Tuesday, July 15, 2014

Boeing and the Ex-Im Bank

Joe Nocera has another post in support of the Ex-Im Bank. It's titled "Helping Big Companies Compete," which I found amusing enough. He comes out boldly in support of subsidizing Boeing, and laments the damage that will be done if the Ex-Im Bank isn't re-authorized. 

A Boeing source told me that it is hearing from customers and potential customers about the fate of the Ex-Im Bank. “It’s a big deal,” my source said, especially in places like Africa, where conventional financing for aircraft is hard to come by.
According the Ex-Im Bank's 2013 annual report Boeing's customers received $8 billion in loan guarantees. That compares to about $109 billion in commercial aircraft orders Boeing received in 2013. It's also slightly less than the $10 billion share buy back Boeing announced on December 16, 2013. Boeing has $10 billion to prop up its stock but can't afford that as a reserve to provide low-cost loans to its customers? Please.

Poor Boeing. What would they do without the Ex-Im Bank? Where would Transportation Partners, owned by Lion Air, Indonesia's largest private airline get a $1.1 billion loan guarantee? Where would China Air get a $558 million guarantee. And the African customers Nocera is worried about? The largest loan guarantee to an African customer (excluding the Middle East) was to Ethiopian Airlines for $125 million. The only other African customers were Royal Air Maroc in Morocco and Comair in South Africa. These three loans totaled $254 million, or 3.19% of the total loan guarantees for Boeing customers. That $254 million is 0.23% of the $109 billion in commercial aircraft orders for Boeing in 2013.

Nocera finds it "mind boggling that anyone in Washington would want to pursue a path that is so clearly destructive to the economy."I don't think the numbers support his conclusion.

It is mind boggling to me as well. But I take the opposite side.

Wednesday, July 9, 2014

Why HUD?

I saw this, "The Senate on Wednesday voted to confirm San Antonio Mayor Julián Castro to be secretary of Housing and Urban Development. The vote was 71-26," and the first thing I thought was, "We have a Department of Housing and Urban Development? Why?"

But I could, and do ask the same questions of the Departments of Agriculture, Energy, Education and the VHA.

Thursday, June 26, 2014

Why are the New Android Watches So Ugly?

I would love to get a "smart" watch. I love gadgets. I would love to have a watch that's a movement tracker, or delivers texts, or has some health data capabilities, or takes some of the functions of my smart phone. But not if they are this ugly. (see below). I hope Apple comes out with something that isn't so plug ugly.

Wednesday, June 25, 2014

The Recipients of the Ex-Im Bank Largesse

In 2013 the Ex-Im Bank authorized $6.9 billion in direct loans, the three largest loans totaled $3.9 billion, or 55% of the total loans made.

The largest loan was $1.9 billion to BG Energy for the Queensland Curtis Liquified Natural Gas (LNG) plant. The Queensland plant is in Australia and will liquify natural gas from Australia and export that gas to China, Japan, Chile and Singapore. BG Energy is part of BG Group and in 2013 generated operating profit of $7.6 billion. BG is a global enterprise including its ownership of the Queensland Curtis Liquified Natural Gas plant. Bechtel Power is supplying engineering services to BG Energy for the Queensland plant. According to the Bechtel website it is "the world's No. 1 choice for engineering, construction, and project management." In 2012 Bechtel had revenues of $37.9 billion.

The New York Times worried today that if the Ex-Im Banks is shuttered, "American companies could lose billions of dollars in overseas orders and decide to move their operations to other countries that provide generous export financing." Is the Times really arguing Bechtel, "the world's No. 1 choice for engineering, construction, and project management" is in danger of moving even more of their operations overseas? Most of Bechtel's projects are overseas already, employing workers overseas.

The second largest loan is $1 billion to Reliance Industries for turbine generator sets for the Jamnagar Petrochemical Plant. It just happens that Bechtel is providing engineering and technical services for the project, but this loan will be used to purchase the generators from "Fluor, Conoco Philips, et. al." Fluor is a large engineering and construction firm and Conoco is one of the world's largest oil companies. Reliance is a large Indian company and according to their web site accounts for 6.9% of India's indirect tax revenue. It has the highest debt rating available and is India's largest private sector employer. In its latest fiscal year revenue was over $68 billion and net profit almost $3.9 billion.

The New York Times criticizes those who want to shut down the bank "as a symbol of corporate welfare," when in fact "a truly serious crackdown on corporate welfare would involve eliminating corporate tax breaks and wasteful subsidies." Is the Times arguing subsidizing Reliance, Fluor, Conoco, BG Group and Bechtel really not an egregious example of corporate welfare?

The third largest loan was to Global Foundries to build a semiconductor plant in Germany. Applied Materials will be supplying the equipment. Global Foundries is based in Silicon Valley but the equipment from Applied Materials will be installed in Germany. Applied Materials generates over $8 billion in sales and is one of the world's leading providers of semiconductor equipment.

The supporters of the bank paint the picture that businesses would fail and exports collapse without its support. Instead, the more realistic portrayal is large, well financed companies are using the US taxpayer to subsidize their operations. I can understand why Big Business loves the Ex-Im Bank. I can't understand why the Times and Democrats do as well.

Tuesday, June 24, 2014

Shocker: Big Business Supports the Ex-Im Bank

It is encouraging to me the Export-Import (Ex-Im) Bank's charter could be cancelled soon, but discouraging that such a small part of the US Government is so difficult to kill. It's discouraging since it means the fight over the consequential budget issues: Medicare, Medicaid, Social Security, Defense, will be even tougher to resolve. The supporters of the New Deal, Great Society and the American Empire made possible by the militiary-industrial complex love to pat themselves on their backs for their humane ability to take from the undeserving and give to the deserving, as they define both, they often refuse to recognize paying for their generosity has a cost. So it goes.

Shocker: Big Business supports the Ex-Im Bank. Of course it does. They are the recipients of the bank's largesse. Even a cursory examination of the bank's direct loans and loan guarantees show the biggest, and most consistent beneficiary is Boeing. That makes sense since Boeing is the nation's largest exporter. Satellites and green energy (since Obama) are also significant recipients of loans and guarantees. Take a look at who is buying these goods and you start to wonder, "Why is it these buyers and these sellers need the help of the US Government to consumate a transaction?" They don't "need" the US Government, but if someone offers you money, you take it.

The arguments in favor of the bank are it supports exports for small business, which is somewhat true but by dollar value the bank supports Big Business, not small. It is also argued Boeing and Caterpillar need to be subsidized by the US Government since their competitors are subsidized. It's a weak argument since it means we should do something stupid as long as our competitors are doing something stupid.

For a time Delta Airlines opposed the bank. It pointed out the bank was subsidizing Delta's competitors. That's also the case for other US businesses competing against the foreign companies receiving the loans and loan guarantees of the Ex-Im Bank. It's quite perverse, the US Government deciding Boeing's competitors should benefit at the expense of US airlines.

Killing the Ex-Im Bank won't have a big impact on the budget or the economy. But it would be a welcome start.

Monday, June 16, 2014

Not even a smidgen of corruption

That was President Obama responding to Bill O'Reilly's question about IRS targeting of conservative groups.

The Associated Press reported last week:

WASHINGTON — The Internal Revenue Service said Friday it has lost a trove of emails to and from a central figure in the agency’s tea party controversy, sparking outrage from congressional investigators who have been probing the agency for more than a year.

The IRS told Congress Friday it cannot locate many of Lois Lerner’s emails prior to 2011 because her computer crashed during the summer of that year.
 further in the story:

The IRS was able to generate 24,000 Lerner emails from the 2009 to 2011 because Lerner had copied in other IRS employees. The agency said it pieced together the emails from the computers of 82 other IRS employees.

But an untold number are gone. Camp’s office said the missing emails are mainly ones to and from people outside the IRS, “such as the White House, Treasury, Department of Justice, FEC, or Democrat offices.”

The IRS is used to squelch free speech. The NSA tramples over our fourth amendment rights. 

Not even a smidgen of corruption.

Wednesday, June 11, 2014

Who Regulates Uber?

I was singing the praises of Uber to Mrs. Knabe. She asked, "Who regulates Uber?" The short answer is no one, and everyone. The non-government regulation of Uber, in my opinion, is far more effective than the government regulation of taxi and livery services. 

I have never had a bad experience with Uber. I have had plenty of bad experiences with cabs. How can this be? How is it possible for Uber, with no government regulation, no agency protecting the consumer, to consistently provide a superior service to the regulated taxi service?

Technology in only part of the answer. With Uber, I rate each ride, and that data is used by Uber to control the quality of its service. But that's only part of the answer because the Taxi and Livery Commissions around the country could do the same thing if they wanted. The real answer is Uber is focused on providing a service that customers want and Taxi and Livery Commissions are focused on serving the owners of taxi medallions. If after a ride with Uber I was dissatisfied, I could instantaneously notify Uber. I could do the same with a cab, but I believe my complaint to Uber would be acted on and my complaint to the Taxi and Livery Commission would not have an impact.

It is not unique to Uber and taxis that regulation by consumers is more effective than the regulation of expert panels. Despite that, unfortunately, both the Left and Right want to rely on experts to manage a system instead of letting consumers punish poor service and reward good service.

Of course, the government is colluding with taxi and livery services to restrict Uber and others from entering the market. To protect consumers of course.

The Virginia Department of Motor Vehicles sent cease-and-desist orders Thursday to Lyft and Uber, telling the two taxi-like services they must stop operating in violation of state law or face fines against their drivers...

Along with the cease-and-desist orders, the DMV on Thursday told the public to research any ride service and learn about its insurance coverage, vehicle maintenance and driver screening process before using it. It pointed people to a list on its website at www.dmvNOW.com/knowyourride, where users can search for a company to see whether it is registered and insured under state regulations.

Neither Lyft nor Uber is on the approved list.
Source: http://hamptonroads.com/2014/06/virginia-dmv-orders-lyft-uber-stop-operating