Michael E. Newton's Blog, page 22
January 31, 2011
Bill Daley Is Right: Government Should Copy Business
by Michael E. Newton
On Sunday's Face the Nation, White House Chief of Staff William Daley said government should act more like a business: "Take some of those cuts, invest them in things that will have a return as you come out of this recession. That's what successful companies do. And that's what the government has got to do." At Bill Daley prompting, let's look at how businesses act during a recession.
Read the rest at American Thinker.
January 30, 2011
Is There a Fed in Your Kitchen?
Have you been wondering why your dishes and glasses don't look as clean as they once did? Wonder no more. There's an environmentalist in your dishwasher.
While you were preoccupied with showers, toilets and light bulbs, the environmentalists were having their way with your state legislature.
The January 31 issue of The Weekly Standard explains it all started in Washington State. The short version is that the Spokane River was polluted largely due to phosphorous run-off from a variety of major sources (industrial and water treatment facilities to mention a few) and from phosphorous in the form of phosphates in dishwasher detergents. The idea was launched to ban dishwasher detergents containing phosphates which is what the Washington legislature did in 2006.
Then the environmentalist lobby went to work getting similar laws passed in other states, although no one knows for sure how much dishwasher detergent really contributed to the pollution problem. When phosphorous gets into fresh water it stimulates algae growth. When the algae die, oxygen needed by plants and fish is depleted.
Although not all states banned the sale of detergents containing phosphates for home dishwashers, enough did so that manufacturers quietly altered their detergent formulas. It just wasn't feasible to make detergents with phosphates for some states but not others. Householders, unaware that detergents no longer contained phosphates to help soften water, prevent particles from adhering to dishes, or give dishes that sparkle extolled in commercials, assumed their dishwashers were to blame.
Even National Public Radio reported irate home owners' complaints that, "…pots and pans were gray, … aluminum was starting to turn black, … glasses had fingerprints and lip prints … and they were starting to get this powdery look to them."
As is the case with light bulbs that require a hazmat team for safe disposal, this green dream also turned out to have unintended environmental consequences. As the Standard explains, "It was the phosphorus in detergents, after all, that allowed modern dishwashers to function well using smaller amounts of cooler water."
If more people revert to hand washing dishes to get them clean, more water and more fossil fuel to heat it will be required. Some people put vinegar in an extra rinse, or run their dishwashers twice, using more water and electricity. So, you may ask, exactly what environmental gains have been achieved by the bans.
Well, you can ask, just don't expect an answer. It turns out that the science behind banning dish detergent is a bit iffy. The Standard points to a 2003 Minnesota study showing only 1.9 percent of the phosphorous there was due to household dish detergents.
However, as Sean Hannity likes to say, "Let not your heart be troubled." Paper plates and plastic glasses are (still) an option…as are landfills to put them in. Or, since restaurants are excluded from the ban, some people suggest buying dish detergent from restaurant supply houses. But lest the phosphate police come knocking, you didn't read it here.
Marcia Sielaff writes for What Would the Founders Think.com.
January 29, 2011
Egyptian Artifacts At Risk
For centuries, Europeans took Egyptian artifacts and brought them to Europe, most notably by Napoleon and Horatio Nelson. More recently, Egypt had been demanding those artifact returned. But now, amid all the chaos in Egypt, those artifacts are at risk.
Looters rip heads off 2 mummies at Egyptian Museum
Would-be looters broke into Cairo's famed Egyptian Museum, ripping the heads off two mummies and damaging about 10 small artifacts before being caught and detained by army soldiers, Egypt's antiquities chief said Saturday.
Zahi Hawass said the vandals did not manage to steal any of the museum's antiquities, and that the prized collection was now safe and under military guard.
With mass anti-government protests still roiling the country and unleashing chaos on the streets, fears that looters could target other ancient treasures at sites across the country prompted the military to dispatch armored personnel carriers and troops to the Pyramids of Giza, the temple city of Luxor and other key archaeological monuments.
Hawass said now that the Egyptian Museum's collection is secure from thieves, the greatest threat to the collection inside is posed by the torched ruling party headquarters building next door.
I'm sure, the European countries and museums that have been considering returning many artifacts to Egypt will cancel their plans to do so.
Hopefully, Egypt returns to peace and establishes a freer society and these artifacts can be safe. But I wouldn't count on it.
January 27, 2011
Hedge fund guru John Paulson tests his hot hand in the illiquid undeveloped real estate market. Trouble ahead?
John Paulson, head of hedge-fund giant Paulson & Co., turned bullish on the U.S. housing market in early 2010. Now he's got a fund that's betting on a rebound.
One of the firm's latest projects has taken it into the Sonoran Desert in the American Southwest, in search of empty residential-development lots.
The fund already has put some money to work.
In August, Paulson agreed to pay $42.4 million for 8,277 unstarted lots and 22 model homes in Arizona, Colorado and Nevada from bankrupt home-builder Tousa Inc.
The biggest chunk of land in the portfolio is Red River, a development about 50 miles south of Phoenix in Pinal County, on the eastern side of the Sonoran Desert.
The article goes on about the potential for profit and the risk involved.
I don't see how this makes sense. Paulson is buying illiquid assets on which he will earn no return until the land is developed but on which he will have to pay property taxes until that time. One of the strengths of great traders is that they realize when their position is not working and getting out quickly. Not every trade will be a winner and great traders realize this. But this position will trap Paulson for years. Yes, he's locked in his investors for years, but what if the investors are locked in for three years and it takes five years to develop these properties or find a suitable buyer?
Additionally, buying land in the middle of the desert requires a lot more research and work to close the transaction than buying up credit default swaps or gold futures and bullion on the open market, as Paulson has done in the past. Paulson has been a great trader, but you can't trade real estate like you do stocks, futures, options, and other financial contracts. It will be interesting to see if Paulson succeeds in this new venture or if venturing into a field in which he has little experience will lead to failure.
January 26, 2011
How to repeal Obamacare without repealing it!
So far, more than 700 organizations have received waivers on Obamacare.
Assuming a new President is elected in 2012, this President can simply hand out 300,000,000 waivers. Problem solved!
Direct Election of President Considered by Founding Fathers
Many today want to get rid of the electoral college method of choosing our president. For example, there is a book called Why the Electoral College Is Bad for America. It has quite a lot of good information in it, though the author draws the wrong conclusion. Or search Google for "electoral college failure" and browse through some of the 333,000 results. Attacks on the electoral college system accelerated after the 2000 election in which Al Gore won more popular votes but George Bush won the electoral college. The Founding Fathers considered, debated, and voted on different methods of choosing a president during the Constitutional Convention of 1787 before choosing the one they thought best.
Deciding how to select or elect the president was one of the most difficult decisions the Founding Fathers had to make during the Convention. They held at least sixteen votes on this one issue…
Read more of my piece written for What Would The Founders Think?
January 25, 2011
Obama's State of the Union: $400 billion of what?
In the State of the Union, President Obama pledged to cut the "deficit by more than $400 billion." Well, just how much money is that?
First of all, that's a $400 billion cut over the next decade. In other words, he wants to cut $40 billion per year.
Let's put that in perspective:
$40 billion is about 3% of the current deficit.
$40 billion is about 1% of current federal government spending.
$40 billion is about 0.3% of our GDP.
Basically, $40 billion is a rounding error. Obviously, I'm very skeptical by calls for small spending cuts when, at the same time, the President also said he plans to increase spending… I mean investments… in other areas.
There is no such thing as government spending. Everything's an investment.
Barack Obama is set to announce new spending on items such as high-speed rail and alternative energy in tonight's State of the Union. But instead of calling it spending, he will call it investment.
Hey, I can play this game too.
Those wars in Afghanistan and Iraq did not involve a single dollar of spending; that money was an investment in international liberty.
Building a border fence is an investment in security.
We can do the same on the revenue side of government.
Those income tax cuts are investments in labor.
Tax cuts on investments are investments in capital.
President Obama to announce freeze in nonsecurity, discretionary spending, but he won't actually do so.
According to the latest news reports:
President Barack Obama will use his State of the Union address to call for a five-year freeze on nonsecurity, discretionary spending, a White House official said Tuesday, hours before Obama goes before the joint session of Congress.
Hey, that sounds like great news. Obama really is embracing his move to the center and the deficit is sure to shrink with this spending freeze.
But wait… Let me finish reading the article:
Obama is also expected to call for spending — or "investments" — in education, research and infrastructure as a means of making the country more competitive.
What? I thought Obama was going to freeze nonsecurity, discretionary spending but here he is proposing new nonsecurity, discretionary spending.
Even so, I consider this great news. I hope and expect the Republicans to hold Obama to his pledge to freeze nonsecurity, discretionary spending and ignore his simultaneous calls for more spending. Actually, it would be even better if the Republicans cut spending, but I don't expect any miracles.
Additionally, if Republicans can quickly pass a budget freezing nonsecurity, discretionary spending, I hope they'll immediately move on to addressing entitlement spending.
The Republicans now have their chance to fix many, but not all, of the problems in our budget. I hope they seize the opportunity at a time that our President is trying to be, or at least pretending to be, moderate.
My motto for writing!
In writing on this blog or in my books, I don't discover long lost secrets or reveal previously unknown information. Instead, my motto is:
"My design was not so much to contribute new facts as to shape the narrative in such a way as to emphasize relations of cause and effect that are often buried in the mass of details." [John Fiske, The American Revolution, Volume 1:vii]
