Last week, Ben Bernanke of the Federal Reserve made a big deal about the Fed doing the “twist” and  buying long-term debt and selling short-term debt. The purpose being to keep interest rates low to promote a faster recovery to the Great Recession we are in. The stock market immediately fell 3 percent and the mood was ugly.

Now I have said many times I am no economist, but I am an economic participant and I think this is all wrong. Maybe it worked back in the olden days, but today’s economic paradigm is different and requires a different approach.

First, have you looked at interest rates lately? They are about as low as they can get, any lower and you will be paying the bank to take your money. In fact a big bank in New York is already doing this.

I think it is about time to take a different approach. I think the Fed should RAISE interest rates…and here is my reasoning.

There are over 40 million senior citizens in the United States. Many of those folks and millions of others have 401k’s  and bank accounts earning little or virtually no interest. Five years ago, those same bank accounts were earning a return for their account holders. Those earnings permitted senior citizens to travel, buy new houses, cars, boats and go out to dinner when ever they wanted to. Now those same people have cut back because the earnings have disappeared. Today, corporate America and the country’s seniors have trillions of dollars sitting idle in bank accounts waiting for some encourging sign so they could be put to use.

Up to now, the Fed and the Administration have been unable to get the economy started because even with low rates there are no jobs and no one wants to spend money because there is no confidence. I say, quit keeping rates artificially low and seniors and others will use their savings account earnings to buy goods and services again.

Money is like manure. You need to spread it around for it to do any good.

More plumbing issues

September 23, 2011

Unless water is where you want it, when you want it, there will be inconvenience involved.

…Woody’s first rule of plumbing.

………………………..

Yesterday, I was just getting over my trauma of the clogged kitchen sink affair when disaster struck again. This time about 3 o’clock in the afternoon, the water was shut off without warning. My first reaction was to check the water bill to see if it had been paid. It had been and was current.

Next, I called the water company to see what was going on. Now, they have one of the automated systems that never lets you speak to a real person. Because of “extremely high call volume”  they send you to this electronic waiting room of hell. They require you to listen to their menu choices and select the topic you want. They never have the choice that I want to express to them though.

After going though a series of “security screens” that the TSA would envy, ( I was expecting an enhanced pat down through the phone at any moment), the voice said that there was indeed an “alert” in my area and the water would be off for 8 hours.

Eight hours!

There was no warning. Even with a hurricane you get a few days warning to get supplied up. But there was no warning at all.

We had a pint of bottled water, half a bottle of non fizzy, fizzy water and a few cans of diet coke in the fridge.

But drinking water was not what I was concerned about. You can live for a few days without drinking water. Besides I had an unopened bottle of bourbon and  I could always go to Starbucks for coffee if I wanted. No, I was concerned with a more critical issue; the ability to flush the toilet.

That is the area of real concern in these matters. Normally, I would have filled the bathtub for just such an emergency. But here we were caught unawares and unprepared.

The hours went by and still no water. Finally, after brushing my teeth with diet coke, I went to bed wondering what will happen tomorrow when I still had no water. Never be able to brush or flush again.

Then at one am,  the water came back on.  The bubbling and purging of air in the pipes woke me up.

I was giddy as a kid on Christmas morning, running around,  turning on water taps and flushing toilets with reckless abandon.

Ah, water, water everywhere and even some to drink!

Does anyone get a newspaper delivered anymore?

My first encounter with news delivery was over 50 years ago, when I was 12 years old and got a paper route. I had about 60 customers and delivered the paper rain or shine 6 days a week for about $2 plus $7 in tips. Nine dollars a week! Well, at least I did not have to pay taxes.

The papers were 5 cents a day or 30 cents a week. Most people gave me a dime tip. The big tippers left 20 cents. Some people gave me nothing, and some were never around when I went there to collect. My mother gave me a nickel and said I was lucky to get that.

I delivered those papers every day for two years, unless I was sick, then Trudy delivered them for me. But she charged me a sister surcharge so for those weeks, my earnings  were slim.

Since that time,  no matter where we lived, I usually got a newspaper delivered to the house each morning. But I have not had that luxury  for nearly ten years. It is not that I started to dislike reading the paper,  I enjoyed it, especially with a good cup of coffee. But now, all the information is available immediately on the internet and delivered free to my laptop. The print newspaper  is not news, it is history.

One thing about the newspapers though is that they seemed, at least in the past, to have a more professional approach to reporting than today’s internet news sources. They had professional writers, editors and reporters schooled in the art of who, what, when, where and how. Papers such as the New York Times and the Wall Street Journal still do,… I think.

However, since the price of entry into the news, blogging, tweeting etc. clubs is relatively low, just about any dope can write and post anything they like for all the world to see (e.g. this space).  Yellow journalism and gross exaggerations are becoming rampant.

Print newspapers went through their catharsis and purged (for the most part) yellow journalism at the turn or the last century. As an industry, Newspapers became better for it and the public was better served.

The digital news needs to do the same thing or it will become irrelevant and silly.

Plumbing

September 17, 2011

Unless water is where you want it, when you want it, there will be inconvenience involved.

…Woody’s first rule of plumbing.

……………………………

My brother-in-law, Barry can build a house with a hammer and a screwdriver.  I can’t even saw a piece of wood straight.  I once sawed my miter box in two. Nevertheless,  I like the beauty of wood and the joy that is carpentry.

I have also, dabbled with electricity and have only been knocked down once while touching a circuit that was supposed to be OFF! But the magic of electricity  continues to fascinate me.

Plumbing however is another story. Of all the home handyman projects  I have been involved with, I hate plumbing the most.

Through the years, I have learned that plumbing is always dirty and messy and inconvenient. Water is supposed to flow down hill, but when it does not, then trouble happens. Like the time I could not get a toilet drain unclogged and had to call a plumber. After a half hour and $100, he found the cause of the problem; a plastic, purple pig which Aimee tried to flush.

My most recent encounter with plumbing occurred this morning. After getting up at 5:30, I put the coffee on and was going to take Mikey outside. Then I noticed that there was water in the sink and the dishwasher had not drained from the night before. Trust me this is not good news at 5:30 in the morning.

I proceeded to remove all the crap that is stored under the kitchen sink and put a pan under the drain pipes. Loosening the pipes I gave thanks that they were the plastic kind and not those old style iron ones, or I would still be looking for a Stillson wrench. A Stillson wrench, what’s that?

Expecting a flood of water, as I released the pipes, I was disappointed that not a drop fell into the pan. No clog here. But the sink and the dishwasher still had standing water. I ran the disposal. Still nothing. The clog must be inside the disposal. All right, time for the big plunger.

Working over the sink drain I created enough suction to split an atom, but still the clog refused to let go. Finally after another attempt, that huge rushing sound I sought arrived as the water flowed into the catch pan, into the cupboard and onto the floor. What a mess, but at least the clog is gone, I thought as I looked at my soaking wet pants and shoes.

Now to clean up.

Several towels later, I was able to reconnect the pipes and restore order under the sink. Water was flowing downhill again and all was right with the world.

I settled down with my coffee and said to Mikey, “That wasn’t so bad, was it?”

He just put his head down on the floor and closed his eyes.

God, I hate plumbing.

Risky Business

September 15, 2011

I have been involved in venture capital investments about a half a dozen times during my life. Some ventures were successful, some not so much. In every case however, I risked my own money and rose or sank with the fortunes of the firm I invested in.

Being a venture capitalist can be rewarding . It can also sting a great deal when the intended plan goes south. Venture capital investments are risky and should only be undertaken after thorough investigation,  analysis and review of the company’s likelihood of success.

Being a new company seeking venture capital  often can be a tough sell particularly in the current depressed economic enviornment. It can however, sometimes be fun and easy, especially when you have a rich uncle as the venture capitalist; a rich Uncle Sam that is.

Such is the story of Solyndra, a solar energy company touted by the Administration as the “wave of the future.”

The Administration thought so much of Solyndra that it saw fit to invest $535 million of your tax dollars in the form of loan guarantees  into the fledging company. A company with a promise but no history of success.

Even my old CPA firm,  PriceWaterhouseCoopers warned against Solyndra’s viability and the White House’s own analysts said the company was not “ready for prime time.” In spite of this due diligence and red flag warnings, the President and his Administration authorized the loan guarantee backed by taxpayer money in a deal that some call “rushed.”

Now, Solyndra has filed for bankruptcy and the taxpayers are on the hook for $535 million.

Just another example of the Washington wastrels playing fast and loose with taxpayer money.

Playing the light

September 14, 2011

When I was a young driver, nearly 50 years ago, times were tough.

Gas was 29 cents a gallon and it took almost $3 to fill up my Volkswagen. We tried to save gas whenever we could. We would do things like take the transmission out of gear when going down a hill so the engine drag would not slow the car down. You could not do that now, because there are no manual transmissions and even  if there were, no one would know how to drive them.

Another cost saving technique we employed was “playing the light.”

That means if you saw a red light ahead, you would slow down and coast the last 200 or 300 yards to the light.  Playing the light so it would turn green by the time you got there. Thereby saving your gas and brakes.

Apparently, today people are in a big hurry and gas at $3.69 a gallon is not a big deal. Everyday, I see people racing to get to a red light only to slam on the brakes and then have to wait for the signal to turn green.

I think they would see a lot more green, if they “played the light.”

More Alchemy

September 12, 2011

The Administration’s latest spending gambit to “boost” the economy is yet another attempt by Washington to throw money at a problem and curry favor with a sceptical electorate. What troubles me is when the President says,…” everything is already paid for.”

How is this possible? Where did the money come from? If there were a spare $450 billion lying around, why didn’t we pay down some of the federal debt already?

This is more of the tired old Washington speak. When will they learn?

This economy will not improve until the consumer and producer segments have CONFIDENCE in the future. As monstrously large as government spending is, it is dwarfed by the private economic sector. It is this 800 pound producer/consumer gorilla that needs to be confident.

Producers want to be sure the business environment will be stable and free of overbearing government regulations. They want to know that their investment in production of goods and services will be rewarded and not taxed away.

Consumers want to know if their future cash flows are stable enough for them to consider purchasing new cars, refrigerators, T.V.s or living room furniture.

Confidence is the key. Political handouts will only ensure dependence not confidence.