Friday, January 25, 2008
Scam of the Day
The Energy Policy Act of 2005 requires that 7.5 billion gallons of renewable biofuel be blended into petrol by 2012. To make that happen, the federal government has been subsidising refiners of E85 with tax credits to the tune of 51 cents a gallon. Meanwhile, to keep the corn-growers well fed, the government has been levying a tariff of 54 cents a gallon on imported ethanol.
But, wait, that’s not all. Car companies in America get a fuel-economy credit for every flex-fuel vehicle they sell. The government rates the fuel economy of flex-fuel vehicles at about 165% the miles per gallon (mpg) they would get on straight petrol. In reality, vehicles running on E85 get 25-30% fewer mpg than their petrol equivalents.
As it costs only $200 to turn a conventional car or light truck into a flex-fuel vehicle, the industry can save itself billions in potential fines that would otherwise accrue for failing to meet the government’s CAFE (corporate average fuel economy) requirements.
—Tech.view column in The Economist, "Bumpy ride for biofuels"
Pot-on-Kettle Attack of the Day
Addressing the media—
While claiming to represent reality, it can tend to legitimise or impose distorted models of personal, family or social life.
Moreover, in order to attract listeners and increase the size of audiences, it does not hesitate at times to have recourse to vulgarity and violence, and to overstep the mark.
—Pope Benedict XVI as quoted in "Pope urges 'more ethical' media"
The Pope also spoke of "infoethics," a term new to me but not to Google. But the meaning he gave it is idiosyncratic since it appears most often in association with librarians.
Like the Church, the media are here to entertain, not inform, and are safely in the hands of responsible parties such as Rupert Murdoch and Clear Channel Communications.
Thursday, January 24, 2008
Let me think....
Re-reading this post I realize that my oblique way of writing could easily lead someone to think I've been working on fuse mechanisms [pun] or some horror similar.
Well, put that thought away. I haven't attempted to build a bomb since Daddy gave me a chemistry set for Christmas. I'm happy to report that I didn't succeed.
Wednesday, January 23, 2008
Lifestyles of the rich and flighty
The Economist reminds us of the hard work the Super Rich have to put into letting even a little of their wealth trickle down—
The space race is set to enter a new phase with the unveiling of the design for Virgin Galactic’s SpaceShipTwo on Wednesday January 23rd. Test flights will begin later this year. Passengers will make short sub-orbital trips in the new machine, which might also eventually be used to carry payloads into space. Hundreds of people have put down some $30m in deposits for trips that are at first expected to cost $200,000 each for about five minutes defying Earth’s gravitational pull.
Virgin Galactic is a part of the "Virgin Group" of enterprises founded by British tycoon Sir Richard Branson. I assume that, like Virgin Atlantic, this will be the no-frills, low-cost version of space travel. For $200,000 I doubt they'll get a ham sandwich, which is just as well since they'd only throw it up anyway.
Yet when I think about it, the idea of sending people with more money than God into space and having them pay for it has a certain appeal. (I hope I don't get labeled as a "populist." That would absolutely end my chances of ever being President.)
Economic Indicator of the Day
Another obscure-sounding indicator is the Baltic Dry index. This is neither a specialist beer nor a measure of Russo-Finnish trade but a composite of global shipping costs for bulk commodities such as grains and coal. As such, it is a rough and ready measure of the state of global trade.
So it seems rather worrying that the index has fallen by a third since its peak in November.
—Market.view column in The Economist, "Baltic Woes"
The Economist quite freely admits that it hasn't a clue what it all means. Nevertheless...
Tuesday, January 22, 2008
Bankruptcy of the Day
Quebecor World, the second-largest commercial printer in the world, filed for bankruptcy protection in Canada and the United States on Monday.
The Montreal-based company, which prints a wide variety of publications at plants in the United States, including Time and Parade magazines as well as catalogs for Victoria’s Secret and Williams-Sonoma, made the move after its banks failed to approve a rescue plan valued at 400 million Canadian dollars ($390 million).
—Ian Austin reporting in "Major Printer in Canada Files for Bankruptcy Protection"
There are going to be a lot of these. "Bankruptcy of the Day" may begin to sound repetitive.
Monday, January 21, 2008
"First" of the Day: Britain nationalizes a bank
The scale of the financial support the Chancellor has today promised to provide to Northern Rock is breathtakingly large and without precedent.
No British Government has ever provided financial help on that scale to a business.
—Robert Peston, business editor for the BBC, writing in "Rock rescue explained."
I've tried to keep you posted on the interesting tale of how a modern neoliberal globalist government—Britain, to name names—finds itself in the odd position of being on the verge of nationalizing a bank—Northern Rock. Actually, the British government is scheming in every way to avoid such a fate. As Peston wrote in a previous post,
They [Prime Minister Brown and Chancellor Darling] have signalled that they are deeply scared of the political ramifications of nationalising Northern Rock, and are prepared to accept almost any price to avoid nationalisation.
The British Treasury hired Goldman Sachs (America's one major investment banking firm to come out of the mortgage debacle in a said-to-be healthy condition) to advise it in the Northern Rock crisis. I'm sure they're worth every penny of their fee, already in the hundreds of thousands of dollars, for the sound suggestions they've offered the government. The basic trick here is to use some financial legerdemain to nationalize the bank in such a way that the public won't notice and Parliament won't have to approve.
Here's the latest—
The Treasury would be guaranteeing the principal and the interest on bonds or “notes” to be issued by the Rock.
That effectively turns those notes into Government bonds, gilt-edged stock.
It means that Rock will be able to raise a colossal sum and at a relatively low rate of interest....
In return for propping up the business, the Treasury is taking control of what happens to the troubled bank, turning its shareholders and board into bit-part players.
The Treasury will determine which of the groups promising to rescue the Rock offers the best business plan.
So to call what’s on the table a private-sector rescue is a misnomer.
Really it would be a partial privatisation, or a public-private partnership.
Which is still a bit of a humiliation for the Government, because it was never its explicit ambition to go into business with a provider of commercial mortgages.
What’s more, the Chancellor can’t be certain that a private-sector rescue will be agreed, even with the provision of so much taxpayer help.
So he also lays out the basis on which the bank would be nationalised, if all else fails.
As I’ve said before, nationalisation would be carried out through legislation.
And the Treasury would pay to shareholders what it thinks the shares would be worth absent any taxpayers support – which it believes would be pretty close to zero.
We are speaking here, of course, of the utter failure of Britain's eighth largest bank, which in September was said to be holding 24 billion pounds ($48 billion) of customer deposits.
In the U.S., direct rescues of failing banks are being carried out not by the American government, which would never stoop to owning a bank, but by the sovereign wealth funds of our Far Eastern and Middle Eastern "trading partners." Why it is ideologically superior for foreign governments to own our banks than for the national government to do so I cannot say. Perhaps it would make us lazy.
1/22/08 — Julia Werdigier of the NY Times adds,
Some analysts have noted that while turning Northern Rock assets into bonds and selling them on the market might keep the bank from being nationalized, it was just such a technique that contributed to the current credit crisis in the first place.
1/22/08 — And Carter Daugherty offers this fabulous quote from one of the thinkers in the company advising the British government during its time of trial—
“Ten days ago, only a very few people thought this [recession] would be a bad one,” said Erik Nielsen, chief European economist at Goldman Sachs in London. “But now you have people debating just that.”
It must be wonderful to be that mind-bogglingly stupid and get paid for it.