redistribution of wealth does not cure poverty

A more effective approach to reducing poverty for the long term is to help people to help themselves.  Simply giving the poor government handouts does not end or even reduce poverty.

For example, in the US we have had a so-called “War on Poverty” since the mid 1960s.  After trillions of taxpayer dollars were spent by the government over the past 50 years, we still have poverty and by numerous measures we have more of it in these United States.


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some thoughts on the stagnant economy

some thoughts on the stagnant economy

Any honest economics professor or instructor will admit that economics is not an exact science, like say chemistry is.  Nonetheless, we can use economics here in our analysis of the present state of the economy in the US and in Europe (which practices similar policies).


a container lift


As the economic suffering and misery continues for millions of persons, we are revisiting this issue.

Much of Europe and the US are stuck in economic recession.  Do not believe the news media reports or the words of the politicians.  The US has not recovered from the recession that began late in 2007, and became much worse in late 2008.  Unemployment in Spain is running at about 25 per cent or higher.  High unemployment rates have become the norm in other European countries.  The true US unemployment rate is much higher than the currently cited (latest) figure of 7.3 percent.  Millions of discouraged job seekers have given up looking for work over time, and these people would work if they could find jobs. They are no longer counted in the official statistics.  Job creation in the US in 2013 has been anemic.  In a normal “recovery”, 90 percent of the new jobs created are full-time. Thus far in 2013 in the US, about 90 percent of the net jobs created have been part-time positions (thanks to the expensive and burdensome requirements of Obama Care).  Many full-time positions are being cut by businesses.

The shame of all this unemployment and under-employment is that the productivity of all these affected workers, the potential added value to the economy, is lost forever.  A waste of human capital is what we are seeing.

Why is this so?  Why the continuing economic woes in the US and in Europe?

Before we attempt to answer these questions, let us say that these years of misery, unemployment, economic dislocation, and declining asset values were not necessary and could have been avoided.  Yes, there are business cycles and there are periodic economic slowdowns in a market economy.  But, where you see very large amplification to the “booms” and then the “busts” (downturns) of economic cycles it is due to government actions and central bank actions that distort the normal functioning of free markets.

(In one of our earliest essays, we indicted Alan Greenspan, former chairman of the Federal Reserve for his central role in causing the housing market bubble and subsequent collapse in the US.  We believe his reckless (and criminal in effect) actions ought to have placed him in a federal prison for the remaining years of his miserable life.  Recall, the severe global economic contraction of late 2008 and early 2009 was caused (started) by the financial panic in the US.  Remember the failure of Lehman Brothers, and the problems with so-called mortgage-backed securities that had been sold to banks in Europe?  Much suffering worldwide ensued.)

To briefly answer the above questions:  Europe and the US are stuck at low or zero economic growth largely because of excessive, at times redundant, and largely needless government regulation of private businesses (regulation overkill), reckless fiscal policies (never ending deficit spending), loose monetary policies (artificially low interest rates, and money creation), and high income tax rates on businesses and individuals.  3 of these four causes are government actions and policies.  The remaining cause is on the part of central banks; that work with corrupt politicians to hide the damage their reckless and profligate spending is doing to the economy.

Let’s expand on these causes to drive our point home that governments around the world need to get out of the way!  (Voters and concerned citizens need to demand this.)

Business men and women will not invest in expanding their businesses in a hostile environment of high taxes, excessive regulations, and with the expectation of more of the same in the future from an over reaching government.  Doubt this?  Study the 1930s in the US under the administration of President Franklin Roosevelt!  This has happened before. The US still had mass unemployment in December, 1941, nearly 9 years after FDR took office.  So, obviously his New Deal was a failure!  He did not “get us through the Depression”.  FDR’s policies and actions prolonged the Depression.  (One might also venture to say that prolonged economic misery is not good for world peace.)

There are hundreds of billions of dollars sitting on the sidelines (much of this with banks that are not making loans) that could quickly enter the economy and spur growth if the policies from Washington were not so anti-growth and so burdensome.

Simply put, government does not create prosperity.  The private sector in a free market economy will do that if government will allow it to by interfering as little as possible.

Excessive regulations.  These kill jobs by raising the cost of doing business.  Managers can always eliminate jobs as a means of saving money and cutting costs.  (Salaries are cash expenses that cannot be deferred or easily financed, but must be paid regularly.)  The onerous and very expensive requirements of Obama Care are forcing many business people to eliminate jobs and/or reduce existing employees’ hours to part-time. Environmental regulations in Europe, and through Obama’s EPA in the US, to reduce so-called “green house gas” emissions are killing jobs in many industries.  (Needless, we say, as man-made global warming has been debunked.)  So-called “green jobs” have not materialized in the US to any significant degree.  Without ongoing government subsidies, many green industries are not economically viable.

Reckless fiscal policies.  Such policies are largely due to very costly and thus unsustainable social welfare schemes and programs (pensions, health coverage, financial aid/benefits for those who do not work, etc.).  These programs are referred to in economics as transfer payments.  As well, the government in the US panders to special interests and distributes much “pork” to them each fiscal year.  This pork, or political paybacks, costs tax payers many billions of dollars each year.  Of course, you have to tax current income earners for all this government “generosity” or largesse.  But, what do you do when taxes are already too high or cannot easily be raised?  You tax the future income earners, even those yet unborn, by running up the sovereign debt of your nation (which future tax payers are obliged to pay off).  Such government borrowing normally tends to raise interest rates for all borrowers.  As well, government borrowing reduces the available pool of funds for business investment.  Large annual budget deficits are thus not good for the economy long-term.

It is amazing to me that the other large credit ratings company, Moody’s, has not yet downgraded the credit rating of US government debt.  S&P did so in 2011.

Loose monetary policies. Central banks (the Federal Reserve in the US, the ECB in Europe) now routinely print money to enable the politicians to engage in their irresponsible deficit spending, and to bail out those countries that have run up truly outrageous debts that can never be repaid.  Needed reforms are often put off or not seriously attempted. (Just this week, the US Federal Reserve announced that it will continue to buy US government debt in large amounts for months to come (known as quantitative easing). Where does the Fed’s money come from to do this?!)  As well, the central banks distort the capital markets by setting very low interest rates that serve to hide the true cost of excessive government debt.  Higher interest rates on the debt would increase the deficits.  Thus the central bankers are enablers of the corrupt politicians.

We believe that you cannot make good the bad fiscal policies of these corrupt, bloated, and inept governments with such loose monetary policies.  You may kick the can down the road, but at some point this house of cards will collapse.  One way it may collapse is with the return of high (price) inflation rates for many years.  As they say in economic circles, “there is no such thing as a free lunch”.  The costs of government largesse and waste have to be paid at some point.  The only real question is how these will be paid.

High taxes.  There are 2 things to consider here.  The more that businesses pay in taxes each year, the less capital (from operations) they have available to invest in research and development, and/or to invest in expansion (capital spending) of their companies.  This means fewer jobs created in the economy.  Similarly, higher taxes on individuals and families reduce consumer spending and that reduces economic growth.  The second thing to be aware of is that these politicians in office will always spend more than is collected in taxes.  They have done so year after year in Europe and in the US.  Thus, raising tax rates does not help to reduce the cumulative national debts.  (Ironically, in the US it has been the case that raising tax rates usually results in lower total tax revenues.)

why this matters

The economic reality is that no country or economic bloc (the EU) can afford large, expensive central governments that lack fiscal discipline.  The logical, if not palatable, solution is to shrink the size, the role, and the reach of government.  If we do not do this, we will all be accepting a lower standard of living and less freedom in our lives.

When the big government Left gets its way, we all lose, we all are poorer, and are less free, and have a dimmer future.

what can be done

What would help the economy to grow, and grow strongly?

1. Reduce government spending by significant amounts.  Do this now.  We cannot wait years to cut spending.  This includes reforming bloated and unsustainable entitlement programs.  Politically unpopular but necessary.  In the US, stop the implementation of Obama Care, a major job killer that the majority of Americans do not want implemented.

2. Reduce the unnecessary and burdensome regulations on businesses, especially on small businesses.

3. Reduce tax rates for businesses and for individuals. Why?  Because the private sector is much better at allocating financial resources in to productive endeavors.

4.  Get back to a sane monetary policy.  Central banks must stop the routine money creation that enables deficit government spending.  Such money creation over time destroys the value of the currency and that creates its own problems.

Obama and climate change

Obama and climate change

We had heard last week that this was coming once President Obama returned from his trip to Europe.

Mr. Obama gave a speech today at Georgetown University in Washington, D.C. announcing a big push to limit or reduce the “dumping” of so-called heat trapping gases into the atmosphere.  (Al Gore praised the speech.)

However, if China and India, by far the biggest emitters of such gases, do not reign in their emissions, any reduction in the US will not be adequate to save mankind from the doomsday the eco-fanatics envision.  China and India have previously said they will not accommodate demands for them to reduce such emissions.  China is building more coal-fired electric generating stations each year and plans to continue doing so for years to come.

Readers, so-called manmade global warming has been debunked.  (Al Gore is one of the few who do not know this.)  Recall the scandal a few years ago about all the fudged data and fraud at East Anglia University in England on this subject?

In case you were living on another planet at the time, or are memory impaired, here is just one link to help you.

So, what is this really all about?

Here we have yet another instance of the abuse of government authority.  It is a power grab.  Mr. Obama wants a Soviet style industrial policy for the United States where his government bureaucrats will micromanage industrial activity.  All for our own good, of course, and for the good of everyone else on the planet.

Why the big push now?  To appease his supporters on the Left?  The Environmental Protection Agency (EPA, a part of the US federal government) is already shutting down coal-fired electric power plants across the country.  (This is significant as coal is the biggest slice of the electric generating pie in the US.  Hydroelectric and nuclear generation trail far behind coal in gigawatt hours produced.)  The EPA is issuing regulations by the day to burden businesses, and make them less cost efficient and thus less economically competitive.  (Increased oil production in the US is coming from state and private lands being developed, not from federal lands.)  The result of all this government overreach will be significantly higher electric utility bills for US consumers and businesses (and possible summer blackouts or brown outs), higher unemployment, and an even weaker economy. (This is in addition to the crushing effects now being felt by many small to medium size businesses because of Obama Care).

We, in the US, cannot afford this man’s vainglorious dreams and fantasies any longer.  We are paying a very heavy price for Obama’s insatiable hunger for power over all aspects of our lives.

Here is another essay to consider.


world economic storm coming?

world economic storm coming?

What’s a person to do?!


We take no pleasure in this essay.  If the world economy struggles, it means that human misery has increased across the globe.  There is already more than enough suffering in this world.

We, from time to time, read the business and financial articles and commentaries on various websites.  What we are now reading is very troubling and has caused us to back burner another essay in the draft stage, and to turn our attention to the state of the world’s economy.  (There are various market, commodity, and financial statistics that we look at every business day.)

There are some commentators who are forecasting another, and much more severe, financial (and thus economic) collapse over the next 2 to 3 years, (i.e. 2014 – 2015).  This is not mere fear mongering or journalistic sensationalism.  These analysts do make at least a persuasive case, if not a compelling one, for this terrible scenario.  (Keep in mind that the less developed countries (in Asia, and Africa) suffered more in the 2008/9 economic collapse than the industrial nations.  This was so because the rapid collapse in world market prices for their raw materials and agricultural products devastated their smaller, less diversified economies.)

So, let’s approach this topic in 2 segments.  First, why is this likely to occur?  Second, what can a person do to protect his or her family from this collapse should it occur.  (If you choose to, you can skip the analysis and scroll down to segment 2 below.)

1. Likely to occur?

It seems so.  For years, really decades, the industrial world has lived on borrowed capital.  (The reasons for this are varied and diverse, and would take us off on a tangent.) Governments from Tokyo to Washington to all throughout Europe have printed their fiat currencies which are now losing value rapidly.  The Japanese Yen is virtually in free fall against other major currencies.  The Japanese have one of the largest debt to GDP ratios in the industrial world.  The US dollar, that safest of safe havens, is on borrowed time (no pun).  Consider that it is measured against the Euro, another sick and failing currency.  Yet, the price of an ounce (an ounce, 28.4 grams!) of gold has soared in the past 10 or so years in both dollar terms and in Euro terms.  Similarly, silver and other metals have increased dramatically in price.  The once mighty US dollar is losing its value, and is not likely to recover it.

The central bankers around the world have printed truly outrageous sums of money since 2008 in an attempt to forestall a worse collapse in asset values and the world’s economy.  This cannot continue indefinitely as there will be no buyers of this government debt that pays very low interest (a negative real interest rate when compared to inflation), and whose principal can never and will never be repaid (it just keeps being rolled over).  The bond markets in the US are already beginning to show a much reduced appetite for US Treasury bonds.

Europe, Japan, and the US are all in recession, perhaps, permanently.  These are the bitter fruits of failed economic policies pursued by reckless and irresponsible governments.  Remember, governments are only as good as the people who make them up!!  In Spain, the unemployment rate is at 25 per cent – that is depression level unemployment.  The rate for young people, 18 – 24, is now over 50 per cent!  Social unrest and upheaval are likely.  Greece, as you know, has already had riots and destruction in the past few years.

In Europe, the German taxpayers are balking at bailing out the debt ridden nations in the south of the Eurozone.  Germany is going to leave the European Union and issue Deutsch Marks and stop using the Euro.  When that happens, the Euro and all the debt denominated in Euros will be worthless.  Major Wall Street banks are large holders of European debt.  The financial fallout of Germany going its own way will hit the US hard.

Lastly, and most importantly, the US shows absolutely no political will to get its fiscal house in order.  None.  Instead of cutting (read: reducing) the out of control government spending, both parties are posturing and blaming the other side.  (Obama proposes spending levels that guarantee near trillion dollar yearly deficits for the next several years!)  Tax increases will not solve the problem.  Therefore, the debt ceiling will be raised again and again and again.  The national debt will continue to climb each and every year.  The financial markets will not accept this, and it will be difficult for Bernanke (or his successor) to keep on printing money to prop up this sham.  (The so-called Federal Reserve has been buying some of the government’s debt (bonds) for some time.  I always ask 2 questions.  Where does all this “money” come from (in hundreds of billions)?  And, where does all this money go?)  To sell these government bonds to anyone, interest rates will have to rise, perhaps significantly.

Confidence is being eroded in the US government and in the US’ economic future.  Look for markets to become jittery, and then to start to fall hard in the next several quarters.  When loss of market confidence turns to panic, it will be like the fall of 2008 all over again.  You will witness daily significant declines in asset values, especially in financial assets (stocks, mutual funds, bonds, financial derivatives).  (By the way, as the stock market appears to be a zero sum game, short sellers will reap enormous profits as they devastate the stock holdings of pension funds in the US.  Your pension with your employer is not as safe as you may think.)  International markets from Rio de Janeiro to Sydney to Hong Kong to Bombay (Mumbai) will also be brought down as they were in 2008.

The most upsetting thing about this situation is that it did not need to happen.  We are not talking about earthquakes, tropical cyclonic storms, etc. that man cannot control.  This economic malaise is man made and did not have to happen.  Sadly, when Europe and the US collapse, they will drag down the whole world.  China can forget about exporting to these two large customers.  They won’t be able to pay.  Everyone of us, all 7 billion, will be adversely affected.

I personally hope that this scenario turns out to have been overly pessimistic.  But, given that the western industrial world continues down the path that it is on, we have to prepare for the worst.

2. What can a person do?

On the macro level, there is nothing we can do.  We are victims of a corrupt system that cannot be “reformed”.  It is not the free market capitalist system that is to blame!  It is the myopic, inept government intervention into the market economy that is the culprit.  These governments are aided by the central bankers.

However, on the micro or individual level, we can do a few things to help protect ourselves from this approaching storm.

1.  If you have debt (mortgage, car loan, etc.) try to get this into a fixed rate contract.  Avoid variable rate loans like the plague.  Rates will not likely remain low forever.  When they start to rise, rates may keep on rising for some time, and then many people will be stampeding to get a fixed rate loan (meaning it will be more difficult to get one quickly).

2.  Keep some of your savings in the form of cash.  The stock market (and this includes mutual funds that are composed of common stocks) is now at near historic highs in the US even though the underlying economy is weak.  It is much more likely that stocks are going to go down in price than continue to go ever higher.  Now, may be the time to liquidate some of your stock positions, meaning take some money off the table.

3.  Perhaps, being a little conservative in your financial decisions would be wise.  What I mean is that with so much uncertainty, you may not want to carry a high debt load.  Maybe you do not buy such an expensive car next year if you really cannot afford to do so.  Or you scale back in some areas of large purchases.  Remember: There is no guarantee that you or your spouse will have a job next year, or the year after.

The sad fact is that significant financial and economic uncertainty (and risk) are here to stay for many years to come.  These governments that created these problems are not capable of solving them.

Best wishes to all!

business transportation logistics: ocean or sea-borne transport

business transportation logistics:  ocean or sea-borne transport

Humans have been sailing the seas for thousands of years.  Today, at any second of the day or night, there are hundreds (really thousands) of cargo (container) ships, oil tankers, metal ore ships, agricultural grain ships, etc. at sea, and hundreds more at ports around the world (taking on cargo or offloading it).

This sea-borne transportation industry plays a major, indeed, a vital role in the modern world economy.  It operates 24 hours a day, 7 days a week, and does not stop its operations for any holidays, bad weather, natural disasters, or wars.  One might think of this industry as being similar to the heart in the body – pumping away, supplying necessary nourishment (raw materials) to the world’s industries.  Shipbuilding, an ancillary industry, is itself a not insignificant employer of workers in the world, and consumes steel, and other materials.

This is to be primarily a pictorial essay, but we have included several helpful/useful industry links for your information, and possible use.

Here are some useful links for those readers who work in this area, or are interested in learning more about it.  (Some of these various websites have links pages with links to many different organizations involved in transportation.)   a resource for ongoing news updates and information on many things affecting or involving ocean shipping (you can sign up for their daily email news updates, it’s free)   International Federation of Freight Forwarders Associations

IAPH – International Association of Ports and Harbors   (    International Maritime Organization

The Journal of Commerce is here:   (Many articles on the site are free to view, but for access to some articles, you need to become a member; basic membership is currently offered online for the reduced price of $35 per year.)     International Association of Marine Aids to Navigation and Lighthouse Authorities     International Association of Cities and Ports    Shipping Guides are the port information specialists and provide information for the shipping industry.     The Seatrade Organization  (information on maritime publications, conferences, exhibitions, training and other special projects)     American Journal of Transportation (AJOT)  North America’s weekly transportation and logistics newspaper’s portal site   Cargo Experts (Florida)

Now, to the pictures.  Please be aware that we have included several miscellaneous pics at the end (below) for those who may tire of, or may not be interested in, all these photos of large cargo ships.  These miscellaneous pics are worth viewing at least once in your life.  😉

A busy port (below) is from


A propeller is by kind courtesy of

A ship (Flamina) fire is courtesy of

An up close shot (below) is from

This impressive twilight photo is courtesy of

This container ship (with windshield wiper from the bridge) is by kind courtesy of

This next photo is courtesy of (South Africa) – looks to have been taken early in the day with a low angle sun.

A red boat beached is courtesy of

This next photo of a container ship passing under the Golden Gate Bridge is from

This photo (below) is from

This China Shipping Line container ship is courtesy of

This ship at sea is from

This photo of a ship at sea (below) is courtesy of

This container ship, that appears to be rather top heavy yet is stable, is courtesy of

Now for the miscellaneous pics that might interest some of the readers.  Enjoy!

Photo of ducks in water is courtesy of

Wooden Pallets is courtesy of (reminds me of when this blogger worked for a while in a warehouse as a freight clerk).

This unusual photo of a sand pit is from

This photo of the California coastline is courtesy of

This photograph of the San Francisco – Oakland Bay Bridge (California, built in 1936-7) is courtesy of  From many office towers in the financial district of San Francisco, one can see this famous landmark, and view ships transiting underneath it on their way to and from the container Port of Oakland.  As well, when you drive into San Francisco from Oakland on the upper deck of the bridge, you are treated to the skyline of San Francisco (which is especially impressive early in the winter evenings when all the tall buildings are lit up).

A Sydney (Australia) harbor bridge photo is from

This Phoenician merchant boat  (possibly a woodcut) is from

Photo of a Chinese junk is from

This pic of a high tech boat is courtesy of

This last photo is from


business transportation logistics, railroads and railfanning

business transportation logistics, railroads and railfanning

Hey everyone,

Way back in the Spring semester of 1980 (my senior year of college), the instructor in the Transportation and Physical Distribution class, Dr. Joe Mattingly, said (paraphrasing from memory) when you save a dollar in costs or expenses it drops to the bottom line.  What he meant is that every dollar in cost savings drops down 100 per cent to earnings before income taxes.  The idea of the class was to effectively manage transportation and warehousing costs to increase profits for a business enterprise.  These type expenses for manufacturers can be a very significant portion of the total cost of goods sold.  (Increases to the top line, to sales revenues, do not drop down 100 per cent to earnings before income taxes because of the cost of those additional products sold.)  Dr. Mattingly also cautioned us undergrads that in business when you make mistakes, it costs you money.

Of course, in 1980, the main focus was on trucking.  The railroads were going through a tough time and there were a lot of fallen flags (regional and smaller railroads going into bankruptcy never to emerge from it).  But, the rail industry was de-regulated shortly thereafter, and positive changes slowly came to the industry.  Now, the intermodal transport of goods is key.  This involves seamlessly moving the cargo containers from manufacturers in Asia across the Pacific Ocean on large ships, then offloading them at West Coast ports (Seattle, Oakland, and Los Angeles/Long Beach) on to trains for movement to markets in the central and eastern sections of the US.  At various major rail centers (Chicago, Kansas City, Dallas, etc.), the containers are taken off the trains and put on trailers for local trucking to final destinations.  (The old Santa Fe (ATSF) Railway was very good at intermodal transport and that was one of the reasons that Burlington Northern acquired the Santa Fe in the mid to late 1990s.  Then the combined railroad was called Burlington Northern Santa Fe (BNSF).  The Journal of Commerce was very good at covering the rail industry during the 1990s, and I fondly recall reading it regularly during that time.)

Trains do have a major advantage over trucks in at least one area, that of bulk transport.  The bulk transport of commodities (metal ores, coal, grains, chemicals, etc.) is a natural for the railroads.  I think it is CSX ( a major eastern railroad, formed from the old B&O and C&O railroads years ago), that, in its commercials on radio, informs us that a train can haul more tonnage of freight for less diesel fuel consumed than trucks are able to. In other words, rail transport is more efficient than truck transport.

The whole area of business logistics is fascinating, and yet is often overlooked or taken for granted in its important role and contribution, not just in individual businesses, but for the entire economy.  Transportation of raw materials and/or finished goods is not glamorous, but affects all of our lives each and every day.

Now, there is another facet of the railroads that is also often overlooked and under-appreciated.  There is much history to the railroads in the USA.  There is also much beauty in many of the areas where the physical rails are located.  Taking photographs of trains, either stopped on a siding, or moving down the mainline(s) in these picturesque areas is a popular hobby among rail fans.  And, rail photography is also popular in Canada and Australia.

On long auto trips here in the West, it has often struck me that along a number of major highways there is a rail line nearby and within sight, often running parallel to the highway.  Well, that is because the rail lines were there before the highways were paved decades later.  The old towns along the highway, where one can now stop for fuel or to eat lunch, were railroad towns in the late 1800s and early 1900s.

Here are some pics from various sites for your viewing pleasure.  These are best viewed on a desktop computer and not on hand-held devices.  (I will not put so many images into any future essays – it is taxing on me, and on all of you.  At least there is much variety here.  But, enjoy!)

This beautiful photo is from

A CP Rail train is from

A rail sunset is courtesy of

This striking photo of rails into sunset is from

A Santa Fe train in Arizona is courtesy of

A set of twin tracks is from

A Powder River Basin (Wyoming) scene is courtesy of

A coal train is from

A container lift is courtesy of

A moon over train is courtesy of

A rail depot is from which supports mass transit

A recent commuter rail tunnel (in Dubai, below) is from

Gotthard rail tunnel is from

A svelte safety rail (below) is courtesy of

Union Rails is courtesy of

A rail switch (below) is courtesy of

This pic of a CSX train in snow is from


This photo of an excursion train in Arizona is courtesy of

This colorful example of intermodal transport is courtesy of

The intermodal flows map is courtesy of

A Kansas Memory (below) is courtesy of


This winter time photo is courtesy of

 A Santa Fe train in a winter scene (below) is courtesy of

This Santa Fe locomotive sports the famous and colorful “War Bonnet” motif, and is courtesy of  Note how small the mechanic is compared to the engine!

This night time photo is from

This photo of a Santa Fe consist (below) is courtesy of

This photo of a train near the highway is from


Eurozone, European Union Lack of Political Will (Kahones) Spells Big Losses for Investors Worldwide

Eurozone, European Union Lack of Political Will (Kahones) Spells Big Losses for Investors Worldwide

Here we go again!

Warning:  This is a RANT.  But read on and see if you agree.

Are you sick and tired of Europe‘s unwillingness, and hence inability, to address its gargantuan fiscal problemsYou ought to be!  The Europeans are costing all of us who save and invest, and all of us who have pension plans with past and current employers, plenty in lost value of those investments.  This European mess is frustrating the world economic recovery and that is punishing all 7 billion of us.

Europe had 3 options a while back.  The Europeans rejected austerity and learning, belatedly, to live within their means.  Now, there are 2 options remaining, and the Europeans are trying to kick the can down the road because they lack the collective will over there to make any substantive decision and then take decisive action.

Europe knows that its 2 options remaining are these: crank up the printing presses and vastly increase the money supply (with cheapened Euros) in order to service these outrageous sovereign debts they have run up in the past 10 years, or continue doing nothing and allow a massive deflation (asset value crash) that will destroy more savings and wealth worldwide than was destroyed in our grandparents’ day in the 1930s.  (Short sellers, the world over, will grow seriously (filthy) rich very rapidly in this scenario as many short sellers did in late 2008!)

Germany was the main driver behind the formation of this Eurozone.  Come on now, Germany, step up to the plate and show some leadership and some fortitude to solve this ongoing crisis.  This European mess has been in the financial news as a major item since late 2009 at least.

Europe stop screwing the entire world.  We, Americans, are not going to send our young men (and young women) to fight and die for you this time when you see the rise of fanatic dictators once again when the economic and political chaos ensues from your cowardly inaction!

You cannot change the world, but you can keep trying!

Protecting and Preserving the Environment: Conservation and Stewardship versus Environmentalism

Protecting and Preserving the Environment: Conservation and Stewardship versus Environmentalism

How best to protect and preserve the natural environment for ourselves and for future generations, while permitting economic growth and an improvement in living standards is today’s question.

“There is no such thing as a free lunch.”  We can thank the late economist Milton Friedman for that insightful amorphism.

He also said “Concentrated power is not rendered harmless by the good intentions of those who create it.”

(Read more at )

The free lunch refers to the fact that there are always opportunity costs or trade-offs.  For example, I am expending time on a Sunday afternoon in writing this short essay.  The time spent on it could have been used in some other activity such as exercising, taking a nap, or making love, etc.  So, I forgo the opportunity to do one or more of these other activities in order to write this essay.  That is an opportunity cost.  One cannot pursue two activities at the same time.  (Please, let’s not get silly here and suggest that this essay could be typed and reviewed, edited, etc. while I was engaging in another activity like making love.)  Another example of an opportunity cost is that the $50 that is in my checking account at the bank can either be left there, or spent on a nice dinner for my wife and I, but it cannot be both left with the bank and used for the dinner.  The same resources cannot be employed in two separate and distinct activities.  (Sure, I could split the $50 by leaving one half of it in the bank and using the remaining $25 on a dinner for two, but that misses the point.)  In other words, as the old adage puts it, “you cannot have your cake and eat it too”.  As we shall see, I will bring this concept back into play shortly.

Now, let us return to the question at the top of the essay.  Conservation and responsible stewardship (of resources) are not new concepts.  These ideas have been around since the beginning albeit they were called by other terms in other languages at earlier times in history.  Early pastoralists learned the negative consequences of overgrazing the same areas and took their herds on tour, and early farmers learned to leave some of their fields fallow so as not to exhaust the soil and learned over time which crops grew best in their fields.  The same basic economic self-interest is in play today, and that is why farmers, industrialists, small businesses, and individuals expend resources for periodic maintenance and replacement of their plant and equipment.  (You could stop changing the oil in your car and not have the transmission serviced at the appropriate interval, but the result is that your car’s useful life will be significantly shortened.  Then you will incur the major expense of having to purchase a new car.  That is not conserving your resources.)  Steven Covey addresses this in one of his books.  (Seven Habits of Highly Successful People, possibly)  He talks about production versus production capacity.  The plant manager could run his factory’s machines 24/7 to greatly boost production in the short run by not allowing any “down time” for maintenance and repairs.  This, of course, will in time, decrease production capacity as machines will breakdown and fail, thereby shutting production down for extended periods of time as major plant overhauls are necessary.

Conservation and stewardship are the approaches, the means, by which we can enjoy a healthy level of production and yet still preserve our production capacity for the future, both ours and for our children’s future.  By these approaches, we can utilize the world’s resources in a socially responsible manner and attain a growing economy, with its attendant rising living standards, and still leave the world a productive, clean, livable place for our children and their children.  A proper balance – that does justice to the current generation and to future generations – is achieved.

Contrast this view with that of environmentalism as it has come to be in practice in recent years (say the past 10 to 15 years).  For many of the proponents of environmentalism, no growth, no further development of the world’s resources is best for the world.  Any development is just too risky, too dangerous, and business people the world over cannot be trusted not to trash the planet, notwithstanding the existing laws in place to protect the environment from just such reckless behavior.

Even after extensive and exhaustive environmental impact studies have been conducted and all the necessary government permits have been obtained, environmentalists continue to block – mostly by their access to the courts – virtually all oil field expansions, further development of coal, new mines (for industrial metals) and expansions of existing mines throughout the United States and in many of the other countries of the world.  (These fanatics pull this crap quite a lot in South American countries.)  We suffer periodic spikes in the price of gasoline largely because of a shortage of refinery capacity, and not a scarcity of crude oil stocks.  We have not built a new refinery in the USA since 1976 because of the success of the environmentalists’ efforts to block such construction.  They would be happy to see all 7 billion of us living in thatched huts and cooking over dung fires.  (Of course, they might still be living in their air-conditioned condos in Florida.)  And, with the help of an out of control EPA, they are now even beginning to fly drones over farmers in Nebraska and Iowa to monitor the evil dust that is being kicked up by farmers’ tractors.  (Seriously, I could not make this up.)

Here is where the opportunity cost concept comes back into play.  The United States is sitting on vast reserves of coal and natural gas.  This is now common knowledge.  There is even much oil in the USA, much of it recoverable from shale oil sands, and offshore of northern Alaska.  The same is true as to great reserves of resources (energy and industrial metals) in many other countries around the world.  We can either leave those resources undeveloped and thereby forgo the current benefits to our economy that such development would bring (not the least in creating many new jobs in the extractive industries), or we can responsibly develop and make constructive use of these bountiful resources.  Even with increased resource development and resource utilization around the world, the world is not going to run out of resources any time soon.  We have enough to go around for many generations.  And, before we run out, necessity, being the mother of invention, will bring us new technologies so that standards of living can remain healthy by using substitutes if any critical resources are eventually depleted.

So, the choice is this: start making greater use of the world’s abundant natural resources in an environmentally responsible way (conservation and stewardship), or stop, or at least delay and frustrate, development of these resources and thereby condemn the world to slower economic growth and lower standards of living.  The opportunity cost of leaving these resources in the ground is a poorer world for all 7 billion of us.

When will Americans say “Enough is enough!” ?

Thank you for your time in reading and thinking about this!  –  Which represents an opportunity cost to you.

btw, I hear my wife calling, she is ready for & desirous of love. ….bye…..😉     Oooops!  She was just calling for an early home-made dinner.  Damn!