Energy Crisis Solved?

GE is looking to cut the cost of solar panel installations in half by engineering a system that would make it possible to roofers and contractors to perform the installation as opposed to higher costed specialized labor. They want to get the total cost down to roughly $21,600 (from roughly $35,000).

Here’s how our Federal government can quickly solve energy problems as well as stimulate the economy in a real manner. We all know that Obama and Congress love spending money. Heck, throw W into the spending mix too, and you have the largest deficits and national debt in the history of the world! Unlike most spending our Federal government does, this spending would actually bring about some real value to America.

Our Government Just Prints More Money Anyway

Spend another $700 billion dollars to install the $21,600 systems on homes in America. Now, the first argument might be that we need to evaluate whether there is enough sun coming in to make this worthwhile. Well, good news, someone has already done that! There is plenty of sun hitting the majority of the United States to make this worthwhile.

The $700 billion investment would put solar systems on approximately 32,407,407 houses. Now, that’s not taking into consideration economies of scale. Manufacturing that many solar panels and performing that many installations would considerably drop the costs associated with the installations. We could easily see a 20-30% drop in total cost, but I’ll stick with the 32.4 million installations for easy math. That’s roughly 24.93% of the estimated 130 million houses in America. With these solar panel systems producing an average of 85% of the house’s energy needs, that means a drop in existing energy consumption by 21.19%

What would happen if our need for energy from existing sources dropped by 1/5??? Well, simple economics would shift the price of energy down. For global warming worriers, it would mean production of 1/5 of our energy now comes from solar. Of course, it wouldn’t really mean a drop in household energy cost by 20 percent. Production from other sources would decline to keep prices from plummeting by 20 percent, but there would be a substantial decline in the cost of energy for the end consumer. Even if it was a 10% decline, I’ll show you at the end just how substantial this could be!

True Trickle Down Economics

Now, let’s get into the worker value! Solar panel production would skyrocket. Solar panel producers would need to hire more employees, put more people to work, order more materials from their suppliers… It’s true trickle down economics. But that’s just the production side of things! There’s the installation side as well. Thousands of workers would be put to work making good, hard-working money! These workers would be driving, eating, buying clothes for their families, etc. True trickle down economics. Local economies around the US would greatly benefit from this massive rise in employment and their subsequent spending!

Now, let’s talk about the true economic savings as energy costs in the United States drop by 20% I’ve mentioned in Energy Based Inflation that rising energy costs have an impact on EVERYTHING. There’s no escaping the cost of energy in our current economy. Every company and every job requires energy. For some companies and some families, energy is a massive expense! For someone like me with a house but no kids, my electric bills are very low. Still, my house could produce enough energy for me and half of what the family that lives across the street from me needs!

But wait! There’s more!!!

Electric cars will become viable global warming worrier alternative energy vehicles. Currently, electric cars don’t really save much (if at all) in greenhouse gas emissions because of the fact that America gets so much energy from coal… This solar panel plan would make electric cars much cleaner than gasoline cars, since American would not be getting 21.19% of our energy from solar. Greenies rejoices!

So, what would the ROI be for our Federal government to print another $700 billion dollars? Well, we can start with the amount that Americans spend on electricity (Retail Electricity): $350,438,000,000. Yes, that’s $350 billion Americans spent on energy in 2009. Now, earlier I reasoned that while there is a 20% energy savings, our costs would only drop by maybe 10% because production from other sources would adjust to compensate for the sudden massive increase in energy production by solar. Even at just 10% that means Americans will be saving $35 billion (yes, BILLION with a B) in energy costs/year.

Collectively, we can go spend that money on other things, save it, invest it in retirement funds/stock market/kitchen remodel, etc. The savings for $35 billion dollars would significantly stimulate the economy because we aren’t just going to sit on that $35 billion. We’ll spend/invest it! We, the people will stimulate the economy from a legitimate and long-term value add from our Federal government. Much better than a couple of $600 “stimulus” checks we got from W! Or the great W/Obama bank/auto bailout.


Nobody Wants to Cut the Federal Budget, but Everyone Wants to Point Fingers and Take No Responsibility

One of my favorite sayings is that when you point your finger at someone, you have four of them pointing back at you.

On Facebook, I’ve been seeing status updates along the lines of the following:

Remember when teachers, public employees, Planned Parenthood, NPR and PBS crashed the stock market, wiped out half of our 401Ks, took trillions in TARP money, spilled oil in the Gulf of Mexico, gave themselves billions in bonuses, and paid no taxes? Yeah, me neither. Re-post from a friend. Pass it on if you’re so inclined…


Salary of the US President…$400,000. Salary of retired US Presidents…$180,000. Salary of House/Senate…$174,000. Salary of Speaker of House…$223,500…Salary of Majority/Minority Leaders…$193,400……….Average US Salary…$33,000 to $77,000. HELLO! I think we found where the cuts should be made! If you agree… repost!

Addressing the second one first, sounds great! Now we’ve narrowed the annual deficit to $485 billion. What’s next?

Now, addressing the first posting…

First, nobody wants to cut anything. We have so many people in America living off of social programs that we’re stuck.

However, it’s not like we didn’t see this coming. Anyone alive when Ross Perot was running his budgetary infomercials knew this day was coming. Despite the cuts and tax increases by Clinton and Congress at the time, we haveĀ since erased them and have reached a mountain of debt that far exceeds anyone’s wildest imaginations. Yet, nobody wants to cut. And if you do want to cut, you’re a “cold-hearted out of touch with the plight of the people jerk.”

Second, Planned Parenthood, NPR, and PBS do not pay taxes at all. So, yes, I remember that part.

Third, as yourself the following questions:

  • Did I borrow money from a bank over the last 10 years?
  • Did I put money into savings accounts, bonds, and other forms of deposits?
  • Did I invent something that changed an industry? Created an industry? Or created jobs?
  • Did I vote for a politician who voted for the tarp spending? Invading Iraq? The automotive bailout?
  • Did I return my government stimulus checks?
  • Did I tell the IRS I didn’t want the Bush tax cuts and send in additional taxes anyway?

Chances are you did borrow money from a bank and didn’t put money into a savings account, bonds, or other forms of deposit. Based upon the lack of innovation in America, I’m betting you didn’t change an industry or even create jobs for people. People voted in record numbers for Obama who gave out the lion share of the TARP funds AND gave money to the automotive industry.

The vast majority of Americans supported invading Iraq back in the day. You can’t jump off the bandwagon and claim innocence now. That’s not how war works!

We all contributed to this mess. How many people purchased homes on interest only loans and/or 125% LTV loans? You can feign ignorance and that the evil banks fooled you into thinking it was a good idea, but I don’t believe that you’d give someone 125% of the value of something they wanted to purchase. You wouldn’t think that was a fair deal or even responsible. Yet, you took the money!

Let’s just face it. We all got greedy. We all got stupid. We all complained about products made in China but had no problem purchasing them when we saw how inexpensive they were.

Still, it’s easier to blame the rich guys or other groups that we aren’t part of. It’s easier to blame the teachers unions, banks, government, etc.

The bottom line is that America really needs to look at ourselves. We really need to look and take responsibility and be accountable for our own contribution to the circumstances we find ourselves in. There are fundamentals of economics, banking, the stock market, foreign policy, business, and monetary policies that we ignored or thought we could work around or outsmart. We elect these officials. We patronize these banks. We drive vehicles that get 14 MPG. We are the ones who want lower taxes and complain when there is no money to fund our social programs.

We are the ones who caused this problem, and until we own up to that we’re going to continue to build up mountains of debt and point fingers. The Democrats will blame the rich and want to tax them more. Still, that falls short by hundreds of billions of dollars. The Republicans will blame the unions and claim “we have a spending problem”. Still, that falls short by hundreds of billions of dollars.

Our Federal government has both a spending and a revenue problem. It’s that simple! It spends more money than it makes, and it doesn’t get enough money to pay for what it wants to even if we cut hundreds of billions of dollars from the budget. Obama calls for $4 trillion, which soundsĀ inconceivableĀ to most but is hardly anything when you see that he build up that much debt in his first two years in office. Oh, by the way, those cuts are over 12 years… So, what he piled on in just two years is going to take 12 years to cut!

Still, nobody wants their share of the pie cut. And since we have so many people getting assistance and gaining from federal spending programs, it’s going to be hard to cut anything for a politician who wants to save his/her country but also stay in office.


The Myth of American Capitalism

American capitalism is dead.

I’m sensationalizing a bit with the first sentence, but the reality is that American capitalism is on life support. We’re propping up aĀ facadeĀ of capitalism and millions of people are blaming “deregulation” (to slander the ideals of capitalism) on this long drawn out “recession”. I’m using a lot of “quotes” here because “deregulation” is a misnomer and the “recession” is really a depression masked by bogus inflation numbers and massive government deficit spending and a decline in the value of the US Dollar. That last sentence was a mouthful, so let’s start with these myths…

Deregulation is defined as the act of freeing from regulation, particularly government regulation. The idea that the federal government deregulated the banks is much like the idea that The Constitution clearly uses the words “separation of church and state”. Deregulation, in the sense that is being used to slander capitalism, was merely a change in the regulations by the government that created holes that thousands of bankers and millions of consumers took advantage of.

Nobody can take a loan out for 125% of the value of their home and honest think there is nothing wrong with that. Just like nobody can offer a loan at 125% of the value of a home and not think there is nothing wrong with that. Just like nobody in the Federal government can pickup a newspaper from 10 years ago about 125% loans and not think there is something wrong. If you can, you’re exactly why we are in the banking mess we are today.


Recession is defined as a decline in GDP, employment, and trading lasting a period of six months to a year. Earlier, I referred to bogus inflation numbers and massive government deficit spending and a decline in the value of the USD. First, the inflation numbers don’t require a rocket scientist (because supposed economists clearly aren’t capable of the math) Ā to figure out that they are false.

Simply take a look at what goes into calculating the Consumer Price Index (CPI). You will find few line items where the government is not heavily subsidizing/regulating that industry. Given that the federal government is more than $14 trillion in debt, it’s pretty clear that inflation numbers are considerably underestimated. If you didn’t follow that last part, I’ll help explain: if is costs you $3.15 for a gallon of milk at the grocery store but the federal government is providing subsidizes to milk producers to the tune of $0.50/gallon, the true cost of a gallon of milk for you is actually $3.65. I’ll admit that I haven’t done the research to find out the exact $/gallon of milk the subsidizes equate to, but you can get the point. Now, count this over the hundreds of entitlement programs the Federal government spends money on, and you have a real problem with the calculation of the CPI (inflation).

To further exacerbate the national debt issue, people don’t really consider the buildup of interest on the national debt as part of the total problem. This isn’t that unusual. A lot of people in business often forget about how borrowing money from a bank or investors requires payments that impact the actual bottom line of the company. Here’s a simple way to think about it: when the Federal government was over budget by $455 billion in 2008, the total increase in national debt was actually more than $1 trillion.

This all compounds!

When you include the devaluation of the USD abroad and the fact that we purchase so much product from overseas and that it takes 6+ months for that devaluation to ripple its way into our prices, you get rest assured that there are much higher prices coming to a store near you very soon…


Now, let’s get back to capitalism. At the beginning of this article, I needed toĀ dismissĀ the myth of low inflation over the last decade so that we could really see that this “recession” is indeed a depression (I’m betting that decades from now, we will finally admit in our history textbooks that the numbers were wrong and that this is a depression).

Capitalism has been slandered by the myth of deregulation. Deregulation was a change in regulation that anyone sane and honorable would have realized had massive holes that were being taken advantage of. Nobody wanted to halt the good times, so our governments (which could have done something about it) did nothing for years! That’s NOT deregulation. It wasn’t an act of capitalism. Plenty of people warned for years about pending doom, and they were dismissed as pessimistic and bearish.

However, these aren’t the true measure of capitalism’sĀ comatoseĀ state. The true measure is that we look to our politicians to “create jobs” and provide “bailouts”. What is capitalistic about bailouts? NOTHING! What is capitalistic about too big to fail? NOTHING! The funniest part about “too big to fail” is that the giant banks that were too big to fail were merged with existing banks, making those new banks too bigger to fail! Why weren’t the banks broken up into smaller pieces with the non-profitable sections written off and offset by “bailout” money? But I digress, and that’s for another sub-1000 word blog.

The Capitalist mindset in this economy would be this: What can I improve, change, or invent that would make a profit, provide jobs, and improve our economy. Instead, we are waiting for Obama to create more Federal jobs, and the “Republicans” are spewing forth their usual taxes rhetoric. Even Sarah Palin is talking about how can the federal government create jobs and stimulate the economy. What would best stimulate the economy would be a strong USD position, 10% reduction in all federal government spending and an increase in taxes. Of course, anyone will say I’m crazy and it wouldn’t work. Because it obviously didn’t work in the 90s when Clinton did it, right?


My Cat Received Federal Reserve Money

It seems like everyone and their mother received money from the Federal Reserve in 2008. My dogs didn’t get any from The Fed, but my cat certainly did! The dogs aren’t too happy about it.

All joking aside, the lending to Verizon, Harley-Davidson, and countless foreign banks really helped prevent a “financial meltdown” and “Some have recorded healthy profits for taxpayers”… Oh wait! I said all joking aside. First, I don’t see how returns to The Fed benefit taxpayers in any way. Second, I don’t see how getting paid back money with interest when the USD has been devalued so significantly over the last two years is actually making a profit.

If I lend someone $10 and they pay me back $12 in two years but $12 is really only worth the equivalent to $9.60, I really didn’t make a profit. That’s what The Fed did on the scale of $9 trillion.

The logic of all this “stimulus” and “bailout” is flawed. The idea is that companies, banks, etc are “too big to fail”. The biggest problem with this logic is that a company reorganizing its debt is not a failure. Sometimes this happens. I’m not talking about completely cooked books like Enron and companies like that. Bankruptcy protection allows a company to sit down with the folks it owes money to and say that instead of going through expensive collections processes and incurring massive attorney fees for our 3 year loan, we’ll pay it back in 5 years instead. That’s just one overly simplified example, but pretty much how it works.

There is no company that is “too big to fail”. Unless there is egregious cooking of the books, the company can always be salvaged and work out deals with its creditors to solve the financial issues. The Fed just printed money and handed it out to people. So what if the money was paid back! The value of the USD has decreased so rapidly over the last 2 years that the money paid back is worth far less in terms of tangible value than it was when it was lent out.

The result of the $9 trillion money printing job is this stalled out economy. Rather than forcing businessmen to grow come cojones and take responsibility for their businesses, Bernanke dished out trillions because he read in a textbook that the idea would work. I’m sure in his mind it has worked because the alternative was a “financial meltdown” (which is patently false). I’m sure Congress and Obama won’t do anything about his reckless action.


FailSpace… Why Myspace Cannot Succeed under NewsCorp

TechCrunch just posted an interesting article about Myspace’s “Hail Mary Strategy”. Ultimately, what Myspace is going to “discover” out of any strategy they have is that they cannot succeed with NewCorp. Yes, NewCorp pumps a ton of money into Myspace. Yes, Myspace would not have been able to spend as much as it did over the last several years if it wasn’t for NewCorp. However, that doesn’t mean that Myspace would have failed without NewsCorp.

I’m going to liken Newscorp’s purchase of Myspace to a bailout. Much like the bank and auto industry bailouts, it is a failure. Pump a bunch of money into a failed system and you get Saturn, GM, Chevrolet, Pontiac, AIG, and Myspace.

To be sure, Myspace had plenty of opportunity to join the rest of the Internet in the innovation that took place over the last several years since the purchase of Myspace by NewsCorp. The most notable failures I can think of by myspace:

  • Failure to popularize and authentication system like FB Connect
  • The continued used of Cold Fusion
  • Failure to go ugly (let’s face it, Facebook and Google have shown the world that ugly generates traffic. And by ugly, I mean a simple, clean interface that isn’t cluttered with banner ads)
  • Failure to implement AJAX everywhere
  • Too little too late with implementing integrations with out websites

I think the last item is the biggest failure and that the mentality inside Myspace stemmed from the culture of NewsCorp. If you look around at the Internet today, the Facebook share button is everywhere. It wasn’t like that not too long ago. Myspace could have integrated with Digg, Youtube, College Humor, and scores of other content aggregation websites. And that’s not all they could have done. They could have developed an elaborate “my space” that allowed users to integrate their information along with their favorite bands, friends, trends, twitter, etc.

What would have happened if Myspace had gone geo last year? Yes, that would have taken development time and a push to jump ship from Cold Fusion (honestly, who uses that anymore?)

Imagine going geo with a combination of calendar, photos, and social networking! Has anyone noticed the lack of a functional web calendaring system in all of the social networks?

Myspace’s focus was on “cool”, which is a huge failure on the Internet. The Internet is not cool. It’s geeky! It’s nerdy. Cool is so not cool anymore!!!

Watching Myspace over the last couple of years is like watching Dr. Evil when he first meets Scott. Myspace continues to try to be cool. Its latest “discover and be discovered” is an attempt at making Myspace cool to use “again and again”. It will only continue the path of Failspace.

How can Myspace be saved? Drop the Newscorp bailout, innovate, leverage the connections with the Entertainment industry, and go ugly.


Walmart Bailout?

I’m sure some will say I’m an alarmist. A grand conspiracy theorist. However, bailouts are all the rage for large companies these days. If we look at the reasoning given to us about bailing out the failed, antiquated, and obsolete GM and Chrysler, a Walmart bailout doesn’t seem that far fetched. GM and Chrysler were too large to let fail. That’s what we were told. Yet, they failed anyway, after taking billions of dollars. Let the economic meltdown begin!

Walmart is posting solid earnings you say? Walmart certainly has many things going for it. However, international economics are not working in favor of Walmart. The vast majority of Walmart products come from China. There is incredible pressure on the US dollar against the RMB. In fact, the USD buys a whole lot less in China today than it did a year ago, let alone a couple of years ago.

China has also changed their employment law. While many view it as good for Chinese workers, it has put additional pressure on the ability to get Chinese made goods. The long term effects of this policy are yet to be determined. However, it is highly unlikely that the new Chinese employment law is going to make Chinese made products more affordable.

China isn’t the only place where Walmart gets products. However, Walmart can’t just start sourcing products in another country where the dollar may be stronger and employment laws aren’t changing. First, international patents will likely prevent most of that from happening. That’s a topic for an entirely separate blog (that I’ll probably never get around to writing). As the USD falls, so will Walmart’s profits.

If Walmart executives choose to cash in on the scare tactics used by GM and Chrysler, they could easily squeeze billions of dollars in a bailout. After all, the total number of employees for GM was estimated at a quarter million. Walmart employs more than two million. That’s eight times as many people losing their jobs if Walmart fails. We can’t let that happen, right? Just think of the children!

If you’ve made it this far and think this has anything to do with Walmart, I’ll spell it out right now. I think GM and Chrysler sucker punched America! I think there is a special place in hell right next to people who talk during movies for the executives and politicians who sucked money out of our pockets for that ridiculous automobile bailout.


Why this Recession is Going to be Worse than it Should Have Been

It’s going to be 6-9 months before things start moving into recovery, and they are going to get much worse over the next 3 months. And that is a best case scenario. Why is this recession going to be so long and so severe? Simple, we denied it was happening for almost an entire year!

Remember, according to our government our economy was fundamentally strong just 3 months ago. That wasn’t the case then. That wasn’t even the case a year ago.

Recessions are fairly simple to recover from if they are dealt with responsibly. Ignoring it for 12 months just dug us a deeper hole. It would be like ignoring a broken leg for 12 months. Your leg would take longer to heal and would probably heal incorrectly (i.e. via $700 billion government bailout = $15 billion automobile industry bailout).