You are browsing the archive for 2013 May 28.

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Sen. Paul Appears on ABC's This Week With George Stephanopoulos- 5/26/2013

May 28, 2013 in Politics & Elections

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Source: RAND PAUL

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If Tesla Would Stop Selling Cars, We'd All Save Some Money

May 28, 2013 in Economics

By Patrick J. Michaels

Patrick J. Michaels

First of all, let’s stipulate that the Tesla model S is a pretty cool looking car, that the high-end version accelerates like a rocket, and that its massive, low center of gravity pretty much inures it against a rollover. Next, let’s congratulate Elon Musk on paying off his half-billion dollar federal loan ahead of time. Finally, thanks to everyone in the country for helping to make this possible, and for continuing to do so.

The public is still on the hook for Tesla, and will be for the foreseeable future.

The public is still on the hook for Tesla, and will be for the foreseeable future.”

First, there’s the $7500 taxback bonus that every buyer gets and every taxpayer pays. Then there are generous state subsidies ($2500 in California, $4000 in Illinois—the bluer the state, the more the taxpayers get gouged), all paid to people forking out $63K (plus taxes) for the base version, to roughly $100K for the really quick one.

The latest round of Tesla wonderment came when it reported its first quarterly profit earlier this month. TSLA stock darned near doubled in a week. Musk then borrowed $150 million from Goldman Sachs (shocking!) and floated a cool billion in new stock and long-term debt. That’s how we—the taxpayers—were repaid.

But is TSLA another Google , or just another DoubleClick? DCLK zoomed from $2 to $200 without ever showing a profit, something Tesla has yet to do with its cars. It then famously crashed.

Tesla didn’t generate a profit by selling sexy cars, but rather by selling sleazy emissions “credits,” mandated by the state of California’s electric vehicle requirements. The competition, like Honda, doesn’t have a mass market plug-in to meet the mandate and therefore must buy the credits from Tesla, the only company that does. The bill for last quarter was $68 million. Absent this shakedown of potential car buyers, Tesla would have lost $57 million, or $11,400 per car. As the company sold 5,000 cars in the quarter, though, $13,600 per car was paid by other manufacturers, who are going to pass at least some of that cost on to buyers of their products. Folks in the new car market are likely paying a bit more than simply the direct tax subsidy.

How’s this going to work in the future? As long as the competition has to pay greenmail to Tesla, probably just fine. And with California gradually ratcheting up …read more

Source: OP-EDS

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'My Scientists Made Me Shrink Your Car'

May 28, 2013 in Economics

By Patrick J. Michaels

Patrick J. Michaels

Three years ago, I ran into former Australian Prime Minister Kevin Rudd at a ritzy Northwest Washington restaurant. We exchanged pleasantries, but before long, our conversation became unpleasant.

Since climate science is my field, I felt compelled to point out that Rudd’s support for a cap-and-trade policy for carbon emissions had recently helped cost him his job as PM. “Well, what should I have done?” Rudd replied. “My scientists, I say, my scientists, told me this is an important problem.”

Having closely followed implementation of Mr. Rudd’s cap-and-trade, my response was admittedly a little testy: “Your scientists said exactly what you paid them to tell you.” It took less than an hour for the daily newspaper The Australian to get wind of the encounter.

How government scientists plunder the till in the name of science.”

That brief interaction with Mr. Rudd is indicative of a widespread problem: The government of Australia, and pretty much every other nation, funds research scientists and then relies on them for policy guidance. It is in the best interest of these government-funded scientists to ensure their fields — and therefore their jobs — are deemed of great importance.

The problem is particularly costly when it comes to environmental science>.

In the United States, government-funded scientists are required to produce a National Climate Assessment every four years. The assessment is produced by the U.S. Global Change Research Program, a 13-agency behemoth with multibillion-dollar annual funding. Under its empowering legislation, the assessments are “for the Environmental Protection Agency for use in the formulation of a coordinated national policy on global climate change .”

The research program and the individuals who write such reports are the largest consumers of federal largesse on climate science. Would they ever produce a report saying that their issue is of diminishing importance — so much so that EPA regulations of greenhouse gases are simply not needed? No, not unless they are tired of first-class travel and the praise of their universities, which are hopelessly addicted to the 50 percent “overhead” they charge on science grants.

The perils of science-by-government-funded-committee became apparent in their first assessment in 2000. The models they used were worse than no forecast at all.

If, for example, the U.S. Global Change Research Program’s computer models were given a multiple-choice test with 100 questions and four possible answers each, simply spitting out random numbers would, within statistical limits, get around 1 out of 4 (25 percent) correct. The initial assessment, however, would get only 1 out of 8 answers correct …read more

Source: OP-EDS

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European Integration or Disintegration?

May 28, 2013 in Economics

By Dalibor Rohac

Dalibor Rohac

First, there were only a handful of cranky Tory backbenchers and libertarian Nigel Farage who were receptive in the 2000s to the growing popular discontent over the way the European Union was being run. Seen as a fringe movement and part of British political folklore, few expected euroskepticism to get much traction.

The coming out of Nigel Lawson, former chancellor of the exchequer, seems to be a game–changer. Writing about leaving the European Union, the Tory peer concluded that “the economic gains would substantially outweigh the costs.” Lord Lawson was soon followed by two Cabinet ministers — Education Secretary Michael Gove and Defense Secretary Philip Hammond — who also indicated that they would favor Britain’s exit.

Finally, writing in Financial Times, columnist Wolfgang Munchau acknowledged that “[a] departure need not be a disaster if the terms are negotiated with skill” — a statement that only weeks ago would look out of place on the opinion pages of a newspaper that had traditionally embraced the euro and European integration with fervent enthusiasm.

For the first time in years, it seems that the British are willing to have an open discussion about the costs and benefits of EU membership, without running the risk of being labeled as political extremists.

While so far this shift has been mostly a British occurrence, it does not have to remain one — indeed, it should not. For many countries in Europe, the costs of being part of the EU are very salient — particularly for those that are part of the eurozone and are expected to contribute toward the bailouts of less–than–solvent countries on the eurozone’s periphery.

Neither should this shift be only, or predominantly, about a binary choice between being a part of the EU versus leaving it. While many small, open economies on the European continent might benefit from the common market, there ought to be space for an open–ended debate about the EU’s governance and its dysfunctions.

Instead of having such a debate, Europeans were long fed the mantra of ever–closer union. It was assumed that the EU’s problems would be solved by deeper integration and tighter policy coordination. The monetary union was a part of that process, as was the growing body of EU directives, regulating everything from privacy issues to mobile–phone roaming charges. At the onset of the crisis, a banking and fiscal union were proposed as fixes to the macroeconomic imbalances that were becoming apparent in the eurozone’s periphery.

Only a small group of politicians tried to challenge that consensus. With exceptions, euroskeptics were not a savory bunch, as they were dominated by groups such …read more

Source: OP-EDS

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Preserving Their Monopoly on Monopoly Money

May 28, 2013 in Economics

By Richard W. Rahn

Richard W. Rahn

“The need to slough off the outworn old to make possible the productive new is universal. It is reasonably certain that we would still have stagecoaches — nationalized to be sure, heavily subsidized and with a fantastic research program to ‘retain the horse’ — had there been ministries of transportation around 1825.”

Entrepreneurs are trying to create superior money, which is needed for global economic well-being, to replace the dollar and other failing government-created currencies. Unfortunately, these innovations are being strangled in their cribs by power-hungry central bankers and politicians. The best known of these new experimental currencies — “Bitcoin” — is now under attack by several U.S. government agencies.

The U.S. Federal Reserve System is responsible for creating and maintaining the value of the U.S. dollar, yet the dollar is now worth only one-23rd as much as it was when the Fed was created in 1913. Of late, the Fed has been keeping interest rates below the rate of inflation, which means that savers are suffering from a loss of real capital (equivalent to a large tax increase on savings), while, at the same time, small businesses and individuals are finding it is nearly impossible to obtain reasonably priced loans unless they are homebuyers. Similar situations are true with the other major world central banks.

Governments the world over are financing massive deficits by selling their debt to the central banks — the ultimate global Ponzi scheme. Smart people see the coming disaster and are looking for alternatives to government-created (central bank) money. Some are buying gold, which served as largely successful, global, nongovernment-created money for much of time before the World War I. Gold buyers, while feeling more secure about holding something real, are at risk because governments hold more than 20 percent of all gold, and even relatively small sales of gold by one or more governments can cause the price to drop substantially. Government officials hate the idea of private people using alternatives to the government monopoly money. From 1933 until 1973, the U.S. government even prohibited private individuals from owning gold coins or bullion.

In the age of the Internet, it is possible to create digital money with or without backing of something real. This possibility gives hope to most people because they could be liberated from the yoke of government money.

As you probably have read, Bitcoin is a brilliant software innovation, whose developers, for good reason, have chosen to remain secret. Bitcoin enables individuals to sell …read more

Source: OP-EDS