Author: bill

by

Beyond a reasonable doubt: Why George Zimmerman will go free

Having served on a jury trial I was curious about the phrase, “Beyond the shadow of a doubt”.  Here is what Wikipedia says about the phrase.

Beyond the shadow of a doubt is not the standard of proof in criminal cases (beyond a reasonable doubt is the standard in common law jurisdictions).

Unless there is some incriminating evidence we do not know about, it looks like the prosecution’s case is weak but it still must proceed to start the healing. There is nothing the prosecutors can do that will bring Trayvon Martin back to life and nothing they do to George Zimmerman to make things right. In hindsight Trayvon should have just kept walking and George should have covered up and taken a beating. Both George and Trayvon would likely have survived their fight battered, bruised, and maybe a bit wiser. Now we are left with the situation where Trayvon will never see his next birthday and George probably dreads the thought of carrying the burden of being Trayvon’s murderer for the rest of his life. For Trayvon’s family and friends revenge is a sour wine that does nothing to sooth their loss. Trayvon is gone. My sympathy and condolences go out to both Trayvon’s family and friends and George Zimmerman’s family and friends. Once again we are reminded that there are no “do overs” in the game of life.

by

The Solyndra Government

The problem I have with the demise of Solyndra is not that our government invested in a company that failed but that the failure is emblematic of a failed decision making process that transcends this investment. Unfortunately for everyone according to the Post politics played a key role the decision making process both in the case of Solyndra and other green technology projects. The same criticism of politics playing key role on the decision making can be made for the 2009 stimulus plan and the Affordable Care Act. Both of these signature legislative pieces for the Obama administration succeeded in satisfying the Democratic base but severely underperformed expectations regardless of your political viewpoint. You would think that we would start learning from our past mistakes. It doesn’t seem so. Recently I saw Paul McCulley on Wealthtrack make the argument that macroeconomics is a black box and that higher government spending will necessarily result in higher gross domestic product. Although he probably will loath the comparison, our government has a bad investment streak going and we have painted ourselves into a financial corner. It is probably time to cut our losses and make sure that our future investments are really, really good. You would think a former senior partner at PIMCO would know a thing or two about working out of a losing streak. I doubt his former colleagues at PIMCO would give him much sympathy if he explained that his bad investments were due to the bond market being a black box. Let me paraphrase something Alexander Pope said a long time ago, the best government is the government that works.

by

The Dilemma of the Quantitative Easing

On Friday the economic statistic I was most interested in was the revolving credit in the Federal Reserve Consumer Credit report. Considering the returns we are experiencing in the stock market, bond market, housing market, and certificate of deposits, the best return for your investment is to pay down your credit card debt which is typically over 18%. Would the average American be the pragmatic investor? The answer continues to be yes.

The next question I had was how long would the average American continue this trend? So I did a few graphs of revolving credit over time to see if disposable income or inflation could explain how far it would fall. Then it struck me. I could not explain the rise in credit card debt. If we look at the graph we can see that the explosion in credit card debt is relatively new way to extract wealth from the middle class.

Total Revolving Credit Outstanding -20110407

 

If you believe like Dave Ramsey that to road to personal wealth starts by getting debt free, our country’s goal for revolving credit should be approximately zero. Even if you believe there is a good reason to carry some credit card debt, the pragmatic decision for the average American will be to continue to pay down their credit card debt. The only attractive alternative to paying down your credit cared is mortgage refinancing. If the mortgage refinancing gig is about over, then the credit card repayment trend should accelerate this year since there are no better investment alternatives. Then we can move onto the next financial bubble, student loans. For the short and medium term continued deleveraging is the logical choice. It is ironic that quantitative easing program whose primary focus was to encourage spending and investment, has caused businesses and households to reduce their borrowing and focus on ways to create their own sustainable financial future. In a way this lack of trust response is a condemnation of the big government model of governing and it makes it much more difficult to grow out of our financial mess. The market may be telling us that we are in the process of establishing a new normal for the way we buy things and the way we govern ourselves or it might be as simple as we are just returning to the old way we bought things. If the private sector and businesses are unwilling to take the risk by increased spending and investments, the local and state governments will not see tax revenue growth. Although higher taxes can help a little bit, most proposals generate too little tax revenue to be significant. Over the years we created a variety of budget gimmicks but eventually state and local governments have to match up revenue, spending, and unfunded liabilities.  As we phase out the budget gimmicks we will once again return to the old ways of running local and state governments. The big four blue states, California, Illinois, New York, and New Jersey, who have large budget deficits and unfunded liabilities are at the most risk to reduced growth prospects. They desperately need businesses in their state to start earning a significant portion of new profits from unit growth if the “grow out of their mess” strategy is going to work. Unfortunately this is easier said than done. Most of the recent NFIB surveys show that increased government regulations are making it harder rather easier to start up and run a business. The bad news is that if these four states cannot grow out of their mess, the country cannot grow out of its mess either. Hmm, maybe we need to listen to what the market is actually telling us and develop a plan that works for this market.

by

Green Energy + Government = Greenfail

When you combine Marc Thiessen’s argument that Energy Department investments in green energy reek with political favoritism with the CBS allegation that $6.5 billion of the $30 billion of Energy Department guarantees for green energy is at risk for immediate default, it is easy to conclude that government involvement in green energy is bad for America.

The interesting question is whether “crony capitalism” will be bad for green energy development over the long term. When I lived in Houston we had a saying that the oil boom is over when the lawyers and doctors start investing in the oil partnerships. Something similar can be said about the government involvement in green energy. Although I am mildly enthusiastic about green energy prospects, I am very suspicious of green energy proposals with government involvement. The green energy bubble has popped.

In his outstanding book, Throw Them All Out, Hoover Institution scholar Peter Schweizer goes through Obama’s 2008 campaign finance records and cross references Obama’s list of donors against the list of those who got grants and loans under the green energy program. Here is what he found:

”¢         71 percent of Energy Department grants and loans went to Obama’s political cronies. 71 percent!

”¢         Collectively, they raised about $457,834 for Obama’s campaign.

”¢         And they were in turn approved for grants or loans of nearly $11.346 billion.

”¢         That means they got $24,783 in taxpayer dollars for every $1 they gave to Obama’s campaign.

Now that is one heck of a return on investment.

Here’s a ”˜rigged system,’ Mr. Vice President « The Enterprise Blog

by

New Food Shopping Experiences

Yesterday I went to the new Penzeys store in Cincinnati. For the last ten years I purchased spices via the internet from Penzeys so I was familiar with their products. Although the store is an hour detour from my regular commute, I was out of a couple of spices. Although you can buy spices in the grocery store, I like the quality, selection, and the bulk quantities available from Penzeys. I am not sure whether this is a good or bad thing, I bought more spices than I planned on.

This morning I decided to take a small detour from my commute and take a look at the progress for the Jungle Jims store at Eastgate. This is another store with a wide selection of exotic items that would be hazardous to my pocketbook. The store opening has been pushed back a couple of months.

image

by

Miami University on U.S. News part-time MBA ranking – Business Courier

One of my alma maters, University of Houston (Bauer), tied Miami University and four other universities for 59th place. Congratulations to all of the schools who made the list. Although the degree did not result in higher pay, I enjoyed my studies at the University of Houston and still enjoy studying business trends.

Miami University Farmer School of Business highest-ranked part-time MBA program in Southwest Ohio, according to U.S. News & World Report rankings for “Best Graduate Schools.”

Miami University on U.S. News part-time MBA ranking – Business Courier

by

FRB: G.19 Release– Consumer Credit — March 7, 2012

Here’s the bottom line. The amount owed the government went up $28 billion and everything else stayed the same or went down. It looks like student loans is the only driver of consumer borrowing.

Consumer credit increased at an annual rate of 8-1/2 percent in January. Revolving credit decreased at an annual rate of 4-1/2 percent, while nonrevolving credit increased at an annual rate of 14-3/4 percent.

FRB: G.19 Release– Consumer Credit — March 7, 2012

by

Government By ‘Expert’ | Hoover Institution

I have been toying with the idea that our modern form of federal government has expanded its power beyond its ability to make good governing decisions on several issues that used to be the responsibility of states. One of the key problems at the federal level is the disconnect between tax revenue and government benefits. It is natural to expect that if spending limits are not placed on federal politicians, they will take advantage of the situation to expand benefits. As a result programs such as Social Security and Medicare which started out with good financial intentions quickly degraded into programs that were dependent on the next generation to pay the bill. It was inevitable that these programs would run into a population mismatch between the group receiving the benefits and the group paying the bill. Asking the next generation to pay for the politically sound but financially stupid management of these programs is not really feasible. This is a lousy way to run a program but is the natural result of deficit spending at the federal level. If we cannot institute spending controls at the federal level, it makes sense to transfer control of these programs to the state level where balancing the budget and spending controls is a more familiar practice.

The modern administrative state is a behemoth incompatible with the rule of law.

Government By ‘Expert’ | Hoover Institution

by

February Follow up on Green Technology that pays for itself

Two months ago I wrote in Follow up on Green Technology that pays for itself that by my calculations the extra insulation I put in the ceiling resulted in a 10.2% drop in kilowatt hours and a $29.78 drop in the total bill. Earlier this month I looked at the January electric bill and said I was disappointed when I found only $7 of savings. I just received this months bill and this month’s bill is $115 lower than last year and I found an error in last month’s savings calculation. Last month’s savings attributable to insulation is now $34 and this month’s savings is $58. My favorite metric, the ratio of Average KWH per day over the Average Heating Degree Day is now solidly under 4. Here is my updated graph using some forecast data for 2012

2012 Goshen Heating Regression

by

More Green Technology That Pays for Itself

When I lived in Texas cogeneration was a popular option with chemical plants who required high pressure steam for their processes. When I moved to Ohio I was surprised that steel plants were not taking advantage of their process. Today I found this article in the Dayton Daily News, Bill clears path for $310M AK project.

Senate Bill 289 would allow AK Steel Corp. and Air Products and Chemicals Inc. to build a $310 million facility to capture waste gas vented from an AK Middletown Works blast furnace to generate steam and electricity as part of the state’s renewable energy market.

Today, the gas is burned off. But with this proposed facility, it could be used to generate steam and electricity for AK’s Middletown plant ”” about one million megawatt hours annually, enough to serve more than 85,000 Ohio homes, according to Air Products, which would own and operate the facility.

State Sen. Bill Coley, R-Middletown, who introduced the bill, wants to amend Ohio law so the blast furnace gas would qualify for the renewable energy market.

Companies that generate power from renewable energy sources ”” usually wind and solar ”” can sell Ohio renewable energy credits to other, less energy-efficient companies or to organizations that want to support renewable energy. The credits are meant to be incentives to pursue renewable energy creation.

The interesting twist in this bill is that the flue gas will qualify as a "Renewable energy resource". This allows the company to get a little more profit by selling renewable energy credits. It seems an odd match but it looks like a win-win situation. We get cleaner air, possibly lower electrical rates, and AK Steel gets a little more profit from the plant. Every day it stays open is a good day for the folks whose jobs are dependent on the plant. Although opening the “Renewable energy resource” credits to flue gas seems to be a stretch, there really are not that many feasible solar or wind projects in this part of the state. Although I think renewable energy credits is a dumb idea that should quietly go away, I understand why the Senator sponsored the bill. The wording in the bill is pretty restrictive on who qualifies. Here is what the bill says:

energy produced by cogeneration technology for which more than ninety per cent of the total annual energy input is from a waste or byproduct gas from an air contaminant source in this state, which source has been in operation since on or before January 1, 1985