need after reaching the stage of the Pellet ramains an Engineering process to transform the dust inside the Pellet into a gaseous form for burning. Engineers need a conceptualism of one pellet for idling an engine, two pellets for maintaining the cyclic speed of an engine, and three pellets emplaced and crushed in a cylinder of an engine to produce acceleration. Coatings of the pellets must be made out of flamible material, themselves consumed in the burning process. The crushing of the pellets can be achieved by a contraction process at piston head at the start of the upstroke. Isn't Everyone glad I am not an engineer? lgl

Friday, July 14, 2006

The Drop in Retail Sales

Retail Sales droppec 0.2% after Gasoline was removed. Does this tell Us something?

It actually tells Us a number of things. Inventories have grown approx. 1.5% over the last two months, so exprected return of Demand did not materialize. This Author is an advocate of plateau Consumptions patterns: there exists a Minima and Maxima mentality in the minds of Consumers, who will not alter Expenditure patterns to Price changes until a certain point is reached either higher or lower. This is what makes Consumer expectations so important; a Price range close to the Maxima with expectation the Price rise will continue, will engage a sharper reduction in Consumption than a normal Economic modeling sampling prediction.

The Retail Sales drop may also entertain longterm implications as well. The Sales may not come back. Why? Consumers let immediate circumstances affect longterm Consumption patterns. Mortgage Debt is at alltime Highs, as is Consumer Credit. The rise in Pricing, both Across-the-Board and volitile Products, can lead to a Consumption pattern designed to pay down debt. Oil have just exceeded $78/barrel, with futures trading above $80/barrel. Consumers may turn in Consumption conservatives.

Another factor has entered the matrix as well which is Population Growth. Adverse Economic data, combined with already-high debt, will constrict the number of Pregnancies. It does not help that fertility drugs (radically more expensive) has produced a record number of Premies and Twins (very much an increased Cost factor). One advantage of the Baby Boomers to Economic performance is the increase in Death rates; Seniors being extemely excessive Consumers, if only in health care provision. Baby Boomers will likely await the death of their parents before their own death, but Retail provision of health care will decline with every death. The end-result, though, may be a reduction in Retail Sales faster than the actual shrinkage of Population. lgl

Thursday, July 13, 2006

Standard Economic Theory Failure

This Author decided to do something today which would get him yelled at a lot (no masochistic tendencies, just rattling the Tree a might). He searched and searched, maybe a nanosecond or so, and decided to discuss Trade theory. Standard Economic theory states the value of the Dollar is too high, constricting the Sale potential of American Exports; potential Buyers (including Americans) opt for lower-valued Foreign Goods. Sounds Good as explanation, but leaves much unsaid.

Dollar devaluation holds many hidden horrors which no One explores. The first unspoken Fact We should examine is what the production of Exports cost. Production of such Goods increase Demand for the material resources to produce Exports in the domestic market; this Demand raising market Prices for the material resources, with complement rise in the cost of production of domestic Goods. The second element resides in the fact that Exports must be distributed (i.e., transported to the Coast and shipped Overseas). Reversion to Economic theory: Business, confronted by transitional Costs to be distributed through market prices, will transfer Costs upon Assured Markets (already established), rather than Acquisitional Markets (always open to Competitive bidding). Translation into English: Exporters will universally throw Distribution, Retail, and even Production Costs of Exports onto the domestic Consumers wherever and however possible (the Minimum being equalization of Total Costs over all Product Pricing, the Maximum being Domestic Consumers paying all Export Costs in higher Pricing.)

What does this Information mean?

Domestic Consumers are faced with a higher-Cost Supply Curve, one in which they are funding Business Export adventures. They are hit with payment of higher Production Costs, and with Business desire to expand foreign markets. The Minimum of this higher Cost will usually range from 8-12%, while the Maximum could potentially range up to 300% of Product Price. Now We come to the concept of Dollar Devaluation. Business wants the devalued Dollar to ease capture of foreign markets. The Consumer, already faced with extraordinary Product pricing, finds Wages are keyed to Production Costs, not to Consumer Prices; only Labor demands can attach Wages to Consumer Prices, inhibited by a surplus of Labor via Immigration or heavy Unemployment.

Dollar Devaluation turns into an Ogre under the above conditions, so that it evolves into direct reduction of the Standard of Living. Business, and many Economists, suggests this is good for the Country, but I would counterclaim it reminds of the hipe of the Chicago Board of Trade (enter upon the later only at your own risk). lgl

Wednesday, July 12, 2006

Environmental Economics

The U.S. Food blog came up with a good Post, Clever solutions to fish dilemmas, which is a basic description of the purchase of deep-sea Trawlers and fishing permits by the Nature Conservatory as a Conservation measure to protect certain areas of the Ocean floor from destruction. Sounds good, does it not? Well, it might also have some other connotations. Check John Whitehead's blog on market forces with a reduction of demand for seafood. It works in the opposite direction as well--with reduction of supply, serving as a floor for seafood prices when such Nature Conservatory actions are taken.

Is that Bad?

The Answer is very simple: This type action, serving both the interests of Conservation and of Business, will prove the only sustainable method of Conservation. The interests of Nature can only be fulfilled with the benevolence of Business interests; they being the only recourse to the necessary financial assets, and legal resources, to maintain Conservation measures. Nature and Economy must work as partners before any gain of Conservation can be attained. lgl

Tuesday, July 11, 2006

In the Air

China reports another Record-breaking Trade surplus, India shelves current round of sale of Public companies to Private Investors, and Republicans claim an increase of Tax revenues will reduce the Government Deficit. We also find an extended Article of Pentagon Cost Overruns which (Surprise?) is generating delays in weapons systems delivery along with reduced numbers of weapons. Another common Tuesday in mid-July.

None of these Problems are new, as a matter of fact, all of them have been building for years without any effective Counters from Anyone. Government leadership try to imply it is simply 'Business as Usual' on all fronts. India has the same complication as does the Pentagon--localized Politics; national politicians cowed by organized Special Interests defended by bought Politicians whose Votes are legislatively vital. China utilizes every leverage which can be hidden to slow the purchase of American Goods on Chinese markets. Bloggers prove that Tax revenues are increasingly volitile, and likely to decrease even before the end of the current Budget Year. Hint: The Government must get Tax Revenues equal to 20% of GDP, if it intends to spend 20% of total GDP inside a balanced Budget.

China has moved ahead of Japan to become the No. 1 holder of Foreign Currency Reserves, and has become the 4th largest Economy in the World ahead of Britain. Chinese-controlled Defense industries produce Weapons Systems of comparable capability to U.S. weapons systems (though more technologically Standard, and less grasping for Top-Gun status) for about 40% of the Cost of the U.S. defense industry. Also, when adjusting for Standard-of-Living differences, Chinese defense industry labor probably are better-Paid. Of course, China chose to Downsize Management, instead of Labor, and dismissed the real value of Stock ownership. lgl

Monday, July 10, 2006

Wheat and Fear

This Author has just finished Rueter articles discussing the decline of the Wheat harvest this year, some 23% reduction of hard red winter wheat, and a projection of a 16% lower Wheat harvest overall for the Country. The projection will be even lower, if rainfall does not increase in the States west of the Mississippi. Too little rain, or too much at harvest time, could cut harvest yields in the northern States. The decline does not seem serious, but there are always complications. A short aside of history: The Tsar of Russia was brought down in 1917, bringing an eventual rise of Communism, because of the shortage of Food, where Wheat and Rye yields were down less than the current projection (remember that Russian acreage yeilds were far lower than in the current U.S., and alternative foods were only about 14% of present American options).

Why then the current worry?

Several things come to mind! Both China and India are rapidly driving their farming complement out of business; China by forcibly converting acreage to industrialization, and India through a poor agricultural policy bankrupting farmers with reduction of planted acreage and yields. The two greatest Populations in the World will be looking for purchasable Hard Grains this year. Numbers from other Countries have not been gathered by this Author, but north Africa is suffering from Drought conditions with already starving Populations. South American agriculture is switching from Grain production to ethanol production, or civil unrest is curtailing acreage harvesting. Eastern U.S. agricultural production may be drowned this year, as may be Western Europe. There may be extreme demand for Export Grains this Year.

A further trouble may come from Speculative sources. We have witnessed the huge rise in Oil prices since Speculative Cash moved from Stocks to the Commodities markets. It will not take long for Speculaters to notice there is an increased demand for Food grains on the international market. Americans have witnessed higher Driving Costs because speculative Fund managers wanted a higher Return on their money. We might get to watch People starve to death, courtesy of CNN, because these same Managers see rich Profits in Food Grains. lgl

Sunday, July 09, 2006

Nuclear Waste

Putin and Bush discovered another way to enrich Russian criminals and Corporate Profits, by the Plan to store nuclear waste in Russia. Reality states that Russians will not accept one pound of nuclear waste from the United States. Russia simply gets the United States to pay for their own nuclear waste disposal needs, where American Corporations take a 20% Profit, and Russian criminals boost the Site Costs by 300%; all paid by the American Taxpayer. All of the Business Elite exalt, and no one cares that Russians especially, but all Citizens of the World will forbid transit of nuclear waste through populated areas.

It is a typical Bush resolution to a vital threat, real Corporate profits are dug from a situation, while the Problem of nuclear waste is left dormant and threatening for future Administrations. The U.S. military finds further problems with discipline in Iraq and Afghanistan, but this Administration is going to push off American Exit from these two Countries until after the next Inaguration, when Someone else can resolve the problems this Administration created. We are beginning to witness the problems created by profligate Spending, Tax Evasion legislated into law, creation of the poorly-thought-out Cash Cow of Proscription D, and letting Corporations handle the groundwork of Homeland Security; all new elements introduced by the Bush administrations. lgl

Saturday, July 08, 2006

Back Online

My Computer and myself are barely on Civil terms as yet, but are back to talking with each other. My Computer Services remain slow (my Guru was on Vacation), if Anyone can understand my ramblings. I personally felt some advantage from my own Relaxation, as in truth, I did not have much to say.

Personal paranoia has begun to crest at the latest summit of Oil prices. N. Korea does not help! There is increasing evidence that Incidents are being stage-managed to insure Oil prices remain high. It is also fact that real evidence of cracks in the American economy begin to appear, caused by the high Oil prices. Iraq also does not help! It has become time for a Change. lgl

Monday, July 03, 2006

Fantastic Prediction

This Author has never been noted for moderation when making predictions about economic events, but this one will be extreme to say the least. I will probably hear about this one, every time I am proven wrong. What is the prediction?

This extended Fourth of July Weekend will see the highest Sales volume of Gasoline in the history of the United States--Past, Present, and Future. It is my estimation that We will never witness such Fuel consumption again on the July 4th Weekend, but also on any Weekend and/or Holiday event. I believe We are making history as We prepare for the Fireworks. We will never travel this way again!

The Minicouper is coming to America. Car Sales are down for SUVs overall, and it is never stated, but down even further in Resales. I have not checked, but estimate RV Sales reflect that free-wheeling adventures of the Home-on-the-Road are coming to an end as well. Boating and Jetsking may start to decline, as both are high-fuel Entertainment. The bigger-is-better lawnmowers may even have peaked. Soccer Moms may be viewing the end of their Tour-Bus industry. I may be Wrong, but I may be Right. lgl

Sunday, July 02, 2006

Agricultural Subsidies

The World Trade talks are getting nowhere again, and actually, because the demands of each Side would injure the standard of living of the other Side. They all want to invade each other's markets, but they do not want to pay for the privilege. This Author has never held much respect for multi-Trade agreements, and the present Talks simply express that Trade agreements have to be sculpted to each Participant in the agreement, they cannot be an ad hoc 'Rule of Thumb' for Everyone--no matter how badly economies are battered.

Take the Issue of American Agricultural subsidies. They created Corporate Agribusiness without helping the average individual Farmer very much. Is this the way to go? Farming is a specialist trade, I possess this knowledge being the Son and Grandson of Farmers, and having engaged in Farming myself. Corporate Executives without farming experience are not qualified to make decision of 'What' and 'Where' to plant and 'When', likwise for using fertilizer, herbicide or pesticide, what type of seed to use, when to Cultivate, when and how to harvest, and what types of Grain storage to use. Farmers need be allowed the freedom to determine the best use of resources, but Farmers must also make a living.

American Farm subsidies must eventually be altered to eliminate the inequities in the system, as well as limit the incrusion of Corporate life into the basic trade. This Author favors a simple system, easily undersood, with simple structural Accounting placed upon the Farmers. A simple Draft of the Enactment would be:

All registered Farmers owning or renting agricultural land, will be guaranteed a Wage of $16 per Hour worked, if they can prove they have worked over 1000 Hours at the Occupation.

Such a law does not guarantee Farm debt, does not promise success at Farming, or the accumulation of wealth. All Agribusiness will need to register one Farmer for each piece of land, and will have to prove each registered Farmer worked at least 1000 hours on the land (We will be generous, and allow each laborer to work any agricultural land to make up the hours). Non-Farmers will not be allowed subsidy because they cannot register the hours worked. Agribusiness must turn into businesses, who are expected to be Profitable without Government welfare. The pay is sufficiently guaranteed to assure Farmers will not be forced from Farming, but insufficiently high to promote artificial assumption of Debt load. The final note states Farmers will not have to exercise greater Accounting than regularly utilized in Income Tax payment. lgl

Saturday, July 01, 2006


People utilize sources in their writing, and an old Internet friend, David Arthur Walters, recently contacted me about using my Thoughts in one of his articles. I agreed to his use of this material, which he had acknowledged would be a compliation of various items I had written through a multitude of postings. The end-result, while sounding more strident than it actually was, helped me clarify my own ideas on the reviewed Subject:

In 2004, military historian and economist Lawrance Lux noted that: “Contemporary
fascism is initially funded by wealthy vested interests. Slogans are coined to
appeal to middle class values, but are quickly dropped when perceived as
conflicting with the desires of the wealthy class. Inheritance taxes are
abolished, ostensibly to help out small businesses. Middle class values are
touted as superior while the economic base of this same class is deliberately
undermined. In a relatively prosperous country, wages are bound to drop and
prices and profits will rise as fascism takes its toll; the standard of living
shall decline accordingly, as the percentage of wealth held by the few rises.
The nation will be incited to war for the aggrandizement of big corporations and
their fascist leaders, distracting the populace from the exploitation at home by
uniting them in fear and hate – naturally unionism and worker unrest will
naturally be condemned as unpatriotic.”

As I said, the tone is too strident. Still, if I could only get him to deal with the Left and the Religious Fundamentalists in the same manner. lgl