Thursday, June 26, 2014
Wednesday, June 25, 2014
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
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
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.further in the story:
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.
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
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.Source: http://hamptonroads.com/2014/06/virginia-dmv-orders-lyft-uber-stop-operating
Neither Lyft nor Uber is on the approved list.
Tuesday, June 10, 2014
A Hillary presidency may not be a bad thing, if she governs like her husband did from 1994 onwards. I think Bill was one of the greatest Republican President's of the 20th century, after, that is, the Republicans took over the House. From that time on he embraced free markets, de-regulation, a stable dollar, and fiscal rectitude. He governed successfully by being everything the current Democratic Party loathes, which is why I'm bemused by his current status in the party.
We will see if Hillary is pulled to the Left by the extremists that control the Democrats or if their fever breaks and she can run from the middle. If that occurs, she may win. And I may vote for her.
Friday, June 6, 2014
But in any case, what zero lower bound?
European Central Bank Cuts Deposit Rate to Negative
The European Central Bank cut its benchmark interest rate to a record low on Thursday and, in an unprecedented attempt to stimulate the euro zone economy, said it would begin charging interest on deposits held by the bank. The so-called negative deposit rate has never been tried on such a large scale and is a bid to push down the value of the euro and encourage banks to invest excess cash rather than hoarding it in central bank vaults. The European Central Bank cut its benchmark interest rate to 0.15 percent from 0.25 percent, and the deposit rate to minus 0.10 percent from zero. Those actions had become all but certain after data earlier in the week showed that inflation in the euro zone fell to an annual rate of 0.5 percent in May, a level considered perilously low.
Tuesday, June 3, 2014
The purpose of the act was
To move the United States toward greater energy independence and security, to increase the production of clean renewable fuels, to protect consumers, to increase the efficiency of products, buildings, and vehicles, to promote research on and deploy greenhouse gas capture and storage options, and to improve the energy performance of the Federal Government, and for other purposes.
To me it doesn't matter that much. Light bulbs are not a large part of my household budget; I'm fortunate in that respect. But light bulbs and energy costs are a much larger portion of the average family household budget, and for those just starting out, like my daughter and my son, every penny counts. Forcing them to pay an extra $10 for a light bulb is a hardship. That's $10 they won't be able to spend on food, clothing, entertainment, or 401-K. There is no stimulative effect of a $12 light bulb. It forces consumers to spend less on some items so they can spend more on light bulbs.
All of this crossed my mind as I listened to Gina McCarthy introduce the EPA's Clean Power Plan that calls for sharp reductions in carbon emissions from stationary power sources. In her impassioned introduction to the proposed regulations she asserted multiple times all the critics who previously predicted high prices and reduced economic activity from these type of laws and regulations were wrong.
Then I looked at the sign for the $12 light bulb and wondered if Ms. McCarthy has been to the grocery store recently to see how the government protects consumers.