Economic quandries or quackeries

There is much discussion about our economy and the future direction for it and for the green movement.  It occurs to me that there are some overlooked bumps in the road that no one is discussing however.   Logical thought can ponder some near term and long term consequences of planned and proposed action from the new administration.  Then there are those ugly unintended consequences that no one has imagined yet.   Those are always the real surprises and sometimes the nastiest ones to deal with.

The defiict will probably be even higer than already projected for the next year at least.  We have already programmed spending for the various bailouts and stimulus packages proposed that will  push the deficit to historic and dangerous levels for next year.   It is dangerous because we are borrowing money and the day might come when our lenders (China, the Arab states) either don’t have the money to loan or else they decide not to loan for political reasons.   When the Treasury can’t find buyers for  US Treasury bills and notes we are in very deep trouble.   There is a limit to how much we can borrow and how much our creditors will lend us.  I don’t pretend to know that number or limit but there is one as sure as the sky is blue.   I fear we might be perilously close to testing that limit sooner rather than later.  There is going to be an additional add on to the deficit due to reduced tax revenues.   The losses in the stock market have been huge this year.   Normally December is a selling month as the big investors and institutions take intentional losses on their bad investments to offset their capital gains on their winners during the year.  This year I don’t think the winners will be that big and the capital gains will be dramatically reduced from what you would expect in a normal year.   I am sure some egg head economist could estimate that number.  But the hedge funds are selling hundreds of billions of dollars worth of stocks and so are the mutual funds to meet their cash demands for customer redemptions and to cover margin calls.  That doesn’t even count the millions of ordinary folks who have big losses and have sold out taking those losses in exchange for a cash position.  Come next spring the Federal tax collector will get much less revenue from capital gains taxes than would ordinarily be the case.  Those revenues will fall off the chart is my prediction.   We are talking billions.    In addition to that you have the threat and certainity of increased taxes whether they come right away or are delayed a year or two.    People don’t like paying taxes, even those smarmy Hollywood types, and they will be doing everything they can to reduce their tax burden by delaying income or diverting that income to another entity.   That will be another drag on tax revenues that will show up the following year–only 16 months from now.

We are going to creat zillions of new jobs by promoting a green economy, whatever the hell that is.   Just remember that those new jobs come at a cost of lost jobs also.  For a new job working on a wind farm there will be an offsetting job lost by a worker  at a coal fired energy plant.   For every new job created to maintain a electric car there will be a job lost by a traditional mechanic working on a gasoline engines.   The list of lost jobs goes on and on.  You think it through  for yourself and you will come  up with many examples and probably many  I never thought about.    Coal miners will be devastated.  That is an industry that employes hundreds of thousands when you include the transportation of  coal.   We need to very carefully make the politicians talk about and acknowledge the jobs that will be lost when they talk about creating new jobs.   Farm jobs will take another big hit if free trade is curtailed as proposed.   Caterpiller the giant industrial and earth moving company  will be whacked because they will not be able  to compete without free trade agreements.  The import tariffs will be too high.   The politicians should have to adhere to truth in advertizing standards and talk about “net” jobs created, if any.

Everyone is on the electric car bandwagon.   They say we have the technology in place to development these cars within a decade on a commercial basis.  Supposedly it will reduce carbon emissions and save money by not sending it to foreign countries.  Those are all great ideas.  But the technology is based upon lithium and cobalt for the battaries.  By the way the Chevy Volt that gets so much hype I find puzzling.  They advertise with glee that it gets 40 miles! on one charge before it has to be renewed.  I guess you folks living in the east coast corridor may think that sounds good but hell I couldn’t drive to see a client and back to my office on that charge.  Sounds damn inconvenient to me to say the least.   Of much more importance is to realize that the essential ingredients in these batteries are not abundant in the US.  Those supplies will have to come from Russia, China and the Congo.   Now you tell me how comfortable you are with that idea of depending on them for your energy source.  Russia is not exactly our best buddy and will certainly not have our best interests at heart.  The Chinese are not known for a charitable nature and I wouldn’t trust them at all.  The Congo….is there anything more to say about unreliability.   Now we depend upon the Arabs for most of our oil but I am far from convinced that swapping them for the Russkies, Chinamen and whoever is in control of the Congo at any given time is an improvement.   Think about that for a while.   Also just to fill out the thinking game, think about where the electricity is going to come from to charge up those cars.   The electricity has to be produced with power.   It won’t be from solar or wind for decades if ever and it won’t come from hydroelectric for many reasons (not the least of which is to protect the snail darter fish!).   There are trade offs I don’t think we have thought through.   Seems to me if we are going to pump billions of dollars into green industry then we should do it for coal.  Make coal a clean energy source.   We have enough to last centuries and would not be dependent on foreigners for our source.  Some express great confidence in American ingenuity when it comes to green technology; I wish they would show the same confidence in our science and innovativeness when it comes to improving coal.  I don’t own any coal and never will but I do love my country and that solution would be so much better for our economy and would keep jobs and then we could have reduced carbon emissions and along the way improve the gas mileage of our vehicles.  The oil supplies would then loom so much larger because the demand would be reduced dramatically.

You better remember to take the turkey out of the freezer today.  They take a lot longer than you think to thaw out.  Many a Thanksgiving dinner has been delayed because someone find the turkey still hard as a rock on Thanksgiving morning after setting it out to thaw only the night before.

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